Global Research: The Connected Industrial Workforce

Global ResearchThe Connected Industrial WorkforceApril 2016

2Copyright © 2016 Accenture All rights reserved.

• Background

• About the research

• Executive summary

• Key findings

• Recommendations

• Connect with us to know more

• Appendix

– Country highlights

2

Agenda


Digital revolution is transforming manufacturing

By bringing machines and artificial intelligence into the workforce, digital is enabling an increasingly adaptable, change-ready, and responsive working environment: a Connected Industrial Workforce in which men and machines, working together, reinvent the production and service processes by which manufacturing outcomes are achieved.

The Connected Industrial Workforce promises to boost manufacturing productivity exponentially, as well as improving operational efficiency, and enhancing safety and risk management. But are manufacturers ready to embrace it?

Accenture conducted a survey to research the awareness and perceptions, challenges and readiness of industrial companies to implement a Connected Industrial Workforce. The findings are based on the self-perceptions of the executives surveyed.


About the research

COUNTRIES(n)

China 101France 100Germany 100Japan 100Switzerland 10United States 101

INDUSTRIES%

Industrial Equipment 51%

Construction Equipment 25%

Automotive 24%

FUNCTIONS%

CEO 6%CIO 9%COO/CSCO 10%CTO 9%Director/Head of industrial Engineering

9%

Director/Head of Digital Strategy/Chief Digital Officer

7%

Director/Head of IT Department or Deputy

9%

Director/Head of Research & Development

8%

HR Manager (Concerned with Digital topics)

8%

Other managerial positions concerned with Digital

9%

Factory Director 8%Operations Manager 9%

REVENUES%

Over $10 bn 6%Between $5.1 bn and $10 bn 19%

Between $1.1 bn and $5 bn 42%

Between $500 m and $1 bn 33%

EMPLOYEES

%More than 50,000 employees 8%

10,001 up to 50,000 13%5,001 up to 10,000 27%2,001 up to 5,000 43%1,501 up to 2,000 6%1,000 up to 1,500 3%


Executive summary

In the next 5 years, the manufacturing environment will

significantly evolve: from human- to human-machine-

centric.

Manufacturing executives believe that the main benefits of this

Connected Industrial Workforce will be an exponential

improvement in manufacturing productivity, improved

operational efficiency, and enhanced safety and risk

management.

To realize the identified potential, companies today spend on average 18% of their R&D budget on the Connected

Industrial Workforce. In 5 years, this is expected to increase to

on average 24%.

Collaborative robots are the preferred technology to achieve

the desired productivity improvements: 63% of the

investigated companies already employ collaborative robots to

boost productivity.

Shortage of skilled labor, data security and system vulnerability are the major challenges that

have to be overcome.

Digital Leaders are already implementing Connected

Industrial Workforce solutions, strong action plans and higher

investments.


Key findings


Awareness of a Connected Industrial Workforce


In 5 years, respondents expect the focus of technology in the production environment to evolve from human- to human-machine-centric

The Augmentation-Automation spectrum

Manual Autonomous

Human-centric Machine-centric

Today

Future

Human with Tools

27%

4%

-23 pts

Machine Augmenting Human

35%

11%

-24 pts

CollaborativeMachines

24%

29%

+5 pts

Human Augmenting Machine

11%

30%

+19 pts

AutonomousMachine

3%

26%

+23 pts5 year difference

Q: Which of the following best describes your understanding of the Connected Industrial Workforce today, and how do you think it will be described in 2020?


Today, 94% of executives consider a Connected Industrial Workforce essential to their business strategy, but only 22% have taken steps to implement it

Connected Industrial Workforce and business strategy

Q: Do you consider the Connected Industrial Workforce to be an important component of your business strategy today?Q: Which statement best describes what drives how the Connected Industrial Workforce is formulated within your business strategy?Q: Which statement best describes the maturity of your company’s Connected Industrial Workforce strategy?

