5G in industrial operations

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How telcos and industrial companies stand to benefit

5G is one of the most hyped technologies of the last 12 months, with the promise of faster connectivity, greater reliability and security, lower latency and network slicing but many are questioning if it will live up to expectations and truly disrupt the telecoms ecosystem. New research from Capgemini reveals that manufacturers across the globe are ready to embrace 5G, but telco players are not quite so ready.

Frank Wammes, Sally Eaves, Gunther May, and Pierre Fortier examine the current state of play and discuss what’s needed in order for it to reach its full potential.

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Transcript:

Frank Wammes:   

Welcome to the Capgemini Applied Innovation podcast where we invite experts to discuss how companies are incorporating innovation into their DNA while exploring the challenges they may face on the way to achieving digital mastery. On previous episodes in this series we covered topics such as the use of blockchain in the enterprise, and the way artificial intelligence is accelerating the transformation of the automotive industry. I am your host, Frank Wammes and today we are focusing on the potential of 5G and how it can transform industrial operations. 5G is one of the most hyped technologies of the last 12 months with the promise of faster connectivity, greater reliability and security, lower latency and networking slicing, but many are questioning if it will live up to the expectations and truly disrupt the Telecom’s ecosystem. New research from Capgemini refuels that manufacturers across the globe are ready to embrace 5G, but telco vendors are not quite so ready.

Today we’ll examine the current state of play, and we’ll discuss what’s needed in order for it to reach full potential. With me in Bangkok is Professor Sally Eaves, Global Strategy Advisor, CTO of Emergent Technologies, keynote speaker and author. Sally, it’s great to have you in this podcast. Next also joining in is Dr. Günther May, Head of Technology and Innovation for the business unit Automation and Electrification solutions at Bosch Rexroth AG. Good to be chatting with you Günther. And finally from Paris, it really is a global podcast this time with myself sitting in Gothenburg, we have Pierre Fortier, Principal consultant in Telco Media and Technology at Capgemini event. Thanks for your time today, Pierre and happy that you are here with us.

Pierre, I would like to start with you. I’m aware that the Capgemini Research Institute has recently conducted a study into the impact that 5G is having and is said to have within the industrial operations. To begin our conversation today, could you tell a little bit more about research that we have done and what stood out for you in terms of some of the key findings that came from the report?

Pierre Fortier:      

Sure. Well, the aim of the research was twofold. First help industrial companies identify 5Gs high potential use cases and what strategy will reap maximum benefits. Second, to give telecom operators a comprehensive and nuanced understanding of the 5G expectations of manufacturing and asset intensive companies and how to meet those demands. To do this, we surveyed over 800 executives from manufacturing companies across 12 countries, as well as nearly 80 telecom operators. We’ve looked at four areas, the appetite of manufacturing and asset intensive companies for 5G and its speedy adoption. Then why potential delays in 5G deployment are leading this companies to consider applying for 5G licenses in some countries. Third, the potential manufacturing use cases that 5G offers. And finally give recommendations for manufacturing and asset intensive companies and telecom players.

Frank Wammes

And what are some of the key findings that you got from it?

Pierre Fortier:      

Well, a number of them, but I’d like to highlight three of them. First one, 5G is perceived as a key enabler of digital transformation, 75% of manufacturing executives we talk to consider 5G to be a key enabler for the next five years. In fact, in our research 30 ranked only second two cloud computing in terms of digital transformation enablement. This comes into context for more and more industrial processes are connected. Connectivity is becoming business initial critical and 5G with its versatility and flexibility holds potential to address existing connectivity pain points and alleviate opportunities.

Frank Wammes:

So it’s fairly related to the industry 4.0 basically?

Pierre Fortier:      

Precisely. Then that’s one of the reason why manufacturers want to move quickly to implement 5G. There is widespread confidence of 5Gs potential. With 65% planning to implement it within the first two years of availability. This is spurring interest in private or dedicated networks. In fact, one third of manufacturers are considering applying for a 5G local license, as they expect it could offer greater economy, security and could be a faster route to implementation, compared to waiting for rollout from telecom players. Last but least, security and operational advantage will drive 5G adoption. When we ask our industrial companies’ respondents about the business reasons for investing in 5G, more than half cited more secure operations and efficiency of operations and cost saving. With the expectation that 5G will help them oversee and manage their industrial operations with enhance connectivity, performance monitoring and predictive maintenance.

Frank Wammes:   

It’s really interesting. So it really sounds like the industry is ready for the adoption for 5G.

Pierre Fortier:      

They’re definitely interested. The speed of deployment though, is uncertain. Yet, here’s a very promising finding for telcos. The study found that manufacturers are willing to pay a premium charge for enhanced 5G connectivity. For example, 71% of industry companies will pay more for 10 or 100 times faster wireless connectivity. When you ask the Telecom operators, I’ll need 55% of them think that there is appetite for this point. This is an example of an [inaudible] for telcos to consider how to build a highly profitable 5G business model.

