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STEEP analysis as a tool for building technology roadmaps

Conference Paper · October 2011

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 STEEP analysis as a tool for building
technology roadmaps
Hadrien SZIGETI1 Mourad MESSAADIA2 Anirban MAJUMDAR3 Benoit Eynard2
1
DELMIA Dassault Systèmes, 10 rue Marcel Dassault - 78946 Velizy Villacoublay France,
Tel: +33 1 6162 6162, Email: hadrien.szigeti@3ds.com
2
Université Technologique de Compiègne, Rue R. Couttolenc - 60200 Compiègne France,
Tel: +33 3 4423 4423, Email: mmessaad@utc.fr ; eynardbe@utc.fr
3
SAP Research Center Dresden, Chemnitzer Strasse 48, 01187 Dresden, Germany
Tel. +49/351/4811-6163, Email: anirban.majumdar@sap.com

Abstract: The global trends in customer demands, products usage, society and
geopolitics are transforming the way our world will produce and consume goods and
services in the near future. STEEP (Societal, Technological, Economical,
Environmental, and Political) analysis looks at the relevant parts of the global trends
for manufacturing and applies proven methodologies to evaluate the importance of
technology research topics for specific scenarios. STEEP analysis has been adapted
here in the context of a governmental research program. This approach allows us to
identify several extreme scenarios that will impact the industry landscape in the
coming years, and rank the key enabling ICT technologies that will have the most
impact on European competitiveness. Another major outcome of this report is a
framework that can be used to evaluate any manufacturing vision & strategy for the
future. The outcome of STEEP analysis provides a guideline for ActionPlanT vision
and roadmap development.

1. Introduction
The global trends in customer demands, products usage, society and geopolitics are
transforming the way our world will produce and consume goods and services in the near
future. Anticipating factors that may influence this vision is crucial to shape a competitive
European industry. Based on numerous work provided by industrials and research
laboratories we have been able to identify and prioritize a short list of global trends that
affect how customers will buy products in the future and which manufacturing research
topics should continue to receive patronage from governments. STEEP (Societal,
Technological, Economical, Environmental, and Political) analysis looks at the relevant
parts of the global trends for manufacturing and applies proven methodologies to evaluate
the importance of technology research topics for scenario developed from a subset of the
global trends. STEEP analysis furthermore influences development of roadmaps by
justifying the inclusion (omission) of research topics which do have (not have) a direct
bearing on changing landscapes of the future.

It is to be noted that while STEEP analysis has been a topic of extensive research in the
field of strategy consulting and marketing, it has been adapted here in the context of a
governmental research program. This approach allowed us to identify and validate a
number of societal, technological, economic, environmental, and politico-legal changes that
impact the competitiveness of European industry. This STEEP analysis cannot predict the
future, but can determine which external influencers may have impact on the priorities in
our roadmap. In this document we identify several extreme scenarios that will impact the
industry landscape in the coming years, and we identify and rank the key enabling ICT
technologies that will have the most impact on European competitiveness. Another major
outcome of this report is a framework that can be used to evaluate any manufacturing vision
& strategy for the future.

The outcome of STEEP analysis provides a guideline for ActionPlanT vision development
(which is the final output of Work Package 2) and to ActionPlanT roadmap development.
The vision document takes the result of STEEP analysis, to transform it into a short number
of key success factors or Ambitions that, industries should adopt in the IT domain to
increase their competitiveness. In the roadmap development process, STEEP result is used
to identify research topics that are worth considering in the next European framework
programme or FP8.