94% say Connected Industrial Workforce is an essential element of their business

strategy

62% of those companies want to actively set the agenda for the Connected Industrial Workforce

But only 22% have already implemented Connected

Industrial Workforce measures


Workforce evolution leads companies to dedicate a higher portion of their R&D budget to a Connected Industrial Workforce

Current and future Connected Industrial Workforce budget

Q: Please estimate your current investment requirements and requirements in the next 5 years associated with the Connected Industrial Workforce within your company. Please state the amount as a percentage of the overall R&D (Research & Development) spending of your company.

Today, companies spend on average 17.6% of their R&D

budget on Connected Industrial Workforce.

In 5 years, companies will spend on average 23.6% of their R&D budget for Connected Industrial

Workforce.

Connected Industrial Workforce budget as % of annual R&D spend


Benefits of a Connected Industrial Workforce


The majority of respondents expect benefits in the areas of improved productivity, operational efficiency and safety and risk management

Top 5 benefits of adopting the Connected Industrial Workforce

Q: Over the next five years, what are the biggest benefits that will drive adoption of the Connected Industrial Workforce within your industry? % ranked in top 3

Improved productivity

Improved operational efficiency

Improved safety and risk management

Optimized asset utilization

Additional competitive advantage

51%

36%

35%

33%

30%

49%

46%

32%

32%

24%

53%

53%

29%

26%

30%

52%

47%

31%

29%

28%

Automotive(n=123)

Industrial Equipment(n=263)

Total(n=512)

Construction Equipment

(n=126)


Exemplary Case 1: How the Connected Industrial Workforce helps to unlock the value potential of digital along the OEM value chain

Partial Digitization Strategy – EBITDA Potentials per Digitization Lever

Note: This Exhibit is based on a fictitious automotive brand with an industry average of 50.0 b€ in revenue and 5.0 b€ in EBITDA. Its product portfolio only consists of passenger cars.Source: Accenture Strategy. Digital Value Creation in the Automotive Industry. Accenture Research Analysis.

Manufacturing & Supply

Marketing &Sales

Research & Development 715 m€115 m€ 415 m€ Aftersales 225 m€

05. Asset Efficiency

01. Analytics-based PLM

Improvement65

02. Virtual Product Deve-lopment & Prototyping

04. Digital-enabled Manufacturing

250

03. Digital Supply ChainManagement 125

50

40

50 b€ Brand

Revenue impact = EBITDA potential of 6.50 % (130 m€) Cost impact = EBITDA potential of 23.0 % (460 m€)

08. Analytic-based Media

Spend Optimization

10. POS Digitalization

25

11. Online Sales 55

09.Centralized Digital Content Management

100

07. Digital-enabled Lead Management

195

06. Predictive & Personalized Offers 235

100

5

14. Digitization of Face-2-

Face Experience

16. Over the Air Features

17. Digital-enabled Workforce

30

15. 3D Printing of Spare Parts 5

13. Personalized After Sales Offers

90

12. Predictive Maintenance 30

10

25

18. Aftersales OnlineStore 35

Connected Industrial Workforce as a value lever to unlock the full potential

Example:According to our respondents, improved operational efficiency and optimized asset utilization are two of the most important benefits of the CIW.

Our survey results and analysis indicate that the Connected Industrial Workforce is able to leverage an EBITDA potential of almost 500 m€$


Exemplary Case 2: For the automotive supplier, the Connected Industrial Workforce impacts 8 value levers with an EBITDA potential of 220m€

Partial Digitization Strategy – EBITDA Potentials per Digitization Lever

Note: This Exhibit is based on a fictitious automotive supplier with an industry average of 20.0 b€ in revenue and 2.0 b€ in EBITDA. Its product portfolio is limited to automotive. .Source: Accenture Strategy. Digital Value Creation in the Automotive Industry.

