Industry 4.0 check-in: 5 learnings from ongoing digital transformation initiatives

IoT Analytics has released a new analysis based on its Industrial IoT & Industry 4.0 Case Study Report 2023.

Key insights

• Digitalization has become essential for industrial companies worldwide, as IoT Analytics expects the industrial IoT market to reach $145 billion in 2023.
• The Industrial IoT & Industry 4.0 Case Studies Report 2023 examines 22 case studies, exploring project objectives, technologies deployed, lessons learned, challenges, and outcomes.
• This article highlights five learnings from the report: ERP upgrades often come first, cloud-native data storage and streaming are gaining traction, private 5G use cases are starting to deliver results, digitalization is becoming essential to sustainability, and the journey toward predictive maintenance continues.

Key quote

“Upon analyzing the case studies outlined in the report, it becomes evident that digitalization is a key catalyst driving technological progress in industrial settings. This includes the enhancement of ERP systems and the migration of data to cloud platforms equipped with real-time streaming capabilities. Furthermore, digitalization proves essential in harmonizing companies with their sustainability objectives. Strategies such as the implementation of predictive maintenance algorithms and the adoption of private industrial 5G use cases are leveraged to improve operational efficiency. Looking forward, the technological landscape is transforming with the rise of AI, poised to shape the future of manufacturing.” – Rajini Nair, Analyst at IoT Analytics

Digitalization has become crucial for manufacturers globally

Digitalization has become crucial for manufacturers operating in increasingly competitive environments. IoT Analytics estimates the industrial IoT market will reach $145 billion in 2023, with a CAGR of 17.9% through 2030, as more companies advance their digital transformation initiatives.

For many organizations, digitalization has already become a game changer:

• Mercedes has achieved 25% greater efficiency in S-Class assembly after optimizing its value chain and introducing innovative technologies at its Germany-based Factory 56 facility.
• TotalEnergies aims to generate $1.5 billion annually in savings through its digital solutions by 2025.
• Covestro improved efficiency and reduced unnecessary downtime by shifting from calendar-based to condition-based maintenance.

These are just some of the benefits highlighted in the Industrial IoT & Industry 4.0 Case Studies Report 2023. The report explores 22 recent industrial digital transformation case studies covering initiatives related to digital transformation, data architecture, predictive maintenance, AI, and industrial 5G.

Why case studies matter for digitalization journeys

Case studies from peers or companies in other industries are a valuable way to learn about digitalization, identify recurring challenges, develop a view of best practices, and understand how organizations manage to scale.

The 22 case studies in the report provide a broad range of manufacturing examples of current IIoT and Industry 4.0 projects, along with project objectives and key takeaways. IoT Analytics’ analysis of these takeaways surfaced five major trends in digital transformation journeys:

• ERP: An upgraded ERP is often the first step in digital transformation.
• Cloud: Cloud-native data storage and streaming are increasingly accepted.
• 5G: The first manufacturers have successfully implemented private 5G use cases.
• Sustainability: Digitalization is becoming a prerequisite for achieving sustainability objectives.
• Maintenance: The journey toward predictive maintenance and remote monitoring continues.

Learning 1: An upgraded ERP is often the first step to digital transformation

IoT Analytics found that many manufacturers prioritize upgrading their ERP systems before pursuing other digital transformation initiatives. Because ERP systems often act as the central nervous system of a business, a modern ERP helps connect different data sources, enabling departments to work from the same information, reduce errors, and improve efficiency.

Selected highlight: Celanese

In recent years, US-based chemical manufacturer Celanese acquired several businesses or divisions from other companies. Celanese had been operating on a legacy SAP ERP system, while the acquired assets relied on different legacy ERP environments, making cross-business integration difficult. Celanese’s global CIO, Sameer Purao, did not want the company investing in integrating new acquisitions into aging technology, making an ERP upgrade a necessary first step in a broader digital transformation plan.

