Industry 4.0 and SMEs

Industry 4.0 and SMEs

Small and medium-sized enterprises (SMEs) look set to benefit most from the digital economy and industry 4.0 (i4.0) technologies.

Small and medium-sized enterprises (SMEs) look set to benefit most from the digital economy and industry 4.0 (i4.0) technologies. Yet when people think of new technologies like artificial intelligence (AI) and virtual reality (VR), they often think of huge, global corporations such as Facebook and Google.  

While these companies have invested heavily in new technology and are leading the shift towards integrated and digital ecosystems, it’s SMEs that are best placed to capitalise on industry 4.0.

As an article in SmartCompany says:

“There was once a time when being a small business meant you were at a disadvantage when it came to technology… Now, the situation is nearly the exact opposite.1

Due to their size, SMEs are agile and able to quickly evolve and change their business model as they progress. Additionally, SMEs generally have less complex structures, less legacy IT systems and less red tape than larger companies, as well as quicker sign-off processes2. This means they are well positioned to adopt new technology.  

No major investment is needed either. The democratisation of key business tools and software through cloud computing means SMEs are able to begin the process of digitisation without the daunting upfront costs they used to face. For those who don’t want to go ‘all in’, even small shifts towards inexpensive technology like data analytics, cloud computing and automation can have a big impact on productivity.

In fact, across all industries many SMEs are already engaging in industry 4.0 technologies even if they don’t refer to them as i4.0. For example, a majority of manufacturing facilities and farms use some form of automation for repetitive tasks and irrigation respectively, while aged care facilities are making use of cloud computing to access HR, accounting and specialised software without the need for powerful hardware.

We’re not saying you should embrace technology just because everyone else is and you definitely shouldn’t implement technology just for the sake of it. However, SMEs do need to start thinking about ways technology can help improve problem areas and set in place clear plans for how specific technology can be used to reduce pain points.

"The Australian economy faces disruption at an unprecedented pace, spurred by the evolution of technology and global trends. To prepare for this new world, Australia must adopt and adapt the world’s emerging technologies to keep up,3” says the Australian Academy of Technology & Engineering in its Annual Review.

For those that do this, the move towards greater digitisation has proven, significant benefits.

According to Deloitte Access Economics, SMEs with advanced levels of digital engagement earn 60% more revenue per employee and are 50% more likely to be growing revenue compared with SMEs with basic levels of digital engagement.4

Despite this, half of Australia’s SMEs are still at either basic or intermediate levels of digital engagement5.

This may be because some SMEs, particularly those in the services industry, feel that industry 4.0 can’t meet their organisational needs. Yet research shows that new technologies can help improve business operations across all sectors of Australia’s economy.

For instance, Australia’s annual healthcare expenditure could be reduced by 8%-12% by automating and simplifying processes, facilitating better connectivity and using better reporting and advanced analytics6. Similarly, advanced data analytics has the potential to increase Australia’s agricultural production by $20.3 billion, a 25% increase compared to 2014-2015 levels7.

These statistics are important for SMEs because they show that technological advances enable businesses to focus on core tasks.

While small size can be beneficial in terms of agility, it can also mean staff get bogged down in non-essential tasks, impacting productivity. Research in 2016 found Australian and New Zealand businesses are wasting $56 billion per year on unnecessary and time consuming administrative tasks8, which equates to approximately $3,900 lost per employee, per year9.

These losses can be mitigated by embracing smart technology, enabling employees to re-focus on core duties.

A survey by SmartSheet found 78% of workers think automating manual, repetitive work will allow them to use the time saved to perform higher-value work10, while 72% of workers say automation will allow them to focus on the more interesting and rewarding aspects of their jobs11.

The Australian Government has recognised this as an opportunity and created Industry 4.0 Testlabs that will give SMEs an accessible way to learn more about industry 4.0 principles, gain hands-on experience, share learnings and access resources. These Testlabs focus on building the capability of SMEs to embrace the latest technologies and digital innovations, including the Internet of Things, big data and analytics, cybersecurity, robotics, sensors and automation, and innovative production methods.

Australia already has strong competitive advantages, including high levels of worker education, stable political and legal systems, high standards of living and a strong research base. Technological advancements enable SMEs to harness opportunities from these strengths, creating new areas of competitive advantage.

Ideas like the Testlabs, as well as the workshops and resources being rolled out by the C4DE, will provide SMEs with guidance on how to do this and enable them to see first-hand that industry 4.0 technology isn’t just for the big end of the town and has incredible potential for businesses of all sizes.

Author: Adelle King 

 

References

Stafford, P 2018, 'Why being a small business gives you a head-start in digital transformation', SmartCompany, viewed 21 December, <https://www.smartcompany.com.au/partner-content/article-series/the-digital-transformation-journey-how-to-modernise-your-sme/#post-68565>.

Minetti, S 2018, 'How SMEs can gain competitive advantage through new technology', HRD Connect, viewed 20 December, <https://www.hrdconnect.com/2018/04/23/how-smes-can-gain-competitive-advantage-through-new-technology/>.

Australian Academy of Technology & Engineering 2018, Annual Review 2017-18.

Deloitte Access Economics 2017, Connected Small Businesses 2017.

Ibid.

McKinsey & Company 2017, Seizing the opportunity from the fourth industrial revolution.

Heath, R 2018, 'An analysis of the potential of digital agriculture for the Australian economy', Farm Policy Journal, vol. 15, no. 1.

Coleman Parkes Research 2016, The $56bn question.

Ibid.

10 SmartSheet 2017, 'Automation in the Workplace', viewed 21 December, <https://www.smartsheet.com/2017-automation-report>.

11Ibid.

 

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23 December 2019

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