Industrial Digital Technologies: Removing barriers to adoption

The managing director of Siemens Digital Factory echoes the Review’s call for the establishment of a national body – the Made Smarter UK Commission – to act as an industry digitalisation enabler.

The Made Smarter Review – initially, the Industrial Digitalisation Review – identified key stakeholder concerns about digital skills shortages, fragmented support for innovation and the absence of clear leadership to articulate the benefits Industrial Digital Technologies (IDT) could deliver to business, the economy and wider society.

[Industrial Digital Technologies include: the Industrial Internet of Things; robotics; automation; additive layer manufacturing; artificial intelligence and analytics; simulation; augmented and virtual reality, and cloud-based platforms.]

The team behind Made Smarter has set out a strategic vision for growth and improved productivity in UK manufacturing by unlocking the potential of IDTs. The Review makes clear that to do nothing would risk falling further behind in industrial productivity terms, while improved innovation, IDT adoption and digital skills are key levers to facilitate a much-needed leap ahead.

Widespread adoption of industrial digitalisation over the next 10 years could provide the economy with a multi-billion-pound boost, with the manufacturing sector seeing growth of 3% per annum, the creation of 175,000 jobs and the reduction of CO2 emissions by 4.5%, according to Accenture.

The Review enabled detailed input and ideas from over 200 stakeholders to be aggregated, with contributions coming from the country’s most influential businesses and academic institutions.

Adopting and implementing the Review’s recommendations, the report’s authors believe, would position Britain as a world leader in the Fourth Industrial Revolution (Industry 4.0), improve our lacklustre productivity levels, create high-value jobs and boost economic prosperity.

While the Made Smarter Review recommendations to help kick start the national industrial digital journey are key – and the establishment of the Made Smarter Commission, with a mandate to develop the UK’s own national Industry 4.0 domestic and global brand, is a positive step in the right direction – it is also important to recognise some of the
barriers, which have, to date, prevented the UK becoming a leader in IDT.

They can be summarised under the themes highlighted in the Review document: adoption, innovation and leadership.

Adoption barriers

A number of interconnected issues collectively impede UK progress in technology adoption. It’s clear we lag the majority of developed countries in output per worker, which evidently correlates with lower levels of digital and automation technology adoption, with recent figures showing the productivity shortfall to be particularly prevalent among SMEs.

This relatively weak position is illustrated by the EU Digital Transformation Index 2017, which placed the UK just 11th in the EU in terms of ‘digital readinesses’. As part of the Made Smarter Review, a number of representative manufacturing companies were surveyed to unearth the primary barriers to IDT take-up.

The findings were broad ranging, from cybersecurity concerns to legacy equipment, a limited understanding of available technologies and their potential, as well as a lack of trusted advice, alongside worries about escalating costs. Companies also raised the issue of skills as a critical barrier to IDT adoption.

Some predictions point to 2038 (only 20 years away) when 90% of jobs will require digital skills, meaning the current competence levels in digital must be urgently addressed.

Estimates show we will require approximately 16.5 million ‘digital workers’ and ‘digital makers’, which is challenging considering that today we have identified 10.5 million employees who still lack even basic online skills.

With a future that will see ‘a job for life’ as increasingly rare, future workforces will have to develop a culture of lifelong learning and reskilling that can support multiple careers through an individual’s working lifetime.

Young people will acquire basic digital skills by default, but to be truly employable more advanced skills are required – for example, coding. The Review believes that digitalisation can offer real benefits to older workers and the sectors they are employed within. Such workers must also acquire appropriate digital skills for their sector to satisfy employers’ needs as technology evolves.

Around two-thirds of the 2030 workforce has already left education for employment, so we can’t rely on teaching institutions to retrospectively address industry’s growing appetite for digital skills. Currently, industry employs roughly three million workers, meaning up to two million of today’s employees will likely need to become more skilled or re-skilled in the workplace.

In the face of this skills shortage, we continue to under-invest in people development. The UK spends half as much on vocational training as the EU average.

Declining employer investment in education is concerning when set against the obvious need for agility and skills needed in the future to compete and remain ahead through an exponentially more impactful Fourth Industrial Revolution.

The existing skills system remains structured around academic faculties and disciplines, with some connection to historical job requirements, yet employers increasingly demand systems and design thinking enabled by a more connected world that now progresses in terms of ‘The Cloud and Crowd’.

The Review’s call for a Single Industrial Digitalisation Skills Strategy is therefore to be welcomed.

Innovation barriers

The UK is a leader in research and innovation, and the Made Smarter Review finds that it is creating a favourable supporting infrastructure to develop and commercialise technology. However, the report establishes that innovation assets are arguably under-leveraged and could do more if funded and focused to support both IDT diffusion and technology startups.

Ultimately, we are lagging behind in the creation of innovative new companies and industries. The Review concluded that better coordination of our national industrial R&D base would yield greater value, whilst the number of company spin outs from universities and research institutions into the manufacturing landscape remains relatively low.

Despite the Impact agenda, connections between companies, universities and the wider research eco-system could be improved to help inspire new targeted ideas and new business opportunities.

The Review has made a number of recommendations to address this situation, including the creation of a series of ‘Digital Innovation Hubs’, large-scale demonstrators and digital research centres focussed on developing new technologies under a new National Innovation Programme.

Leadership barriers

Poor historical uptake of industrial technology is an unfortunate UK fact. What lies behind this is complex and the subject of numerous studies. However, not appreciating the benefit of plant and equipment investment, lack of cohesion in the finance and support institutions, lack of appropriate company skills and lack of incentives are all contributors.

Part of the challenge in convincing our industrial sectors to adopt IDT has been the lack of messaging from the top of companies and government, and the Review finds utility in having an overarching national narrative that explores and communicates the significant opportunities that digitalisation promises.

An international appreciation of our ambition and growing capability would also help secure welcome inward investment, in addition to helping inspire current and future workers with a vision of how they could secure high-skilled, higher-paying jobs within a thriving part of the economy.

Without a national strategy for manufacturing, or an institution as a point of contact for IDT leadership, market messages remain fragmented and confusing, compounding the clarity issues that make it difficult for industrial companies (including many SMEs) to recognise the benefits of IDT adoption.

Leadership is vital

Creating a focal point, a centre for coordination of IDT is essential. It must be one that imparts leadership through a strategic vision, distributes information, focuses on the development of management skills and coordinates commercialisation support. It is the logical step to take to address the leadership barrier.

The Review advocates the establishment of a national body – the Made Smarter UK Commission – comprising industry, government, academia, further education institutions and research and innovation organisations. It would act as an enabler to help overcome the numerous barriers to IDT, as articulated by the business community.

The Made Smarter Review is an important piece of work that clearly uncovers and identifies key areas that have influenced the rate of IDT understanding and adoption. It makes carefully considered and practical proposals and now sits with government for evaluation.

The future prospects of the UK’s industrial and manufacturing base can only be strengthened if they are adopted at a time when the race to realise the potential of digitalisation and the Fourth Industrial Revolution intensifies around the globe.