Frank Wammes:   

This is quite interesting because I had some discussions with Telcos indeed. And what I see is that they see all the advantages, but they struggle a little bit to find how can we apply it and how do we build the sustainable business models behind it. So this gives opportunity. So Sally, if I can ask you. It’s an area where you’re hugely interested in and have been watching already for some time. So can you tell us a little bit about where do you see the advantages of 5G compared to previous generations? What are the real different shades that this brings to us?

Sally Eaves:

Yeah, absolutely. I think probably the starting point is that 4G is reaching its limits, really its technical limits. Particularly around how much data can be transferred quickly across the blocks and spectrum. So we’ve got a lot of congestion. So I think one of the biggest C-changes really is around that area. But overall, I mean there’s a number of benefits. Higher speed, reduced latency, capacity for a larger number of connected devices. So as a catalyst for IOT in particular. And also less interference and better efficiency. So we’ve got a number of benefits there. As I kind of touched on really, I really see 5G as a connectivity engine, it’s really going to fuel things around scaling at the edge around analytics, around AR, VR, and also real time processing. So at the moment there tends to be quite a few barriers around digital transformation that have affected a number of the organizations that are in that study. So around organizations in the industry sector, around manufacturing in particular. So I see 5G as a way of really countering those gaps. So it’s going to be a massive catalyst for innovation.

I also see a particular value add in certain areas such as supply chain, around shop floor, and also around product and service management. And again, that’s a number of the key outcomes that came through through the Capgemini research as well. So very much in alignment with the findings that are coming through strongly there.

Frank Wammes:   

Yeah, I do agree and then actually, I was involved in the pilot that we did for one of the ministries where we looked at can you deploy the HoloLens to do maintenance in the field on large things, which like, the HoloLens was not the issue, but how do you stream then the videos that you want to look at, and then it was like, “Will not be solved with the current networks that you have.” So if all these great promises come in and all these huge business cases, which I don’t even think that we already looked into the widespread of those business cases, what’s holding us back? What do we need to overcome in order to reach this full potential of 5G to be realized?

Sally Eaves:

One of the key things is definitely management of expectations, which comes down in a large degree, really around education and awareness. So again, one of the things that came through strongly in that rapport is that you’ve got readiness to implement on the form of manufacturers for example. But it’s delayed with what telcos can provide. There’s a mismatch there, and I think that’s a really important point around open dialogue around this. So that’s one of the key points I’d bring to attention, definitely. Also around implementation roadmaps, clarification of what you’ve got in your initial portfolio, where you’re looking to get to. It’s all about that use case management. So a lot of work needs to be done around that area in particularly. And also things around managing and monitoring networks. That needs to be done differently. We need complete visibility with 5G and again that’s something I think that used to be addressed more closely.

Frank Wammes:   

Yeah. And if you look to the point that Pierre said earlier also had a interest that actually manufacturers said like, “Perhaps we should have our own licenses rather than the telcos.” If you look at it, where do you see that then the initiative should come from, because I see that the telcos want to explore the networks, but they are looking into, “Okay, but how can we then just generate money out of it, out of these business cases?” Will that be a play for the telcos or is that really being developed much more by the other industry itself that will use the 5G network? How do you see that development?

Sally Eaves:

Well, there’s a big catalyst from industry, absolutely, definitely. But for me, we need a far more collaboration around these areas. I think some of the areas that haven’t been considered maybe as much as they need to be on the industry side when they’re looking at talking about licensing is things around regulation. There’s a lot of disparity across different countries around that at the moment. And I think again, the complexity around that, we started to see echoes of that in the report that’s come through. But I think definitely that’s an area that needs more consideration. So again, the whole collaboratory aspect to this, working on pilot projects together. I think far more work needs to be done in that area.

Frank Wammes:   

Yeah. And you can’t solve that as one company on its own. That really requires this.

Sally Eaves:

Precisely, precisely. Has to be in a corporate environment.

Frank Wammes:   

Okay. And now on that perspective, looking at manufacturing, Günther, I’d just like to bring you here in, because you’ve written extensively about 5G and its impact on manufacturing. Particularly in terms of how it will define the factory of the future, which of course you know with indeed everything that Sally already said with the conductivity, with the speed, all these features can have major impact. Can you talk us through some of the applications you expect to see?

Günther May:       

Sure. We think at Bosch Rexroth that in the future factories need to be very flexible in order to deal with the growing demands regarding individualization of products and in our vision of the factory of the future, basically only the building and wireless infrastructure such as wireless power and communication will be fixed. And the manufacturing equipment needs to be fully flexible and be set up to fulfill current needs and we don’t want too many cables in such an environment. And with 5G we see the first wireless communication system that fulfills the requirements for industry usage specifically regarding transmission robustness and real time behavior.

Frank Wammes:   

And it will also be the case in the complexity of a manufacturing where there’s so many machines and other frequency in the air that 5G really will be the one that actually deal with that. But how do we get there? What are you doing to bring the potential of 5G to life within your company?

Günther May:       

We are working closely together with partners and already have presented many use cases for example, on the Hannover Messe industry fair in April of this year, in corporation with Qualcomm and Nokia. And our first demo was already in 2017 where we cooperated with Nokia. And we are currently working on bringing 5G into our products and evaluate them in our more than 280 Bosch production plants.

