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implemented a significant Industry 4.0 pilot. This is an important insight into the current rate of adoption, since many manufacturers start their Industry 4.0 journey by piloting new technology or solutions before embarking on a full roll-out of digital transformation. The research found that 70% to 80% of


larger manufacturers have implemented a significant pilot project for Industry 4.0 production solutions, compared to 40% to 50% of SME manufacturers. Interestingly, although the advantage of


scale and market power have placed larger players ahead of the game in terms of pilot testing, their digital transformation is likely to be more complex and drawn-out, thus offering small, nimble players an opportunity to challenge a misconception over the achievability of digital transformation by smaller players.


Specialist finance Manufacturers were also interviewed for their views on the role that specialist finance was playing in enabling their digital transformation. Challenges to implementing digital


transformation tend to pivot around the issue of finance – understanding the commercial benefits of Industry 4.0, knowing that there will be a reliable return-on-investment, and paying for Industry 4.0 technology at a rate that is less than, or matches, those expected commercial gains. These hurdles, however, can be tackled


using smart-finance techniques – known as ‘Finance 4.0’ – which cover the full range of requirements, from the acquisition of a single digitalised piece of equipment, to financing a whole new factory, to even acquiring a competitor. As the pace of digital transformation


gains momentum, manufacturers are increasingly making use of integrated finance options to facilitate their Industry 4.0 investments and accelerate their journey towards digitalisation. Whilst traditional financiers do not provide


appropriate mechanisms for this kind of project, Finance 4.0 arrangements tend to be offered by specialist providers that have a deep understanding, not only of how the digitalised technology works, but also of how that technology can be leveraged to deliver the benefits of digitalisation.


September 2019


This can often act as a barrier to digital transformation because the manufacturer is discouraged by the idea of having to pay for both the pilot arrangement and the scaled approach during the transition period


Financiers with a knowledge of


manufacturing in general, and digitalisation in particular, will adapt the finance arrangement to align with the likely benefits, or outcomes, the manufacturer will gain from the technology. Savings or gains from access to the


technology are used to fund monthly payments, making the technology cost- neutral for the manufacturer. Consideration is given to the complete


technology solution in order to identify the best finance package to effectively digitalise a manufacturing facility’s operation. Furthermore, equipment and technology


finance options allow manufacturers to upgrade during the financing period and offer protection against technological obsolescence – providing manufacturers with an additional flexibility to roll out Industry 4.0 and grow at the same fast pace as the accelerating demand for their products.


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Transition Whilst the benefits of moving to a digitalised- manufacturing environment are clear, the process of transition has to be carefully managed and commercial risk eliminated by rigorously testing new technology in the real-world production environment. This can often act as a barrier to digital


transformation because the manufacturer is discouraged by the idea of having to pay for both the pilot arrangement and the scaled approach during the transition period. Recognising the challenges of transition,


financing arrangements are available that defer payment for a new system until it is reliably up and running. This removes the financial challenge of


having to pay for the new system while the old one is still running – and helps reduce the risk of ‘pilot purgatory’ for manufacturers.


Conclusion Ultimately, while there is momentum behind the transition to Industry 4.0, the pace of transformation could stand to accelerate, especially as incumbent players look to compete with rival economies, stay ahead of new entrants, and manage disruptive change. By enabling manufacturers to invest


immediately through flexible-finance solutions, they are able to secure a competitive advantage from Industry 4.0 before the tipping point is reached, after which the early-mover advantage will have largely diminished. CCR


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