“Our previous ERP system had been a backbone, but it was close to 20 years old. Given its age, we didn’t want to invest in transforming until we upgraded that piece first. The acquisitions underscored that it wouldn’t make sense to invest in integrating them into older technology, so we opted to upgrade.” — Sameer Purao, Senior Vice President and Global CIO, Celanese Corporation

In May 2023, Celanese announced completion of its upgrade to SAP S/4HANA. Since the company had acquired DuPont’s Mobility & Materials business just six months earlier, it quickly moved to upgrade that legacy ERP environment as well, with completion expected in the first half of 2024.

While Celanese’s transformation journey includes many other dimensions, the ERP upgrade created a stronger backbone for future digitalization initiatives. The company also benefited from improved visibility and collaboration, enhancing transparency, teamwork, and data access across the enterprise.

Learning 2: Cloud-native data storage and streaming are increasingly accepted

The cloud market nearly doubled between 2020 and 2022, growing from $109 billion to $206 billion, based on IoT Analytics’ analysis of global cloud projects. While the COVID-19 pandemic played a major role, large-scale enterprise digitalization efforts and strong SaaS adoption were also important growth drivers.

Cloud storage and data streaming allow companies to centralize and share data with a smaller operational footprint than on-premises servers, which come with infrastructure and maintenance costs. Moving these services to the cloud also enables organizations to scale without major capital investment in physical hardware.

Selected highlight: Michelin

In 2019, tire manufacturer Michelin began using Apache Kafka on-premises in its data centers to gain real-time insights and process data as continuous streams. However, as its operational footprint expanded, so did the resources required to maintain the solution. By Q4 2019, Michelin’s IT department had initiated a migration to the cloud, selecting Microsoft Azure as its cloud partner.

“One of the challenges with [streaming technology] Kafka was its operational complexity, especially as the footprint expanded across our organization. It’s a complex, distributed system, so we had to allocate a lot of our valuable technical resources and expertise to babysit it and keep it running.” — Olivier Jauze, now CTO of Experiences Business Line, Michelin

By 2021, Michelin had migrated its services to Confluent Cloud for Azure, a Kafka-based platform supporting its multi-cloud environment. The company then expanded into new use cases and migrated one of its most critical projects, online order management, to the cloud, replacing its on-premises orchestrator. By 2023, Michelin had extended its cloud-based event streaming architecture into supply chain management, customer services, manufacturing, and R&D.

Through its adoption of cloud-native data storage and streaming, Michelin achieved several benefits, including:

• Cost savings: An estimated 35% cost reduction compared to on-premises operations
• Improved uptime: 99.99% uptime

Learning 3: The first private 5G manufacturing use cases are succeeding

As 5G continues its public rollout globally, some manufacturers have successfully deployed private 5G networks to support new industrial use cases. While speed and latency are often cited as headline advantages, IoT Analytics found that improved reliability over Wi-Fi, stronger cybersecurity, and local data access are the main adoption drivers.

The research also found that some companies did not immediately deploy fully 5G-specific technology. Instead, many first implemented robust LTE-based solutions that could later be upgraded to 5G more easily once the technology matured or gained industrial approval.

Selected highlight: Airbus

To increase aircraft production and validation efficiency, Airbus partnered with Ericsson in 2021 to implement private industrial 5G networks at 11 aircraft assembly manufacturing sites in Europe. The deployment began with private 4G networks that either already offered 5G capabilities or could be upgraded seamlessly.

Airbus’ ambitions extend well beyond Europe. During a Q&A at the 5G Manufacturing Forum in November 2022, Hakim Achouri, 5G and IoT solutions expert for digital aviation at Airbus, noted: “Airbus is going way beyond 11 networks at 11 sites, expanding beyond its core European manufacturing bases in France and Germany, to also deploy private 5G in Canada, China, Spain, the UK, and the US.”

With its implementation of private 5G networks across production and assembly facilities, Airbus has realized several benefits:

• Support for advanced use cases: Including site surveillance, flight-to-ground data offloads, quality inspections, and automated guided vehicles (AGVs)
• Enhanced user experience: Greater speed, bandwidth, and reliability give employees access to more data, making operations smoother and more secure
• Scalability through reusability: By creating a repeatable deployment pattern, Airbus has been able to scale private 4G/5G networks across multiple sites with consistent performance

Learning 4: Digitalization is becoming a prerequisite for sustainability

IoT Analytics recently highlighted how companies are deploying digital twins to help achieve sustainability goals. More broadly, digitalization projects are helping companies monitor energy consumption, optimize resource usage, and reduce environmental impact in manufacturing.