Manufacturing & Supply

Marketing &Sales

Research & Development 19 m€150 m€ 250 m€ Aftersales 33 m€

01. Analytics-based PLM

Improvement20

02. Virtual Product Deve-lopment & Prototyping

05. Digital Supply ChainManagement 60

20 b€ Brand

Revenue impact = EBITDA potential of 7.25 % (145 m€) Cost impact = EBITDA potential of 22.0 % (440 m€)

Connected Industrial Workforce as a value lever to unlock the full potential

Our survey results and analysis indicate that the Connected Industrial Workforce is able to leverage an EBITDA potential of more than 250m€$

03. Model based Product Development

04. Virtual Product Development

20

65

405

07. Connected Machines

06. Assisted Operators 30

09. Smart Factory

10. Virtual Testing 10

08.Connected Products 70

50

2010

Example:Together with Collaborative robots or AGV’s the smart factory will come to alive.According to our respondents, these are the most important productivity levers which the CIW implementation promises.

12. Digital Marketing 13

11. Digital Customer Management 6

14. Analytics for aftersales (OEM, Wholesaler, SC)

14

13. B2C Online store 4

15. Warranty Analytics (OEM & Wholesaler)

15


Collaborative robots are the preferred technology to achieve the desired productivity improvements

Top 5 applied technologies/devices

Q: Which technologies are most important for productivity improvement in your industry?

Collaborative robots (e.g., Baxter or YuMi)

Automated Guided Vehicles (AGVs) (e.g. unit loads)

Augmented reality devices (e.g. Smart Helmets)

Tablets

Smart Watches

71%

72%

56%

39%

31%

Automotive(n=123)

56%

45%

52%

49%

33%

62%

49%

48%

52%

40%


63%

54%

51%

48%

36%

Total(n=512)

Construction Equipment(n=126)

Collaborative Robots Automated Guided Vehicles Smart Devices


Today, injection molding is commonly assigned to collaborative robots, but respondents see the highest future potential in assembling

Assigned tasks to collaborative robots*

Q: Which tasks does your company currently assign or plan to assign to collaborative robots in the next 5 years?

*Note: Only Respondents who employ collaborative robots

Today, injection molding is the most commonly assigned task

to collaborative robots.

The highest potential is seen in assembling with 39% of

companies planning to assign this task in the next 5 years.

In the next 5 years, gluing and welding will be the most

common task assigned to collaborative robots with 72%.


Challenges in the adoption of a Connected Industrial Workforce


More than two thirds of companies are concerned about the availability of the right skills and about data and system vulnerability

Importance of each risk associated with the Connected Industrial Workforce

Q: How do you assess the importance of each of the following potential risks associated with the Connected Industrial Workforce?

27%

29%

30%

32%

36%

38%

31%

42%

44%

34%

35%

40%

28%

25%

30%

Medium Risk No RiskHigh Risk

Shortage of skilled workers

Data vulnerability(e.g. privacy threats, corporate data

security)

System vulnerability(e.g. system breakdowns due to

complexity)

Employment legislation orlabor union objections to Connected

Industrial Workforce

Job losses


Security concerns are seen as the most important challenge when it comes to adopting a Connected Industrial Workforce within a company

Challenges for adoption

Q: What are the 3 greatest challenges of adopting the Connected Industrial Workforce within your company? % ranked in top 3Q: What are the 3 most important security challenges for your company when you think of the Connected Industrial Workforce? % ranked in top 3

Top 3 Challenges

Top 3 Security Challenges

Security concerns

Implementation complexity

Legacy equipment (e.g. no connectivity or embedded

sensors)

Network security

Corporate data security

Cloud security

34%

31%

28%

42%

39%

35%


Readiness to implement a Connected Industrial Workforce


Automotive companies consider themselves to be leaders in digitization

Industry assessment

Q: How would you assess the current degree of digital or digitization for your industry overall? Note: Digital Laggards (1-6); Digital Followers (7-8); Digital Leaders (9-10)

24%

24%

23%

23%

51%

55%

58%

55%

25%

21%

19%

22%

The automotive business is already

disrupted from several angles. It is already realizing the huge

potential of a digital automotive industry.

Automotive(n=123)


Construction Equipment

(n=126)

Total (n=512)

Digital Leaders (9-10)Digital Followers (7-8)Digital Laggards (0-6)

In 2020, we estimate that the Connected Industrial Workforce could be helping to unlock as much as €500 million in profitability for an automotive manufacturer with annual revenues of €50 billion.


