5G technology is critical for a successful digital transformation

Posted on 23 Jul 2019 by The Manufacturer

Manufacturers are beginning to view 5G technology, and its associated high data speeds, as a vital component to their business, prompting interest in obtaining private licences as a way to control 5G strategy. A recent report has come up with some interesting findings.

5G technology is a critical component of a digital transformation strategy, with many companies planning to implement the technology within two years of it reaching the market, according to the latest findings from the Capgemini Research Institute.

When industrial companies’ executives were asked which technologies will be the most integral to their digital transformation over the next five years, 75% mentioned 5G as a key enabler, revealed the study – 5G in industrial operations: How telcos and industrial companies stand to benefit.

5G Capgemini report - image TM

This places 5G second only to cloud computing (84%), and ahead of technology innovations such as advanced automation and artificial intelligence/machine learning.

Increasingly, 5G is being regarded as a catalyst of digital transformation, and that manufacturers expect it to deliver more secure and efficient operations.

Industrial companies believe that 5G’s versatility, flexibility, and reliability will help address connectivity challenges (a limiting factor to digital transformation for 44% of those polled) and fuel future use cases, cited the report.

What is 5G, and what can it do?

5G is the fifth-generation of mobile internet connectivity, making better use of the radio spectrum and enabling far more devices to access the mobile net at the same time.

Networks could be launched next year in some countries, with download speeds up to 20 times faster than current technology, making most of the things you do on a smartphone quicker.

Standards are still being formalised for the all the 5G protocols. Higher frequency bands have more capacity but their shorter wavelengths mean they have a lower range.

Holding a license

The report also found that one-third of industrial companies contacted are planning to apply for their own 5G license, with the larger organisations taking the lead with 47% expressing interest.

This is fueled by a desire for greater autonomy and security, combined with concerns about telecom operators being too slow in rolling out 5G public networks.

5G Capgemini report - image TM

Gunther May, Head of Technology and Innovation, Business Unit Automation and Electrification, Bosch Rexroth, said, “As a solution provider and a manufacturer, we are monitoring the 5G landscape closely and we believe there are multiple benefits to holding our own license.”

He added that “it would allow us to be in full control of our 5G strategy by giving us the freedom to either deploy the network alone or with a telecom operator”.

Moving quickly

The report found that there is widespread confidence in 5G’s potential, with almost two-thirds of industrial companies (65%) planning to implement it within the first two years of availability.

In Italy (35%), France (30%) and Canada (27%), over a quarter intend to use 5G within the first year, while 75% of industrial companies in the UK and Italy, 69% in Spain, and 68% in the US and Norway plan to start within the first two years.

The largest manufacturers are most likely to implement 5G first (when compared with the broader industry): 74% with annual revenue above $10bn expect to do so within the first two years, compared to 57% with revenue between $500m and $1bn.

Security advantages

When asked about the business reason for investing in 5G, more than half or respondents cited more secure operations (54%) and efficiency of operations/cost savings (52%), with the expectation that 5G will help in enabling or enhancing use cases such as real-time edge analytics, video surveillance, remote control of distributed production, AI-enabled or remote controlled motions, or remote operations through augmented reality/virtual reality.

Premium services

Despite uncertainties around the speed of deployment, manufacturers are already willing to pay a premium charge for enhanced 5G connectivity, with 72% of industrial companies willing to pay more for enhanced mobile broadband speed and increased capacity, yet only 54% of telecom operators think there is an appetite for this.

This presents an opportunity for telecom operators to consider how they build a highly profitable 5G business model, said the report.

In conclusion

“This research makes it clear that industrial companies are confident about the benefits of 5G before it has even come to market,” said Pierre Fortier, Principal Consultant in Telecom, Media and Technology at Capgemini Invent.

“That said, 5G is an emerging technology and there will be many challenges to overcome before it is ready to be deployed at scale. Co-innovation between industrial companies and the telco ecosystem, in the form of pilots and open experimentation platforms, will be essential to create winwin business, service and operating models that will foster 5G adoption,” he added.

This article first appeared in the July issue of The Manufacturer magazine. Click here to subscribe