Getting Ready for Industrie 4.0

In Germany, Industrie 4.0 has remained a top strategic approach to leverage digital technologies to improve competitiveness of various industries and sectors through the industrial Internet of Things (IoT), big data and data analytics.

While Gartner sees this strategy emerging in European countries (such as Italy, Spain and the U.K.), as well as Asia/Pacific, focusing on smart manufacturing and supply chain, a number of questions remain on every CIO's mind.

Frank Ridder, managing vice president at Gartner, shared his views to help organisations initiate their Industrie 4.0 strategy.

How does an organization start an Industrie 4.0 program, and what is first?

The German Industrie 4.0 initiative constitutes a digital transformation that requires change management in business and operations, and it is a journey.

First, organizations need to define strategic goals, which are tailored to their requirements and core competencies that they want to digitalize to create competitive thrust. An organization with a solid strategy for Industrie 4.0 represents an opportunity to streamline processes between business units and across operations, such as production, logistics or customer care. Furthermore, that strategy helps organizations optimize sourcing or innovation projects by including customer information or creating dynamic service or maintenance agreements.

It is critical that leaders also prepare their organizations and the support functions for a journey of change culture and management, which involves breaking with conventional wisdom and includes innovation and knowledge exchange among employees as a part of best practice.

CIOs should develop the strategy together with other C-level executives and support the discussions, for example, on more-transparent processes, quality or knowledge exchange that leverages technology as a platform.

Often, workforce skills lack the progress of technology adoption. How can IT leaders make their staff more digital?

The transition to Industrie 4.0 requires huge levels of change and new skills not only within discrete functions, such as manufacturing, but also across the entire organization — touching almost every department and function.

While technology is a significant enabler of digital business, we found that organizations surveyed by Gartner ranked big data/analytics, skills/expertise and process management as key technology inhibitors for faster digital business adoption.

However, there are technologies that are a significant accelerator for digital business technology. Letting the IT department cover most these issues alone will suggest a lot of money and time spent or an insurmountable obstacle. CIOs should expect the investment into digital business technology to lead to new sourcing arrangements and increased use of external services.

Regarding skills, staffing up for digital business is much more than identifying technical skills. C-level executives need to build a bench of versatilists who can fill a variety of the granular entries across the broad fields of expertise for each activity stage. The challenge becomes one of negotiating their time.

We also recommend that they expand beyond internal development alone. Pilot new ways to find, build and acquire digital business capabilities. Social sourcing, microtasking, small company acquisitions and global networks are fruitful channels.