The impact of digital transformation on industries
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1 Headline Verdana Bold The impact of digital transformation on industries Tim Hanley, Deloitte Global Leader, Consumer & Industrial Products Industry group March Sao Paolo, Brazil
2 What we will cover Impact of IoT on industries Developments in advanced technologies Digital developments in various industries Strategic considerations Digital transformation lessons 2 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 2
3 Impact of IoT on industries View of Industry For information, contact Deloitte Touche Tohmatsu Limited. 3
4 Impact of IoT on industries Companies are using IoT to impact their businesses in several ways, to: Enhance customer experience Generate new revenue Create efficient operations Achieve product differentiation Improve aftermarket / aftersales experience Reinvent their business models Collaborate with others to innovate For information, contact Deloitte Touche Tohmatsu Limited. 4 4 Copyright 2015 Deloitte Development LLC. All rights reserved.
5 Industry 4.0 Represents the completion of the physical-to-digital-to-physical transition, enabling manufacturers to create value in the physical products Industry 4.0 is known by several terms: Industrial Internet Connected Enterprise SMART Manufacturing Smart Factory Manufacturing 4.0 Internet of Everything Internet of Things for Manufacturing Source: Deloitte University Press. Industry 4.0 and manufacturing ecosystems. Exploring the world of connected enterprises For information, contact Deloitte Touche Tohmatsu Limited. 5 5 Copyright 2015 Deloitte Development LLC. All rights reserved.
6 Industry 4.0 Significant pace of innovations in advanced technologies Industry convergence leading to new ecosystem collaborations As-a-service opportunities 6 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 6
7 Developments in advanced technologies For information, contact Deloitte Touche Tohmatsu Limited. 7
8 Which advanced technologies will we see? Ranking of future importance of advanced manufacturing technologies by US CTOs US: Predictive Analytics, Smart Products (IoT), and Advanced Materials are considered most promising China: Prioritizing Predictive Analytics to close the gap with the US and creating competitive advantage through HPC Europe: Integrated priorities very much aligned with Industry 4.0 paradigm, creating closed loop design/build process (Source: Deloitte Touche Tohmatsu Limited and US Council on Competitiveness, 2016 Global Manufacturing Competitiveness Index) 8 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 8
9 Some trending advanced technologies Artificial Intelligence Drone technologies Robots as colleagues 9 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 9
10 Digital developments in various industries For information, contact Deloitte Touche Tohmatsu Limited. 10
11 Digital transformation in manufacturing Grow Operate Products Adding intelligence to existing products Creating new data products and services New product possibilities through I4M tech Planning Demand sensing and planning Supply planning and supplier integration Outbound network optimization Customers Marketing and selling products Aftermarket experience Dealer integration Factory Enhancing capability effectiveness Production asset intelligence Activity synchronization and flow Engineering Reducing idea to market time Linking design with product intelligence Improving engineering effectiveness Support Creating leverage for technical talent Customer configuration knowledge Support optimization Source: Deloitte University Press. Industry 4.0 and manufacturing ecosystems. Exploring the world of connected enterprises Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 11
12 Digital developments in consumer products Wearable technologies For information, contact Deloitte Touche Tohmatsu Limited. 12 Copyright 2015 Deloitte Development LLC. All rights reserved. 12
13 Digital developments in consumer products Engage customers in innovation Custom printed shoes power elite athletes 3-D printed mold enables made-to-measure 13 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 13
14 Digital influence on the retail experience $0.56 Amount of every dollar spent in a store which is influenced by a digital interaction Source: Deloitte. The new digital divide. The future of digital influence in retail 14 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 14
15 Digital developments in retail Making a payment Copyright For information, 2015 Deloitte contact Development Deloitte LLC. Touche All rights Tohmatsu reserved. Limited. 15
16 Digital developments in retail Reinventing how to reach consumers Tesco Virtual Store in Seoul Subway Kate Spade Virtual Store in NYC For information, contact Deloitte Touche Tohmatsu Limited. 16 Copyright 2015 Deloitte Development LLC. All rights reserved. 16
17 Digital developments in automotive Future of mobility Copyright For information, 2015 Deloitte contact Development Deloitte LLC. Touche All rights Tohmatsu reserved. Limited. 17
18 Digital developments in buildings Connected buildings - The Edge in Amsterdam For information, contact Deloitte Touche Tohmatsu Limited Copyright 2015 Deloitte Development LLC. All rights reserved.