2. Background
Professional consulting organizations1 defines STEEP analysis as an “audit of an
organization’s environmental influences with the purpose of using this information to guide
strategic decision-making”. The reason STEEP analysis is considered a powerful tool is
because it helps in obtaining a comprehensive view of an organization’s current
environment and future threats with the underlying assumption that if an organization is
able to identify its shortcomings and assess all factors that influence its business landscape,
it will be “better placed than its competitors to respond to changes”. The result of STEEP
analysis is a document that aids the management of a company in making decisions about
growth forecasts, new product opportunities, and new (unexploited) markets. The S-T-E-E-
P alphabets (‘P’ interchangeable with ‘L’) correspond to the categories of external
influencing factors. Examples are provided below, taken from CPID’s complete template
[2]:

Social factors • Consumer attitudes and opinions. Buying patterns

Technological factors
Economic factors
Ecological / Environmental
factors
Political (and Legal) factors
• Demographics (age, gender, race, family size)
• Education level
• Maturity of innovations such as Internet, transportation or bio-
tech & genetics
• New ways of learning, collaborating and socializing
• Intellectual property issues
• Home and overseas economies and trends
• Taxation changes
• Job growth/unemployment
• Ecological and environmental issues
• organizational culture (management style, staff attitude and
engagement) toward environment
• Market and customer values toward environment
• Funding, grants and initiatives
• Trading policies
• Governmental leadership
• (Legal) Regulatory bodies and processes
• (Legal) Environmental regulations
• (Legal) Employment law

1
The Chartered Institute of Personnel and Development
 2.1 Mapping Global Megatrends to STEEP factors

SOER 2010 Report (European environment — state and outlook) [3] defines 11
megatrends that have a direct bearing on Europe. The report directly binds Europe to the
rest of the world through the STEEP factors and states that while Europe contributes to
global environmental decline through its dependence on fossil fuels and minerals; it also
gets directly affected through global environmental changes and increasingly through
global socio-economic pressures. While the SOER 2010 report is much broader in scope
and describes the impact of megatrends on the “European environment” in general,
ActionPlanT focuses on a subset of megatrends that impact European manufacturing. Key
challenges for manufacturing frequently found in referenced roadmaps are listed in 1[4]:

STEEP Examples of key challenges for manufacturing

Overpopulation, employment, ageing population, public health for
Social all, poverty and social exclusion…
Technological Scarcity of strategic raw materials, and security of energy supply…
Economic Globalisation of the economy…
Climate change, loss of bio-diversity, increasing waste volumes, soil
Environmental loss and transport congestion…
Political Fragmented regulation…

Table 1: Some key challenges for manufacturing from EFFRA roadmap

2.2 ICT for Manufacturing

Let us consider the manufacturing domain and focus on how “ICT for Manufacturing” can
help manufacturing address some of the key challenges and become more competitive.
Figure 1: “ICT for Manufacturing” influence on manufacturing below depicts how
requirements of the industries are turned into ICT Topics, or “ICT for manufacturing
challenges” that have to be researched in order to produce new ICT solutions for
manufacturing.

Figure 1: “ICT for Manufacturing” influence on manufacturing

For instance industry requirements for more manufacturing flexibility are turned into ICT
Topics about global collaboration, smart factories, machines architecture, advanced
robotics, on-demand logistics networks, reconfigurable manufacturing systems, self-aware
production machines or knowledge based production systems.
While our ability to develop novel IT technologies is not heavily dependent on changes in
STEEP environments, the varying levels of adoption of the IT technologies for
manufacturing solutions by the different industries do get influenced by the scenarios
analysed by our STEEP analysis. The speed at which an industry can be modernized is
driven by external factors such as the demand changes, the readiness of employees to
accept modernization, the urgency of sustainable improvements, political will etc. The goal
of the STEEP analysis described in this document is to provide the key factors that will
influence the adoption of ICT for Manufacturing by any industry.

3. STEEP Analysis and Model

Based on the list of clusters of R&D topics provided by state-of-the-art analysis of over 35
roadmaps, we first identified which/how different factors impacted the R&D topics in a
positive or a negative way. These identified factors were further streamlined and grouped
into a set of 25 STEEP Factors, each taxonomized into distinct Factor Clusters (Social,
Technological, Environmental, Economical, and Political/Legal). This set of finalized
STEEP Factors is described in next section. The final step of the analysis consisted of
mapping these factors to ICT topics (distinguished by their topic codes) which were
presented to the ActionPlanT experts in the form of scenarios for evaluation and ranking
(described in Part 3).The STEEP Model

Here we approach STEEP analysis and its subsequent validation with ActionPlanT experts
in a formalized way through presentation of the STEEP Model (Figure 2).

