Turning Possibility Into Productivity

TURNING
POSSIBILITY
INTO
PRODUCTIVITY.

From self-driving cars
to virtual assistants,
Industry X.0 is using
AI to turn ordinary
products into industry
game-changers
Copyright © 2018 Accenture. All rights reserved. 2

Copyright © 2018 Accenture. All rights reserved.
ABOUT THERESEARCH
10%
50%
40%
11%
13%
76%
20%
10%
20%
10%
20%
20%
More than $10bn
$1bn+ to $10bn
$500mn to $1bn
Senior Vice President, Executive
Vice President, or Vice President
C-Level Executive
Managing Director,
Senior Director or Director
Source: Accenture Research Industry X.0 Products, 2018
China
France
Germany
US
Japan
Italy
By
revenue
By
designation
By
country
We surveyed 500 industrial companies across six
of the most industrialized geographies to understand
their perspective on embedding AI in their products
3

46%
51%
53%
55%
68%
DIGITALDISRUPTIONIS
DRIVINGDIGITALREINVENTION
Q. To what extent do you expect your industry to be disrupted by the following in the next 3 years?
(% of respondents saying “to a large/very large extent”)
New innovations
enabled by technology
New competitors
New regulation
Social and cultural shifts
Demographic shifts
Copyright © 2018 Accenture. All rights reserved. 4Source: Accenture Research “DisruptabilityIndex” survey of 1,440 executivesconducted in April–May2017
Digital disruption threatens to replace around half of the
companies in the current S&P 500 over the next 10 years

ANDAI-EMBEDDEDPRODUCTS
AREKEYTODIGITALREINVENTION
ANDTOP-LINEGROWTH
Combining Artificial Intelligence
(AI) with other powerful digital
technologies creates smart
products and services.
The products and services evolve
with their users in an intimate and
continuous process of innovation
and exchange.
Our research shows almost all
industrial players recognize
the power of AI.
Only a handful however have
established such Industry X.0
products in the market at scale.
Industry X.0 products and
services are the key to higher
stock market valuations.

WHATDISTINGUISHES
THEFAR-SIGHTEDFEW?
They convince
stakeholders of
their belief in
digital reinvention
They clearly
envisionthevalue
it generates and
its impact on
the business
They commit,
from the top, to the
success of their
vision—executing
a customer-centric
future at pace
and scale

ASTAGGERING9OUTOF10COMPANIES
AREALREADY DEVELOPINGINTELLIGENT
PRODUCTSFROM SCRATCH
273
124
7290%
10%
Developing Not developing
Industrial and Electrical
Equipment (IEE) and
Heavy Equipment (HE)
Automotive
Consumer Durables
RESPONDENTSCLUSTER

BUTDATA QUALITY ANDCYBERSECURITY
LOOM LARGEAMONG THECHALLENGES
FACEDBYINDUSTRIALS
11%
33%
35%
36%
37%
39%
40%
45%
45%
51%Data quality
Data/cyber security
Making vs partnering towards developing
an AI-embedded product/service
Data sharing/IP protection
Customer receptiveness
Defining AI algorithm/code
Human–machine interaction complexity
Regulations
Job loss fear among employees
Others Foundational challenges

ORCHESTRATING
THEECOSYSTEM
ISKEY
Most industrial players are leveraging only their
immediate ecosystem, rather than an expanded
network of start-ups, suppliers, customers and
academic institutions that can complement and
strengthen their existing capabilities.

