Industry companies are only embracing 5G technology on a limited scale for now. At only 30% of industrial organisations are projects in the pilot phase or beyond. Most companies are still in the idea and planning phase. A missed opportunity, as 60% of early adopters of 5G in industry are realising greater efficiencies with it.
This is according to research by Capgemini Research Institute, the results of which are collected in the report 'Accelerating the 5G Industrial Revolution: State of 5G and edge in industrial operations'. Taking part in the survey were senior executives (director level or higher) from 1,000 global industrial companies planning to adopt 5G. 150 senior telecom executives from 75 telecom operators that have rolled out 5G networks or are planning to do so also participated. Finally, in-depth interviews were conducted with 25 experts from major industry and telecom companies working on 5G, as well as other players within the 5G ecosystem.
Early adopters: 5G delivers benefits
Among other things, the survey shows that 5G technology in many cases meets the expectations of early adopters. For instance, the majority report that 5G applications meet or exceed their expectations. 60% additionally report that 5G is helping them achieve higher operational efficiency.
Key use cases generating business impact include using 5G to perform video-based quality inspections and to manage and control machines on the stand. However, consider also controlling Automated Guided Vehicles (AGVs) and other autonomous robots. Or remote collaboration using augmented reality and virtual reality. Industrial companies are optimistic that 5G will increase their sales in the future by facilitating new products, services and business models.
Increasing operational efficiency
Four in 10 industrial companies surveyed expect a comprehensive rollout of 5G technology in at least one location within two years. Such investments can be profitable. For example, 60% of early adopters report that 5G helps them achieve higher operational efficiency. 43% experience greater flexibility.
64% of industrial companies surveyed plan to adopt 5G-based edge computing within three years. Motives include higher performance, reliability, data security and privacy. More than a third of organisations prefer private 5G networks. This percentage is highest in the semiconductor and high-tech sectors (50%). The aerospace and defence sector follows with 46%.
Challenges
While industrial companies see potential in 5G technology, they also see a variety of challenges ahead. Capgemini highlights that for organisations to make the most of 5G's potential, they need to address a number of challenges:
- Integration of 5G technology with existing networks and IT systems. Organisations report that the lack of standardised and interoperable solutions leads to more time for assembly and testing.
- defining use cases for 5G technology and estimating return on investment. This plays out particularly in brownfield environments. Here, the return is measured against existing options such as wired connections and the cost of replacing cables.
- Managing cybersecurity. For instance, companies report difficulties in selecting reliable or qualified suppliers. They also struggle to anticipate the security impact of different network deployment scenarios. In addition, many lack internal processes that limit exposure to risk. 70% of industry companies surveyed see managing cybersecurity as a key challenge related to 5G deployments.
- Working with multiple suppliers: Often, an industrial 5G solution consists of functional components from multiple suppliers. 69% of industrial companies see identifying, contracting and managing multiple suppliers as a major barrier.
Sustainability
5G technology is energy-efficient compared to previous technologies. The technology also enables environmentally and sustainability-oriented use cases. At the same time, however, there are also concerns about the environmental impact of 5G technology. More than half of industry companies (53%) see reducing the environmental impact of 5G deployments as a priority. 67% want to consider sustainability credentials of 5G operators, vendors and suppliers when making purchasing decisions around 5G.
"Industrial 5G is a key catalyst in unlocking the potential of smart industry and accelerating data-driven digital transformation," said Fotis Karonis, Group Leader of 5G and Edge Computing at Capgemini. "Enterprises need to capitalise on the benefits of 5G by tapping into shared expertise and co-create innovative, sustainable solutions for the future. An element of iteration is required, but organisations should aim to leverage the 5G ecosystem to jointly test solutions and move forward with large-scale 5G adoption, refining the approach as the ecosystem evolves."
Which network model fits best?
Industrial companies that want to benefit from the advantages of 5G need to get a clear picture of the opportunities offered by 5G and edge computing. Among other things, they need to identify which network model (a private, hybrid or public network) best suits the needs of their business. And consider any concessions they make in doing so. Industry companies can also explore external ecosystems for sharing expertise and jointly testing and validating the benefits of 5G.
Capgemini also sees a role for telecoms companies in increasing the deployment of 5G in industry. For instance, they need to quickly build essential capabilities to offer vertical and more specific solutions. For instance, telecom companies are already aligning their 5G strategy with companies' need for private 5G networks. o 63% of telecom companies offer industrial-grade private network solutions. 86% plan to roll out such an offering within two years. They are also betting on edge computing. 37% of telcos already offer 5G-based edge computing services. 61% want to do so within three years.
Further information is available in the report‘Accelerating the 5G Industrial Revolution: State of 5G and edge in industrial operations‘.
Author: Wouter Hoeffnagel
