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Turning Possibility Into Productivity

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From self-driving cars to virtual assistants, Industry X.0 is using AI to turn ordinary products into industry game-changers.

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Turning Possibility Into Productivity

  1. 1. TURNING POSSIBILITY INTO PRODUCTIVITY.
  2. 2. From self-driving cars to virtual assistants, Industry X.0 is using AI to turn ordinary products into industry game-changers Copyright © 2018 Accenture. All rights reserved. 2
  3. 3. Copyright © 2018 Accenture. All rights reserved. ABOUT THERESEARCH 10% 50% 40% 11% 13% 76% 20% 10% 20% 10% 20% 20% More than $10bn $1bn+ to $10bn $500mn to $1bn Senior Vice President, Executive Vice President, or Vice President C-Level Executive Managing Director, Senior Director or Director Source: Accenture Research Industry X.0 Products, 2018 China France Germany US Japan Italy By revenue By designation By country We surveyed 500 industrial companies across six of the most industrialized geographies to understand their perspective on embedding AI in their products 3
  4. 4. 46% 51% 53% 55% 68% DIGITALDISRUPTIONIS DRIVINGDIGITALREINVENTION Q. To what extent do you expect your industry to be disrupted by the following in the next 3 years? (% of respondents saying “to a large/very large extent”) New innovations enabled by technology New competitors New regulation Social and cultural shifts Demographic shifts Copyright © 2018 Accenture. All rights reserved. 4Source: Accenture Research “DisruptabilityIndex” survey of 1,440 executivesconducted in April–May2017 Digital disruption threatens to replace around half of the companies in the current S&P 500 over the next 10 years
  5. 5. ANDAI-EMBEDDEDPRODUCTS AREKEYTODIGITALREINVENTION ANDTOP-LINEGROWTH Combining Artificial Intelligence (AI) with other powerful digital technologies creates smart products and services. The products and services evolve with their users in an intimate and continuous process of innovation and exchange. Our research shows almost all industrial players recognize the power of AI. Only a handful however have established such Industry X.0 products in the market at scale. Industry X.0 products and services are the key to higher stock market valuations. Copyright © 2018 Accenture. All rights reserved. 5
  6. 6. WHATDISTINGUISHES THEFAR-SIGHTEDFEW? They convince stakeholders of their belief in digital reinvention They clearly envisionthevalue it generates and its impact on the business They commit, from the top, to the success of their vision—executing a customer-centric future at pace and scale Copyright © 2018 Accenture. All rights reserved. 6
  7. 7. ASTAGGERING9OUTOF10COMPANIES AREALREADY DEVELOPINGINTELLIGENT PRODUCTSFROM SCRATCH 273 124 7290% 10% Developing Not developing Copyright © 2018 Accenture. All rights reserved. 7 Industrial and Electrical Equipment (IEE) and Heavy Equipment (HE) Automotive Consumer Durables RESPONDENTSCLUSTER Source: Accenture Research Industry X.0 Products, 2018
  8. 8. BUTDATA QUALITY ANDCYBERSECURITY LOOM LARGEAMONG THECHALLENGES FACEDBYINDUSTRIALS Source: Accenture Research Industry X.0 Products, 2018 11% 33% 35% 36% 37% 39% 40% 45% 45% 51%Data quality Data/cyber security Making vs partnering towards developing an AI-embedded product/service Data sharing/IP protection Customer receptiveness Defining AI algorithm/code Human–machine interaction complexity Regulations Job loss fear among employees Others Foundational challenges Copyright © 2018 Accenture. All rights reserved. 8
  9. 9. ORCHESTRATING THEECOSYSTEM ISKEY Most industrial players are leveraging only their immediate ecosystem, rather than an expanded network of start-ups, suppliers, customers and academic institutions that can complement and strengthen their existing capabilities. Copyright © 2018 Accenture. All rights reserved. 9
  10. 10. THEJOURNEY Copyright © 2018 Accenture. All rights reserved. 10
  11. 11. Copyright © 2018 Accenture. All rights reserved. 11 TOSUCCEED,OUR RESEARCH DEFINESA FOUR-STAGE JOURNEY TOEMBARK ON Believe Digital reinvention starts with conviction. Companies need to really believe in the power of AI to shape the future of their products and businesses, and to bring key stakeholders with them. The good news is that nearly 70 percent display such conviction. Envision When it comes to transforming conviction into a commercially viable vision, however, only 16 percent of survey respondents qualify. In many cases, it’s the CEO who puts the data-driven stake in the ground, authorizing top teams to start developing the investment and ecosystem strategies to acquire, process and secure the data needed to drive maximum value from AI. Commit Armed with a robust vision and data-driven strategy, the next step is to commit appropriate management and financial resources to two critical areas: gaining the skills needed to ensure frictionless integration of new IT with legacy infrastructures; and shifting elements of the business model to embed AI. Just 5 percent reach this stage. Execute Only 2 percent of survey respondents achieve the scale they need to drive market value from their digitally reinvented products. They do so by working with ecosystem partners to identify, in granular detail, the AI components they want to combine with other digital technologies, now and in the future, as part of their customer value proposition.
