Industry 4.0: Are you ready?

Why the Internet of Things (IoT) will force every company to be more tech-savvy
Industry 4.0: Are you ready?
Industry 4.0: Are you ready? (image source: Flickr/JCT600)

While there are several definitions for Industry 4.0, it essentially translates into a marriage of physical and digital technologies such as analytics, artificial intelligence, cognitive technologies and the internet of things (IoT). This combination of the physical and digital worlds allows for the creation of a digital enterprise that is not only interconnected, but also capable of informed decision making.

As with previous industrial revolutions, the impact of these changes has the potential to significantly affect industries, businesses and communities, influencing not just how we work, but how we live and relate to each other.

A recent Deloitte global survey sought to measure business and government readiness for Industry 4.0. The survey polled 1,600 C-Level executives across 19 countries and what ultimately emerged was a picture of the opportunities and challenges global leaders saw in creating new value in a changing world – a picture that conveys both hope and ambiguity.

As executives consider the changes that will impact on business in the next five years, the emergence of new business models is at the top of their minds together with new regulations. Ultimately, many jobs and required skills will change dramatically, though it is too early to gauge to what degree. The two fundamental drivers that executives can consider when trying to anticipate the changes are technology (robotics, artificial intelligence, IoT etc.), and the changing workforce (the gig economy, crowdsourcing etc.).

“If you look at schools, apprenticeships and university programmes, governments should do much more in fostering an IT culture. Coding and creating apps, for instance, should become a regular part of anyone’s curriculum,” said Frithjof Netzer, Senior Vice President and Chief Information Office, BASF, about the fourth industrial revolution.

How does IoT tie into Industry 4.0?
IoT is a core part of the fourth industrial revolution and to put it simply, IoT enables us to access information that few had access to before, or that was not even available at all. With this information now readily available, we can draw new insights to ultimately improve the world around us. We need to make a vast amount of decisions on a daily basis and with the right processes in place, IoT helps us make these decisions quicker and more accurately than ever before.
It makes sense for people to live in a connected world and businesses are starting to see the value in adopting an IoT strategy. The key market players are starting to improve their effectiveness and efficiency using insights gained from IoT and the automated workflow. In less competitive environments such as personal life, IoT is changing the way you look at your health, finances and work. The trick will come in how we decide to spend the “free time”. As time goes on, we will be increasingly exposed to an immense amount of new IoT technologies. The balance, however, lies in critically evaluating new technologies to determine whether it contributes positively to the goals that you want to achieve.

Companies face ever-increasing disruption in the market, irrespective of the industry they are in. To remain competitive, companies require real-time access to data and insights to make informed decisions at high velocity. IoT enables the gathering of data about the market, their operation and highlights potential efficiencies, which can drive better decision making. Most IoT data that companies use to improve their value offering to their existing and potential clients come either directly or indirectly from their consumers.

Once data is gathered it needs to be processed into information to have meaningful value. Processing this data not only requires advanced processing technologies but also the relevant skills to perform analyses. This is why the data aggregation at the edges is becoming very important. More companies like Facebook and Google are able to create a digital profile based on browsing habits, social media activities and location tracking through phones and other devices.

How IoT is transforming industry
“The Fourth Industrial Revolution creates unlimited possibilities for the people who are interested in business. While it can be scary when companies apply technology to transform business models in their industries or across other industries, it generates innovation and improves competitiveness,” said Chun-Yuan Gu, President of Asia, Middle East and Africa Region of ABB.

Globally, we are seeing the market uptake in industrial companies are really gathering momentum and the early adopters are starting to see the return on their investment in IoT. Utilising IoT data to optimise process and drive efficiencies translates into cost reductions. What we have also seen is that companies are generating alternative revenue streams from the IoT data gathered, like value-added services around predictive maintenances of products or equipment.
IoT has become synonymous with Digital Transformation because it is the first step in the Digital Transformation journey. This is due to the technology having significant business process impact potential, the speed at which the technology can be implemented and then extract business value from the data. IoT is often thought of as primarily an industrial or consumer technology. But this sentiment is quickly changing.

Digital Transformation requires companies to implement and integrate new digital technologies to reduce costs, enhance productivity, increase revenues and customer experience. Most of the ERP companies are adapting their solutions to easily integrate with the digital technologies by using open protocols and integration standards. This creates the opportunity to integrate the operational world more closely with the business world to create value.

Potential challenges
Security requirements of an IoT solution are complex. They entail much more than the traditional security requirements of confidentiality, integrity and availability. Now, they also need to address authentication, authorisation, freshness of data, nonrepudiation, and forward and backward secrecy. An IoT solution consist of at least three layers namely a sensor layer, a network layer and an application layer. All these layers are vulnerable to attacks. Attacks can be broadly categorised as physical, network and software attacks.

Device management is key when securing an IoT solution. We humans are still the biggest threat to any solution. IoT is no different. That is why it is important to set up roles with appropriate access to the task to be performed. Division between systems within the IoT device itself is very important. There is no reason why a car’s climate control system should be integrated with the brake system. Apply general security best practices such as change default password, rotate password, switch off remote functions, which are not needed and Include IoT devices in regular vulnerability management programs.

IoT is no longer just a buzz-word in the South African context. The IDC last year indicated that the market for connected devices in SA will account for $2 billion of the global total value of $1.7 trillion by 2020. IoT is moving out of the experimental phase as more companies are making IoT a business strategy.
Deloitte fits into this landscape by helping organisations understand the opportunities and risks presented by the Fourth Industrial Revolution and apply that insight in pursuit of key objectives. We draw on deep industry experience and extensive knowledge in artificial intelligence, IoT, analytics and other technologies underpinning Industry 4.0 to help organisations develop and execute innovative approaches to better serve their customers, people, communities and other critical stakeholders.

By Dawid Breet, Deloitte Africa Technology Practice Leader