Figure 2: STEEP Model

The STEEP Analysis class represents the analytical method described in this section. The
result of this analysis generates STEEP Impact classes. Each STEEP Impact class contains
a “comment” attribute which indicates whether the particular topic is worth researching. At
the beginning of STEEP analysis we had more than 150 STEEP impacts. These were
streamlined and grouped into a set of 25 STEEP Factors. The list of these 25 STEEP
Factors is presented in subsection 2.3
Scenario classes describe hypotheses about certain future situations in European. A
scenario is constructed by mixing different STEEP Factors each of which can be favourable
or unfavourable. A Scenario class gives a Factor Value to each of the 25 STEEP Factors.
Each Factor Value class has an integer numerical value attribute associated with it in
addition to a comment attribute. These values can range from 1 (extremely negative) to 4
(positive outlook). Numbers 2 and 3 describe less drastic possibilities.

The goal of STEEP Model Matrix class is to classify different ICT topics for a given
scenario by combining different Factor Values. The method of this class will be detailed in
Section 3.

4. STEEP Scenarios

In this section we present the results of evaluation of the different STEEP scenarios. As
outlined in the previous section, each scenario consists of a combination of favourable as
well as unfavourable STEEP Factors. During the first STEEP Knowledge Café in Dresden,
such scenarios were presented to the ActionPlanT experts and comments as well as factor
values were collected.

4.1 Scenario Building

Our trial of the STEEP analysis during the initial months of the project resulted in a set of
seven key questions. Each key question groups 1, 2 or 3 of the previously mentioned
STEEP factors. Three key questions (workers trends, consumption trends and cost
reduction trends) are linked with the intensity of the current economic crisis and its social
impacts. The other four key questions (technology, economics, sustainability and politics)
are linked with the willingness of European industries to become more competitive by not
only reducing production costs but by also accelerating their modernization efforts. These 7
key questions were used as building blocks to created extreme scenarios. In Figure 3, we
illustrate a scenario which reflects both a continuing crisis and an accelerated industrial
modernization.

If the economic crisis continues, more jobs will be relocated. It implies that consumers
cannot afford to buy high-value products any longer. Consequently productivity stays as
the most important driver for industrial change instead of innovation and quality. This
forms a cycle as represented in the left part of the figure. Simultaneously, the EU may
aggressively fund SMEs with the aim of getting an accelerated industrial modernization.
The cycle could be counterbalanced due to, amongst others, worldwide regulations
favouring the sale of European goods.
 Figure 3: "Voluntary" modernization scenario

Similarly we can represent the opposite scenario with Europe successfully coming out of
crisis yet failing to modernize its industries (illustrated in Figure 4).

If Europe can successfully come out of the crisis, relocation of jobs should be possible with
workers open to new ways of executing tasks. As a consequence, the consumption of safe
and quality goods will be encouraged which in turn will lead to more innovative R&D.
However, modernization can still fail because of inadequate political and economical
initiatives by the European governments (with focus shifting on to “other things” as soon as
the crisis is over). So, even though some social, economic, and technological factors favour
modernization, inadequate political/legal measures could deter it. In such a scenario, the
worldwide market share of European industrial goods and services may rapidly decline.

E6

E7

P10
E5:

P11

Figure 4: "Stuck in the Crisis” scenario

After designing scenarios from key questions we can represent our four scenarios along
two orthogonal axes; one for the crisis intensity and the other for the speed of industrial
modernization. Depending on these two axes we have four extreme situations: Voluntary
Modernization, Most Favourable Environment, Least Favourable Environment, and Stuck
in the crisis. These are represented in Figure 5 below.
 Accelerated modernization of industry

Modernization (+)
Most
Voluntary
Favorable
Modernization
Environment

Crisis Europe
continues (-) Crisis intensity (+) spirals out of
or expands crisis

(-) Industry
Least
Stuck in the
Favorable
crisis
Environment

Failure of modernization politics

Figure 5: Extreme Scenarios

5. Scenario Validation
Reality is more diverse than these four illustrative extreme scenarios. In order to validate
our STEEP model, we took the help of ActionPlanT experts at the first workshop in
Dresden. At the workshop, experts were first presented with different “contrasted
scenarios” composed of different STEEP Factors, and built based on design of experiment
theory. They were asked to evaluate the impact of each STEEP factor in their specific
scenario. Once factors have been evaluated, we created a “STEEP model Matrix” based on
their comments. This matrix is presented in Part 2 and used in Part 3 to evaluate the
importance of research clusters in each of our extreme scenarios. This evaluation gives us a
good measurement of the sensitivity of each cluster of topics in the STEEP environment.

