Industry 4.

0: the fourth industrial revolution –

guide to Industrie 4.0
Industry 4.0 represents the fourth industrial revolution in manufacturing and industry. Industry 4.0 is the current
industrial transformation with automation, data exchanges, cloud, cyber-physical systems, robots, Big Data, AI, IoT and
(semi-)autonomous industrial techniques to realize smart industry and manufacturing goals in the intersection of people,
new technologies and innovation.

IoT (Internet of Things), the convergence of IT and OT, rapid application development, digital twin
simulation models, cyber-physical systems, advanced robots and cobots, additive manufacturing,
autonomous production, consistent engineering across the entire value chain, thorough data
collection and provisioning, horizontal and vertical integration, the cloud, big data analytics,
virtual/augmented reality and edge computing amidst a shift of intelligence towards the edge
(artificial intelligence indeed with a convergence of AI and IoT and other technologies): these are some
of the essential technological components of the fourth industrial revolution.

The value created by Industry 4.0 vastly exceeds the low-single-digit cost savings that many manufacturers
pursue today (Boston Consulting Group)

Those are quite a lot of terms and components indeed. Yet, Industry 4.0 is a rather vast vision and,
increasingly, vast reality that also stretches beyond merely these technological aspects. It is an end-to-end
industrial transformation.

What makes it all the more fascinating (and at first sight complex) is that convergence of two worlds which
have been disconnected thus far: Information Technology (IT) and Operational Technology (OT) with the
hyper-connected digital industry, the bridging of digital and physical, cyber-physical production systems
and the Industrial IoT with applications enabled by Industrial IoT platforms, a ‘subset of IoT platforms
with usually a more vertical approach’, as parts (and names) that describe this fourth industrial revolution.

The integration of IT and OT is far from a fact yet, although there are differences, depending on the
Industry 4.0 projects. As it is still early days in the maturity journey and vision of Industry 4.0, there
mainly is a focus on projects (while Industry 4.0 at a more mature level is a holistic given) and such
projects can vary a lot. Projects around energy efficiency, factory energy management and HVAC
(Heating, ventilation and air conditioning), for instance, bring us to an entirely different world (with
different solutions, skills and standards) than, for instance, additive manufacturing, robotics or augmented
reality to name a few. In the end, integration and convergence is what it will be about as specialists will
continue to be needed.

Despite the vastness, terminology and many concepts, Industry 4.0 is about the digital
transformation in and of industrial markets (a.k.a. industrial transformation), in the beginning only
the digital transformation of manufacturing, and with a big role for the Industrial IoT. And just like
digital transformation it requires a strategic view and staged approach.

In this overview we make ‘Industrie 4.0’, as it’s originally called, tangible and look at and beyond the
technologies and processes: as always, outcomes and goals need to come first.
Table of Contents [hide]

 Industry 4.0 is not just about factories (anymore)

 The origins of Industrie 4.0
 Industry 4.0 definition – the digital transformation of industry and the fourth industrial revolution
o The original definition of Industry 4.0 (or better: Industrie 4.0)
o What is Industry 4.0 (according to several sources)?
o What Industry 4.0 is not
 The evolving reality of Industry 4.0
 Industry 4.0 and the fourth industrial revolution (4IR)
 Industry 4.0 and the Industrial Internet
o The fourth Industrial Revolution and the third industrial innovation wave of the Industrial
Internet
o Globalization, architectures and standardization: the collaboration between Industry 4.0 and
the Industrial Internet Consortium
 The state of Industry 4.0: how are manufacturing companies doing?
o Industry 4.0 in 2017: the first stages of maturity
o Industry 4.0 – the next maturity stages
o Industry 4.0 challenges and risks
 Benefits of Industry 4.0
o Enhanced productivity through optimization and automation
o Real-time data for a real-time supply chain in a real-time economy
o Higher business continuity through advanced maintenance and monitoring possibilities
o Better quality products: real-time monitoring, IoT-enabled quality improvement and cobots
o Better working conditions and sustainability
o Personalization and customization for the ‘new’ consumer
o Improved agility
o The development of innovative capabilities and new revenue models
 Industry 4.0 strategy and implementation
o Industrie 4.0 is a vision AND a reality with a documented strategic roadmap towards
realizing the vision
o Industry 4.0 maturity models and roadmap basics
 The building blocks of Industry 4.0: cyber-physical systems
o Cyber-physical systems (CPS) in the Industry 4.0 vision
o Cyber-physical systems before Industry 4.0
o Cyber-physical systems: summary of the key characteristics
 Industry 4.0 building blocks: the (Industrial) Internet of Things
o Internet of Things and cyber-physical systems: similar characteristics
 o CPS-enabled capabilities and Internet of Things use cases
o Smart factories, smart plants and smart applications
o Internet of Things and Industry 4.0 connectivity
 The Reference Architectural Model Industrie 4.0 (RAMI 4.0)
o Industry 4.0 and RAMI 4.0: international expansion
o Key elements of RAMI 4.0 (and Industry 4.0 components)
o The 3 dimensions of RAMI 4.0
o Additional resources on RAMI 4.0 and the Industry 4.0 components
 Industrie 4.0 principles: horizontal and vertical integration
o Horizontal integration in Industry 4.0
o Vertical integration in Industry 4.0
 The automation pyramid and new business models in Industry 4.0
o Level one: sensors and actuators – connecting what should be connected
o Level two: systems and internal services – monitor and manage
o Level thee: connectivity – connect for new applications and capabilities
o Level four: new services and ecosystems – transformation
 Industry 4.0 design principles
o Interoperability, interconnection, connectivity
o Information transparency, virtualization and virtual entities
o Decentralization, autonomous decisions and autonomy
o Real-time capability
o Technical assistance and service orientation
o Modularity
 Industry 4.0 and technologies
o Technologies as enablers of improvements and (new) capabilities
o Industry 4.0 technologies in a scope of levers and value drivers
o Before looking at technology: the strategic and holistic need of prioritization and dealing
with complexity
o Industry 4.0 and ubiquitous technology-enabled innovation
 Beyond the automation pyramid: the disrupted application levels in Industry 4.0
o The blurring of borders on the level of hierarchies and solutions
o The changing enterprise resource planning level
o The disrupted manufacturing execution systems level
o The complex SCADA systems level
o In the end it’s the “human system” that decides
 Industry 4.0 has gone global: Industrie 4.0 initiatives and evolutions around the world
 Industrial Data Space: linking IoT and smart services in Industry 4.0 and beyond
 Energy efficiency, power management and Industry 4.0
 More articles and resources relating to Industry 4.0

Industry 4.0 is not just about factories (anymore)

Although the term Industry 4.0 and the reference architecture model behind it originate from
Germany (hence ‘Industrie 4.0’) and there is major key focus on production and manufacturing it’s
clear that the vision – and reality – of the fourth industrial revolution has caught the attention of
organizations across the globe as we’ll explore at the end of this article and that the scope de facto
stretches beyond manufacturing, let alone factories.

Although Industry 4.0 originally was only used for manufacturing (in contrast with other leading initiatives
such as the Industrial Internet and the Industrial Internet Consortium or IIC), it is de facto going further.
In the early days of the Industry 4.0 view we wouldn’t have been able to say that; it was a manufacturing
initiative, period. Today, we clearly see how the several parties which were involved in Industry 4.0
themselves move it to smart transportation and logistics, smart buildings, oil and gas, smart healthcare and
even smart cities.
An increasing number of vertical industries is adopting the technologies, concept and principles of Industry
4.0.

We clearly see this expansion across other verticals on top of manufacturing in the material that gets
published by leading Industry 4.0 institutes such as the German national academy of science and
engineering (acatech). This doesn’t mean that they (alone) are broadening the scope, the opposite is true (as
well): the mentioned vertical industries (and others) are increasingly adopting the Industry 4.0 concept,
principles and technologies. How else could it be? It’s not as if manufacturing lives in splendid isolation
and, despite the specific characteristics, processes and priorities in manufacturing, the underlying
technological and transformational traits do overlap in this hyper-connected age.

The principles of Industry 4.0 have gone global, even if the term doesn’t ring a bell everywhere (the
fourth industrial revolution is more widely recognized).

Industry 4.0 is a vision and journey. Organizations implement Industry 4.0 initiatives and prepare to turn
the clearly document Industrie 4.0 vision, components, principles, technologies and architecture into
reality, within their context.

This global diffusion of the Industrie 4.0 vision and technologies, at different speeds, is related with the
universal challenges and possibilities across the globe and with the cross-fertilizations, enabled by
collaborations with the US industry, the Japanese industry, EU industry initiatives and so forth. Still, there
are several hurdles to take before the Industry 4.0 vision is realized in more companies than is the case
today. More about how Industry 4.0 is a vision and a reality at the same time in the section on Industry 4.0
strategy and roadmaps.

This being said, time for a deeper dive. As per usual, everything starts with understanding what
exactly we are talking about, what are the benefits and how it is all evolving and impacting
organizations in real life.

So, let’s start with the roots of Industrie 4.0 before diving even deeper into those mentioned frameworks
and so forth.

The origins of Industrie 4.0

When Germany launched a project under the name ‘Industrie 4.0’ to digitalize manufacturing at the
Hannover Messe in 2011, the government officials, industry leaders and academics who were
working on the project probably had no idea that Industry 4.0 and specifically that fourth industrial
revolution would become such a widely used concept.

Moving beyond its roots, Industry 4.0 and the Industrial Internet are meeting in a global collaboration
towards the digital transformation of manufacturing and other industries.
Despite the vision aspect, ‘Industry 4.0’, is a very real phenomenon, transforming manufacturing and other
sectors into connected and digital manufacturing (and more) with additional benefits and a range of
technological evolutions and possibilities to move beyond the sheer operation dimension towards the so-
called fourth industrial revolution.

Industry 4.0 definition – the digital transformation of industry and

the fourth industrial revolution

Industry 4.0 is the digital transformation of manufacturing, leveraging third platform technologies,
such as Big Data/Analytics and innovation accelerators, such as the (Industrial) Internet of Things;
and requiring the convergence of IT (Information Technology) and OT (Operational Technology), IoT
devices, sensors and actuators, robotics, data, artificial intelligence and manufacturing processes to
realize connected factories, smart decentralized manufacturing, self-optimizing systems and the
digital supply chain in the information-driven cyber-physical environment of the 4th industrial
revolution (sometimes called 4IR).

Industry 4.0 also stands for the fourth industrial revolution as such. It is a new stage in the organization and
control regarding the end-to-end value chain across the life cycle of products whereby increasing demand
of customers for personalization is a driving force and flexibility, as-a-service models and the use of
information technology go hand in hand with a move towards more autonomous decision making, a
changing role for the workforce, new industrial organizational and collaborative paradigms and connected
cyber-physical systems with security by design and turning data from various IT and OT systems into
intelligence, decisions and new business models as leading principles.

The initial goals in Industry 4.0 typically are automation, (manufacturing) process improvement and
productivity/production optimization; the more mature goals are innovation and the transition to
new business models and revenue sources with information and services as cornerstones.

Industry 4.0 is also called ‘smart industry’, ‘intelligent industry’, ‘smart factory’ or ‘smart manufacturing’.
In many senses it is related to the Industrial Internet and since 2016 the Industrial Internet Consortium and
Industry 4.0 platform, “Plattform Industrie 4.0”, indeed started collaborating.

This is probably not the shortest Industry 4.0 definition ever and it does contain some terms we might need
to explain further such as the third platform and innovation accelerators as they exist in the DX (digital
transformation) economy, as well as the integration of IT and OT, which is key in the cyber-physical
context of Industry 4.0 as we’ll see.

A shorter definition of Industry 4.0: the information-intensive transformation of manufacturing in a

connected environment of data, people, processes, services, systems and production assets with the
generation, leverage and utilization of actionable information as a way and means to realize the
smart factory and new manufacturing ecosystems.

The original definition of Industry 4.0 (or better: Industrie 4.0)

The definition of Industrie 4.0 as proposed in 2011 was pretty lengthy too. In a paper, entitled
“Industrie 4.0 – Smart Manufacturing for the Future”, GTAI (Germany Trade and Invest) looked at
the questions what is smart industry (a synonym of Industry 4.0) and what Industrie 4.0 means.
 Industrie 4.0 – Smart Manufacturing for the Future by Germany Trade and
Invest – an Industry 4.0 must-read (PDF opens)

An extract: Smart industry or “INDUSTRIE 4.0” refers to the technological evolution from embedded
systems to cyber-physical systems…INDUSTRIE 4.0 represents the coming fourth industrial revolution on
the way to an Internet of Things, Data and Services. Decentralized intelligence helps create intelligent
object networking and independent process management, with the interaction of the real and virtual worlds
representing a crucial new aspect of the manufacturing and production process”.

