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BUSINESSES IN TRANSITION TO INDUSTRY 4.0

08-08-2019
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A report from the Ai Group outlines the state of business digitalisation as more and more businesses participate in the Fourth Industrial Revolution or Industry 4.0. In this latest revolution, business models are being transformed to take advantage of the possibilities of connected devices, data analytics and other technologies.

The report, The Fourth Industrial Revolution: Australian businesses in transition, draws on a range of sources including the Group’s recent surveys of employers largely in the manufacturing, services, construction and mining services sectors and a diverse range of case studies of digitalisation in businesses. It follows on from the Ai Group’s 2017 report, Business Beyond Broadband: Are Australian businesses ready for the Fourth Industrial Revolution?, which reviewed businesses’ use of and investment in digital and associated technologies.

“Business engagement with the current upheaval is growing, maturing and moving well beyond hype and theory,” Ai Group Chief Executive Innes Willox says.

“This report assesses progress on digitalisation and changes to the underlying technological landscape; highlights case studies from leading innovators; and sets out key policy priorities for work by government and businesses.

“In our latest report we find that Australian businesses are currently transitioning to and within Industry 4.0. An overall finding is that there has been substantial progress in embracing Industry 4.0. But the gap between 4.0 leaders and the majority of businesses is substantial.

“We have found that companies are punching above their weight, doing amazing things with new technology and leading the way for others. As expected, such steps are often neither perfect nor easy and present successes along with their own practical challenges. Many SMEs are progressing Industry 4.0 strategies without using this label. Instead, their primary objectives are to implement strategies or new approaches to enable them, for example, to manage their operations, become more efficient, improve productivity and improve bottom line performance.

“Others are not yet adopting 4.0 building blocks under any label. For example, despite expected cost efficiencies through adoption of connected devices, often called the Internet of Things, challenges remain for promoting the business value of IoT. According to the latest ABS data on business use of IT, more than 60 per cent of businesses did not see any value in IoT – a pillar of Industry 4.0.

“Cybersecurity threats remain a growing and evolving risk management issue for many businesses. 2018 saw the commencement of a range of significant data privacy legislation including the Australian Notifiable Data Breaches Scheme, as well as the controversial Assistance and Access Act, which requires suppliers of secure systems to help circumvent them.

“Over 30 per cent of businesses surveyed by Ai Group experienced a cyber security incident, with the most common arising from hacking, phishing and malware. Positive news is that Ai Group data also found nearly 80 per cent of businesses invested in cybersecurity measures, up from just over 20 per cent in our 2017 report.

“Even with improvements in cyber security investment, notifiable data breaches under the NDB Scheme point to the need for improved cyber security and data management posture within organisations, where government support might assist.

“More broadly, information is needed on how to navigate the wave of digitalisation: maximising participation, minimising the pain of change and disruption, and preventing disenfranchisement.

“This need is not just for businesses but the full range of organisations and individuals. Governments can provide strong visionary leadership. Australia needs to achieve inclusive growth. Making the most of the Fourth Industrial Revolution is essential to that goal.”

In addition to the key findings, the report also includes recommendations to support the transition to Industry 4.0, including strong, cybersecure and resilient businesses, business and technology investment, an innovation ecosystem, a legal and regulatory framework, standards, sustainability, trade, workforce skills and workplace relations.

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