Each contrasted scenario is a fictive scenario composed of 10 STEEP factors, five positive
factors – called Opportunities – and five negative factors – called Threat – chosen with
an ad-hoc distribution, so that the set of all scenarios cover as many cases as possible. As an
illustration, we present our third scenario in the following:
 Manufacturing companies have totally reorganized their supplier networks &
operations model in order to be reactive to demand changes, even if much progress is
needed to detect new consumer trends and develop faster innovative product and
services. Regarding ease of use of manufacturing systems and sustainability efforts,
European companies are lagging behind.

In 5 years from now the current economic crisis will be behind us. Consumers are now
sensitive to innovative highly targeted products over regular shopping of low-cost standard
products (S2.1), so that manufacturing companies have totally reorganized their
supplier network & operations model to be reactive to demand changes (E6.2). As a
result they are investing strongly in ICT and new B2B services enabling last minute
ordering or innovative pricing policies (E7.3) New production technologies are used in full
scale production to gain competitive advantage (T4.2), and in particular to track production
details of all goods manufactured in Europe in order to implement the new traceability
regulations and defeat increasing counterfeit (P11.2). However manufacturing companies
could not at the same time also focus on sustainability issues so they are lagging behind
regarding environment-friendly production systems (EN9.2), and in particular regarding
minimizing their energy costs (T4.1). Very few efforts are also required regarding ease
of use of manufacturing ICT solutions since workers are not changing job frequently and are
used to current production systems (S1.3). Eventually many progress are needed also to
detect new consumer trends and develop faster innovative product and services (E6.1)

Example of a scenario provided to experts for validation exercise (Scenario 3)

We simulated five contrasted scenarios similar to Scenario 3 for the first ActionPlanT
workshop in Dresden. Each scenario is used by two different expert teams.

Table 2: Number of experts comments per team and per STEEP factor

Considering the number of experts, we chose to make ten teams grouped by pairs. Each pair
received the same scenario. For instance team 1 and team 2 worked on Scenario 1. Table 2
above contains comments given by the experts for each STEEP factor. The higher number
of comments, the darker the colour of the cell. We then ran a “blind test” with experts to
validate our mapping between the factors and the ICT topics. Based on the feedback
gathered from experts, we compiled 427 additional comments which were used in our final
model. Experts’ comments were grouped in a new table containing the total number of
comments for each association of STEEP factors with a cluster of topics. We retained only
associations between a factor and a cluster that were done at least by two expert teams. We
were then able to highlight significant factors for every cluster, and vice-versa.
 Table 3: Example of STEEP analysis of a scenario (collapsed table)

6. Analysis of the three extreme scenarios

The result of this analysis led to 3 groups of ICT topics corresponding to 3 extreme
scenarios:
o In the scenario called Stuck in the Crisis, favoured topics are those that require a
better socio-economic situation, but are relatively easy to adopt by industry decision
makers and require a limited amount of leadership in transforming manufacturing
organizations
o In the scenario called Voluntary Modernization, favoured topics are those that are
rather independent of the exit of economic crisis, but not easy to adopt by industry
decision makers because they depend on their will of modernization, and their
leadership in transforming manufacturing organizations
o Eventually in a scenario such as Most Favourable Environment, we consider Mixed
topics that require both a moderated improvement of the economy and a moderated
will of modernization from industry decision make
The 3 scenarios can be studied using tables similar to Table 3 above (not presented
here); Numbers between brackets reference the team of experts which provided
each comment.