Automotive is investing more than other industries in the Connected Industrial Workforce

Budget allocation in current and future Connected Industrial Workforce adoption and implementation


The Automotive industry is leading in investing in the Connected Industrial Workforce and will extend its lead over the next 5 years.



Digital Leaders dedicate more of their R&D budget to a Connected Industrial Workforce and will continue to raise the bar over the next 5 years

Budget allocation in current and future Connected Industrial Workforce adoption and implementation


14%

19%

23%

19%

25%

29%Today, companies leading

in digitization spend almost double the amount

than digital laggards.

In the next 5 years, digital followers risk lagging

further behind due to the continued increase in investment of those already in the lead.


Today

Next 5 years

LeadersFollowersLaggards


In the next 5 years, Digital Leaders plan to implement a Connected Industrial Workforce strategy, whereas Digital Followers will still invest in defining itCurrent and future investments in Consulting Services

Q: Please estimate your current investment requirements and requirements in the next 5 years associated with the Connected Industrial Workforce within your company. Please state the amount as a percentage of the overall R&D (Research & Development) spending of your company.Q: In which kind of technology or professional service do you plan to invest?

Digital Leaders Digital Followers Digital Laggards

28%32%

27%

38%33%

25%

% of companies investing in consulting services to implement their Connected Indus-

trial Workforce strategy

Digital Leaders Digital Followers Digital Laggards

38%

20% 23%

39%30%

22%

% of companies investing in consulting services to define a Connected Industrial

Workforce strategy

Digital Leaders are already one step ahead and will increase investments in consulting services to implement the Connected Industrial Workforce

from 28% to 38%.

The share of Digital Followers investing in consulting services to define their Connected Industrial

Workforce strategy will increase from 20% to 30% within the next 5 years.

Today Next 5 years


In the next 5 years, more Digital Leaders will increase their investments in collaborative robots and augmented reality devices

Current and future investments of Digital Leaders in Hardware

Q: Please estimate your current investment requirements and requirements in the next 5 years associated with the Connected Industrial Workforce within your company. Please state the amount as a percentage of the overall R&D (Research & Development) spending of your company.Q: In which kind of technology or professional service do you plan to invest?

Today, half of the Digital Leaders invest in autonomous guided vehicles.In the next five years, more Digital Leaders will start investing in collaborative robots and augmented reality devices.


Digital Leaders recognize the urgency and have the confidence to drive adoption of the Connected Industrial Workforce

How to embrace the Connected Industrial Workforce

Support from leadership

Hiring new talent

External companies to help

Training & new roles

0% 20% 40% 60% 80% 100%

Digital Leaders and Followers have a strong and balanced agenda to embrace the Connected

Industrial Workforce within their company.

Digital Laggards lack determination in closing the gap to benefit from

the Connected Industrial Workforce.

Tactical importance of actions to embrace Connected Industrial Workforce

Digital Leaders Digital FollowersDigital Laggards

High importanceLow importance

Q: How important will the following be to help your employees embrace the Connected Industrial Workforce?


Over 80% of Digital Leaders have taken action to connect the workforce in terms of hardware, software and people

Measures to “connect” the workforce

Q: To what extent does your company take any of the following measures to “connect” or “digitize” the existing workforce?

51%

46%

46%

39%

32%

33%

41%

36%

45%

51%

16%

13%

18%

16%

17%

Upgrading existing IT hardware infrastructure

Increasing the level of automation

Increasing the number of connected tools

Upgrading existing software landscape

Developing new modes of job-related training and

skills

Measures taken by Digital Leaders to connect the workforce

Have started to use this measure on a pilot-program basis

Have fully functional programs using this measure

Have not started with pilots or have not planned to implement

More than 80% of companies leading in

digitization have already implemented or are

currently piloting relevant measures.

Half of Digital Leaders have already invested in

upgrading their IT hardware infrastructure and in connecting their

devices.


Recommendations


Envision the full promise of the Connected Industrial Workforce to get started on your journey

Define the specific benefits that apply to you. Be bold in your thinking. Leading companies already are.