THEJOURNEY

TOSUCCEED,OUR RESEARCH DEFINESA
FOUR-STAGE JOURNEY TOEMBARK ON
Believe
Digital reinvention starts
with conviction. Companies
need to really believe
in the power of AI to shape
the future of their products
and businesses, and to
bring key stakeholders
with them.
The good news is that
nearly 70 percent display
such conviction.
Envision
When it comes to transforming
conviction into a commercially
viable vision, however, only
16 percent of survey
respondents qualify.
In many cases, it’s the CEO
who puts the data-driven stake
in the ground, authorizing top
teams to start developing the
investment and ecosystem
strategies to acquire, process
and secure the data needed to
drive maximum value from AI.
Commit
Armed with a robust vision
and data-driven strategy,
the next step is to commit
appropriate management and
financial resources to two
critical areas: gaining the skills
needed to ensure frictionless
integration of new IT with
legacy infrastructures; and
shifting elements of the
business model to embed AI.
Just 5 percent reach
this stage.
Execute
Only 2 percent of survey
respondents achieve the
scale they need to drive
market value from their
digitally reinvented products.
They do so by working
with ecosystem partners to
identify, in granular detail,
the AI components they want
to combine with other digital
technologies, now and in the
future, as part of their
customer value proposition.

BELIEFISNOTTHEISSUE
Most know they
need to change
Many industrial
players struggle
to realize their
AI dreams
Only 24%
recognize that digital
reinvention drives
top–as well as
bottom-line growth
24%

68%
16%
5% 2%
YETONLY TWO PERCENTOF THE500
COMPANIES SURVEYED ACTUALLY
EXECUTEONTHEIRVISION
Industry Cluster
Number of
Respondents
Believe
Believe &
Envision
Believe, Envision
& Commit
Believe, Envision,
Commit & Execute
Industrial & Electrical Equipment
(IEE) & Heavy Equipment (HE)
295 67% 14% 3% 1%
Automotive 130 63% 19% 9% 5%
Consumer Durables 75 83% 19% 7% 1%
Believe Believe &
Envision
Believe,
Envision &
Commit
Believe,
Envision,
Commit &
Execute
Source: Accenture Research Industry X.0 Products, 2018Copyright © 2018 Accenture. All rights reserved. 13

COMPANIESSUCCESSFULLYEXECUTING
ONTHEIRCOMMITMENTTOEMBEDAIINTHEIR
PRODUCTSDISPLAYUNIQUEATTRIBUTES
Such companies build
business models with a
lifecycle perspective.
They are keen to drive
below and above the
line value for their
customers…
…to win their loyalty…
Analytics
…by pivoting to a
mix of AI technologies
best suited to drive
customer goals…
Natural language
processing
Robotics process
automation
Customer loyalty
Insights on product
and service usage
Cost reduction
After-sales services
to customers
Sources of generating
profitable revenue
Customer value
proposition
Increased safety
Smart solutions
& services
Predictive
maintenance
Data analytics
…and building the
necessary digital skills
System
integration
Creating
data lakes
Next 3 yearsCurrent
Source: Accenture Research Industry X.0 Products, 2018Copyright © 2018 Accenture. All rights reserved. 14
64%
64%
55%
82%
82%
64%
82%
82%
73%
91%
73%
73%
45%
36%
45%
64%
64%
45%

INDUSTRIESAND
GEOGRAPHIES
EXHIBITUNIQUE
CHARACTERISTICS
All Industrials recognize the imperative of digital reinvention.
But thanks to such structural differences as the composition
of their product portfolios and how close they are to the end
user, each industry cluster takes a somewhat different
approach to the digital reinvention journey.

Purpose: to cut cost (78%) and drive revenue (84%)
Technologies to combine with AI: Industrial Internet of Things (IIoT) platform (62%);
Mobile computing (64%)
Challenges: the complex nature of the sector and the missing layer between
customer-facing and innovation/product development (64%)
Purpose: to boost revenue (88%) and gain insight on product usage (70%)
Technologies to combine with AI: Big data analytics for predictive maintenance
(90% of truck makers; 70% of OEMs)
Challenges: Data/cyber security (70% of truck makers); data quality (55% of OEMs)
Automotive
Industrial, Electrical
and Heavy Equipment
Manufacturers
Consumer
Durables
Purpose: to boost revenue (75%) and gain customer loyalty (71%)
Technologies to combine with AI: Mobile computing (69%) and big data analytics (67%)
Challenges: data quality (61%) and customer receptiveness (55%)
HOWINDUSTRIES DIFFER

