What exactly is “digitisation”, why is it such a big deal to UK businesses and what part does it play in the “fourth industrial revolution” (Industry 4.0)?
These important questions are up there with other universal imponderables like: “If a tree falls in a forest and no one is around to hear it, does it make a sound?
There are a lot of snappy sounding phrases being bandied about the value of digitisation for businesses, but few of us actually understand what they mean or appreciate the benefits they may deliver for all kinds of businesses.
In the second part of our Industry 4.0 series, Adrian Williamson, software analyst at R&D tax specialist, Jumpstart, gives examples of savvy companies who are harnessing the power of digital technologies to reap rewards in improving internal efficiency, customer services and delivery of new product concepts.
What is Digitisation?
“Digitisation” covers a wide range of initiatives, but at the very core it means making more effective use of software technologies. This may be as simple as extending the role of software applications in gathering, analysing and using information more effectively in decision-making processes in your business, through to increased connectivity across plant and equipment both inside and outside the business in order to improve customer services or your company’s ability to service client needs.
The idea of the “smart factory” has also been around for a number of years but, to many, remains a vague and nebulous concept. In simple terms it is the increasing proliferation of sensors in the manufacturing environment providing greater levels of information and understanding of what is going on, supporting better informed decisions and control of manufacturing processes.
Smart factory – a case study
A good example of this is an English industrial weaving company which recently adapted a manufacturing execution system, originally developed for automotive manufacturing, to serve its own needs in an industrial weaving environment. The introduction of sensors and monitoring technology throughout the process line, and the manipulation of the software application to record performance relevant to weaving, has given the company much more information on manufacturing performance such as dynamic stock reporting, as well as machine loading and availability information. This in turn has allowed the management team to improve its raw materials stock holding and increase its plant utilisation levels. The “cherry on the cake” is that all of the above activities made the company eligible for R&D tax relief and they realised £19,000 tax benefit in a single year.
The many benefits of improved connectivity
Investment in improving connectivity between disparate devices and applications (developing the Internet of Things or even the Industrial Internet of Things) can have significant impact on internal efficiencies and enhance customer service.
For example, a UK-based logistics company has over the last two years invested heavily in improving the communications functionality of its legacy inventory tracking system, allowing customers to track the movement of their goods, across a number of carriers and transport modes, on any mobile device. This digitisation project also resulted in new automated invoice production and presentation, a bonus to both the logistics company’s own staff and its clients. Another bonus was being able to claim £148,000 in R&D tax benefit on their qualifying costs!
Servitisation through digitisation
Digitisation leads to the development of new service concepts, and the increasing “servitisation” of the manufacturing economy, as one lucky company found out.
The company was looking to develop an asset register and audit application to comply with stringent international corporate governance laws. They developed a web-hosted application, currently being applied in oil & gas but equally appropriate across global capital-intensive sectors, such as construction and shipping. In addition to creating the first of its kind subscription service, the company successfully received £37,000 R&D tax relief last year, for its efforts.
There are three quick examples of how businesses in the UK are using digitisation to significantly improve both business efficiency and customer services AND receive a nice tax benefit back in to the company coffer courtesy of HMRC.
How your company can benefit
To find out how you could leverage funds back in to your business through claiming R&D tax relief on your digitisation projects, call us on 01223 200690, or send us a message using the form below.