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Industry 4.0 Overview

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The convergence of integrated software, efficient hardware and modern networking infrastructure has created a new technology environment. Industry 4.0 sits at the convergence of these technologies and enables many industries that we actively track. Catalyst Investors’ history in software and TMT is quite relevant to Industry 4.0. We are excited to meet and partner with growth stage companies that are built as Industry 4.0 solutions from the ground up, as well as existing service businesses that can adopt Industry 4.0 technologies as an evolution.

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Industry 4.0 Overview

  1. 1. 1 INDUSTRY 4.0 OVERVIEW April 2020 Jackson Evans & Tyler Newton
  2. 2. 2 “…the fourth industrial revolution creates a world in which virtual and physical systems of manufacturing globally cooperate with each other in a flexible way…” - Klaus Schwab, Founder and Executive Chairman of the World Economic Forum WHAT IS INDUSTRY 4.0? Originally coined by the German Ministry of Education and Research to promote the digitization of manufacturing… The “Fourth Industrial Revolution” is characterized by the convergence of digital systems and networks within the physical realm of manufacturing 18th and 19th centuries Steam power and large scale manufacturing: coal, textiles, steel, railroads, mechanization of agriculture Early to mid 20th century Oil, electricity and mass production: autos, appliances, refrigeration and A/C, radio, TV, film, airplanes, chemicals, plastics, consumer packaged goods, department stores Late 20th to early 21st century Computers and mass customization: hardware, software, cable/satellite TV, wireless networks, single-purpose manufacturing robots, internet, digital media, global supply chains, big box stores, smart phones, ecommerce, social networks, gig economy, cloud computing Now to future Cyber-physical systems powered by cognitive computing: IoT, 5G, robotic process automation, prescriptive analytics, edge computing Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0 Catalyst’s take: While the concept was originally tied to manufacturing, many of the enabling technologies can be applied to automating service industries as well. The value is an increase in productivity for developed market labor whether in supply chain, real estate, healthcare, agriculture, manufacturing or other services.
  3. 3. 3 Industry 4.0 characterizes the convergence of modern technologies, creating an opportunity for all investors (technology, infrastructure, business services, etc.). We are focused on a subset of the industry where software layers that syndicate various devices, information and services will serve as the platform for which other firms can build their own offerings. MARKET OVERVIEW Source: Marketsandmarkets, The Manufacturer and Deloitte. Historical Growth Impediments Where Is It Relevant? Lack of universal standards Costly implementations with questionable ROI High power consumption and lack of bandwidth Data regulation and security concerns Adjacent Sectors $27BN Industrial and Manufacturing software spend in 2024 Applications driving spend include ERP software, product lifecycle management, inventory tracking, CRM systems, demand planning and manufacturing operations management Technologies expected to have the greatest impact on TMT organizations over the next 5 years $717 BN Smart Cities market by 2023 $20 BN North America IoT Middleware Market
  4. 4. 4 TECHNOLOGIES DRIVING INDUSTRY 4.0 Hardware Software Network & Connectivity Source: Forrester. Technology Enables • More bandwidth • Lower latency • Extended coverage • Edge computing • 5G • WiFi & Bluetooth • Towers Technology Enables • Size & power • Compatibility • Connectivity • Range • RFID • Cameras • Physical sensors • Batteries Technology Enables • Integrations • Speed • Functionality • Platforms • Cloud • APIs • Containers While Industry 4.0 may imply connections to manufacturing, we believe that it is also a more broad characterization of the ability of existing software and processes to permeate previously untapped industries and verticals by leveraging new, and improved, technologies (5G, edge computing, sensors, etc.) Building Blocks… …Driving New Technology Applications At Catalyst, we see opportunity in tech- enabled services that combine the above technologies into solutions that solve particular business problems or processes, both vertical and horizontal ▪ Connectivity: IoT platforms, network security, fog computing, big data and data lakes, AI / ML, predictive analytics, visual recognition ▪ Human-machine interfaces: AR / VR, natural language processing, wearables ▪ Smart machines: autonomy, advanced logistics, 3D printing, simulation, industrial IoT ▪ Advanced: nanotech, genomics, quantum computing, digital-biological interfaces
  5. 5. 5 IMPLICATIONS OF INDUSTRY 4.0 On Industries ▪ Modernize “lagging” industries: real estate, retail / supply chain, public sector, transportation and healthcare ▪ Importance of network security for highly connected systems ▪ Ongoing trade off between privacy and convenience – tech companies will continue to drive this shift ▪ Industry wide standards will make implementation and product selection easier for enterprises On Processes ▪ Automation of mundane functions: payments, accounting, payroll, ordering, inventory, scheduling, check out, delivery, loyalty, marketing, compliance, monitoring and maintenance and customer service ▪ Increase efficiency of resource utilization for both productive and environmental benefit ▪ Cloud-based software, APIs and databases will add flexibility and functionality across the board On Businesses ▪ May require more capital to get off the ground, but offset by multi-year and pre-paid agreements ▪ Business models may have a hardware component and “lumpy” sales in early days ▪ Recent trend of using cheap labor will be disrupted due to increased automation and rising minimum wages ▪ Ability to “re-shore” supply chains and speed up responsiveness to changes in demand / data Beyond the direct impact of Industry 4.0 on manufacturing and industrial operations, there will be ancillary effects throughout all industries, business processes and operations Customer care technology combining AI- driven chatbots, IVR, website content and analytics to interface with customers and provide solutions to their issues Automated check-in / check-out systems for retailers and restaurants that integrate with back-office applications MSSPs geared toward Industry 4.0 systems for certain verticals with expertise in sector compliance and regulation Automated logistics systems for specific supply chains, including warehouse automation, asset tracking and inventory management Solutions to modernize healthcare, government, transportation and education utilizing Industry 4.0 technologies Opportunities for Catalyst
  6. 6. 6 ILLUSTRATIVE PROVIDERS – OLD & NEW Back-end SoftwareApplications Supporting Technology Telecom Hardware IoT & ERP Platforms Data & Analytics Business & Security Tools Note: This is not meant to be an exhaustive list but rather a sample of a few industry players and sectors (horizontal & vertical). Monitoring & Tracking VerticalHorizontal Real Estate & Warehouse Retail & Supply Chain Manufacturing Urban Operations
  7. 7. 7 Please send any inquiries to jackson@catalyst.com

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