6.1 Scenario 1 – Stuck in the crisis

Crisis is behind us. Consumers’ purchase power is increasing and workers agree with
necessary modernization of production processes. However companies do not invest
sufficiently to modernize their production systems, continue to focus on cost reduction
and fail to meet innovation or green challenges.

High-Performance Zero Defect: Assuming that more and more consumers will be able to
seek higher quality products and companies will be able to invest in new cost-efficient
business models, production systems, “simulation systems and other software topics”,
research for better quality monitoring and proactive process improvement will be
required, as well as “advanced interaction systems to reduce machinery & robots operation
learning time” [7]. “Consumers will be willing to pay for high-quality products. As a
reaction companies will invest in proactive quality monitoring leading to zero-defect
systems”. [4] Additionally, as market for modern production assets with new high-tech
efficient ICT solutions is expected to develop significantly, research for development of a
new generation of knowledge-based self-learning systems will be required. “In an
attempt to modernize the industry, companies will move toward the objective of zero-defect.
There will be a bias towards increasingly intelligent systems, thus promoting research and
progress on knowledge-based systems with self-learning capabilities.” [4]

Sustainable Social Well-Being: Because of increasing rate of change in manufacturing

organizations, in order to reduce workers stress and facilitate turnover, research on
adaptive and responsive human machine interface as well as new human robot
interactive cooperation in advanced factory environments is required. “Fast learning
curve is required from employees, especially to allow employees to co-operate easily with
robots, and manage resistance to change in working practices.”[2,3,7] As a matter of fact
the later topic is dependent on the level of governmental funding in favour of new
automation systems. The same trend of increased rate of change also requires more research
on the new human centred production site, which includes “methodologies for enhancing
flexible smart automation while maintaining a level of employment with highly satisfied
and highly skilled workers, and guarantee an efficient transition from current to future
situations in relation to the definition of future worker skills” (EFFRA Roadmap). This
topic will also require the wide acceptance of workers for electronic work tracking in
factories in order to optimized work based on real-time data. “Ability to measure human
activity in the factory is required to build a factory around them, blend flexible automation
with skilled people. But ICT is not the only factor affecting this case.” [2, 3, 6, 7, 8, 10]

6.2 Scenario 2 – Voluntary modernization

Manufacturing companies have totally reorganized their supplier networks &

operations model in order to be reactive to demand changes and will focus on
innovation, quality, safety and traceability. Regarding ease of use of manufacturing
systems, European companies are lagging behind. Moreover, workers show some
resistance and consumers are looking for low cost products. SMEs are generously
supported by government programs.

Sustainable Economic Growth topics: The general trend of energy costs combined with the
increasing demand for smart sustainable products creates a need for more sustainable
production assets, and in particular to optimize energy costs, predictive maintenance
(“maintenance contributes to less energy consumption”), [2] extended lifetime and end of
life management. Additionally the trend to track electronically more work in factories and
optimized work based on real-time data could increase the importance of sustainable
decision support methodologies relying on virtual models (also known as Manufacturing
Intelligence) allowing constant optimization of environmental performance and assets
lifetime, monitoring systems, risk simulation tools and ease of production assets
reconfiguration.

High Performance Simulation: On the one hand, increased demand for smart (low energy
consumption…) and safe products, along with the will of manufacturing companies to
optimize energy costs of their production systems requires advanced research in the field of
reconfigurable manufacturing systems designed for healthy, green and safe products.
"Consumers have to be willing to pay the extra value instead of low cost basic product.”
[4,6,9] On the other hand increased usage of data collection in factories along with
development of manufacturing technology standards will push to develop knowledge
based tools for process planning, integrated shop-floor simulation & other software
supporting distributed engineering, manufacturing decisions made on virtual models
(“design for safety and environmental performance”) [1,4,6,7,9] and “plug and play”
manufacturing data exchange between partners (“more exchange of information = more
knowledge”) [9].

