Canadian industrial firms lagging on digital front
Seventy-three percent of industrial companies expect to invest less than 5% of annual revenue on digital technology, according to a recent report from KPMG Canada.
The consulting firm examined digital readiness by surveying C-suite leaders at 165 companies in Canada – including regional, national, and global players in manufacturing, mining, oil and gas, power utilities, construction, transportation, and infrastructure.
Half of respondents said they are investing in digital technology to create a competitive edge. However, KPMG thinks that the scale and investment in digital technology at industrials is too reserved.
"We found that companies have significant digital ambitions and high expectations for returns on investment, but their level of investment is too modest and, at times, too linear," said Stephanie Terrill, KPMG's national leader of its management consulting practice. "To truly move the dial, companies need to do more than make incremental investments to build digital capabilities; they need to build a modern digital foundation for a great leap forward.”
The sub-5% annual revenue investment cited by three-quarters of companies is too little to achieve wide-ranging digital transformation, according to the firm. Terrill recommends that industrial companies at least double, if not triple their digital investment to remain competitive in a shifting environment.
Though some companies are using digital technologies like self-driving vehicles and integrated pipeline sensors, the KPMG report believes more should be done. Industrial companies need to put more emphasis into using new technologies, such as machine learning, machine-to-machine (M2M) communication, and the internet of things (IoT).
IoT has many useful applications in an industrial context, enabling predictive maintenance, downtime reduction, and greater visibility into production and delivery. “Companies should already be investing in IoT-compliant technology, especially to connect their legacy equipment. It's fast becoming a baseline requirement for companies in these capital asset-intensive sectors; those that fail to invest in IoT will quickly fall behind,” said Yvon Audette, COO of management consulting services at KPMG.
Only 23% are actively adopting IoT technology currently, while 43% say the tech is in the planning or discussion stage.
Neither blockchain nor digital twin technology are particularly popular, with only 4% and 6% actively adopting the tech, respectively, and only 19% in the planning or discussion stage.
The KPMG report also revealed that many Canadian industrial companies have overlooked the opportunity of big data, with only 21% actively leveraging data analytics.
On the other hand, firms seem to at least be addressing cybersecurity, with 60% of leaders concerned about cybersecurity risks. Seventy-two percent said that they are actively investing or have industry-leading adoption in the area.