And it’s not done! More in the paper (PDF opens) and in our Industry 4.0 definitions list below.

What is Industry 4.0 (according to several sources)?

If you wonder what Industry 4.0 is in practice, you’ll find more on the various aspects and evolutions
further below.

However, if you need a description Industry 4.0 and seek an Industry 4.0 definition, which you can use for
whatever purpose, take a look at the Industry 4.0 definitions we gathered from various other sources which,
in many cases, are also excellent starting points to learn more about the pretty broad reality of Industry 4.0,
the fourth industrial revolution and all its aspects.

Obviously not all definitions of Industry 4.0 are the same. Industry 4.0 in practice means many things for
many people and what some consider a definition of Industry 4.0, others won’t. Yet, in the end it comes
with its principles (and design principles) and aims to realize a more connected, integrated and digital
industrial transformation with multiple outcomes from automation and operational excellence to innovation
and ecosystems of value.

The MES (manufacturing execution system) plays a central role in initial stages as the digital hub of
information and connectivity, just as the BMS (building management system) is the digital hub of
information and connectivity in smart building automation.

What Industry 4.0 is not

Talking about the definition of Industry 4.0 and the fact that there isn’t one definition a few remarks
though.

At the very core Industry 4.0 includes the (partial) transfer of autonomy and autonomous decisions to
cyber-physical systems and machines, leveraging information systems
Industry 4.0 has been defined as “a name for the current trend of automation and data exchange in
manufacturing technologies. It includes cyber-physical systems, the Internet of things, cloud computing
and cognitive computing. Industry 4.0 creates what has been called a smart factory”.

This Industry 4.0 definition is close to the original definitions but not entirely correct or at the very least
not correct anymore. Industry 4.0 goes beyond the factory, let alone the smart factory. Industry 4.0 is also
about more than automation and data exchange (e.g. the key role of workers, the key role of energy
efficiency etc). More about some of these aspects are covered in detail when we look deeper at the Industry
4.0 vision.

Here is why that Industry 4.0 definition is too limited and not correct in a few bullet points:

 The industrial transformation of manufacturing goes beyond the factory, let alone the smart factory.
 The Industry 4.0 vision encompasses more than automation and data exchange in manufacturing
technologies as 1) it stretches beyond technologies and 2) looks at the end-to-end chain, including,
for instance, warehousing, logistics, recycling, energy and so forth.
 As you’ll see the cyber-physical systems which take center stage in Industry 4.0 are the enablers of
phenomena such as smart grid, smart logistics and even smart buildings, to indeed the smart factory
of smart manufacturing in smart industries. Obviously, all these evolutions are connected.

This being said, the link with the concept of the smart factory does exist and does come back.

Benefits, goals and how it is all connected in a holistic way first (but below are those definitions
anyway).

REPORT
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Industry 4.0 definitions

Defining the fourth industrial revolution, known as Industry 4.0.

Source: https://www.i-scoop.eu/industry-4-0/

Industry 4.0 according to BDI (the German industry voice)

Industry 4.0 refers to the fourth industrial revolution. After mechanisation (Industry 1.0), mass production
(Industry 2.0) and automation (Industry 3.0), now the “internet of things and services” is becoming an
integral part of manufacturing. Industry 4.0 technologies have the potential to create extraordinary growth
opportunities and competitive advantages for Germany as a business location. Experts forecast that
businesses will be able to increase their productivity by about 30 percent using Industry 4.0.

Industry 4.0 according to Germany Trade and Invest (original

definition)
Smart industry or “INDUSTRIE 4.0” refers to the technological evolution from embedded systems to
cyber-physical systems. Put simply, INDUSTRIE 4.0 represents the coming fourth industrial revolution on
the way to an Internet of Things, Data and Services. Decentralized intelligence helps create intelligent
object networking and independent process management, with the interaction of the real and virtual worlds
representing a crucial new aspect of the manufacturing and production process. INDUSTRIE 4.0 represents
a paradigm shift from “centralized” to “decentralized” production – made possible by technological
advances which constitute a reversal of conventional production process logic. Simply put, this means that
industrial production machinery no
longer simply “processes” the product, but that the product communicates with the machinery to tell it
exactly what to do. INDUSTRIE 4.0 connects embedded system production technologies and smart
production processes to pave the way to a new technological age which will radically transform industry
and production value chains and business models (e.g. “smart factory”).

Industry 4.0 according to McKinsey

Industry 4.0 is the next phase in the digitization of the manufacturing sector, driven by four disruptions: the
astonishing rise in data volumes, computational power, and connectivity, especially new low-power wide-
area networks; the emergence of analytics and business-intelligence capabilities; new forms of human-
machine interaction such as touch interfaces and augmented-reality systems; and improvements in
transferring digital instructions to the physical world, such as advanced robotics and 3-D printing.

Industry 4.0 according to SAP

Industry 4.0 is a collective term for technologies and concepts of value chain organization. Based on the
technological concepts of cyber-physical systems, the Internet of Things and the Internet of Services, it
facilitates the vision of the Smart Factory. Within the modular structured Smart Factories of Industry 4.0,
cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make
decentralized decisions. Over the Internet of Things, Cyber-physical systems communicate and cooperate
with each other and humans in real time. Via the Internet of Services, both internal and cross-
organizational services are offered and utilized by participants of the value chain.

Industry 4.0 according to the European Parliament

In this PDF document from the European Parliament, Industry 4.0 is defined as follows: "Industry 4.0 is a
term applied to a group of rapid transformations in the design, manufacture, operation and service of
manufacturing systems and products. The 4.0 designation signifies that this is the world's fourth industrial
revolution, the successor to three earlier industrial revolutions that caused quantum leaps in productivity
and changed the lives of people throughout the world.

Industry 4.0 according to Wikipedia

Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. It
includes cyber-physical systems, the Internet of things and cloud computing. Industry 4.0 creates what has
been called a "smart factory".

7
Industry 4.0 (or the original German 'Industrie 4.0') according to
Gartner
Industrie 4.0 is a German-government-sponsored vision for advanced manufacturing. The underlying
concept of Industrie 4.0 is to connect embedded systems and smart production facilities to generate a
digital convergence between industry, business and internal functions and processes. Industrie 4.0 refers to
a fourth industrial revolution (following water/steam power, mass production and automation through IT
and robotics) and introduces the concept of "cyber-physical systems" to differentiate this new evolutionary
phase from the electronic automation that has gone before.

The evolving reality of Industry 4.0

So, Industry 4.0 was originally a project in Germany with several components and workgroups.

Companies are implementing Industry 4.0 but in rather ad hoc and isolated ways

As said, one component was and still is the smart factory of tomorrow, or as some call it the digital or
connected factory. A factory that is not just making manufacturing faster, more flexible and more efficient
but also is ‘intelligent’. Indeed, machine-to-machine communication and processes whereby machines and
technologies can identify issues and take autonomous decisions, based on third platform technologies, an
integrated IT/OT environments and the so-called Industrial Internet of Things. It’s clear that also, among
others, security and artificial intelligence play a big – and increasing – role here.

Among the several third platform technologies and their innovation accelerators in Industry 4.0: Big
Data (Analytics), cloud computing (and, more recently edge and fog computing) artificial intelligence and
cognitive, collaborative robots (cobots) and industrial robots, augmented reality and virtual reality,
advanced security, simulation methods such as digital twins and, as said, the Internet of Things (IoT). We
take a close look at the Internet of Things in Industry 4.0 and compare it with a key building block of
Industrie 4.0, the cyber-physical systems, below. However, it’s not just about IT; OT (Operational
Technology) and the convergence of the many operational technologies and realities with IT as we know it,
are at least as important. That will become clear if you read about architectural frameworks and the
mentioned cyber-physical systems.

IoT is a key component in this whole equation, mainly from an industrial Internet of Everything
perspective, which looks a bit more at the processes, data analysis and people picture than the
Internet of Things does. Also the Internet of Robotic Things plays an increasing role in Industry 4.0.

The technologies in fact were a second component that was studied in the ‘Industrie 4.0’ workgroups, on
top of the smart factory and the other dimensions such as (the future) of work, the economic context of the
manufacturing industry and so forth. Other technological factors include network technologies, security, all
the advanced mechanics and components of cyber-physical systems, the list goes on.

The principles and technologies of Industry 4.0 were connected to a concept of a fourth industrial
revolution as is known (hence the 4 and the acronym 4IR).

Industry 4.0 and the fourth industrial revolution (4IR)

 The
four stages of the Industrial revolution – source DKFI 2011 via SAP

As a reminder the classic view of these four industrial revolutions, as Industry 4.0 became
increasingly popular, was:

1. The first industrial revolution, which REALLY was a revolution, and, among others thanks to
invention of steam machines, the usage of water and steam power and all sorts of other machines,
would lead to the industrial transformation of society with trains, mechanization of manufacturing
and loads of smog.
2. The second industrial revolution is typically seen as the period where electricity and new
manufacturing ‘inventions’ which it enabled, such as the assembly line, led to the area of mass
production and to some extent to automation.
3. The third industrial revolution had everything to do with the rise of computers, computer
networks (WAN, LAN, MAN,…), the rise of robotics in manufacturing, connectivity and obviously
the birth of the Internet, that big game changer in the ways information is handled and shared, and
the evolutions to e-anything versions of previously brick and mortar environments only, with far
more automation.
4. In the fourth industrial revolution we move from ‘just’ the Internet and the client-server model to
ubiquitous mobility, the bridging of digital and physical environments (in manufacturing referred
to as Cyber Physical Systems), the convergence of IT and OT, and all the previously mentioned
technologies (Internet of Things, Big Data, cloud, etc.) with additional accelerators such as
advanced robotics and AI/cognitive which enable Industry 4.0 with automation and optimization in
entirely new ways that lead to ample opportunities to innovate and truly fully automate and bring
the industry to the next level.

Some also like to add the injection of technology and connectivity in the human/digital mind and
body convergence to Industry 4.0.

The injection of AI, hyper-connectedness and data analysis into how things, machines, communicate, act
and lead to actionable insights with an omnipresence of the Internet of Everything in virtually each
piece/machine of the Industry 4.0 dream is one thing, the convergence of man and machine (or
technological extension) is still a bit further away and it’s so complex and will lead to so many more
debates (also ethical) that it’s already called the fourth platform by IDC.
Industry 4.0 – the convergence and application of industrial technologies as the Boston Consulting Group
sees it – source

In the view of the Boston Consulting Group (we tackle their Industry 4.0 research below) Industry
4.0 refers to the convergence and application of nine digital industrial technologies: advanced
robotics, additive manufacturing, augmented reality, simulation, horizontal/vertical integration, Industrial
Internet, the cloud, cybersecurity and Big Data and Analytics.

It’s clear that today some companies have invested in a few of these technologies; predominantly the
traditional pillars of the third platform such as cloud and Big Data / Analytics and, increasingly in the
Industrial Internet of Things from an integrated perspective and thus overlapping with several of these
“technologies” or maybe better: sets of technologies and connected benefits.

Industry 4.0 and the Industrial Internet

Obviously, it wasn’t just in Germany (and Europe) that the digital transformation of manufacturing (and
some related industries and processes) was occurring with industrial giants in the Industry 4.0 space
(Bosch, Siemens, you name it).

The fourth Industrial Revolution and the third industrial innovation wave of the
Industrial Internet

As mentioned, in the US, GE and a range of other industrial players (including non-American ones
who are also members of the “Plattform Industrie 4.0”) launched the Industrial Internet
Consortium.

By 2018, only 30 percent of manufacturers investing in digital transformation will be able to maximize the
outcome; the rest are held back by outdated business models and technology (IDC)

The Industrial Internet, as we wrote previously a term coined by American industrial giant GE, looked
pretty much like Industry 4.0., although in the Boston Consulting Group image above it is mentioned as
one of the enabling industrial technologies in the network of machines and products and networked objects
communications sphere of IIoT.

The difference between Industry 4.0 and the Industrial Internet, however, is that, originally, the Industrial
Internet was seen as the third industrial innovation wave. So, a third wave of innovation instead of a fourth
revolution in the industry.

It only shows how relative revolutionary terms are as the three industrial Internet innovation waves
respectively were:

 The Industrial Revolution. The real one and more or less a combination of the first and second
revolution in the Industry 4.0 view.
 The Internet Revolution: ‘computing power and the rise of distributed information networks’.
 The Industrial Internet: what is called the fourth industrial revolution in Industry 4.0.

In the
Industrial Internet view Industry 4.0 is the third industrial innovation wave

Today the concept of four industrial revolutions, however, has gained widespread adoption and so has
Industry 4.0.

