Challenges of Adopting Industry 4.0 and Some Strategic Initiatives

The challenges of adopting Industry 4.0 formed the core of the conversation between ARC’s Ralph Rio, Vice President Enterprise Software, ARC Advisory Group, and Prabhakar Shetty, Global Head Digital Manufacturing Services, L&T Technology Services, during the ARC Industry Forum in Orlando.  This blog focuses on the salient points and quotes of the interview, which can be viewed here or on YouTube.

Watch on YouTube

Challenges of Adopting Industry 4.0

“If you look at the Industry 4.0 landscape there are four key points that have emerged as key challenges,” said Prabhakar.  He spoke about these issues:

• Most of the digital pilots have started and stopped without reaching a logical conclusion.
• As this is a new concept, there are very few benchmarks available, so when organizations embark on the Industry 4.0 journey, they lack reference benchmarks to follow.
• Organizations are unsure about how to approach the actual implementation process. 
• Many organizations react to peer pressure without thinking through the specific business benefits for them.

Next, Prabhakar spoke about some of the practical challenges of the continuously evolving technology landscape.  "If you look at machine to machine connectivity with the OT data coming into the IT applications, many find that integration more dynamic than anticipated.  This IT/OT integration is often  in a state of flux as the organization learns to adopt the technologies,” said Prabhakar.  That makes it difficult for the larger organizations to figure out where to begin their Industry 4.0 journeys. 

Another important aspect goes beyond the technology issues and involves the people, he explained.  Those digital journeys that were isolated point implementations have often come to a standstill, because the gaps are due to key stakeholders being excluded.  “There needs to be convergence of the people right from the board level all the way to the end users and other stakeholders,” said Prabhakar.

Organizational Dynamics

“Technology moves rapidly, and some customers are adopting it about  as fast as the technology change happens,” said Prabhakar.  However, other organizations are very slow in adoption, and this impacts three core areas:  

• The very business model of the organization
• The customer's journey and view of the organization
• The customer’s expectations  

This impacts the entire people structure in the organization and drives the need for cultural change.  It’s not just about ROI, other aspects impact an organization.  If your shop floor downtime is going to cost $100 per minute, and you lose two hours every month, that is a significant total revenue or production loss.  That provides a savings and ROI.  “But, one needs to also understand the application of these technologies from an organizational context, and go beyond traditional models of KPIs and ROI.  What is required is a broad view in terms of organizations understanding that this is about business transformation,” he said.

In the Context of Industry 4.0

Most of L&T Technology Services’ global clients across industry have started their digital journeys, but often need help figuring out the next step.  As Prabhakar had explained earlier, most of the challenges have been related to the approach itself, such as ensuring that people are included in the process, scalability issues, etc.  This is what the company is addressing through Industry 4.0 with a repeatable methodology and set of tools.  Each digital journey is different and needs its roadmap with clear steps, budget, expectations, and outcomes.  And at every step the people should be included.

Change Management

Prabhakar said that most of the digital initiatives need to convey a message of the effect on the people and organizational structure.  Humans have an innate fear of change and become concerned about losing jobs due to automated processes.  Prepare people by explaining and providing an understanding of the changes and how automation will help them.  Giving an example, Prabhakar spoke about the automobile industry and how electric vehicles are impacting the industry in a positive manner.  “It's not that people have stopped making automobiles.  It is just that the type of automobiles have changed,” he remarked.  Now, we are on the threshold of business change where people will be employed in a different manner.

Ralph concluded the interview by commenting about this combination of technology, processes, and people that takes Industry 4.0 to a new level, which is referred to by L&T Technology Services as Industry 4.NOW.