BCG: Industry 4.0 to lift manufacturing to new levels

15 June 2015

Industry 4.0, which refers to the transformation of manufacturing processes with the latest automation and digital technologies, is expected to lift manufacturing to new levels, an analysis from BCG finds. The firm foresees nine technologies that are expected to transform manufacturing over the coming decade. To highlight the benefits of Industry 4.0, the firm uses Germany as an example, where the improved manufacturing will come with productivity gains of between 5% and 8%, and an increase of 1% to GDP every year.

Since the dawn of the industrial revolution, technological developments have provided jumps in the capacity and productivity of manufacturing. Yet while other industries have surged ahead in recent decades, with large developments in IT, mobile and e-commerce, manufacturing has been slow to make substantial gains.

Industry 4.0
In a recent report from the Boston Consulting Group (BCG), titled ‘Industry 4.0: The Future of Productivity and Growth in Manufacturing Industries’, the consulting firm explores the changes driven by technological advancements that are expected to take make in manufacturing over the coming decades. The firm finding that there are nine key technologies set to transform industrial production in the coming decades: industry 4.0. To demonstrate its findings, BCG uses case studies from Germany, which is recognised as a world leader in industrial automation.

Nine technologies are transforming industrial production

The nine technologies are in one way or another related to the digitalisation of the industrial sector, and are broadly interconnected in their expected effect on the industry. The technologies include the deployment of autonomous robots that work with people in production. Isolated, optimised cells will come together as a fully integrated, automat­ed, and optimised production flow, leading to greater efficiencies and changing tra­ditional production relationships among suppliers, producers, and customers. Furthermore, advanced analytics in the manufacturing process is set to increase lean methods of production, while horizontal and vertical supply chain integration through network and information cohesion will improve value chain wide productivity, among others.

Industry 4.0 gains
The effect of these technologies on manufacturing is expected to produce considerable increases in productivity. To quantify the potential benefits, BCG created an outlook for the adoption of these technologies on German manufacturing in the coming decade.

Industry 4.0 productivity gains

One area in which the new technologies are expected to create a net benefit is in productivity gains. Industry 4.0 technologies are set to improve German manufacturing productivity to the tune of €90 billion to €150 billion over the next 5 to 10 years. In terms of conversion costs – excluding that of materials – the gains will range between 15% and 25% according to the report. While with materials costs factored in the gains are 5% to 8%. The largest total gains are projected in machinery at between 10-15%, the production of wind turbines will account for 1% of German manufacturing output, with new technologies set to increase the productivity conversion costs by between 25-35%.

The rise of the machines to replace human beings, following Industry 4.0, is set to produce a change in the kinds of skills that will be in demand in the coming years. Lower skilled repetitive jobs will go, to be replaced with a significant demand in the mechanical-engineering sector – which could see a 10% increase. Overall manufacturing will see a 6% increase in employees, from around 6 million to 6.5 million by 2025.

Increased manufacturing employment

Industry 4.0 will itself come to manufacture industry 4.0 goods, which will have considerable market value and are set to contribute €30 billion to GDP per year, or an additional 1% on GDP growth per year.

“Germany has excellent chances of further expanding its global leadership role in machine building and automation, considerably increasing productivity and growth and creating more high-skilled jobs,” explains Michael Rüßmann, a BCG partner and Co-Author of the report. “To maintain this advantage in the long term, however, German companies have to invest much more strongly in building production-related IT and software competence and train highly skilled workers in these fields in a targeted manner.” The firm estimates that adapting production processes to incorporate Industry 4.0 will require that German producers invest about €250 billion during the next ten years, amounting to about 1-1.5% of manufacturers’ revenues. 


How a change toolkit can help consultants deliver transformation

23 April 2019

Changefirst is a company that provides a cloud-based transformational change toolkit to consultants and companies. David Miller, Founder of Changefirst, sat with to discuss how the toolkit known as ‘Roadmap Pro’ adds value to consultants. 

When David Miller called time on his 15-year career with American Express to found Changefirst in 1995, change management was a different animal altogether. According to Miller, even as recently as five years ago, the business of change was much more manageable. The pace of change was slower and project timescales were longer.

Since then, however, the accelerating pace of change and the widespread impact of digital transformation has completely transformed the role of change management professionals. Those working in change management now face more projects, with diversified end-goals, new ways of working (e.g. agile), and are left with shorter timescales to deliver them. The drastic alteration in the sector prompted the IT and services company based in West Sussex to develop a new SaaS-based toolkit for implementing change more effectively.