Globalization, architectures and standardization: the collaboration between Industry 4.0

and the Industrial Internet Consortium

The Industrial Internet Consortium had a more cross-industry approach than German “Plattform
Industrie 4.0” (the Industry 4.0 Platform), which was more focussed on manufacturing (although it’s
also used for logistics and more, see Logistics 4.0).

As both the Industrial Internet Consortium and Plattform Industrie 4.0 shared many efforts and views, and
more and more companies became member of both platforms, both organizations started looking at
similarities and collaboration. After all, we still do live in a globalized world, certainly in industrial
production and related markets.

So, collaboration became obvious, even more so because both industry bodies were working on an
architectural framework. In the context of Industry 4.0 and “Plattform Industrie 4.0” this framework is
known as RAMI 4.0, short for the Reference Architecture Model for Industrie 4.0. The Industrial Internet
Consortium’s framework is known as IIRA, short for the Industrial Internet Reference Architecture.

Early 2016 the Industrial Internet Consortium and Plattform Industrie 4.0 announced their
collaboration, with a focus on standardization, the architecture for the “new” manufacturing, the
business goals and the role of the Internet of Things in it all.

If you look at Industry 4.0 today you’ll notice that there is also an increasing attention for industries, other
than manufacturing as already was the case in the Industrial Internet Consortium and that cyber-physical
systems, which we’ll tackle next are seen beyond the scope of cyber-physical production systems but also
as the enablers of, among others condition monitoring and remote possibilities, which in term don’t just
enable and drive the smart factory.

The state of Industry 4.0: how are manufacturing companies

doing?

All revolutions and associations aside, the question is how far we are in Industry 4.0. Are
manufacturing companies fully ready? And what means readiness in this industrial context to begin
with?

The definition of a strategy is challenge number one in Industry 4.0 (Boston Consulting Group)

In other words: what are the characteristics, principles, technological maturity levels, (achieved and
desired) benefits and realizations and where do we start with Industry 4.0 or the Industrial Internet? As
you’ll notice the answers to these questions are very similar to those in digital transformation across any
industry and as in any digital transformation strategy challenge. After all; in the end, regardless of the
different technologies and market context in manufacturing, digital transformation is a universal given in
any industry whereby similar capabilities and outcomes are sought. Yet, as mentioned in the beginning of
this article, Industry 4.0 is a vision and reality with projects and clear steps towards the vision.

Industry 4.0, which in more than one way as said is the digital transformation of manufacturing, today still
is mainly focused on the first stages of transformation and ‘maturity’ from a benefit and potential
perspective: enhancing productivity, automation and the optimization of operational processes, business
processes and, the number one Internet of Things use case from an IoT spending perspective:
manufacturing operations, followed by (predictive) maintenance and smart maintenance services.

Industry 4.0 in 2017: the first stages of maturity

This is also what the Boston Consulting Group found in a December 2016 report: companies are
implementing Industry 4.0 but in rather ad hoc and isolated ways.

This is exactly the same phenomenon we see in any industry that is in digital transformation – or revolution
if you prefer. It’s that first stage in a broader ecosystem of possibilities as organizations move from more or
less obvious goals to true innovation and even disruption. The illustration below from the Boston
Consulting Group shows some aspects of this broader ecosystem of possibilities, beyond the enhance
productivity dimension.
Enhanced productivity is just one piece of Industry 4.0 – source

In other words: MOST manufacturing and industrial companies (there are plenty of exceptions and we
mention several across this site) are still in that stage where the intention to transform exists and isolated
efforts exist but there is often a lack of a bigger picture, a broader strategy or, as the Boston Consulting
Group calls it in the Industry 4.0 context ‘a comprehensive program’.

Industry 4.0 ranks high on the agenda, yet in practice one or two isolated aspects of Industry 4.0 are
implemented, the company says. Examples: big data and/or robotics.

This is really the first stage of maturity whereby there is also a focus on the mentioned optimization and
automation goals and gains, which is perfectly normal but it shouldn’t stop there.

You can perfectly compare this with the findings of IDC regarding the gradual evolution from
Internet of Things pilot projects to more scalable deployments, whereby IDC found that the sought
benefits of these deployments are mainly focused on internal goals and on operations.

This situation is poised to remain like that for a while tough as, despite the increasing number of large IoT
projects, the Internet of Things is more seen as strategic and tactical than transformational and internal
goals are key.

As the image below shows, enhancing productivity, reducing costs and the automation of internal processes
dominate. It’s clear that in companies that are further from a benefit perspective and look at better customer
service, new revenue streams, changes in business models and innovation, IoT deployments go further.
 Internal
goals and productivity improvement dominate most IoT deployments in the current maturity stage

Industry 4.0 – the next maturity stages

Where the Boston Consulting Groups says that the vast majority of respondents see Industry 4.0 as
an opportunity to improve productivity – and analyzes how this is done in practice- the parallels are
crystal clear. So, what does it take to move to those next maturity stages?

Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. It
includes cyber-physical systems, the Internet of things and cloud computing. Industry 4.0 creates what has
been called a “smart factory”. (Wikipedia)

Not for the sake of maturity but for the sake of moving beyond that enhanced productivity towards higher
agility, real-time opportunities, the development of an innovative capability and true innovation,
identifying new information-driven and service-oriented sources of revenue and many more goals?

The answers are again the same as in all digital transformations, as are the challenges. Developing new
competencies, finding new opportunities in the equation of intelligence, people, processes and innovation,
and creating competitive benefits and services which can have an important impact on the business model
and even the industry as a whole, requires more than projects and more than productivity.

Industry 4.0 challenges and risks

And it’s here that also in Industry 4.0 we find those eternal hurdles. The Boston Consulting Group,
among others, identified:

 The definition of a strategy (for Industry 4.0), challenge number one.

 The rethinking of the organization and processes to maximise outcomes.
 Understanding the business case.
 Conducting successful pilots.
 Making the organization realize action is needed.
  Change management, so often overlooked.
 Company culture.
 A true interconnection of departments.
 Talent….

They are all challenges we’ve seen in so many other areas and there are at least two we want to add
(there are more):

1. Information management excellence as it’s all about actionable intelligence and connected
information and process excellence in a context of relevance, innovation and timely availability for
any desired business, employee AND obviously customer goal.
2. (Cyber)security (and privacy). The increasing number of attacks in the Industrial Internet of Things
are a fact as IT and OT converge. Moreover, one of the main reasons which hold IIoT initiatives
back are concerns regarding security and IIoT is, as said a key component of Industry 4.0.

On top of these challenges there are several others, practical, technological and ecosystem-related:

 The challenges regarding the integration of IT and OT.

 Data compliance questions.
 Managing risk and lowering costs in uncertain times.
 Dealing with the complexity of the connected supply chain.
 A better understanding of IT and OT technologies and, more importantly, how they can be
leveraged.
 Altering customer and industrial partner demands.
 Competition and the fact that Industry 4.0 champions gain a competitive benefit fast.
 The eternal and extremely important human challenge (talent, future of work, employment,…..).

While leading manufacturers are overcoming the mentioned challenges and some already have,
others will need to step up their pace. It’s not a coincidence that the Boston Consulting Group report
is entitled ‘Sprinting to Value in Industry 4.0’.

Is fear of others taking the lead a good advisor? No? Do you need to start somewhere? Yes, and you can. Is
it, even if fear is a bad advisor, time to sprint to value in Industry 4.0 in a world where digital
transformation is a marathon with several sprints? Looking at what the best in class are doing we would say
yes.

Moreover, there are some predictions you might want to look at, such as this first one from an IDC article
with 10 predictions for the manufacturing industry, as summarized end 2016: By 2018, only 30 percent of
manufacturers investing in digital transformation will be able to maximize the outcome; the rest are
held back by outdated business models and technology.

More about the steps to move further in Industry 4.0 on this site (e.g. in industry cases), in examples across
industries, in future contributions and in the presentation of the Boston Consulting Group and the
accompanying article (among many other sources).

Sprinting to Value in Industry 4.0 from The Boston Consulting Group

Benefits of Industry 4.0

Whether it’s Industry 4.0, Smart Industry or the Industrial Internet, there are ample benefits for
manufacturers to transform the way they work.

We’ve mentioned some benefits, risks and challenges earlier in this overview but let’s look a bit closer at
some of the main advantages. Several of them are also explored more in depth in other articles on this site.
The essential goal of Industry 4.0 is to make manufacturing – and related industries such as logistics –
faster, more efficient and more customer-centric, while at the same time going beyond automation and
optimization and detect new business opportunities and models.

Most of the benefits of Industry 4.0 are – obviously – similar to the benefits of the digital transformation of
manufacturing, the usage of the IoT in manufacturing, operational and business process optimization,
information-powered ecosystems of value, digital transformation overall, the Industrial Internet and many
other topics on our website. However, let’s summarize a few of the key benefits of Industry 4.0.

Enhanced productivity through optimization and automation

As mentioned in the section on the state of Industry 4.0, optimization of processes and of productivity
is the first benefit that manufacturers see.

It’s also one of the first goals of Industry 4.0 projects. In other words: saving costs, increasing profitability,
reducing waste, automating to prevent errors and delays, speeding up production to work more in real-time
and in function of the overall value chain, where speed is crucial for everyone, digitizing paper-based
flows, being able to intervene faster in case of production issues and so forth.

It’s the low hanging fruit, yet important. On top of the research from BCG we mentioned earlier, the signs
that investments are done in these areas first are clear. Again, it’s not a coincidence that, from a spending
perspective, the number one use case in which manufacturers invest their Internet of Things (IoT) budgets
is manufacturing operations (a whopping $102.5 billion on a total of IoT $178 billion across all
manufacturing use cases in 2016). Industry 4.0 offers various solutions to optimize, from optimized asset
utilization and smoother production processes to better logistics and inventory management.

Real-time data for a real-time supply chain in a real-time economy

While we just mentioned speed in a context of optimization, automation and enhanced productivity,
it is a benefit in many other ways as well.

A lot of the productivity improvement benefits are rather about the internal goals of costs and process
optimization. Yet, at the same time several also fit in a perspective of enhanced customer-centricity.

Industry 4.0 is about the entire life cycle of products and manufacturing obviously doesn’t stand on its
own. If you look at the entire value chain and ecosystem within which manufacturing operations reside
there are many stakeholders involved. These are all customers. And customers also want enhanced
productivity, regardless of where they sit in the supply chain. If the final customer wants good products fast
and has increased expectations regarding customer experience, quality, service and products that are
delivered on the exact time they want, this impacts the whole supply chain, all the way up to manufacturing
and beyond. Speed is not just a competitive advantage and customer expectation in an increasingly real-
time economy, it’s also a matter of alignment, costs and value creation. Moreover, customers simply expect
it.

Once again the crucial role of data and information surfaces.

Industry 4.0, smart factories, supply chains, informed customers, alignment: it’s all about data, from the
actual operations to the delivery of a product to an end customer and beyond.

The more data you gather early on and the more timely this data gets where it matters when it matters, the
more value down the supply chain. In fact, this is the essence of one of the three dimensions of RAMI 4.0,
the Reference Architecture Model Industry 4.0, which we tackle below.

Higher business continuity through advanced maintenance and monitoring possibilities

When an industrial asset gets broken it needs to be fixed. That costs time, money and very often a lot
of moving around by support people and engineers.

When a key industrial asset, such as an industrial robot in a car manufacturing plant gives up, it’s not just
the robot that’s broken. Production is affected, costing loads of money and unhappy customers, and
sometimes production can be fully disrupted. It’s everyone’s worst nightmare as business continuity is an
extremely high concern.

On top of all the replacement/fixing work, resources and costs, reputation can be damaged, orders can be
cancelled and with each hour that passes money is thrown away. If industrial assets are connected and can
be monitored (health status monitoring, for instance) through the Internet of Things and issues are tackled
before they even happen the benefits are huge. Alerts can be set up, assets can be proactively maintained,
real-time monitoring and diagnosis becomes possible, engineers can fix issues, if they do occur from a
distance, the list goes on. Moreover, patterns and insights are gained to optimize in areas where things
seem to have issues more often and a world of new maintenance services opens up as we’ll see. No wonder
that asset management and maintenance are the second largest area of IoT investments in manufacturing.

Better quality products: real-time monitoring, IoT-enabled quality improvement and

cobots

We mentioned that customers want speed. However, that doesn’t mean they are ready trade quality
for speed, well on the contrary.

If you have everything in your production system and its broader environment hooked up with sensors,
software, IoT technologies, systems of insight AND the customer, you can also enhance quality of your
products. Automation definitely plays a big role here and so do the typical components of cyber-physical
systems (more below) and the Internet of Things whereby quality aspects can be monitored in real-time and
robots reduce errors.

