Industry 4.0 is changing the way manufacturers design and manufacture their products. Digitization is a business priority for every organization today, making the Industrial Internet of Things ubiquitous in the context of industry. Convergence of technologies such as machine-to-machine (M2M) communication and advanced manufacturing techniques with data and analytics is driving exceptional levels of productivity, efficiency, and performance.

Today, manufacturing is moving from mass production to mass customization. This means manufacturers are focusing on meeting the ever-changing needs and demands of customers. Large industrial tech companies such as GE, Siemens, and Cisco have been dominating the market for years. With its significant implications and enormous potential gains, the industrial IoT wave has now reached small and medium companies striving to innovate in this space. In today’s world, start-ups are poised to have a strong impact on economic growth. The global start-up ecosystem is expanding rapidly with more and more start-ups attacking the critical needs of the heavy manufacturing industry by innovating in cloud platforms, analytics, machine learning, and so on to extract useful information and deliver insights from the ocean of data available.

These days, companies face a lot of pressure from increased competition. Large companies are also seeking successful innovation in terms of technology, products, and services. Original equipment manufacturers (OEMs) are always striving to expand their geographic coverage. At the same time, they aim at venturing into new markets and diversifying their product range. One way of tapping into this field is by collaborating with start-ups across various business activities.

Start-ups have emerged in every technological vertical and over the last few years; they have been successful in addressing the grey areas such as cybersecurity, advanced machines interactions, and artificial intelligence that seemed like a dream a decade ago. Start-ups are, therefore, playing a key role in bringing innovation into the market in a faster and more cost-effective manner.

Successful corporate start-up collaboration paves the way for new business models bringing new products into the market in accordance with changing consumer demand. While most start-ups have the zeal and skills to innovate and bring their ideas to the market, they often lack access to clients, capital, and resources. On the other hand, while large companies have the capital, resources, and access to a wider market, they often struggle for innovation. A successful partnership will benefit both start-ups and corporates by providing them with invaluable experience, useful connections, access to resources, and market expertise, resulting in greater savings and revenue. With such collaborations, start-ups will have easy access to business expertise, targeted client network, opinions and feedback for best solutions and services, and a huge potential for acquisitions and joint ventures. These collaborations will also help corporates improve the existing infrastructure and effectiveness by revamping existing technologies and providing more cost-effective and innovative solutions. These partnerships also increase the risk-taking ability for corporates to experiment with new ideas and forge potentially beneficial joint ventures.

With advances in technology, Frost and Sullivan believes that by 2022, Industrial IoT will penetrate every industry vertical. The increasing number of start-ups and numerous innovative solutions in the market will provide a number of opportunities for disrupting large industrial organizations. With the competitive shift in the market and start-ups venturing into niche technology segments, the culture of advanced technologies in manufacturing is set to pave the way for organizations to not only act as consumers but also become originators and innovators in order to remain competent in the market. Start-ups bringing digitization to the heavy manufacturing industry have witnessed substantial investments to the tune of about $2 billion.

According to Frost and Sullivan, the number of start-ups is expected to increase rapidly, estimated to record a compound annual growth rate (CAGR) of 25–30% by 2022.

Many large organizations are investing and partnering with start-ups for to improve their product capabilities. For instance, GE has acquired two technology start-ups, Bit Stew Systems and Wise.io, to enhance its artificial intelligence capability and expand its Predix Platform. GE made a substantial investment of $153 million to acquire Bit Stew Systems. This acquisition helped it garner Bit Stew’s platform and enabled significant savings annually.

With companies seeking successful innovation at every instance, manufacturers have realized the importance of close interaction with customers; and partnering with start-ups has provided them with the platform to embrace new forms of innovation and ensure close proximity to customers. Many OEMs have also taken an initiative to develop their own platforms and programs, where they partner or form a joint venture with start-ups by making substantial investments. GM Ventures, BMW Startup Garage, JLR Tech Incubator, and Volvo Venture are a few such initiatives and programs. With increasing customer demands and the rise of customized, personalized, and unique products, the new era of manufacturing over the next decade will be marked by immense innovative opportunities for manufacturers through collaborations and joint ventures, where innovation will only be the key element to sustain in the highly competitive market and drive long-term success.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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