This focus is reinforced by findings from IoT Analytics’ latest What CEOs Talked About report, where “sustainability” and related terms remained among the most frequently discussed themes in corporate boardrooms.

Selected highlight: TotalEnergies

TotalEnergies has publicly stated its ambition to achieve carbon neutrality by 2050. To support that objective, the company has used digital solutions to advance sustainability measures on its offshore platforms.

One example is the retrofit of flare network pipes with LoRaWAN-connected temperature sensors to detect gas leaks. Because hydrocarbon release changes pipe temperature significantly, operators can be alerted by email as soon as a temperature anomaly is detected. This not only helps reduce hydrocarbon emissions but also lowers product losses.

Learning 5: The journey toward predictive maintenance and remote monitoring continues

According to the Predictive Maintenance and Asset Performance Market Report 2023–2028, published in November 2023, the predictive maintenance market reached $5.5 billion in 2022. Several tailwinds support this growth, including labor shortages, energy efficiency initiatives, and the need to reduce CO2 emissions. But cost reduction remains one of the strongest drivers, as highlighted in the case studies report.

Equipment failure—especially during key operating hours—reduces productivity and adds repair costs. To minimize these risks, companies often rely on preventive maintenance procedures, such as time-based inspections or sensor-triggered interventions. However, time-based maintenance can be inefficient when equipment does not actually require servicing, and manual data collection remains labor-intensive.

Digital solutions allow companies to remotely monitor critical equipment and define intervention thresholds based on actual operating conditions, well before failure occurs.

Selected highlight: Battalion Oil Corp

US-based Battalion Oil Corp partnered with Novity to pilot a predictive maintenance solution designed to detect valve leaks in compressors and reduce unexpected downtime. Previously, Battalion relied on handheld devices to sporadically measure valve cap temperatures and identify gradual leaks. Although these checks were intended to happen daily, competing maintenance priorities often interrupted the process.

“Predictive automation is a game-changer for the oil and gas industry. By analyzing data in real-time and making accurate predictions about future events, drilling companies can optimize their operations to maximize efficiency, reduce costs, and improve safety. This technology has the potential to transform the way we do business and stay competitive in today’s market.” — John Smith, CEO of Oil and Gas Exploration Company

An early step in the solution involved using a crank angle sensor and pressure transducers. Because physical crank angle sensors are often among the most difficult and expensive sensors to install, engineers developed a virtual crank angle sensor based on physics-based and data-driven methods using pressure sensor data.

After validating that the rotational position calculated by the virtual sensor matched the output of physical sensors, engineers applied prognostic methods to the combined data from the virtual crank angle sensor and the physical pressure sensors. The result was the ability to predict gradual valve failures several weeks in advance—typically five to seven days before routine temperature checks would have detected a leak.

The digital transformation journey continues

The Industrial IoT & Industry 4.0 Case Studies Report 2023 goes beyond the five examples above and explores 18 additional case studies of ongoing digital transformation projects. While many companies are making meaningful progress, the road ahead remains long, particularly for manufacturers that still depend heavily on analog or paper-based processes. Even so, many organizations are already seeing measurable value, whether in the form of higher efficiency, improved resilience, or earlier fault detection.

Digitalization is no longer a nice-to-have for manufacturers. It has become a competitive necessity. That view is reflected in the market itself: according to IoT Analytics’ enterprise IoT market dashboard, the IIoT market reached approximately $145 billion in 2023 and is forecast to grow at a CAGR of 17.9% between 2023 and 2030.

Looking ahead, AI is becoming a major theme in industrial digital transformation. According to IoT Analytics’ ongoing What CEOs Talked About series, the topic and related terms attracted high and growing interest in boardrooms throughout 2023. IoT Analytics is also seeing a growing number of generative AI projects, including in industrial settings, and plans to continue tracking this evolution through future case studies and analysis.