On the flip side and one of the risks and challenges to tackle, as mentioned earlier: the more you automate,
the less work for people, in theory. And the same goes for other mentioned benefits such as maintenance
(the less you need engineers for support, the less support engineers you need). It’s a dilemma and known
issue which we’ll cover later. In the meantime do know that robots are not going to take all human jobs
over soon. Ample companies have increased the usage of robots and at the same time hired more. The
reason we mention it in the context of quality is that this is certainly one area where you see cobots
popping up (cobots is a fancy term for advanced collaborative robots or put more simply: robots that fit a
collaboration between man and machine).

Better working conditions and sustainability

Talking about people, the human (and social) dimension is ubiquitous in Industry 4.0. Moreover, if
we look at the possibilities and benefits, that human, social and even environmental aspect is key in
the goals of Industry 4.0.

Improving working conditions based on real-time temperature, humidity and other data in the plant or
warehouse, quick detection and enhanced protection in case of incidents, detection of presence of gasses,
radiation and so forth, better communication and collaboration possibilities, a focus on ergonomics, clean
air and clean factory initiatives (certainly in Industry 4.0 as the EU wants to be leading in clean air and
clean anything technologies), the list goes on.

Personalization and customization for the ‘new’ consumer

We all know it: consumer behavior and preferences have changed. Digital tools have changed the
ways we work, shop and live.
People have also become more demanding, among others with regards to fast responses and timely
information/deliveries as mentioned earlier. On top of that consumers also like a degree of personalization,
depending on the context. Take sports shoes, for instance. Once a few colors of the same shoe were
enough, know we want the ability to customize them in whatever way.

On top of that another phenomenon is taking place and it does disrupt traditional supply chains. Consumers
increasingly get (and want) possibilities to have a direct interaction with a brand and its manufacturing
capability. Digital platforms to customize products as mentioned, shortened routes between production and
delivery, possibilities to co-create and so on. In many manufacturing environments these things already
happen. And it’s not just in a consumer environment. We increasingly see customization in a B2B context
as well, even if it’s just to stick a label, add a custom feature or adapt any characteristic of the product
whatsoever.

If you want to offer these services at scale and even turn them into a competitive advantage, automation
and several technologies and processes in industry 4.0 become a necessity. A real-life example without
disclosing the details: a large bank wanting specific office equipment to use across all its branches
(customer-facing context) with its own look, feel and features as part of a rebranding. There are plenty
more examples.

Improved agility

Now that we speak about competitive benefits and customization we also need to tackle agility,
scalability and flexibility.

The same scalability and agility which we expect from supporting IT services and technologies, such as the
cloud, are expected in manufacturing. This is partially related with the previous topic of customization but
mainly is about leveraging technologies, Big Data, AI, robots and cyber-physical systems to predict and
meet seasonal demand, fluctuations in production, the possibility to downscale or upscale; in other words:
all the adjustments that are sometimes more or less predictable, can be made more predictable or are not
predictable but can be handled thanks to increased visibility, flexibility and a possibility to leverage assets
in function of optimal production requirements from a perspective of time and scale.

The development of innovative capabilities and new revenue models

Digital transformation, as you can read in our digital transformation strategy overview, is a matter
of many levels, steps and capabilities.

You can transform processes, specific functions, customer service, experiences and skillsets but in the end
true value is generated by tapping into new, often information-intensive, revenue sources and ecosystems,
enabling innovative capabilities, for instance in deploying an as-a-service-capacity for customers, advanced
maintenance services and so on.

In the end, Industry 4.0 is also about that. It’s a topic we wrote about very often. You can read more about
it in our article on the digital transformation of manufacturing.

Industry 4.0 strategy and implementation

As mentioned previously, it’s important to point out that Industry 4.0 is still mainly a vision. Does
this mean it is just a vague idea? No, on the contrary.

What we do see indeed though is that most organizations are still in the early stages of preparations for
Industry 4.0 and mainly working ad hoc for now. Yet, the vision of Industry 4.0 is far more studied and
documented that that of other evolutions.
Industrie 4.0 is a vision AND a reality with a documented strategic roadmap towards
realizing the vision

Let’s compare digital transformation and the role in it of the Industrial Internet of Thing, which
along with evolutions in mechanics, engineering and manufacturing, essentially are what Industry
4.0 is about.

Digital transformation, although being academically looked upon and despite the existence of numerous
digital transformation frameworks and roadmap strategies, which are developed by numerous people, has
no universal definition nor clear industry-wide approach. The same goes for the implementation of the
Industrial Internet of Things.

Just like digital transformation and the Industrial Internet of Things, adoption of Industrie 4.0 happens in
the individual context of an organization. However, Industry 4.0, which is about more than automation in
manufacturing and ultimately also shows a vision of transformation in the end, is thoroughly studied,
prepared and presented by a big platform with academia, companies and far more as it was a clear mandate.

In essence this means that in Industry 4.0 there is a body of work, reference models, roadmaps and
well-described components before the actual implementations really happened. That is pretty
unique.

So, just like digital transformation, Industry 4.0 requires a staged approach whereby the initiatives in the
earlies maturity stages and areas ultimately lead to the realization of an integrated vision and reality. Yet,
as opposed to digital transformation this vision and reality is far more studied, documented and
standardized (despite the mentioned need to work in the context of the individual business as well).

Industry 4.0 maturity models and roadmap basics

In the Industry 4.0 maturity models there are several ways to look at the mentioned staged
approaches. One such maturity approach looks at the information and actual operations and
manufacturing systems perspective with autonomous machines and systems as true Industry 4.0.

In this gradual approach, whereby each stage builds upon the next one and adds more value, we move from
data to information to knowledge to wisdom and action from a data perspective. Indeed, the good old
DIKW model.
 Industry
4.0 strategy – a staged approach with value opportunities at each step and higher overall value across the
journey – stages, preparations, implementations and actions

From the perspective of systems and equipment/machines these stages correspond with, respectively seeing
what is happening (data), knowing why it’s happening (analytics, knowledge), predicting what will happen
(based upon the patterns and capabilities we developed before and AI) to the ultimate step Industry 4.0
strives for: an autonomous reaction by autonomous machines within the self-optimizing Industry 4.0
systems.

A second maturity approach revolves more around the business as such and corresponds with what
you would typically see in any project.

What do we want to achieve and what do we have today (assess), where do we want to go and what are the
missing links to get there (called the methodological analysis in Industrie 4.0, of which gap analyis is part)
and then the deployment of a strategic plan with a clear roadmap with regards to processes, security, skills,
technologies and implementation.

And, as is always the case this is of course followed by monitoring and improvement.

The building blocks of Industry 4.0: cyber-physical systems

Cyber-physical systems (CPS) are building blocks in Industry 4.0 on one hand and part of the
Industry 4.0 vision on the other.

Cyber-physical systems are combinations of intelligent physical components, objects and systems with
embedded computing and storage possibilities, which get connected through networks and are the enablers
of the smart factory concept of Industry 4.0 in an Internet of Things, Data and Services scope, with a focus
on processes.

Simply put, as the term indicates, cyber-physical systems refers to the bridging of digital (cyber) and
physical in an industrial context.

Cyber-physical systems (CPS) in the Industry 4.0 vision

This might still seem complex but, then again, cyber-physical systems are complex. Moreover, the
term isn’t new and is better known in an engineering and industry context.

It fits more in the Operational Technology (OT) side of the converging IT/OT world which is typical in
Industry 4.0 and the Industrial Internet. So, if you want to understand Industry 4.0 or the Industrial Internet,
you’ll need an understanding of some essential operational, production and mechanics terms.

Cyber-physical systems in the Industry 4.0 view are based on the latest control systems, embedded
software systems and also an IP address (the link with the Internet of Things becomes clearer, although
strictly both are not the same but they certainly are twins as we see in the next ‘chapter’.

In the Industry 4.0 context of mechanics, engineering and so forth, cyber-physical systems are seen
as a next stage in an evolution of an ongoing improvement of enhancement and functions integration.

Looking at Industry 4.0 as the next new stage in the organization and control of the value chain across the
lifecycle of products, this ongoing improvement in which CPS fits started from mechanical systems, moved
to mechatronics (where we use controllers, sensors and actuators, more terms that are familiar in IoT) and
adaptronics, and is now entering this stage of the rise of cyber-physical systems.

Cyber-physical systems essentially enable us to make industrial systems capable to communicate and
network them, which then adds to existing manufacturing possibilities.

They result to new possibilities in areas such as structural health monitoring, track and trace, remote
diagnosis, remote services, remote control, condition monitoring, systems health monitoring and so forth.

And it’s with these possibilities, enabled by networked and communicating cyber-physical modules and
systems, that realities such as the connected or smart factory, smart health, smart cities, smart logistics etc.
are possible as mentioned previously.

Cyber-physical systems before Industry 4.0

In the original definitions, going back over a decade, IP addresses where not specifically mentioned
in cyber-physical systems.

In 2008, Professor Edward A. Lee from the University of California, Berkeley, defined Cyber-Physical
Systems as follows: “Cyber-Physical Systems (CPS) are integrations of computation and physical
processes. Embedded computers and networks monitor and control the physical processes, usually with
feedback loops where physical processes affect computations and vice versa”.

On his page on the Berkeley website, Professor Lee links to cyberphysicalsystems.org where you find his
definition and a CPS concept map in the form of a mind map where you can click the various components
to read more. For the German Industrie 4.0 academia and industry people, CPS (and that bridging of
cyber/digital and physical) was key in Industry 4.0.

Cyber-physical systems also include dimensions of simulation and twin models, smart analytics, self-
awareness (self-configuration) and more . We’ve tackled some of these topics, including digital
twins, previously.

Hopefully, the essence of the concept, context and reality of the evolution towards cyber-physical systems
has become a bit clearer now. Note: there is a difference between cyber-physical systems and cyber-
physical manufacturing systems or cyber-physical production systems (CPSS) where we move from the
technological component to the far more important process and application dimension.

Cyber-physical systems: summary of the key characteristics

Next, we take a deeper look into the Internet of Things and its place in Industry 4.0. You’ll notice
that both are virtually twins.

Before doing so we summarize some key characteristics of cyber-physical systems as they are related
with the Internet of Things:

 Cyber-physical systems are seen as a next evolution in manufacturing, mechanics and

engineering. The essential dimensions are the bridging of digital and physical, which is possibly
thanks to Internet technology, and the bridging/convergence of Information Technology and
Operational Technology.
 Cyber-physical systems can communicate. They have intelligent control systems, embedded
software and communication capabilities as they can be connected in a network of cyber-physical
systems.
 Cyber-physical systems can be uniquely identified. They dispose of an IP (Internet Protocol)
address which means that they use Internet technology and are part of an Internet of Everything in
which they can be uniquely addressed (each system has an identifier).
 Cyber-physical systems have controllers, sensors and actuators. This was already the case in
previous stages before cyber-physical systems (mechatronics and adaptronics); however as we’ll
see with the Internet of Things it plays an important role.
 Cyber-physical systems are the basic building blocks of Industry 4.0 and the enablers of
additional capabilities in manufacturing (and beyond) such as track and trace and remote control
(more about these capabilities in the next section on CPS and the Internet of Things).
 The capabilities which are possibly thanks to cyber-physical systems enable smart factories,
smart logistics (Logistics 4.0) and other smart areas of applications, among others in energy, oil and
gas, and utilities.

Industry 4.0 building blocks: the (Industrial) Internet of Things

As promised, time for the Internet of Things. The Internet of Things (IoT) is omnipresent in Industry
4.0 and its international counterparts, as mentioned previously.

As you can read on our page on the Industrial Internet of Things (IIoT) and deduct from the graphic above
on cyber-physical systems, CPS essentially is mainly about the Industrial Internet of Things.

Internet of Things and cyber-physical systems: similar characteristics

The presence of an IP address by definition means that cyber-physical systems, as objects, are
connected to the Internet (of Things). An IP address also means that the cyber-physical system can
be uniquely identified within the network. This is a key characteristic of the Internet of Things as
well.
The main Internet of Things use case in manfacturing, from a spending perspective, concerns
manufacturing operations

Cyber-physical systems are also equipped with sensors, actuators and all the other elements which are part
of the Internet of Things. Cyber-physical systems, just like the Internet of Things need connectivity. The
exact connectivity technologies which are needed depend on the context (in both).

The Internet of Things consists of objects with embedded or attached technologies that enable them to
sense data, collect them and send them for a specific purpose. Depending on the object and goal this could
be capturing data regarding movement, location, presence of gasses, temperature, ‘health’ conditions of
devices, the list is endless. This data as such is just the beginning, the real value starts when analyzing and
acting upon them, in the scope of the IoT project goal.