  12. 12. BELIEFISNOTTHEISSUE Copyright © 2018 Accenture. All rights reserved. 12 Most know they need to change Many industrial players struggle to realize their AI dreams Only 24% recognize that digital reinvention drives top–as well as bottom-line growth 24%
  13. 13. 68% 16% 5% 2% YETONLY TWO PERCENTOF THE500 COMPANIES SURVEYED ACTUALLY EXECUTEONTHEIRVISION Industry Cluster Number of Respondents Believe Believe & Envision Believe, Envision & Commit Believe, Envision, Commit & Execute Industrial & Electrical Equipment (IEE) & Heavy Equipment (HE) 295 67% 14% 3% 1% Automotive 130 63% 19% 9% 5% Consumer Durables 75 83% 19% 7% 1% Believe Believe & Envision Believe, Envision & Commit Believe, Envision, Commit & Execute Source: Accenture Research Industry X.0 Products, 2018Copyright © 2018 Accenture. All rights reserved. 13
  14. 14. COMPANIESSUCCESSFULLYEXECUTING ONTHEIRCOMMITMENTTOEMBEDAIINTHEIR PRODUCTSDISPLAYUNIQUEATTRIBUTES Such companies build business models with a lifecycle perspective. They are keen to drive below and above the line value for their customers… …to win their loyalty… Analytics …by pivoting to a mix of AI technologies best suited to drive customer goals… Natural language processing Robotics process automation Customer loyalty Insights on product and service usage Cost reduction After-sales services to customers Sources of generating profitable revenue Customer value proposition Increased safety Smart solutions & services Predictive maintenance Data analytics …and building the necessary digital skills System integration Creating data lakes Next 3 yearsCurrent Source: Accenture Research Industry X.0 Products, 2018Copyright © 2018 Accenture. All rights reserved. 14 64% 64% 55% 82% 82% 64% 82% 82% 73% 91% 73% 73% 45% 36% 45% 64% 64% 45%
  15. 15. INDUSTRIESAND GEOGRAPHIES EXHIBITUNIQUE CHARACTERISTICS All Industrials recognize the imperative of digital reinvention. But thanks to such structural differences as the composition of their product portfolios and how close they are to the end user, each industry cluster takes a somewhat different approach to the digital reinvention journey. Copyright © 2018 Accenture. All rights reserved. 15
  16. 16. Purpose: to cut cost (78%) and drive revenue (84%) Technologies to combine with AI: Industrial Internet of Things (IIoT) platform (62%); Mobile computing (64%) Challenges: the complex nature of the sector and the missing layer between customer-facing and innovation/product development (64%) Purpose: to boost revenue (88%) and gain insight on product usage (70%) Technologies to combine with AI: Big data analytics for predictive maintenance (90% of truck makers; 70% of OEMs) Challenges: Data/cyber security (70% of truck makers); data quality (55% of OEMs) Automotive Industrial, Electrical and Heavy Equipment Manufacturers Consumer Durables Purpose: to boost revenue (75%) and gain customer loyalty (71%) Technologies to combine with AI: Mobile computing (69%) and big data analytics (67%) Challenges: data quality (61%) and customer receptiveness (55%) HOWINDUSTRIES DIFFER Copyright © 2018 Accenture. All rights reserved. 16
  17. 17. Asian respondents are relatively more bullish on the fact that their company’s product and service portfolio will contain AI 84% of US respondents are concerned their businesses will struggle against competition by not integrating AI in the customer experience. (vs. only 30% in Italy and 32% in Germany) US Italy Germany 84% 30% 32% 45% of Chinese and 40% of Japanese companies anticipate that 21-30% of their revenues will come from AI embedded products and services (vs. only 13% respondents of US) Chinese Japanese 45% 40% HOWGEOGRAPHIESDIFFER Copyright © 2018 Accenture. All rights reserved. 17
