- Manufacturers across the world face considerable challenges to invest in Industry 4.0, particularly in the light of the current global healthcare crisis. New research from Siemens Financial Services (SFS) estimates that the global investment challenge for smart factory transformation is almost $400 billion (£326 billion) over the next five years
- Digital transformation – to Industry 4.0 platforms – provides manufacturers with an opportunity to gain long-term competitive advantage
- That transformation is urgent. Previous SFS research has shown that the window of opportunity to get ahead of the competition has a ‘tipping point’ of 5-7 years, after which manufacturers will be playing catch-up
- Smart manufacturers are deploying new financing models, mainly from manufacturing-specialist financiers, to provide commercially sustainable ways of paying for this urgent digital transformation
Siemens Financial Services (SFS) has released a new research paper entitled Industry 4.0: Rising to the Challenge, the first of a series on the investment challenges faced by manufacturers migrating their businesses to Industry 4.0 technologies.
Investment in digital transformation now constitutes the difference between surviving and thriving for companies, even more so in the light of recent economic uncertainty..
SFS has developed a model which conservatively estimates the size of the investment challenge faced by the manufacturing industry as it seeks to implement smart factory technology during the five-year period 2020-2024.
Previous research from SFS has found that the ‘tipping point’ for investment, at which half of manufacturers will have substantially migrated to Industry 4.0 production platforms, will occur within the next 5-7 years.
New financing models to enable Industry 4.0 investment are often aligned to business outcomes, to integrate financing closely with the expected rate of return-on-investment delivered through the benefits of digitalized technologies.
“Given the twin pressures of growing competition in domestic and export markets for European manufacturers, investment in digital transformation is at a critical point,” says Brian Foster, Head of Industry Finance, Siemens Financial Services. “Smart finance enables sustainable ways to invest that facilitate clearly identified desired business outcomes for the manufacturer, all achieved through access to the right technology and services with support from a knowledgeable specialist financier. This is especially supportive given the likely economic impact of the current global healthcare crisis.”
Methodology
SFS has developed a model which conservatively estimates the size of the investment challenge faced by the manufacturing industry as it seeks to digitally transform. The model takes a variety of analyst predictions of the value of the smart manufacturing market for the five-year period 2020-2024 inclusive. The resulting figures are then adjusted to reflect the proportion of smart manufacturing that is already being acquired through smart finance. Additionally, the estimate is reduced to just half of the ‘available market’, to give a highly conservative view of the sheer scale of investment required even to reach 50% market penetration.
For further information, please see: www.siemens.com/rising-to-the-challenge
For further information on SFS, please see www.siemens.com/finance