IoT devices can also receive data and instructions, again depending on the ‘use case’. All this applies to
cyber-physical systems as well, which are essentially connected objects. There are more similar
characteristics but you see how much there is in common already.

CPS-enabled capabilities and Internet of Things use cases

Moreover, the new capabilities which are enabled by cyber-physical systems, such as structural
health monitoring, track and trace and so forth are essentially what we call Internet of Things use
cases.

In other words: what you can do with the Internet of Things. Some of them are used in a cross-industry
way, beyond manufacturing.

Below are two examples of CPS-enabled capabilities we tackled previously and how they really are
IoT uses cases.

Track and trace possibilities in practice lead to multiple IoT use cases in, among others, healthcare,
logistics, warehousing, shipping, mining and even in consumer-oriented Internet of Things use cases. There
are ample applications of the latter with numerous solutions and technologies. You can track and trace your
skateboard, your pets, anything really, using IoT.

Structural health monitoring is also omnipresent, mainly across industries such as engineering, building
maintenance, facility management, etc. With the right sensors and systems you can monitor the structural
health of all kinds of objects, from bridges and objects in buildings to the production assets and cyber-
physical assets in manufacturing and Industry 4.0.

Smart factories, smart plants and smart applications

The new capabilities, of which we just mentioned two and which are possible thanks to CPS in the
Industry 4.0 view, in turn enable smart plants, smart factories and anything smart.

What is a core enabler of smart logistics and so forth? Indeed, the (Industrial) Internet of Things, beyond its
simple aspects of sensors, actuators, communication capabilities and data collection/analytics. You can
perfectly compare this with the Internet of Everything view of connected objects, people, processes and
data as the building blocks of smart applications.

It is another key similarity between the CPS view of industry 4.0 and the reality of the Internet of Things,
which is key in Industry 4.0.

To conclude: in fact, you can call cyber-physical systems the (albeit advanced) things in the Industrial
Internet of Things in manufacturing. So, CPS and IoT are de facto more than twins.
Internet of Things and Industry 4.0 connectivity

A key component of the Industrial Internet of Things is connectivity. According to research,

industrial manufacturers still have some catching up to do in regards with connectivity overall.

Among others, the adoption of cloud-based services and the connection of legacy systems to digital
networks is lagging somewhat behind. Yet, as IIoT strategies are being envisioned and designed, the
number of Industrial Internet of Things connections is growing rapidly and changes occur in the types of
connectivity solutions that are used.

In 2017 research from ABI Research, it is estimated that in 2017 there will be 13 million extra (new)
wireline and wirelines connections across the globe. In total this would bring the number of Industrial IoT
connections to 66 million. In the years after, this growth continues and even accelerates (18 million new
connections per year by 2021).

Looking at the various types of Industrial IoT connection connection solutions in manufacturing and thus
Industry 4.0, it is expected that revenues from cellular and satellite connectivity fees will reach more than
$138 million in 2017.
The major part of connections consists of fixed line deployments but wireless is growing and will account
for approximately a quarter of all new connections in 2017. Moreover, on the longer term it is expected that
LPWA will be the fastest grower and that the shift to 4G LTE continues.

Research Director Jeff Orr points out that with the lowering costs in storage and processing, Industry 4.0
comes in reach of all manufacturers. With the evolutions in the connectivity options and solutions in that
crucial component of Industry 4.0, which the Industrial Internet of Things is, this is even more the case.

The Reference Architectural Model Industrie 4.0 (RAMI 4.0)

While, as mentioned the Industrial Internet Consortium has a framework, called IIRA (Industrial Internet
Reference Architecture), German ‘Plattform Industrie 4.0’ developed the so-called Reference Architectural
Model Industrie 4.0 (RAMI 4.0).
Industry 4.0 and RAMI 4.0: international expansion

RAMI 4.0, although originating from Germany, just as Industrie 4.0, is playing an increasing role in
other countries as well. As a matter of fact, ‘Platfform Industrie 4.0’ is seeking alignment at
European levels and with other countries across the globe.

Even if some EU countries use different terms such as intelligent factory, future industry, digital
production or smart manufacturing, the European Commission (EC) is also intervening.

The 3-dimensional RAMI 4.0 model shows that the production object must be tracked across its entire life
cycle (video ZVEI, see below)

Early 2017, a forum was held in the scope of the EC’s ‘Digitizing European Industry’ project. Industry 4.0
and RAMI 4.0 are also clearly mentioned within various programs on the website of the EC (and a PDF
with the essence of the Reference Architectural Model Industrie 4.0 is available on it, not without reason).

At the mentioned forum, the so-called ‘Stakeholder Forum’, held early 2017, international collaboration
around Industry 4.0 was one of the topics. ‘Plattform Industrie 4.0’ used the occasion to further expand
bilateral relationships with, among others the French Industry of the Future Alliance (Alliance Industrie du
Futur) and Italy’s Intelligent Factory project (Fabbrica Intelligente). Outside of the EU, partners include
the mentioned IIC (Industrial Internet Consortium) and Japan’s Robot Revolution Initiative (meanwhile,
Japan announced its all-encompassing Society 5.0 initiative at the CeBIT 2017 tradeshow).

An overview of the ongoing acceptance and leverage of Industrie 4.0 technologies, concepts and principles,
as mentioned previously, at the bottom of this page with over a dozen Industry 4.0 initiatives across the
globe.

If you are looking for some examples of Industry 4.0 cases in practice, it’s probably interesting to
know that you can watch a map, translated in English by ‘Platfform Industrie 4.0’, right before the
forum.

Click on a place on the map and read more about the specific case (for now only German examples).

Key elements of RAMI 4.0 (and Industry 4.0 components)

What are some of the key aspects you need to know about RAMI 4.0 (the architectural model
overviewis embedded below)?

First, know that there are two documents which laid out the foundations of Industry 4.0 and RAMI 4.0.

The Industrie 4.0 workgroup findings report

In 2013, the so-called “Umzetsungsempfehlungen” document was published. It’s essentially the report of
the ‘Industrie 4.0’ workgroup that, among others covered principles and foundations, including:

 Horizontal integration across value-added networks.

 Vertical integration and networked/connected production systems
 The technologies for CPPS (cyber-physical production systems)
 The consistency of engineering across the entire value chain.
 The new social infrastructures of labor/work.

We mention these topics of that first document as we’ll tackle them more in depth.

The Industrie 4.0 strategic implementation document: where RAMI 4.0 comes in
The second document, the “Umsetzungsstrategie”, a document with the recommendations for the strategic
translation and implementation of Industry 4.0, was published in 2015 and contains the RAMI 4.0 model,
the Industry 4.0 components and a research roadmap for implementation.

It’s this document and more specifically, RAMI 4.0 AND the Industry 4.0 components which we
tackle here.

The 3 dimensions of RAMI 4.0

The RAMI 4.0 architecture reference model is explained using 3 dimensions:

1. The first dimension consists of the hierarchy levels.

2. The second dimension covers the life cycle and value stream.
3. The third and final dimension covers the so-called RAMI (architecture) layers.

The hierarchy level

The hierarchy dimension consists of 7 aggregation levels, being 1) the connected world, 2) the
enterprise, 3) work centers, 4) stations (or machines), 5) control devices, 6) field devices (sensor and
actuators) and 7) products.

Important to note: while traditionally these levels are seen as a “real hierarchy” and depicted as a pyramid,
in Industry 4.0 they are more conceived and depicted as a mesh in a reality of ubiquitous connectivity of
everything, including processes, devices, products, organizations, ecosystems and so forth. In the pyramid
that shows Industry 3.0 there are only 6 levels with the enterprise at the top. While it’s true that the
connected world is far more connected from a technology and business perspective, we must point out that
there is such a thing as the extended enterprise with its ecosystems since long before anyone even talked
about Industry 4.0.

The hierarchy dimension is what we covered several times in our articles on ubiquitous connectivity and
digital transformation but in a different scope of hierarchy with smart products and smart factories as part
of this connected world.

It also about technologies (where we similar decentralizations all across the board) (IT and especially OT)
and about the ubiquitous interaction of participants across hierarchy levels, whereby the product is seen as
part of the network.

The life cycle and value stream dimension

The life cycle and value stream dimension, as the term already describes, covers the various data
mapping stages across relevant life cycles in RAMI 4.0 and across the entire value chain and the
various processes (and stakeholders).
Industry 4.0 – RAMI 4.0 model – The life cycle and value stream dimension

We’ll cover this more in depth later as it’s key in the data part, starting from the pre-production
development product data model, starting at the idea and development (data on, among others, , all the way
across further stages downstream, including actual production and the various processes until the
production object is end of life and gets recycled or trashed). The idea: the more data early on, the more
value later on.

The architectural layer

The third dimension, the architecture layers, consists of 6 components: business, functional,
information(a), communication, integration and asset.

Essentially we’re talking about 1) the enterprise and its business processes, 2) the functions of assets, 3) the
required data, 4) communication as access to information, 5) integration as, quote, ‘transition from real to
digital world and 6) assets as physical things in the real world.

Bring all three dimensions together and, on top of a nice visual, you have a 3D service-oriented
architecture. More in the video from German ZVEI (the German Electrical and Electronic Manufacturers’
Association) below. It is by far the best RAMI 4.0 explainer you’ll find in English in a video format.

 A clear explainer of the RAMI 4.0 reference architecture model for Industry 4.0 by the German
Electrical and Electronic Manufacturers' Association.

Additional resources on RAMI 4.0 and the Industry 4.0 components

Below is a list with more resources in case you want to dive deeper into the reference architecture model
and the components of Industry 4.0. There is also a paper regarding the interoperability of the frameworks
of the Industrial Internet Consortium and the Industry 4.0 Platform.

Sources regarding RAMI 4.0: the Reference Architectual Model of Industry 4.0.

Source: https://www.i-scoop.eu/industry-4-0/

RAMI 4.0 - an architectural model for Industrie 4.0

Presentation by Dr.-Ing. Peter Adolphs covering RAMI 4.0 and the Industry 4.0 component (PDF)

RAMI 4.0 and Industrie 4.0 component

Two tools have now been created to provide a better overview of existing standards and technologies – the
“reference architecture model Industrie 4.0” developed by the Plattform Industrie 4.0 and the “Industrie 4.0
components”.

RAMI 4.0 and the IIC Architecture: interoperability

A white paper (PDF) on the website of Infosys that looks at the interoperability of RAMI 4.0 of the
Industry 4.0 Platform and the reference architectural model of the Industrial Internet Consortium.

RAMI 4.0 introduction paper by Dr. Karsten Schweichhart

A PDF with a clear and illustrated introduction to RAMI 4.0, written by Dr. Karsten Schweichhart of
Plattform Industrie 4.0 on the website of the European Commission.

RAMI4.0 – Reference Architecture Model Industry 4.0

PDF by Martin Hankel, Industry 4.0, Bosch Rexroth AG, from end 2016 explaining the RAMI 4.0
framework. Comparable with the PDF on the website of the European Commission.

RAMI 4.0 Status Report

Reference Architecture Model Industry 4.0 Status Report (in PDF) from July 2015 on RAMI 4.0.

7
The Reference Architectural Model RAMI 4.0 and the Industrie
4.0 Component
Page on the website of ZVEI (German Electrical and Electronic Manufacturer's Association) with links to
plenty of RAMI 4.0 resources.

Industrie 4.0 principles: horizontal and vertical integration

After this introduction to RAMI 4.0, which as mentioned was laid out in the 2015 document with
recommendations for Industry 4.0 strategies and implementations, let’s take a look at some other so-
called Industry 4.0 principles.

These were established in the 2013 report in which the Industrie 4.0 workgroups presented their findings
on, among others those principles and foundations. Remember that, as mentioned and as we’ll cover more
in depth, those recommendations, principles and so forth mainly were about manufacturing but that de
facto Industry 4.0, its principles, vision and elements are going beyond manufacturing – and will continue
to do so as Industry 4.0 moves from vision to reality in meeting the inevitable transformation of other
industries as they are already taking place today.

Despite the fact that there is a difference between horizontal and vertical integration the goal is the same:
ecosystem-wide data information between various systems and across all processes, using data transfer
standards and creating the basis for an automated supply and value chain.

Horizontal integration in Industry 4.0

Horizontal integration refers to the integration of IT systems for and across the various production
and business planning processes.

In-between these various processes there are flows of materials, energy and information. Moreover, they
concern both the internal as external (partners, suppliers, customers but also other ecosystem members,
from logistics to innovation) flows and stakeholders.