An example of this is that Software-as-a-Service (SaaS)-based services in the HR technology space have been steadily increasing in recent years, as companies explore ways in which to reduce costs and access new innovation in the space. SaaS can reduce the cost of ownership, an HR department’s dependence on IT support, improve employee experience, and increase the speed at which value is yielded by change.

How a change toolkit can help consultants deliver transformation

Speaking to, Miller explained, “The pressure from digital transformation and the race to reinvent business processes means that the sheer pace and volume of change projects can be overwhelming and chaotic. Organisations needed a whole new way to respond to the challenge – one that is quick and easy to use and supported collaborative working; one that is online and can rapidly scale across the organisation itself. We saw these trends emerging and they were the inspiration for developing the Roadmap Pro tool as a SaaS-based approach to implementing change projects.”

Consulting sector

The SaaS toolkit provided by Changefirst, named Roadmap Pro, has the potential to yield value for consulting industry incumbents, as they are so often drafted in by clients to oversee complex change programs. However, firms might still be skeptical of the need for an external tool to do something that in essence is already part of their core business, and something they theoretically know inside out.

When asked how Changefirst believes it can make inroads into the consulting sector, Miller noted that not all consulting firms have the same level of change management capabilities. Indeed, the toolkit is designed to be tailored to firms, depending on their level of know-how.

“Our solution can help and how consultants choose to use it is likely to differ based on the change management maturity of their firm," Miller explained. "The more capable firms can utilise Roadmap Pro to increase productivity, improve client delivery, consistency and to rapidly on-board new hires and contractors. Less capable firms also might want all these benefits too, but it's highly likely they also want the ability to rapidly increase their client-facing change management capabilities.”

The toolkit is an ‘Out-of-the-Box’ solution, supported by Changefirst’s service offering, which enables clients to deliver higher time-to-value returns compared to other approaches. It is mostly configurable, and the ability to customise it is increasing during 2019, with Changefirst working with new clients to make changes that ensure the software meshes with their clients' implementation methods, while giving them the advantages of the installed content. The system takes the best practice content the firm has built up since it first launched, and makes it available in a state-of-the art, SaaS-based software solution.

“We’ve spent 25 years building our ‘best practice’ model," Miller added. "We have a huge database, that we are able to query, and that tells us a lot about what is happening during change projects. We continuously synthesise that with the lessons we have learned from working with over 300 organisations around the world. This has enabled us to build a methodology which was described by Forrester Research as one of the three most used change management methodologies in the world.”

“We’ve spent 25 years building our ‘best practice’ model... We continuously synthesise that with the lessons we have learned from working with over 300 organisations around the world.”
– David Miller, Changefirst

Roadmap Pro uses this wealth of experience for three key building blocks, which integrate these capabilities: effective online learning; change management diagnostics and analytics; and pre-populated change management planning. It also creates high levels of client engagement, enabling consultants to easily collaborate with clients.


There have been some fears in the consulting sector that the leveraging of technology could risk the cannibalisation of hourly work. However, Miller regards this more as an opportunity than a problem.

He argued, “If you look at all the reporting from the analyst community, it’s becoming clear that clients want more digital support and what is called 'Reusable Assets'. In other words, they want IP that consultants have used left behind so they can continue to use it. Consultants now have a big opportunity to create continuous revenue streams and client ‘stickiness’ by using digital tools on assignments and then letting clients continue to use their tools. These firms will also sell more hours and generate more opportunities by on-selling and supporting clients' use of the tool.”

Indeed, the benefits seem to have already been judged to outweigh the perceived risks. Roadmap Pro was only launched in early 2018, but Changefirst’s partners are already using it to deliver a variety of major projects. These include usage in a major real estate change for a European media company; in the outsourcing global IT services for a Brazilian manufacturing company; for implementing a new global HR business model for a European chemical company; and for implementing industry changing technologies for both infrastructure and for new ways of working in a major transportation organisation.

According to Miller, clients have already presented the toolkit with “tremendous” feedback. The interface and the marriage of content and software have drawn particular praise, but Miller concluded that the bigger picture here is that Roadmap Pro can help the firms looking to challenge the Big Four. Indeed, with many firms looking to leverage technology to increase their competitiveness and digital presence, technology like Roadmap Pro is undoubtedly playing a role in seeing such companies win more of the bids against larger organisations around the world.