Asian respondents are relatively more bullish on the fact that
their company’s product and service portfolio will contain AI
84% of US respondents are concerned their
businesses will struggle against competition by
not integrating AI in the customer experience.
(vs. only 30% in Italy and 32% in Germany)
US
Italy
Germany
84%
30%
32%
45% of Chinese and 40% of Japanese companies
anticipate that 21-30% of their revenues will come
from AI embedded products and services
(vs. only 13% respondents of US)
Chinese
Japanese
45%
40%
HOWGEOGRAPHIESDIFFER

TRAILBLAZERS
OFTHEFOUR-
STAGEJOURNEY
The stories of those in the lead clearly
confirm the critical importance of turning
vision into commitment, as well as the power
of a collaborative and combinatorial approach.

FAURECIA
CO-CREATINGAN
INDUSTRYX.0PRODUCT
BELIEVE
The next generation of cars
will be connected and intuitive,
consistently reflecting the
driver’s preferences and
adapting architecture and
functionality. “The cockpit
intelligent platform, powered
by AI, is the centerpiece of our
future life-on-board products
and services strategy.”
ENVISION
Faurecia aims to become
the leader in the integration
of the technology “bricks”
that populate the Intelligent
Cockpit. It plans to accelerate
the transformation of its
operations and develop new
business models and user
experiences for the cockpit.
COMMIT
Patrick Koller, Faurecia CEO,
is the key advocate of the
Intelligent Cockpit and his entire
top team has visibility to this
initiative and participates in
various capacities. Renewed
investment in in-house R&D
is deepening and expanding
technology expertise, and the
company is actively scouting
for external expertise.
EXECUTE
Faurecia is pursuing
collaborations and
partnerships to identify
and combine appropriate
technologies, while Faurecia
Ventures is investing
in start-ups.
Sources: Faurecia innovation, Connected and autonomous vehicles,
Intelligent Cockpit video and Faurecia corporate news

SCHNEIDER
ELECTRIC
INNOVATING
INDUSTRYX.0
SERVICES
BELIEVE
Connecting products and
making them smarter is
Schneider’s top priority. Its
second core belief is closing
the loop on data—turning data
into business-centric insights
and action.
ENVISION
Schneider aims to cut the
time from product ideation
to market by 80 percent by
delivering innovation at
every level and reinventing
the customer experience
with new digital services.
COMMIT
Digitization is at the heart
of Schneider’s DNA. Since 2017,
Chief Digital Officer, Hervé
Coureil, has been advancing
the company’s digital strategy
and accelerating its digital
transformation.
EXECUTE
Schneider has partnered
with others to deliver its new
digital services, and combines
multiple digital technologies
(including cloud, analytics
and AI) to scale up the value
to customers. In 2017 the
company commercialized more
than 40 digital service offerings
and has more than 20 in
development for 2018.
Sources: CNBC Interview with Jean-Pascal Tricoire, Driving digital
transformation with IoT innovation, CMOs' Evolving Analytics
Imperative and AI: The Answer to the IoT Data Apocalypse

HOWDOYOUSTART
YOURJOURNEY?
We propose a set of specific and concrete actions for industrial
companies to take at each stage of their digital reinvention
journey.

THEC-SUITEAGENDA
FOR THENEXT100DAYS
Define the Digitally
(re)invented product
you want to build
Identify the value to
be built and owned
and identify the
impact on both top
and bottom lines
ENVISION
Articulate your
belief in digital
reinvention of the
product and share
it with stakeholders
BELIEVE
Commit senior
management
to securingstrategic
and tactical
partnerships that
create value and
mitigate risk
COMMIT
Execute innovation
and ecosystem-
driven business
models
EXECUTE

THANKYOU
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AI Turns OrdinaryProductsinto Industry Game-Changers

Turning Possibility Into Productivity

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