3 questions for Julia Arlinghaus and Thomas Bauernhansl about ‘Industrie 4.0 im Mittelstand: Erfolgsfaktoren in der Organisation’

Copyright:
Julia Arlinghaus © Fraunhofer IFF_Viktoria Kühne; Thomas Bauernhansl © Rainer Benz
Munich, 1 September 2025

Julia Arlinghaus:

While many large companies are already using Industrie 4.0 solutions, SMEs are often only at the beginning of their digital transformation. The majority of SMEs see considerable difficulties in implementing digital technologies, although there are strong drivers such as competitive pressure. Technological complexity, overregulation, and limited resources are obstacles that are slowing down implementation. Key enabler technologies such as AI, big data, and IoT have only been utilised by a minority to date.

Thomas Bauernhansl:

If the term Industrie 4.0 is understood to refer to the networking of production using state-of-the-art information and communication technologies and the use of digital and automated technologies, then this encompasses a wide range of solutions. These range from the use of networked machines, to the digital representation of products, machines, and processes by means of digital twins, and the application of artificial intelligence.
All of these solutions involve different hurdles, but also offer potential. In general, the use of digital applications for Industrie 4.0 in Germany has increased noticeably in recent years. According to a study by the German Aerospace Centre, the proportion of SMEs able to demonstrate a basic level of digitalisation has doubled from 2017 to 2023, reaching 77 pp.
This development is partly attributable to support measures that have been introduced by policymakers specifically for SMEs in the past. At the same time, however, it is clear that the adoption of new technologies such as artificial intelligence or digital twins has not yet advanced significantly. Although the use of artificial intelligence offers considerable potential for competitiveness, only six per cent of SMEs are making use of these technological advantages, according to the German Economic Institute.
SMEs are also struggling with the use of digital twins. This is partly due to the lack of a shared understanding of what exactly digital twins are and how they can be used. It is precisely in this area that research can – and must – play a key role in raising awareness and enabling SMEs to make profitable use of this technology.
It can also be observed that SMEs perform less well than larger companies when it comes to the use of Industrie 4.0 solutions. This can be illustrated, among other things, by the so-called Digitalisation Index, which tracks the progress of digitalisation based on a range of criteria. According to the latest study conducted for the DLR Project Management Agency as part of the “Mittelstand-Digital” funding initiative for 2023, the index for SMEs stands at 122, while larger companies score significantly higher with an index of 191.

Julia Arlinghaus:

The limited resources of small and medium-sized enterprises do not fundamentally stand in the way of implementing Industrie 4.0 solutions. However, they do require pragmatic approaches and targeted strategies. Industrie 4.0 offers a wide range of opportunities for SMEs, such as increased efficiency, new business models, or improved customer communication.
It is advisable to begin with smaller, clearly defined projects. These might involve order processing or the use of digital tools in customer service. Such projects can become flagship initiatives within the company and help drive the broader implementation of Industrie 4.0 solutions.
Open test and experimentation environments allow companies to explore the potential and risks of new technologies in a low-threshold setting without major investments. Technologies that require minimal qualifications—such as no-code or low-code applications—can also facilitate initial access.

Thomas Bauernhansl:

A lack of resources is undoubtedly a challenge when it comes to implementing Industrie 4.0 solutions for businesses. According to a representative survey conducted by Bitkom on the biggest obstacles to the use of Industrie 4.0, 77 per cent of the responding companies cited “lack of financial resources” and 55 per cent mentioned “lack of skilled personnel” as reasons hindering the implementation of Industrie 4.0.
However, these are not the only barriers to the use of Industrie 4.0 solutions in businesses. There are also factors over which companies have no control. These include, for example, insufficient or underdeveloped digital infrastructures, such as broadband and mobile networks in rural areas. The lack of standards and interoperability between different systems, platforms, and machines also presents many companies with significant challenges. A current example that highlights this issue is the European Union’s Green Deal, which aims for climate neutrality and represents the largest ecological and economic shift within the EU. Part of this Green Deal is the so-called Digital Product Passport, which provides relevant information about a product, such as its material composition or production conditions, thus ensuring greater transparency along the value chain. In implementing this product passport, many companies are confronted with a lack of standards and technical solutions and often feel left to their own devices.
In this regard, policymakers have a crucial role to play in specifically addressing these barriers and making new technologies and solutions accessible to industry through the promotion of research and innovation.
Despite these challenges, it should be recognised that the adoption of Industrie 4.0 applications offers businesses significant opportunities. In general, their use contributes to improved competitiveness, leads to more sustainable and resource-efficient production, reduces error rates, and enables new digital business models. Therefore, investments in the digitalisation of businesses are essential for future viability.

Julia Arlinghaus:

Organisational factors play a key role in the success or failure of Industrie 4.0 projects in SMEs, as they can be directly influenced by the company itself. Clear leadership structures, a high degree of willingness to change, the competencies of employees, and a targeted strategic alignment of projects are the crucial factors. For instance, in a carpentry business, the transparent and step-by-step introduction of a digital order management system led to the successful digitalisation of internal processes. Key to this success was the complementary peer learning and strong commitment from the leadership team.
However, missing responsibilities, lack of resources, or inadequate IT security standards act as barriers, as shown by an example from the logistics sector. There, an innovative but insufficiently integrated quality assurance system had to be discontinued after a cyberattack.
Successful companies are characterised by structured project planning, interdisciplinary teams, clear communication, and systematic competency development. It is also crucial to recognise and actively manage the risks associated with new technologies at an early stage.

Thomas Bauernhansl:

Organisational factors have a significant influence on the successful implementation and application of Industrie 4.0 solutions in companies.
Starting with the leadership level, which has a decisive impact on the motivation and execution of Industrie 4.0 projects. In this context, it is also important that the right decisions made by leadership can positively influence the willingness to change among management and employees. An open communication culture and the early involvement of employees play a crucial role in this process.
The coordination and management of Industrie 4.0 projects can be effectively supported through roadmaps, the division of projects into manageable sub-projects, the inclusion of risk management, and the efficient use of resources.
Due to their size and limited resources, SMEs cannot easily establish a dedicated digitalisation department. Therefore, the competencies and qualifications of employees must be systematically identified, consolidated, and developed. Furthermore, SMEs should also seek suitable partners with SME-oriented experience in Industrie 4.0, from whose expertise they can benefit and create synergies.

The publication of the Research Council Industrie 4.0 “Industrie 4.0 im Mittelstand: Erfolgsfaktoren in der Organisation” deepens these topics. You can find the publication here (in German).