19 Digital developments in energy Rising global demand for energy Renewable energy growth Energy as integral to ecosystems Copyright For information, 2015 Deloitte Development contact Deloitte LLC. All rights Touche reserved. Tohmatsu Limited. 19
20 Strategic considerations Supply chains Ecosystems Service opportunities Cybersecurity Talent For information, contact Deloitte Touche Tohmatsu Limited. 20
21 Supply chains are getting smarter A few trends in the distribution setting Higher traceability of products along the supply chain enabled through connected technology Voice-directed warehousing or voice picking using speech recognition Mobile and wearable augmented reality technologies and adaptive robotics in distribution centers Source: Deloitte University Press. Industry 4.0 and distribution centers. Transforming distribution operations through innovation. October Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 21
22 Emergence of new ecosystems Collective ability to learn, adapt, and, innovate together to capture new value Public policy and collaborative investments from government and business are vital 22 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 22
23 Innovation requires collaborative support Many nations have invested heavily in ecosystems to connect people, policies and organizations to translate ideas into commercial products and services An illustration of the current US innovation ecosystem Source: Deloitte Touche Tohmatsu Limited and US Council on Competitiveness, Advanced Technologies initiative. Manufacturing & Innovation 23 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 23
24 Public and private partnerships 1 Unmet need Ongoing trends related to sustainability and energy efficiency driving OEMs like Ford to explore new ways to reduce energy use in their high-volume vehicles with low weight materials 4 Process technology 2 Material innovation Identify new, low-cost, and light weight materials and design manufacturing processes that enable OEMs to reduce vehicle weight and cost while maintaining safety New process and design technologies and manufacturing methods will be required to enable these materials to be applied to composite automobile frames for high volume production 3 Open innovation and ecosystem Ford, Dow, and Oak Ridge Laboratory have created a partnership to bring each of their expertise in materials, process technologies, and federal research and grants to develop lower-cost, more energy efficient vehicles. In June 2012 the US DOE committed $9 million to funding this partnership. Source: DTTL Global Manufacturing Industry group. Reigniting growth: Source: Advanced Deloitte Global Materials Manufacturing Systems. 11 Industry December group Advanced Materials Systems For information, contact Deloitte Touche Tohmatsu Limited. 24 Copyright 2015 Deloitte Development LLC. All rights reserved. 24
25 Service opportunities Example: Hitachi - Rail-as-a-service Hitachi Insights Group formed to bring together Hitachi s unified Internet of Things (IoT) business and go-to-market strategy Hitachi has USD$5.4 billion in IoT solutions and services revenue generated in 2015 and 33 solutions in-market Hitachi pioneering Rail As a Service in the United Kingdom Exploring digital transformation and As a Service plays across industries 25 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 25
26 Service opportunities Example: After-market service opportunities Telematics devices in machinery to predict failures and engage in proactive maintenances and repairs 26 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 26
27 Service opportunities Mobility-as-a-service Mobility as a service (MaaS) has potential to revolutionize transport and will change our mobility experience as consumers MaaS offerings will likely incorporate autonomous vehicles Collaboration between a consortium of players Technology that makes Maas work is already here Watch Ben s Journey 27 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 26
28 Cybersecurity Developing a mature, advanced cyber risk program starts with investing in a balance of secure, vigilant, and resilient capabilities tailored to the organization and aligned to its strategic goals. Work to define standards for interoperability Use purpose-built devices or add-ons, rather than pre-iot solutions Develop clear responsibilities for the players in your ecosystem Establish a baseline of data Institute data governance Create loosely coupled systems 28 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 28
29 A changing workforce Digitalization and demographical changes 70% by 2020 Millennials want rewarding and purposeful work experience By 2020, 70% of your workforce will be Millennials Many highly-qualified employees want to be able to work independently of time and place The workforce of the future more globally minded and connected Source: Deloitte Global Human Capital Trends The new organization: Different by design. The Wall Street Journel. Four Nations Are Winning the Global War for Talent. October 2016 Freelancing Growing use of independent workers for short-term projects 34% of US workforce freelance with expected growth to 50% by 2020 Women Surge in migration of highskilled women. Highly skilled female immigrants in OECD countries rose 150% to 14.4 million between 1990 and Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 29
30 Future of work Augmented workforce 41 percent Number of companies fully implemented or made significant progress to adopt cognitive and AI technologies within their workforce 34 percent Number of companies in the midst of pilot programs 17 percent Number of global executives say they are ready to manage a workforce with people, robots and AI working side by side Source: Deloitte Global Human Capital Trends Rewriting the rules for the digital age 30 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 30
31 Importance of robotics, cognitive computing and artificial intelligence (AI) Source: Deloitte Global Human Capital Trends Rewriting the rules for the digital age 31 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 31
32 Digital transformation lessons For information, contact Deloitte Touche Tohmatsu Limited. 32
33 Readiness for digital transformation Source: MIT Sloan Management Review and Deloitte Digital Business Study. 33 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 33
34 Companies are asking a range of questions about digital What does digital mean for my enterprise? How do I digitize critical areas of the business? What infrastructure do I need? How do I get the value out of the data I have? What are the leaders within the industry doing? What outside approaches could we adopt? For information, contact Deloitte Touche Tohmatsu Limited. 34 Copyright 2015 Deloitte Development LLC. All rights reserved. 34
35 General Electric Transforming into a digital industrial company 1. Baseline your capabilities 2. Build a vision 3. Look for some quick wins that generate value 4. Don t be scared of partnering Source: GE presentation Who s going to eat your lunch? at IoT Solutions World Congress. 25 October Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 35
36 Six keys to digital transformation Begin with a strategy-informed ambition Lead with capabilities Be agile and flexible Drive to value Build in sustainability Invest in talent 36 Copyright 2015 Deloitte Development LLC. All rights reserved For information, contact Deloitte Touche Tohmatsu Limited. 36
37 About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte s more than 244,400 professionals are committed to making an impact that matters. Deloitte serves 4 out of 5 Fortune Global 500 companies. About this presentation This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network ) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication For information, contact Deloitte Touche Tohmatsu Limited. 37 Copyright 2015 Deloitte Development LLC. All rights reserved. 37
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