PARIS—The global manufacturing industry could see between $519 billion and $685 billion in value-added revenue by 2020 through smart, connected devices, per a new report by Capgemini’s Digital Transformation Institute. The report, Digital Engineering: The New Growth Engine for Discrete Manufacturers, says that while the potential returns are significant, manufacturers need to invest in digital continuity and digital capabilities to benefit.
Manufacturers estimate that close to 50 percent of their products will be smart and connected by 2020, a 32 percentage point increase from 2014. Further, 18 percent say that they plan to stop manufacturing products altogether and move to a pure service-based business model. A move in this direction will make the shift to a service-based model a business imperative and will require enhanced capabilities.
“With the significant potential gains of smart, connected products and digital continuity predicted in the next two years, the requirement to invest in new technologies is too large for manufacturers to ignore," says Jean-Pierre Petit, head of digital manufacturing at Capgemini. "However, the road to getting there is a challenging one. Manufacturers must balance the priorities between sustaining their core businesses while investing in digital acceleration. They must make investments in digital skills, ecosystems, tools, roadmaps and new ways of working. It will be a lot of work, but for those that get it right, there is a sustainable leadership to gain.”
Manufacturers, meanwhile, have started refocusing their IT investments. Around 50% of manufacturers aim to spend more than 100 million euros in Product Lifecycle Management platforms and digital solutions in the next two years, while the proportion of IT budget earmarked for maintaining legacy systems has dropped significantly, from 76 percent in 2014 to 55 percent in 2017.