In other words: horizontal integration is about digitization across the full value and supply chain, whereby
data exchanges and connected information systems take center stage. As you can imagine this is not a small
task. For starters, within organizations there are still quite some disconnected IT systems. This is a
challenge for all organizations, industrial or not. If you start looking at seamless integration and data
exchange with suppliers, customers and other external stakeholders, the picture becomes even more
complex.
Also keep in mind the life cycle and value stream dimension of RAMI 4.0 here where we talked about
the importance of early data collection and provisioning.

Whether it concerns product data or information about the various mentioned and other processes across
the horizontal value chain (so, the path from supplier and production to end customer and/or other
stakeholders/partners), there is still quite some work to do in this regard.

Nevertheless, it is critical for Industry 4.0 and for business overall. The benefits and drivers for this
need for horizontally connected information systems are pretty comparable to those we find in
information management, as are the disadvantages if systems are not integrated.
We’re talking about customer service and satisfaction (with many customers in supply chains), planning,
employee productivity and satisfaction, speed and so forth. Compare it with information management
challenges in an insurance scenario: if back-office information on, for instance a claims process, is not
connected with the front end, customer service agents can’t help the customer fast enough if he/she seeks
information or help on the (status) of the process. It’s exactly the same in Industry 4.0 and manufacturing.
We’re just talking about more stakeholders, highly interdependent processes and stakeholders, far more
processes and data and so forth.

It’s a no-brainer that horizontal integration helps with horizontal coordination, collaboration, cost
savings, value creation, speed (as an enabler of smooth service and operations but also of faster time to
market and worker’s efficiency) and the possibilities to create horizontal ecosystems of value, based
on information.

Horizontal integration in Industry 4.0 leads to the creation of a stronger and more connected horizontal
value network – source and courtesy HP (now HPE)

However, it’s not because it’s a no-brainer that it’s easy. Ask any organization in any industry. Last but not
least: we’re not just talking about information. It’s the knowledge, insights and action which matter in the
end.

Vertical integration in Industry 4.0

Whereas horizontal integration is about IT systems and flows in the supply/value chain and the
various processes happening across it, vertical integration has a hierarchical level component.

In other words: it’s about the integration of IT systems at various hierarchical production and
manufacturing levels, rather than horizontal levels, into one comprehensive solution.

These hierarchical level are respectively the field level (interfacing with the production process via sensors
and actuators), the control level (regulation of both machines and systems), the process line level or actual
production process level (that needs to be monitored and controlled), the operations level (production
planning, quality management and so forth) and the enterprise planning level (order management and
processing, the bigger overall production planning etc).
Typical solutions and technologies in this vertical integration include PLCs which control manufacturing
processes and sit on the control level, SCADA which enables various production process level and
supervisory tasks and is de facto commonly used in industrial control systems, MES or manufacturing
execution systems for the management level and intelligent ERP for the enterprise level, which is the
highest level in this hierarchical picture.

As mentioned previously, the MES (manufacturing execution system) plays a central role in the first
stages of Industry 4.0 transformation as the digital hub of information and connectivity.

The automation pyramid and new business models in Industry 4.0

As mentioned previously the opportunities which are offered by Industry 4.0 stretch beyond goals of
automation, higher efficiency and so forth. As the people behind Industrie 4.0 say themselves the true
opportunities reside in the identification and implementation of new business models.

The true opportunities of Industry 4.0 reside in the identification and implementation of new business
models

Although that is easier said than done (for many companies reaching these stages and goals is a virtually
impossible task, certainly now, one of the reasons why they mainly focus on a staged approach or smaller
steps as you can read in our article on industrial transformation), it is the true goal: new business models
based on data, new ecosystems and new ways to service customers, meet demands in novel ways and
create new revenue streams.

These more aspirational goals of industrial transformation mainly revolve around the service
dimension of the so-called automation pyramid.

Below is a nice example of such an automation pyramid, courtesy of the people at invilution. Indeed, it
looks like the vertical integration image above. It’s not as if the people behind Industry 4.0 invented
everything, right? What we do have now is the growing importance of the Internet of Things. And Industry
4.0 is of course a lot about IT entering a world of OT in combination with IoT and convergence between IT
and OT. And, yes, it also looks a bit like the DIKW pyramid, a model that has existed forever to show the
path from data to information to knowledge to wisdom (and in some depictions to action), in the end it is
all very much related.

Automation pyramid by invilution – source and credits invilution

That automation pyramid is really just a depiction of the implementation of Industry 4.0 in the organization
and will not just look familiar to people who have been active in industrial automation forever but will also
seem familiar to many who have already looked at the strategical aspects of Industrial Iot strategies.

The automation pyramid for the implementation of Industry 4.0 we are going to look at from a
transformation perspective (call it an industrial transformation pyramid) consists of 4 levels.

Do also think about the layers of network models such as OSI and others when looking at them as
obviously there is a technological dimension and IT and IoT people will – of course – recognize a lot too.

Just as other aspects of Industry 4.0 such as vertical integration and horizontal integration, essentially we
are talking about data, starting from connected assets, all the way up to the services built upon the
identification of assets with sensors and systems which carry information that gets analyzed and send
across networks to other platforms where the new services are built upon. If you ever happened to see this
simply automation pyramid you’ll notice we’ve adapted it a bit as the dimension of ecosystems for the
deployment of new services lacked a bit (more below).
Level one: sensors and actuators – connecting what should be connected

The first layer of the automation pyramid concerns sensors and actuators. In an Internet of Things
context we would say the ‘things and device’ layer although here you can imagine other technologies
and systems as well.

The first layer essentially consists of product and manufacturing assets and components which become
information carriers as they can be addressed, localized and identified through sensors and are connected.
Pretty much the foundation of IoT indeed: connect what needs to be connected to ‘sense’ what needs to be
‘sensed’, bridge digital and physical and lay the foundation for the next levels.

Level two: systems and internal services – monitor and manage

Built upon that connected layer of sensors, actuators and essentially data sits a layer of services and
systems that enables the new ways in which the value chain is organized and managed.

Here we meet applications such as energy monitoring and the monitoring and management of systems and
conditions of assets such as machines, buildings, infrastructure and so forth. In other words: mainly
monitoring and managing, albeit it with the next step in mind: we do monitor for a reason – to enhance,
understand and build new capabilities. Although it’s more part of the third level you can imagine
applications here whereby you can for instance find ways to monetize based upon performance.

Level thee: connectivity – connect for new applications and capabilities

Adding the additional layer of connectivity whereby not just assets are connected but also the data
and monitoring systems we then come to IoT and IP service models that enable smarter applications
and new capabilities such as preventive/predictive maintenance, asset tracking and so forth whereby
there is already a change in business approach for many organizations.

Initially these maintenance, tracking and other applications are often focusing on internal operations but of
course some can become additional revenue sources when deployed and offered in a customer ecosystem
context, for example by offering maintenance contracts that could bring in new revenues or be offered as a
service with the equipment you sell, while lowering costs for yourself (service and support) and your
customers (less downtime).

Level four: new services and ecosystems – transformation

The fourth layer, finally, is where you can leverage the capabilities and services and data/intelligence
you have to really transform your business model with myriad services, depending on the context.

These could range from applications enabling consumers to tailor the goods they order and sell advanced
services to come up with new revenue streams, certainly when developing services within ecosystems of
data and possible partners. It’s also here that you can start developing new services that mean a significant
shift in your core business by aggregating data and intelligence from your intelligent systems and those of
others with complementary systems and tapping into entirely new customer segments. And it’s also here
that we see industrial IoT data exchanges and monetization platforms. In this stage it’s not that much the
technology that limits what you can do but your vision and imagination.

But again, it looks easier than it is in practice of course. Going from less paper and legacy systems to
simply connecting assets and leveraging IoT, bridging IT and OT integration challenges in the first
layer and being able to monitor and manage whatever needs to be monitored and managed, from
energy to structures and beyond is already a huge step for many.
 From
automation pyramid to industrial transformation pyramid with Industry 4.0

Industry 4.0 design principles

Industry 4.0 is often resumed in six so-called design principles, essentially serving as part of the
Industry 4.0 vision and to make the guidelines clearer for companies who want to understand,
identify and implement Industry 4.0 projects.

There has been an awful lot of academic work into those design principles so you might find other terms
and potentially four instead of six design principles. In essence they are relatively simple – and should
allow to explain what Industry 4.0 in the end means to.

These relatively well-known Industry 4.0 design principles are 1) Interoperability (now and then also
referred to as interconnection or simply connectivity), 2) information transparency (also virtualization or
virtual entities), 3) decentralization (also decentralized/autonomous decisions or autonomy), 4) real-time
capability, 5) technical assistance and service orientation (with Human-Machine Interaction) and 6)
modularity.

A look at these Industry 4.0 design principles in a bit more detail.

Interoperability, interconnection, connectivity

In order to move to intelligent manufacturing, smart factories, or connected industries, you need to
bridge things such as real things, people, standards, work processes (man and machine) and more.
And to bridge all that you need data and networks. They must all inter-operate and inter-connect.
Interoperability is also about collaboration and the ability to have different standards talk to each other so
data from various sources can be leveraged

You need to bridge IT and OT, you need to have assets such as machines that can connect and
communicate thanks to sensors and other equipment and you need to connect people, data, machines and so
on. This is indeed mainly about the Internet of Things and, in a broader perspective an Internet of Services,
Internet of People, Services and Things, Internet of Everything, whatever name you prefer.

Interoperability is also about collaboration, the ability to have many (really many) standards talk to each
other so data from various sources can be leveraged (why we use Industrial IoT gateways, IoT platforms
and talk about IT and OT integration, which goes beyond technology and is about human collaboration
too, namely IT and OT teams).

Interoperability means connected devices, connected communication technologies, connected people,

connected data, people connected and collaborating with machines, machines working with machines, an
interoperable unified and holistic information, security and data layer and so forth. Inter-operating and
inter-connecting and in more than one sense connected with vertical and horizontal integration.

Information transparency, virtualization and virtual entities

Information transparency (or virtualization) might be a bit harder to explain to a friend as it is not
about the transparency of information.

Information transparency essentially is the capability of information systems and cyber-physical systems to
simulate and create virtual copies of physical world elements through the creation of digital models that are
fed by all this data you get through sensors and inter-operating and inter-operable ‘things’.

Without interoperability, information transparency and virtualization are not possible as the information
needs to be put in context and systems are context-aware, combining information from other sources too. In
the cyber-physical lingo of Industry 4.0 you could say that you need information from the cyber
environment (virtual, digital) and the physical environments (aware of context in space and place).

Finally do note that we speak about context-aware information. This essentially means two things: 1)
information is not data, remember the DIKW model so analytics and moving from data to information and
so forth is key here and 2) context-aware also means that the information can differ, depending on not just
the actual context in which it is gathered and enriched but also in the context of its scope which can mean
real-time information and so forth. The easier way to explain it to a friend is probably to say that there is a
virtual copy for pretty much everything.
Industry 4.0 design principles for Industry 4.0 scenarios

Decentralization, autonomous decisions and autonomy

As mentioned earlier one of the core goals of Industry 4.0 is to bring autonomy and autonomous
decisions to machines and cyber-physical systems.
Only then the agility and flexibility needed to be able to deal with uncertainties, respond to demands of
personalization, the concept of the smart factory and its place in an inter-connected ecosystem, the required
data analytics and the various logistics can be enhanced, meeting the need for speed. We tackled this aspect
of autonomy and (semi-)autonomous decisions and intelligence more in depth in our article on Logistics
4.0.

Decentralization is not just a given in Industry 4.0 and Logistics 4.0, it is pretty ubiquitous: the Internet of
Things, fog and edge computing, intelligence moving to the edge across myriad applications, including
building automation, blockchain, the list goes on. In fact, the IoT de facto is a decentralized given as such.
We are talking about a distributed reality. However, in the scope of Industry 4.0 and Logistics 4.0 it
essentially depicts the movement to phenomena in autonomous production systems, autonomous decisions
in warehousing (smart shelves, cobots,…) and in myriad other aspects and applications (self-driving
vehicles, shutting controls off or switching them on, taking decisions in production, predictive
maintenance, you name it).

Decentralized and autonomous decisions are not just key in the technologies and cyber-physical systems of
Industry 4.0 but also in the human aspects as not all decisions can be fully automated and human planning,
interpretation and decisions are still key and in many cases there is a mix of semi-autonomous capabilities
in collaboration with people (e.g. collaborative robots).

The end of the discussion on decentralization and autonomy is far from over, certainly from the human and
decision-making perspective. In Industry 4.0 the mantra has been to only let decisions go to ‘higher levels’
in case of issues and so forth. However, in practice this is not always achievable, let alone desirable.

Real-time capability

If you strive towards more autonomy on the machine and cyber-physical system level you do so for
increased efficiency and to meet the demands of an increasingly real-time economy.

