30.06.2016 Industrial businesses investing hundreds of millions in digitalization

 Manufacturing industry's businesses started to invest approximately 5% of their yearly turnover in digitalization, shows a report by PwC. Digitalization has clearly become a part of also Finnish industrial business' core activities. The creation of a cultural shift and shortage of qualified experts slows down the development in Finland and globally. 

PwC's global Industry 4.0: Building Digital Enterprise –report was responded by over 2000 businesses in 9 industries and from 26 countries. In the report from Finland 54 industrial businesses took part in the study.

Industrial companies' preparation for the fourth industrial revolution, industry 4.0, is in full speed: in Finland and globally 30% of companies values their digitalization level high. The percent is believed to rise up to 70% in the upcoming five years.

Businesses digitalize their core activities in their internal hierarchies and in order-supply chains with their partners. Also the product selection is extended with digital functions and new innovative, data-based services are introduced.

"Finnish businesses are pursuing similar profitability improvements through digitalization as other businesses around the world, although there are relatively less pioneers in the industry than in other countries. In order to maintain competitiveness the target level and the speed of change should be challenged more often", says PwC's consulting services' leader Kimmo Nieminen.

Industrial businesses in Finland and around the world are ready to invest approximately 5% of their yearly turnover in digitalization. From the combined turnovers of the respondent companies this would make 907 billion US dollars. Majority of the investments is targeted in digital technologies like sensors, devices connected to the Internet and software and applications like production directing systems. Businesses invest also in education and the implementation of organizational changes.

Finns see less potential in savings than other countries The most equipped in digitalization according to PwC's report are Japan, Germany and the United States. The goals for digitalization vary between countries. In Japan and Germany businesses use digitalization for improving efficiency and the quality of their products above all.

In the US the trend seems to be developing new business models through digital products and services. The Chinese manufacturing industry businesses focus on competing in the global competition with efficiency and savings in costs.

"The focal point in Finnish industry is to increase turnover with new digital services and business models. Compared to other countries Finland's industry sees less potential in lowering costs and improving efficiency by digital solutions", says PwC's Industry 4.0 –service responsible Antti Niku.

Data analytics in key role

Over 80% of businesses believe data analytics having a significant impact on decision-making and operative activities during the upcoming five years. The professional management of data offers, among others, valuable information about the use of products, the functions of devices and helps to maintain long-term customer relations.

With analytics the products can be developed for the needs of the customer and personalized services can be offered for the product. The shortage of data analytics specialists is a challenge all over the world. 40% of businesses' data analytics are the responsibility of individual employees, not a specialized department. In Finland only 15% of businesses see themselves being progressive in analytics and almost every one in four viewed the expertise being weak.

"From Finnish businesses 13% has outsourced their data analytics for outside specialists, which is much more than in other countries (5%). Data analytics is becoming one of the industrial businesses' key skills and a clear trend in the future is to build data analytics expertise inside the organization", Antti Niku says.

The report also emphasizes the significance of data security.

Digital ecosystems can work only is all parties can trust that their information won't end up in wrong hands. In order of gaining trust business must make heavy investments for their system's security and they must have clear standards for protecting their information.