Frank Wammes:   

Good. And it sounds like you’re very much at the forefront of this change, but do you believe greater industry collaboration is needed to really accelerate the progress, or can companies do it on their own?

Günther May:       

Definitely. Using 5G in campus networks in factories needs the cooperation of a lot of roles such as factory owners, machine manufacturers, automation providers, 5G technology providers, network operators, frequency regulators, and even more. And for this corporation, we think that the 5G alliance for connected industries and automation, so it’s called 5G-ACIA is a good forum.

Frank Wammes:   

Okay, so Pierre listening to Sally and Günther’s perspectives, what advice would you give to companies looking to adopt 5G over the next year?

Pierre Fortier:      

Well, there are a few areas which they can look at. First of all, I think it’s very important for organizations to get a clear picture of where their current technology portfolio will be challenged by the use cases they want to pursue, in order to understand whether 5G holds the answer or previous technologies like 4G in some cases. Then operationalizing a new technology is challenging, and organizations should collaborate with others in the 5G ecosystem to launch pilot projects. Both with telecom operators and network vendors and also they need to engage with their peers to share findings and requirements in order to create win-win models with telco ecosystem. Third, the opportunities was prior to 5G networks sums up several implementation path. Can have private networks, public networks, or even hybrid networks to take advantage of both options based on local considerations. I believe companies must think carefully before proceeding down a path and need to take into account strategic fit, capabilities and total costs. And finally, no solution should be cast in stone. They should be adjusted to fit the changing use cases roadmap and organizations need to re-examine their connectivity requirements at regular intervals.

Frank Wammes:   

Yeah, I can imagine. And also in the CTO community we think of Capgemini, we now put … We had an idea like should 5G be one of the themes, but we also said “It’s a broader perspective of connectivity to see where do you need to use what?” So I think that is indeed something that everybody needs to continuously re-examine. So thanks for that Pierre.

Sally, question to you because while you’re in Bangkok, you’re going to speak to large banks, I understood. So banking and 5G, is that also a logical combination?

Sally Eaves:

It is, it is. I think in terms of kind of a final wrap up about some of the advice coming through here. So yeah, you’re right. I’m speaking at the Asian Banker Event and its quite traditional audience here, but also off the back of that, I’m also talking about financial inclusion, kind of as my sort of wrap up piece for that. I think we had some key themes that really drew out the discussion today around obviously collaboration, around managing expectation gaps alongside education. And as well as the technology aspects that we’ve covered in quite some detail.

Also, just around culture, organizational agility and that cultural and tech alignment. Because obviously when we’re implementing new technology, it tends to be that area, the human side of things where sometimes things fall. So, for me that was a important thing kind of to the discussion as well. Around collaboration. We heard a great example just there working more closely with other stake holders and for me that really is cross-sectional. So it’s startups in universities, telcos, vendors and the crowd reading encouraging art, very active participation. There’s several 5G forums that I’m involved in directly and I think that’s very, very important.

But lastly, going back to what you said about the event I’m here now, but also in more generally. I do a lot of work with the UN for example and sustainable development for which is to ensure inclusive and equitable quality education and really promote lifelong learning opportunities. 5G can make a massive difference there. So, some of the stuff I’m very involved in is working with big organizations in the tech sector about how we can bring things together to open opportunity … Educational deprivation is a big issue across the world. I think 5G, the access this can give can make a massive difference there. So, this can be transformational business but also can be transformational for society too. And that’s again something I’m very, very passionate about.

Frank Wammes:   

Yeah, super cool because then it’s not only technology for the technology’s sake, but it’s really for impact for society. I like that perspective and I think your answer and the answers of Pierre and Günther, it also showed we need to think from a different perspective. And I like the thing that you said, it’s also about the culture of agility and the culture of change. And I think from a telco perspective they have been used already to like how do you go to different business models, et cetera. But as Günther also said like, if you want to go what I always call the segment of one or had a highly personalized production environments that requires a different way of your business models in the marketplace. And Günther also pointed out, it’s not only about using it within the manufacturing, it’s also then what is the effect that I need to implement within my products as well. So it’s like it’s about products, it’s about manufacturing, it’s about business models, it’s about societal change, if we think in the right perspective.

Well that makes it a very big topic. But of course, we need to make sure that we approach it in the right way. And I think that’s all that we have for today in the podcast of the Capgemini Applied Innovation podcast. I would like to thank you Pierre, Sally and Günther for joining us to discuss 5G. I really liked your different perspectives and the added value that I think it gave to our listeners. And I also would like to thank you for listening in from wherever you are in the world.

If you enjoyed this episode and you want to connect to the people that we have on the podcast, we will make sure that you can find their social profiles in the medium that you use to listen to this. And of course, share it through your social channels or subscribe to the podcast series and rate the show. This will help other people interested in innovation and 5G find this episode. And if you have topics you would like to cover on future episodes, leave a comment or get in touch. Finally, to download a copy of the 5G and industrial operations report and get more of the facts and the findings that were discussed in this podcast, visit capgemini.com and search for 5G in industrial operations. We look forward to you joining us for future episode of the Capgemini Applied Innovation podcast.

Goodbye for now.

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