Indian industrial sector is warming up to the idea of digitisation. Catching up with its global peers, 65% of manufacturing companies in the country will have high level of digitisation in five years' time as opposed to 27% at present, said a PwC report on Thursday. Globally, while 33 % of manufacturing firms have employed advanced digital technologies, 72% of such firms will have this capability by 2020.
The report, Industry 4.0, surveyed ,2100 industrial companies in 26 countries including more than 50 big companies in India from segments such as Automotive, Heavy Engineering, Chemicals, Metals, Paper and Pulp and Transport and Logistics.
Industrial companies, globally, are going through complete value chain transformation using new age technologies, said PwC, terming this digital transformation as Fourth Industrial Revolution aka Industry 4.0.
"While Industry 3.0 focused on the automation of single machines and processes," said Sudipta Ghosh, Leader - Data and Analytics, PwC India said. " Industry 4.0 concentrates on the end-to-end digitisation of all physical assets and their integration into digital ecosystems with value chain partners."
Industry 4.0 framework includes emerging technologies such as cloud computing, mobile devices, IoT (Internet of Things) platforms, Location detection technologies, advanced human-machine interfaces, authentication and fraud detection, 3D printing, smart sensors, big data analytics and advance algorithms, multilevel customer interaction and customer profiling and augmented reality and wearables.
"At the end of this transformation process," the report said, " successful industrial companies will become true digital enterprises, with physical products at the core, augmented by digital interfaces and data-based, innovative services."
According to the data collated by PwC, 39% of the Indian industrial companies plan to invest more than 8% of their annual revenues in digital programmes in the next five years, while two-third of the companies investing in Industry 4.0 expect return on investment (RoI) from their digital investments within two years. This is more than the global figure, where 55 percent of the companies are expecting the RoI from digital transformation in the first two years.
Data analystics will be assuming a larger role in decision making process, with more than 90% of the companies using it to drive business decisions as compared to 53% at present. This will include predictive analytics as well which is increasingly becoming an important aspect of the entire decision making process.
However, according to PwC, there are challenges like lack of a clear digital operations vision from the leadership, lack of skills in data analytics capabilities and operational disruption from cyber security breaches among others, which these manufacturing companies will have to overcome to leverage the full value of Industry 4.0,
"For an emerging economy like ours with a very strong focus on the growth agenda, it is only natural that Industrial Products sector will leverage the technological breakthroughs for building its digital ecosystem," said Ghosh. "This will enable them to add significant value to their customers by knowing how the product is being used and will also drive efficiency improvements across the value chain."
According to Bimal Tanna, Leader, Industrial Products, PwC India, digitisation is no longer a luxury for the manufacturing industry today, but a necessity to drive revenues, efficiency and profitability in the future.
"Progressive Indian industrial companies are willing to invest heavily in digitisation technologies such as sensors or connectivity devices as well as software and applications such as manufacturing excellence systems, "said Tanna. "Investing sooner and spreading out investments over time will enable companies to avoid huge capital investments later on."
More than 80% of the respondents in India are expecting a greater than 10% improvement in efficiency gains. Also, more than 60% are expecting an over 10% reduction in costs from operations and an over 10% improvement in additional revenue in the next five years.