Advanced analytics, the IoT and the information and production systems in a smart manufacturing
environment in its broader context of collaboration and ecosystems already are all about the development
of real-time capabilities.

Without interoperability, information transparency and virtualization are not possible

So, it’s only logical that on the level of data, turning it into actionable intelligence and actions/decisions
and on the level of the processes and functioning of the overall manufacturing, logistics and ‘smart factory’
operations there is a need for a real-time capability. Flexibility, predictive maintenance, being able to
quickly replace assets in case of failures and the IoT all are important in this perspective which also
touches the previously mentioned design principles and the data to decision aspects tackled previously.

Moreover, a real-time capability is essential for the last two design principles, service orientation and
modularity.

Technical assistance and service orientation

The service orientation is related with the as-a-service economy, the Internet of Services and the
obvious fact that manufacturing needs to be more tailored to the demand of customers for services and
products with value added services (e.g. personalization) instead of what the company decides to produce.
In a sense it’s transforming manufacturing in a scope of customer-centricity and evolving customer
demands.

Yet, the service orientation is also related with the need for manufacturers and other industries to develop
new services that are de facto based upon data, turned into intelligence, and seek new service-based
revenue models. Moreover, technical assistance and, more specifically maintenance, is a core principle as
IoT and data analytics simply allow the transformation of services and maintenance. There are plenty of
companies who changed their service models by simply adding levels of intelligence and connectivity with
IoT to the equipment they sell.

Assistance systems must also serve the ‘internal customers’: all possible workers who need to be able to
take decisions, where the changing skillsets also come in, supported by several systems that enable them to
do so. And here we also meet Human-Machine Interaction.

Finally, the service aspect is also related with the development of new as-a-service-models based upon data
but also based upon the evolution towards a Machines as a Service model.

Modularity

Modularity means many things, depending on how you look at it: the various individual modules
within the broad smart factory environment or simply as the end result when it becomes agility and
flexibility.

We’ve covered this before in, among others, the scope of flexibility and agility from the perspective of
customer demand, being able to plan for the unpredictable and the increasing demand for personalization.

You could say that modularity has everything to do with a shift from rigid systems, inflexible models and
linear manufacturing and planning to an environment where changing demands from customers, partners in
the overall supply chain, regulators, market conditions and all other possible elements causing the need for
transformation and flexibility are put in the center. The modules are locally controlled without hierarchy.

Industry 4.0 and technologies

Previously in this overview of Industry 4.0 we touched upon several technologies. If you look at the
presentation and data from the Boston Consulting Group, you’ll see some of the main technologies in
Industrie 4.0.

As a reminder: BCG mentions advanced robotics, additive manufacturing, augmented reality, simulation,
horizontal/vertical integration, the Industrial Internet (of Things), cloud, cybersecurity and, finally Big Data
and Analytics.

Most of them are really umbrella terms for several technologies. We already tackled horizontal and vertical
integration, cyber-physical systems and the Industrial Internet of Things as really vast realities with many
technologies and components before on this page (and elsewhere). We also have literally dozens of articles
on other evolutions in the mentioned convergence and application of nine digital industrial technologies as
BCG calls them.

Yet, instead of sending you to other pages and taking into account the specific aspects of some
technologies in an industrial scope we’ll zoom in on a few more which are rather typical in manufacturing
and industrial markets. Those that are less typical (with typical ones being the integration of IT and OT,
additive manufacturing, industrial robots and so forth) are probably the ones you are looking at today: IoT,
Big Data, the cloud, maybe 3D-printing etc. They are the technologies that we meet in IDC’s so-called
third platform with transformational pillars and innovation accelerators.

Technologies as enablers of improvements and (new) capabilities

So, what technologies are really key to Industry 4.0? It depends but the Internet of Things is clearly
critical as it is what makes most so-called Industry 4.0 levers (see below) possible.

Security is also an inherent part of the Industrie 4.0 vision. In fact, most of the mentioned technologies are
essential as they are inevitably connected and interdependent. So, where do we start?
The best way to start is by looking at your goals and challenges and at the capabilities you need on
your Industry 4.0 journey.

Big Data, analytics, the cloud (and the fog), AI and simulation, to name a few, are about the adaptability,
flexibility, modularity, scalability and rapid deployment and integration capabilities that we want to see
with Industry 4.0. These capabilities come back in many of the Industry 4.0 resources we previously listed
(such as Gartner’s page) and are also means to an end.

Do note that several consulting firms and analysts zoom in on other digital technologies as enablers of
Industry 4.0. Mobile devices and technologies are just one example. More advanced interfaces in the
relationship between human and machine are another (or better: new interfaces in the relationship between
human and technologies as machines makes us overlooks the critical software dimension in a world where
software as they say is eating that world. Think artificial intelligence agents and bots or in another context
phenomena such as Robotic Process Automation or RPA).

Industry 4.0 technologies in a scope of levers and value drivers

Obviously you can’t implement all technologies at once, nor should you. We looked at the strategic
dimension of Industry 4.0 before and will continue to focus on it.

If you want to have a more value-oriented and purpose-driven view at the technological journey, you might
want to check out the so-called digital compass which McKinsey made a few years ago, especially the
value drivers in it.

For the many organizations who are still in the beginning of their Industry 4.0 journey it might look a bit
overwhelming but when you look closer it isn’t.

At the center are the value drivers which we all know and touch upon 8 areas/dimensions: time to
market, matching supply and demand, quality, inventories, labor, asset utilization, resource/process
and service/aftersales.

The digital compass for Industry 4.0 of McKinsey – full

image and source

So, these are really some main areas where, in the scope of that compass, you could create more value
towards one or more stakeholders at the same time. Because obviously, it’s not just about these 8
dimensions as such but about the question how you can improve the various processes and experiences of
those involved with a clear connection to tangible value.

The second part of the compass shows the Industry 4.0 levers which are connected with the value
drivers. As an example: in order to better utilize your assets, remote monitoring and control and
predictive maintenance can help you achieve that goal.

From a technology perspective, it’s a matter of knowing what technologies are needed to ‘do’ remote
monitoring/control and/or predictive maintenance and it’s here that we start looking at technologies such as
Big Data analytics and of course the Internet of Things as you can’t get data from your assets for
monitoring/maintenance purposes if they aren’t connected with the purpose of doing so.

Although companies such as McKinsey and many others are absolute leaders in Industry 4.0 it remains
important to start from your individual goals and means to achieve them, after having conducting analysis
and drafting a plan and roadmap that serves your business.

Before looking at technology: the strategic and holistic need of prioritization and dealing
with complexity

In that sense we say the exact same thing regarding Industry 4.0 as we did about digital
transformation: the technologies are enablers and there is far more to look at.

While that might sound like common business sense it is often forgotten. So, be careful with an
overemphasis on ‘the technologies you really should have’ and also be careful with the many models,
frameworks and compasses out there.

The reality of Industry 4.0 ad of supply chains looks like a big complex mesh with loads of moving
connections, nodes and dimensions if you try to visualize it. Yet, technologies and Industry 4.0 are about
reducing our complexity and that of our processes, partners, customers and supply chains in a prioritized
and staged way. It’s in this exercise of looking at our complexity that the capabilities are built to innovate
and develop capabilities and flexibility, which in the end are mainly about dealing with and removing
complexity with novel approaches for our various stakeholders by tapping into the opportunities we detect
in a complex reality.

And that requires a different approach for each organization, even if there are many common lessons and
strategies we can learn from. Yet, there is never a one size fits all. Take a look again at the digital compass
of McKinsey, for example. You might want to improve customer service; the dark green part of the
compass. But that doesn’t mean that predictive maintenance, remote maintenance and virtually guided self-
service are the solutions to make it happen. The labor part, for example, is also key in customer service.
And so is the inventories piece. And what about time to market and quality? Or the flexibility in utilizing
your assets. They all play a role in better servicing the customer. The ways that work best for your
customers and your business depend on how all these levers and all the other service aspects that aren’t
necessarily even mentioned as they’re not part of that Industry 4.0 compass, interact, what your customers
want and who they are today and could be tomorrow.

That’s why Industry 4.0, just like digital transformation, is by definition a holistic given and can’t be
captured in an illustration, whether it’s one we made, McKinsey’s digital compass or any framework out
there. Take them for what they are: instruments and compasses to think about dealing with complexity and
offering ideas or approaches which we can leverage in our own, increasingly digital, reality of challenges
and opportunities, in which industrial transformation and technologies fit.

Industry 4.0 and ubiquitous technology-enabled innovation

On a level of manufacturing (and supply chain management) technology in the sense of operational
technologies and traditional manufacturing technologies it is clear that a lot is happening as well,
enabled by information technology (IP, analytics and AI, for instance), IoT, scientific research and
innovations and technological innovations on virtually all levels.

Who would have ever thought that one day there would be a tool holder which enables the collection of
data from the machining processes which then get sent to a dashboard to provide insights into what’s
happening inside slender tubular components to an operator? Who would have ever though that a company
like Airbus one day would have an aviation data platform and commercialize it?

The thing with all the technological evolutions in Industry 4.0 is that it goes in all directions. And it doesn’t
matter if it’s called IT or OT. According to IDC’s manufacturing predictions for 2018 and beyond, for
example, we are moving from an ERP to an intelligent ERP whereby embedded intelligence forms the
backbone to automate large-scale processes and speed up execution times by up to 25 percent. That –
secure – backbone is poised to integrate IoT, cognitive (artificial intelligence and machine learning) and
even blockchain technology and by 2021 a fifth of the largest (Global 2000) manufacturers would depend
on it.
Next generation presses and tooling equipment, evolutions in Manufacturing Execution Systems, new CAD
and CAM applications, shaping materials, digital platforms and industry clouds, smart assets, customer-
driven design possibilities through virtual reality, crowdsourcing and product virtualization, the list of what
is changing and yet to come is long. However, as per usual not everything will be relevant for everyone.
More about the mentioned predictions and the evolutions in operational technology and industrial
technologies used in manufacturing, in combination with IT via the button below.

Manufacturing industry technology forecasts

Beyond the automation pyramid: the disrupted application levels

in Industry 4.0
Although we often mentioned the traditional image of the automation pyramid (just as we like to keep
referring to the DIKW model to explain things) with its nicely and easy looking hierarchical levels
taking center stage in the vertical integration of Industry 4.0, at the same time it is crystal clear that
this pyramid and mainly what’s behind its various levels is disrupted.

While for many companies Industry 4.0 and Industrial IoT are far from a reality yet, the preparations to
move in industrial transformation have an impact on hardware, software, technologies, processes and the
integration, connectivity and interoperability of it all.

The blurring of borders on the level of hierarchies and solutions

Just as the borders between the various technologies and the various levels of our traditional
automation pyramid are blurring, so are the data, communication and system silos.

With the move to the cloud, the increasing importance of IoT and the need to connect systems with the
proper newer technologies which we see in Industry 4.0 and in the third platform and its innovation
accelerators, the solutions landscape is changing in the ongoing integration of IT and OT. It comes with
many challenges, on the level of value creation, connected data and security, to name a few.

The design principles of Industry 4.0 such as interoperability, virtualization, decentralization, real-time
capabilities, a service-oriented approach and modularity all play a key role in the radically changing
architectures of the various industrial solutions as we know them

However, one needs to start somewhere. And often one starts at the edge, of the business and of the
technology stack. Keeping in mind the traditional automation pyramid that’s where sensors, actuators and
cyber-physical systems sit and meet the PLC control level. It’s here and in SCADA systems that the
journey starts as everything becomes integrated, or better, interconnected with increasingly modular
approaches.

From a perspective of the vendors of software alone this is also a challenge for many. Manufacturing
execution systems and SCADA systems, to name just two, exist since a long time and aren’t designed
for the mentioned evolutions. It often leads to a bolt-on approach which customers really don’t want.
Radical architectural changes and evolutions in ERP software, manufacturing execution systems, SCADA
systems and even the ‘lower’ levels are inevitable. On the longer run they even go far beyond the
‘platform’ and ‘service-oriented’ models most can imagine today.

The example of ERP moving to intelligent ERP with AI, IoT and blockchain is a perfect illustration for
this. As said, for many organizations blockchain is still something they never heard about or know from the
virtual currency perspective alone.

With edge computing, and again AI, other applications in the broader picture of manufacturing
operations is becoming one of many uncertainties about the long-term future of SCADA, MES and
so on. Do expect a landscape in which it’s not the plant floor that matters nor even the plant alone.
It’s the whole value chain, including an increasing need for multi-plant orchestration, smart supply
chain management and service-oriented approaches whereby functions are services and in the end
we move to intelligent pieces that seamlessly interconnect on all levels.