  18. 18. TRAILBLAZERS OFTHEFOUR- STAGEJOURNEY The stories of those in the lead clearly confirm the critical importance of turning vision into commitment, as well as the power of a collaborative and combinatorial approach. Copyright © 2018 Accenture. All rights reserved. 18
  19. 19. FAURECIA CO-CREATINGAN INDUSTRYX.0PRODUCT BELIEVE The next generation of cars will be connected and intuitive, consistently reflecting the driver’s preferences and adapting architecture and functionality. “The cockpit intelligent platform, powered by AI, is the centerpiece of our future life-on-board products and services strategy.” ENVISION Faurecia aims to become the leader in the integration of the technology “bricks” that populate the Intelligent Cockpit. It plans to accelerate the transformation of its operations and develop new business models and user experiences for the cockpit. COMMIT Patrick Koller, Faurecia CEO, is the key advocate of the Intelligent Cockpit and his entire top team has visibility to this initiative and participates in various capacities. Renewed investment in in-house R&D is deepening and expanding technology expertise, and the company is actively scouting for external expertise. EXECUTE Faurecia is pursuing collaborations and partnerships to identify and combine appropriate technologies, while Faurecia Ventures is investing in start-ups. Sources: Faurecia innovation, Connected and autonomous vehicles, Intelligent Cockpit video and Faurecia corporate news Copyright © 2018 Accenture. All rights reserved. 19
  20. 20. SCHNEIDER ELECTRIC INNOVATING INDUSTRYX.0 SERVICES BELIEVE Connecting products and making them smarter is Schneider’s top priority. Its second core belief is closing the loop on data—turning data into business-centric insights and action. ENVISION Schneider aims to cut the time from product ideation to market by 80 percent by delivering innovation at every level and reinventing the customer experience with new digital services. COMMIT Digitization is at the heart of Schneider’s DNA. Since 2017, Chief Digital Officer, Hervé Coureil, has been advancing the company’s digital strategy and accelerating its digital transformation. EXECUTE Schneider has partnered with others to deliver its new digital services, and combines multiple digital technologies (including cloud, analytics and AI) to scale up the value to customers. In 2017 the company commercialized more than 40 digital service offerings and has more than 20 in development for 2018. Copyright © 2018 Accenture. All rights reserved. 20 Sources: CNBC Interview with Jean-Pascal Tricoire, Driving digital transformation with IoT innovation, CMOs' Evolving Analytics Imperative and AI: The Answer to the IoT Data Apocalypse
  21. 21. HOWDOYOUSTART YOURJOURNEY? We propose a set of specific and concrete actions for industrial companies to take at each stage of their digital reinvention journey. Copyright © 2018 Accenture. All rights reserved. 21
  22. 22. THEC-SUITEAGENDA FOR THENEXT100DAYS Copyright © 2018 Accenture. All rights reserved. 22 Define the Digitally (re)invented product you want to build Identify the value to be built and owned and identify the impact on both top and bottom lines ENVISION Articulate your belief in digital reinvention of the product and share it with stakeholders BELIEVE Commit senior management to securingstrategic and tactical partnerships that create value and mitigate risk COMMIT Execute innovation and ecosystem- driven business models EXECUTE
  23. 23. THANKYOU For more details visit: AI Turns OrdinaryProductsinto Industry Game-Changers

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