By 2020, at least 30% of Industry 4.0 projects will get their algorithms from large marketplaces

Less than 5% of these projects used marketplace algorithms in 2016

 
Gartner says that by 2020, at least 30% of Industry 4.0 projects will get their algorithms from large marketplaces, a significant increase compared to the less than 5% in 2016. companies have promising initiatives in the area, the main challenge remains the use of algorithms as a basis for these projects.
 
"Industry 4.0 projects are facing two major challenges. First, in the connected world of cyber-physical systems, they need to deal with the sheer volume, real-time speed and diversity of data. Second, to drive new values and differentiated innovations, new algorithms need to be developed, making them the foundation of Industry 4.0 initiatives," explains Thomas Oestreich, vice president at Gartner.
 
Oestreich explains that the development of new algorithms requires knowledge and skills that most companies do not yet have. To speed up the time to market and development process, some organizations use a combination of service providers and algorithm marketplaces.
 
According to Gartner, reusable algorithms can reduce development time. Analytics vendors have started creating marketplaces for software components such as analytics algorithms to provide end users with more flexibility and choice. These trading locations promote the benefits of application economics for software development, significantly reducing distribution costs and improving access to the thousands (even millions) of available algorithms.
 
Marketplaces offer reusable algorithms that help companies accelerate their development processes and keep pace with digital business-driven transformations. "Reusing and applying pre-built algorithms to specific tasks can substantially reduce development time, in addition to offering an important library that expands the possibilities of in-house creative teams", says the expert. "We encourage CIOs to create a task force with Data and Analytics leaders to jointly assess marketplaces and then create their own library of available and potentially useful algorithms," adds Oestreich.
 
Early adopters of Industry 4.0 are also revamping their ERP (Enterprise Resource Planning) solutions. ERP systems are connected to the Internet of Things (IoT) infrastructure, consisting of sensors and actuators, middleware for data collection and storage, applications and analytics for decision making and necessary actions.
"Many ERP solutions are old and cannot support the required volume and level of detail of corporate data and transactions that need to be processed," explains Christian Hestermann, Research Director at Gartner.
 
The music industry is a good example of how an industry has transformed. Customers have gone from buying full albums at a specialty store to streaming a single song, where the small amount owed is charged on the spot. "ERP could quickly become the bottleneck of digital business, preventing a company from acting quickly enough to seize opportunities in a fast-paced digital world," says the director.
 
CIOs need to develop occasions in digital businesses so that they can expand their activities. Signals from sensors embedded in products or from external sources can be used to provide additional services to customers. “This will require modernizing the ERP solutions involved because older ones won't be able to afford the level of detail and required volumes of microtransactions,” says Hestermann.
 
According to Gartner, by 2020, 50% of companies that revamp their core ERP systems and migrate their IoT infrastructure to a standardized platform will increase customer interactions by 20%.
 
“CIOs will need to determine the areas where IoT and digital business are critical to them and develop Industry 4.0 value chains, modeling the capabilities that companies need. They also need to assess the current state and needs for renewal across all layers of the IoT architecture and take appropriate steps to improve", concludes Hestermann.