Sustainable Environmental Friendliness: Based on the increasing consumer preference for

environment friendly product, the increase of energy costs and the push to consider
environmental impact of production processes, there is a need to consider the topic of high
efficiency and near to zero emissions in manufacturing processes replacing current
production systems, “increasing environmental performance and improving life-cycle
management”. [1,7] The impact of this research on industry competitiveness is also
dependent on the level of funding policies because it “requires investment in manufacturing
equipment and tools, and assumes that that governments will fund societal targets” [1,6,9]

6.3 Scenario 3 - Most Favourable Environment

2015: The most favourable environment happens. Manufacturing companies can

focus on innovation, quality, safety, traceability, green production assets and the
emerging market for durable and easy to recycle goods. Priorities are the same for all
available investments.

Smart Factory: ICT for agile manufacturing and customisation including the “deployment
of large scale testing and validation of hybrid production systems based on improved
robotics and automation technology for cooperative task between humans and robotics”
[7].

Virtual Factory: ICT for value creation from networked manufacturing and logistics,
including “integrated product / services” [7].

Digital Factories: ICT that facilitates collaboration between product designers, process
engineers and manufacturing teams including the “development of risk analysis tools
supporting investment, operation or maintenance decisions” [7].

7. Conclusion
This STEEP analysis provides a guideline to ActionPlanT vision document and to
ActionPlanT roadmap. The vision document takes the result of STEEP analysis, to
transform it into a short number of key success factors or Ambitions that industries should
adopt in the IT domain to increase their competitiveness. Specific novel IT paradigms are
developed that aid in combating manufacturing challenges.

STEEP Model is also used to help the prioritization of research topics in the ActionPlanT
roadmap. The extreme scenarios (scenarios 1 and 2) discussed in this article give important
feedback about which clusters of topics are more important than others. In the roadmap, the
STEEP results will be combined with TRL to identify specific research topics that are
worth considering in the next European framework programme.

Scenarios developed in this document are simulations of what the future could look like in
Europe. The value of the STEEP model is more in the ability to evaluate any future
manufacturing vision & strategy provided to the commission. By answering our scenario
 related questions on workers, target market, etc., the STEEP model helps in determining
how ICT can contribute to solving specific manufacturing challenges.

We expect this STEEP model to be extended with time and become the basis for building a
unique reference system that stores all visions and strategies under a comparable format.
This extension will require an IT system implementing the model of figure 2 to be
manageable, for instance a web portal allowing the edition of clusters, STEEP factors,
weights and comments, and allowing the test of new scenarios. We hope it will simplify the
task of those who have to compare and merge many roadmaps into a single program or
more generally run strategy seminars in large companies. Our model could also allow
steering a research program / strategy plan, and evaluating results. To go further in that
direction we strongly recommend augmenting this STEEP Model with time, especially in
two open directions:

• Consider industry / business unit specificities: for instance in our project we only had
time to consider manufacturing as a whole, while an industry per industry analysis
would be a possible improvement. Similarly a strategy plan would benefit from
considering the STEEP analysis business unit by business unit.

• Complete STEEP analysis with other standard strategic diagnosis tools, in particular
considering stakeholders strengths and weaknesses, and analyse their ability to execute
a defined strategy

References
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Stanford-Smith and Enrica Chiozza (Eds.), ISBN 1 58603 205 4. IOS Press, Amsterdam, 2001, pp. 3-7.

[2] M. Morrison. PEST/ PESTLE Analysis Tool -History and Templates. Retrieved from
http://rapidbi.com/created/the-pestle-analysis-tool/.
[3] European Environment Agency (2010, November 28). SOER_2010_GLOBAL_MEGATRENDS.
Retrieved from http://www.eea.europa.eu/soer/europe-and-the-world/megatrends.

[4] European Commission, FACTORIES OF THE FUTURE PPP – STRATEGIC MULTI-ANNUAL

ROADMAP. Prepared by Ad-hoc Industrial Advisory Group, ISBN 978 92 79 15227 6. Publications Office
of the European Union, Luxembourg, 2010.

[5] French Ministry of Economy, Finance and Industry. (2011, April) Key Technologies 2015: 85 key
technologies in seven economic sectors.
Retrieved from http://www.industrie.gouv.fr/tc2015/index.php.

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