Identify and address what’s holding you back. Is it Legacy IT systems, data and systems security or the skills gap?

Raise your game. Dedicate higher proportions of your R&D budget to build a Connected Industrial Workforce.

Define your journey and who owns it. Gain senior leadership support, engage all stakeholders in the strategic plan, identify the value you expect to drive and track it appropriately.

Identify new job profiles. Build, train or hire to acquire the right skills.


Connect with us to learn more

René WiedemannIndustrial Equipment Industry Lead, [email protected]

Christian HaukeConnected Industrial Workforce Study [email protected]

@AccentureInd

Read the full reportwww.accenture.com/connectedworkforce

Eric SchaefferGlobal lead for [email protected]

Research TeamGeorg BergerConnected Industrial Workforce [email protected]

Matthias WahrendorffIndustrial Research [email protected]

mailto:[email protected]



http://www.accenture.com/connectedworkforce





Appendix


Country highlights


US company executives believe they are leading the way

The results clearly indicate that the US is already working on its transformation of the industrial workforce.

US companies realize that the Connected Industrial Workforce will play a huge role in staying ahead of the competition within the industrial sector.

28% of their R&D budget is spent already on Connected Industrial Workforce. In 5 years, it will be 40%.

28% of US companies can be seen as Digital Leaders.

53% of US companies have already implemented Connected Industrial Workforce measures.

IT Security is considered the most important challenge in adopting the Connected Industrial Workforce in the US.

IT Security is considered the most important challenge in adopting the Connected Industrial Workforce in the US.


German company executives reveal they need to boost their efforts

German companies are aware that the Connected Industrial Workforce is key to driving future business in the industrial sector.

Many companies are piloting Connected Industrial Workforce measures but they are currently hesitant to implement them.

15% of their R&D budget is spenton a Connected Industrial Workforce. In 5 years, it will be 20%.

Only 10% of German companies can be seen as Digital Leaders.

71% of German companies are currently piloting Connected Industrial Workforce measures, but only 10% have already implemented solutions.

Implementation complexity is considered the most important challenge in adopting the Connected Industrial Workforce.

Legal issues will not pose a challenge in adopting Connected Industrial Workforce measures.


French company executives reveal they are yet to connect their workforce

Most French companies say that they’re currently piloting Connected Industrial Workforce measures.

Only 12% are first movers and have already connected their industrial workforce.

14% of their R&D budget is spent on a Connected Industrial Workforce. In 5 years, it will be 19%.

Only 8% of French companies can be seen as Digital Leaders.

65% of French companies are currently piloting Connected Industrial Workforce measures, but only 12% have already implemented solutions.

IT Security concerns are considered the most important challenge in adopting the Connected Industrial Workforce.

Difficulty of migration/installation will not pose a challenge in adopting Connected Industrial Workforce measures.


18% of their R&D budget is spent on a Connected Industrial Workforce. In 5 years,it will be 23%.

25% of Chinese companies can be seen as Digital Leaders.

73% of Chinese companies are currently piloting Connected Industrial Workforce measures, 20% have already implemented solutions.

Legacy Equipment is considered the most important challenge in adopting the Connected Industrial Workforce.


Chinese executives believe they are moving with confidence

20% of Chinese executives say they have already implemented Connected Industrial Workforce solutions. 73% are piloting Connected Industrial Workforce measures or reviewing their pilots.

There is a high proportion of digital leaders among Chinese companies and these are driving the digital agenda in their respective industries.


Japan’s industrial executives reveal they are yet to realize the benefits

Most Japanese companies say that they are currently piloting Connected Industrial Workforce measures. Only 11% are first movers who have already implemented solutions.

13% of their R&D budget is spenton Connected Industrial Workforce. In 5 years, it will be 17%.

Only 4% of Japanese companies see themselves as Digital Leaders.

61% of Japanese companies are currently piloting Connected Industrial Workforce measures, but only 11% have already implemented solutions.

IT Security and cost concerns are the most important challenges in adopting the Connected Industrial Workforce.


Global Research: The Connected Industrial Workforce

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