CxO priorities, and digital and IoT-related investment trends in the manufacturing industry – insights from various sub-verticals

Manufacturers today are investing in the modernization of their enterprise landscapes (e.g. migrating to SAP S/4HANA), moving their IT infrastructures to the cloud, or implementing data management and analytics solutions. These are all important measures to lay the foundations for the digital transformation of companies’ processes.

But what about digital and IoT-related investment trends?

In a recently published report, teknowlogy focuses on investment trends and sample projects relating to new digital technologies such as the Internet of Things (IoT), artificial intelligence (AI), augmented reality (AR)/virtual reality (VR), and additive manufacturing and generative design approaches.

Besides the investment trends and examples of project initiatives given in this report, there are certainly many more digital and IoT-related initiatives out there, and the report just gives an overview of trends and projects that we have been talking about with manufacturing CxOs in the past 12 months.

Some trends can be observed in various sub-verticals; examples are:

  • Connected worker solutions are interesting topics in sub-verticals such as automotive, aerospace, and oil and gas.
  • Predictive maintenance concepts, in particular, play a major role the more critical production assets are within the production process and the higher the damage that will be caused through unplanned downtime of production assets (e.g. mechanical and plant engineering, oil and gas).
  • Basically, the integration of the IT domain with the operations technology (OT) domain plays an increasing role in all sub-verticals, and particularly in shop-floor operations, where the utilization of production assets needs to be increased. The challenge for many manufacturers is to capture data from production assets (OT) and analyze it in a way to generate insights from it, leveraging IT.
  • Ensuring worker and plant safety is a major topic in most industries, but particularly in process industries such as oil and gas, and chemicals.
  • Industries that are especially challenged with ongoing measures to comply with compliance regulations are the food industry (e.g. regulations for food safety), pharmaceuticals (e.g. regulations for patient safety), and chemical and oil and gas (e.g. environmental, health, and safety (EHS) regulations).

Besides those trends that can be seen in various sub-verticals, a major distinction can be made in terms of investment behavior between discrete and process manufacturing industries: the modernization of industrial processes by means of new technologies is clearly lagging behind in process industries (e.g. oil, gas, chemical), and investment decision cycles tend to be much longer than in less complex production environments, such as in discrete industries (e.g. automotive, mechanical engineering). This is because the potential risk associated with changes made to a running production system is often perceived as too high due to process interdependencies. Modifications might impact a complex system of processes and, for instance, lead to serious incidents, i.e. hazardous events such as an explosion at an oil rig or a chemical plant. Besides, no plant operator would want to make changes to a running system unless the expected benefits clearly exceed the risks.

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Fig.: Level of digital maturity and adoption speed by manufacturing sub-verticals

For further details please refer to our recently published report “Manufacturing Industry: CxO Priorities and IT Investment Trends by Sub-Verticals