Think about the previously mentioned design principles of Industry 4.0: interoperability, virtualization,
decentralization, real-time capabilities, a service-oriented approach and modularity. They all play in the
radically changing architectures of the various solutions that exist.

A quick look at some of the evolutions in the top 3 levels of our classic automation pyramid which is
starting to look like a mesh as systems start speaking the same languages of industrial protocols and IIoT.

The changing enterprise resource planning level

On the ERP level there is the previously mentioned evolution towards ERP with a key role for
artificial intelligence which will be injected in all applications for that matter, without one even
knowing it.

Leveraging blockchain, machine learning, advanced analytics and so forth to essentially take care of all
transactional, contractual, administrative, predictive, autonomous, analysis and far more aspects of all the
data that is still to be unlocked intelligent ERP is poised to lead to unseen levels of process automation and
speed with a focus on outcomes. It is indeed something else than ERP as Excel Runs Production.

Enterprise resource planning evolutions

The disrupted manufacturing execution systems level

On the level of manufacturing execution systems we’ve already started to move away from
traditional monolithic legacy systems of record but here as well a lot is poised to change.

End-to-end integration in a smart connected MES is increasingly important (ARC, 2017)

Think again artificial intelligence and machine learning, increasing autonomy, the previously mentioned
move towards a service-oriented and modular service approach, more integrations with even more systems
than is already the cases and MES functions in embedded systems with a far more end-to-end approach
beyond the plant floor, let alone the individual plant.

Manufacturing execution systems evolutions

The complex SCADA systems level

Finally there is SCADA. As previously mentioned SCADA systems for now remain an important step
on the level of operability and is seen as critical to connect distributed assets, as per usual to generate
actionable intelligence.

Although on the short to medium term there is an acceptance that

Industrial IoT and SCADA will remain or become good friends as there are ample situations where
SCADA is needed today, on the longer term SCADA will probably disappear as security, intelligence and
functionality in ERP, in PLC and in IoT will only increase on all levels.

There are very few arguments for SCADA which continue to remain relevant in the scope of overall IoT
and technology evolutions on the long run. Yet, it isn’t for tomorrow. What will first change is the
HMI/SCADA software and overall HMI layer as ample new technologies enable ample new human
machine interface experiences.

However, here, as well as in all the other mentioned levels there is still a long way to go, not in the least on
the level of SCADA/HMI security issues.

SCADA systems and evolutions

In the end it’s the “human system” that decides

The goals of Industry 4.0 are pretty clear. Getting there is another ball game. Maybe we’ll even
never fully get there, no one has a crystal ball.
Yet in the mean time for some it’s still getting rid of paper, for others it’s catching up and for a few it’s
moving towards innovation and what in the end it is all about: the actual outcomes which by definition are
human. And whether all the mentioned dramatic changes in software and systems, in processes and ways of
optimizing, automating, creating value and changing experiences will fully take place in the end is also a
human matter.

Because here is the simple thing: it’s not the actionable intelligence nor the connection of actionable
intelligence with even more connections and multiplied intelligence that matters, it’s what you use it for
and do with it.

Industry 4.0 has gone global: Industrie 4.0 initiatives and

evolutions around the world
As we mentioned in the introduction of our article and in the scope of the RAMI 4.0 reference
architecture model for Industrie 4.0, the Industry 4.0 view and concept has clearly gone global and
continues to do so.

In the US, Industry 4.0 is de facto having an important impact on smart manufacturing initiatives and there
is the collaboration with the Industrial Internet Consortium.

Moreover, there is an increasing number of organizations and countries where Industry 4.0 is becoming
adopted. Examples include the UK (Industry 4.0 and the work around 4IR, short for 4th industrial
revolution by the EEF), Japan (where there is, as mentioned already a collaboration with Japan’s Robot
Revolution Initiative), China (where the Industry 4.0 outline is at the basis of ‘Made in China 2025’) and
the numerous EU initiatives of which we mentioned some previously. On March 23rd 2017, the EU alone
looked at plans to align the already 12 existing and 9 coming national industry transformation initiatives.
Essentially all of them are leveraging the Industry 4.0 concept, regardless of their many different names.
Industry 4.0 across the globe – main initiatives, partnerships and influences as of March 2017

However, the global expansion of Industrie 4.0 is not just a matter of government initiatives or
agreements. It is also a result of an increasing focus among industrial giants and leading consulting
firms on Industry 4.0.

From PwC and Accenture to McKinsey; they’re all heavily involved in Industrie 4.0. One example of an
industrial giant, from outside the EU, that is heavily involved in Industrie 4.0 is Infosys that supported the
plans of the German Academy of Science and Engineering, Acatech (which coined the term Industrie 4.0),
to create an Industrie 4.0 Maturity Index.

The consortium which was created in the Spring of 2016 to get the Industry 4.0 Maturity Index ready by
April 2017, includes research institutions and several industry bodies, as well as companies such as
Infosys.

Expect a range of announcements and partnerships to further drive the Industry 4.0 concept further across
the globe. Last but not least, also remember that we’re not just seeing a global/regional expansion of
Industry 4.0: there is also an increasing adoption of Industry 4.0 principles and technologies across vertical
markets beyond manufacturing (healthcare, utilities, smart cities, oil and gas etc.).

Industrial Data Space: linking IoT and smart services in Industry

4.0 and beyond
Various research organizations, with a leading role for the Fraunhofer Institute, and the German
government are pushing a reference architecture model and virtual construct for secure data sharing
based on standardized communication interfaces.
That is a mouthful to say that Industrial Data Space, which aims to define the data architecture for the
connection of smart services and IoT in a landscape of ever more data wants to become a global standard.
Industrial Data Space focuses on the connection of several existing platforms and wants to enable partners
to share data for digital transformation purposes within a clear pre-defined model whereby data sovereignty
and data security are among the key focus areas.

The Industrial Data Space Association is conducting talks with other organizations with similar
architecture frameworks, countries outside Germany and the EU in the scope of the movement towards a
European Data Space. Although there is an important focus on Industry 4.0, the Industrial Data Space
stretches across other industries as well. The illustration below from the presentation of Prof. Dr. Jan
Jürjens on the website of the EU (which can be downloaded in PDF here) shows some of the core
principles of Industrial Data Space.

Core
principles of Industrial Data Space – source EU PDF opens

Energy efficiency, power management and Industry 4.0

The fourth industrial revolution needs to be powered. Yet, the sources of power and how we leverage
them inside industrial settings are changing.

Energy efficiency and power management are simply inherent to Industry 4.0. The focus on ecology, cost
savings, changing regulations, the sheer possibility to create, combine, measure and optimize in entirely
new ways, using pervasive metering, sensors, IoT and data analytics, the list goes on.

Moreover the energy sector as such goes through its digital transformation, also known as Energy 4.0. And
obviously there is the need for maintenance and asset management, the increasing emphasis on continuity
and productivity in a real-time economy, whereby systems can’t fail and power availability and reliability
are essential, and the reality of the connection of new power sources. This also goes for the power critical
facilities and buildings in Industry 4.0, from airports to factories and other buildings where energy
efficiency and Industry 4.0 go hand in hand.

Industry 4.0 and power management according to Kevin Morin – read the post

More articles and resources relating to Industry 4.0

Below are some more articles on our website which tackle aspects, components and evolutions that are
relevant for Industry 4.0. Click the headlines for the desired article.

Digital transformation in manufacturing 2017 and beyond

Industry 4.0, although having expanded to other industries is still primarily a matter of the
manufacturing industry.

In this article on the digital transformation and digitization of manufacturing we tackle the evolutions,
challenges and accelerators and look into research and data for 2017 and beyond with a worldwide focus.
Digital transformation in manufacturing

Logistics and supply chain in Industry 4.0

Industry 4.0 and industrial digital transformation overall have a strong impact on the organization,
human dimensions, technological evolutions and even disruptions in logistics and supply chain
management or SCM.

We looked at some aspects of what is also called Logistics 4.0 earlier and in previously mentioned articles
with regards to the rise of cobots in Logistics 4.0, IoT, cloud and advanced data analytics as drivers of
connected logistics and the digital transformation of logistics and transportation overall.

Yet, how is logistics and supply chain management evolving in Industry 4.0? A key evolution is the
movement of autonomous and semi-autonomous intelligence and decisions to various areas of logistics and
the edge. Smart trucks, self-driving vehicles, smart containers, they are all part of this transformation.

Yet, the human, organizational and transformational impact of Industry 4.0 on logistics and SCM goes
further than that as covered in this article.

Logistics and supply chain 4.0

Industry 4.0 in the UK: on the road to 4IR and industrial leadership

Manufacturing companies in the UK feel prepared for Industry 4.0.

However, on top of traditional barriers to move in the journey towards Industrie 4.0, the UK also has
specific challenges, including the need for a more industry-wide plan and readiness strategies. Associations
such as the EEF are helping manufacturers to take that journey of what is called 4IR in the UK (4th
industrial revolution) .

End January 2017 the Industrial Digitalisation Review team in the UK was asked by the UK government to
draft a document to support the government’s industrial strategy. It resulted in the impressive Made
Smarter Review that has a strategy striving to put the country in a leadership position in industrial
digitalization.

Made Smarter Review

More on Industry 4.0

The EU and Industry 4.0: boosting manufacturing and industry transformation

In March 2017, the EU announced a series of initiatives to boost Industry 4.0 across the European
Union.

In this article we look at, among others, the spending plans, the several national initiatives in the EU and in
the UK and the creation of a European platform. Industry 4.0 initiatives are ubiquitous in EU member
states and beyond.

Industry 4.0 in the US and beyond: Industrial Internet

With a central role for the Industrial Internet of Things, US manufacturing giant GE (General
Electric) developed what it called the Industrial Internet.

Along with several other leading companies, universities, consulting firms and so forth the Industrial
Internet Consortium or IIC was launched. This large association includes many US organizations but also
companies from across the globe, including from Germany.
The Industrial Internet Consortium works together with other associations and with the Industry 4.0
Platform as both have similar goals. This includes collaborations on standards and frameworks. In this
article you learn more about Industrial Internet and the Consortium.

Japan: from Industry 4.0 to Society 5.0

Japan has its own industrial revolution and collaborates with the Industry 4.0 platform.

In March 2017, however, Japan announced a far-reaching program that aims to go far beyond the
transformation of manufacturing and any other industry. Society 5.0 includes Industry 4.0 but touches upon
Japanese society in the broadest possible sense, including culture, legislation and even philosophy.

Industry 4.0 across the globe: gaps in Industry 4.0 readiness and the Industrie 4.0 Maturity Index

An overview of research, conducted in 2015, about the state of Industry 4.0 across the globe.

In this article we look at the research’s findings, which cover China, the US, the UK, France and Germany,
as well as the Industrie 4.0 Maturity Index which builds upon it, was announced in 2016 and is available
since April 2017.

Industry 4.0: launch of a global network of Industrie 4.0 Digital Capability Centers

As Industry 4.0 is going global, initiatives are taken to enable manufacturers to learn about Industry
4.0 in a practical way.

One of those initiatives, launched in March 2017, is the creation of a network of so-called Digital
Capability Centers (DCCs) by McKinsey, academic institutions and companies such as PTC whereby a
realistic factory environment serves as a showcase and test environment. There are Industry 4.0 DCCs in
Germany, Singapore, China, the US and Italy.

Industrial data and analytics: the challenges and benefits, with an example

Just as in most other industries, data is ubiquitous in the industrial markets of Industry 4.0. One can
even wonder if Industry 4.0 isn’t all about data, in combination with analytics, artificial intelligence
and other technologies where relevant.

The problem with industrial data is that, just as is the case with other forms of data and information in any
area of information management, tends to reside in silos such as ERP and industrial control systems but
also in applications that really aren’t fit for an advanced use. More about the role of data and an example of
applying data, analytics and AI in the oil and gas industry.

Augmented reality and virtual reality in Industry 4.0

In bridging the digital and physical worlds, a range of technologies is used in Industry 4.0: from the
Internet of Things and cyber-physical systems to augmented reality.

Spending on virtual reality and augmented reality is expected to grow strongly through 2021. Where
discrete manufacturing and process manufacturing already account for a large part of AR/VR spending in
2017, the use cases of augmented reality in Industry 4.0 are evolving. On-site assembly and safety and
process manufacturing training are important use cases, yet maintenance will increasingly become key. On
top of that, applications such as prototyping, product design and simulations/test provide the case for
AR/VR in Industry 4.0 as hardware and software matures.

Top image: Shutterstock – Copyright: MNBB Studio – All other images are the property of their respective
mentioned owners. – Images used for first infographic – copyright: respectively elenabsl and Maxfarruh
All other images are the property of their respective mentioned owners.