Value Creation Of Industry 4.0 System In Manufacturing With BPR As Value Creation Basis

Industry 4.0 is a word that isn't used all that much in academic literature,yet information system professionals use it to refer to technologies,such as industrial internet(IoT)and business intelligence(BI),which have become quite topical in recent years.These kinds of technologies have become commonplace in companies and nowadays every other production company seems to have their own“Smartfactory"-system.However,it is not all that clear what is the added value of implementing such industry 4.0 systems.Industry 4.0 is a word that isn't used all that much in academic literature,yet information system professionals use it to refer to technologies,such as industrial internet(IoT)and business intelligence(BI),which have become quite topical in recent years.These kinds of.technologies have become commonplace in companies and nowadays every other production company seems to have their own"Smartfactory"-system.However,it is not all that clear what is the added value of implementing such industry 4.0 systems.The link between information systems(IS)and business process value creation is traditionally quite hard to demonstrate,but it can be said that IS aims to change how people do their work by enabling efficient ways to do their work tasks.Thus,the added value of a system,if existing,might be found in the way these systems affect the thinking and practices,work processes,of people they involve.The main literature basis for value creation this thesis studies is business process reengineering(BPR).The justification for selecting BPR as a value basis for this thesis can be argued by the overlapping areas of industry 4.0 and BPR.BPR,as understood within the context of this thesis.describes how utilizing information systems can lead to development of new processes and ways to operate within a company.Industry 4.0 systems often aim to change the manufacturing process by utilizing an information system based on advanced digitalization.The similarities in these definitions justify observing industry 4.0 from the BPR's point of view.It is relevant to acknowledge that the terms BPR and industry 4.0 are not "trendy" in academic context their selection for the main terms used in this thesis might seem questionable.However,the concepts of BPR are present in literature to this date even if the names of the terms used have changed.Additionally,the selection of industry 4.0 as a substitute for terms like IoT and BI is important,since the term is nowadays used by companies to refer to concepts present in literature.Thus,defining the term and using it is important to bridge a gap between corporations and academia.By using the concepts defined within BPR and topics under industry 4.0,this thesis studies how these work processes change in relation to these kinds of systems.The empirical part of the thesis is done this by conducting a theme interview with employees at Stera Technologies Ltd,whose work roles are intertwined with industry 4.0 system.The aims of this thesis are to observe the value creation process of an industry 4.0 system and while doing so to determine if the seemingly overlapping definitions of industry 4.0 and BPR function together,even if they industry 4.0 is not prevalent and BPR is not topical in academic literature.The question this thesis aims to answer is related to the value creation to IoT-data based BI system.This kind of system can be associated with the umbrella term industry 4.0 and the term is used going on,while referring to such systems.The term itself refers to the "fourth industrial revolution'",which is supposed to take place in the near future.More specifically it refers to the modular and efficient manufacturing systems in which products themselves control the manufacturing process(Lasi et al.2014,239).This term is rather relevant in terms of this thesis and it is defined more specifically later on.The main research question of this thesis can be formulated as follows:"How does implementation of an industry 4.0 system generate value with business process reengineering concepts as value basis?".The main research question is supported by following sub-research questions:What industry 4.0 means as a term?Does the case system create value through business process reengineering?The fundamental research problem,that this thesis tries to solve is to find out what value does an industry 4.0 system called "SmartFactory" provides to the company in which the research takes place.At the moment,the company has developed and implemented the information system,but they are not clear about what tangible benefits it does provide.The system and the company are described later on the thesis.To answer the research questions posed,this thesis studies prior IS literature on industry 4.0 and work processes.Key theories to consider are how value is created through IS and how business process reengineering creates value.Hammer(1990)claims that the usual methods of boosting performance via automation and rationalization have not been as effective as companies need.Especially IT investments have lacked in terms of results.His proposed solution to this problem is business process reengineering,in which company's business processes are rebuilt from scratch to create value.This idea of reorganizing business processes and models is supported by the ideas present in industry 4.0 literature.For example,Matthyssens(2019)argues that industry 4.0 and IoT solutions force companies to break their industry model and remodel their business.This idea is very similar to the idea of reengineering business processes.Several well-cited articles,such as Brynjolfsson&Hitt(1996),define the lack of investment effectiveness as "IS productivity paradox".This term has been discussed widely in literature and it is one of the key problems regarding IS investments.This paradox is related to the main research question of this thesis,since in essence this thesis is trying to solve how a business case can be made for an IS investment.Investments in IT have often dissatisfactory results to companies,since IT is used to automate old processes instead of creating new ones(Hammer,1990,2015).This thesis focuses especially on creation of new work processes is related to value creation.Man(2001)describes the value creation of changes in work processes by presenting how"mindsets" can lead to cost saving in production.In more recent literature "mindsets" are discussed,for example by Metallo et al.(2018).They describe how IoT mindset enables value creation through distinct capabilities of new technology.This thesis draws on existing literature to define how value creation is viewed when it comes to IS.Peppard et al.(2000)view value creation in IS to stem from information exploitation.Value creation in IS is a complicated issue and authors like Peppard(2000)have defined it in multiple different ways.BPR was selected as the basis for value creation in this thesis to limit the scope of the literature reviewed.The main connections this thesis aims to discover between IS literature and research results is evidence on how work processes have changed in a meaningful way when they are influenced by industry 4.0 systems.The goal of the literature review is to present frameworks similar to Peppard et al.(2000)ideas regarding information exploitation and then integrate the models into a clear framework which is then used to as a basis for conducting and analyzing interviews.The selected literature is discussed more on the literature review part of my thesis.The research uses qualitative methods to pursue its research questions.The selected research methodology of this thesis is case study.This approach can be justified because there is a limited amount of people using the case system.Because of this,quantitative methods are difficult to apply.The research combines interviews and ERP data for its research material.The methodology is further described and justified in the methodology section of the thesis.Like discussed earlier,this thesis aims to utilize work process and value creation models in order to inspect whether implementing industry 4.0 system changes work processes of people who are involved with system,in a meaningful manner.Hopefully,this research can add to the existing research by reinforcing or debunking results found regarding industry 4.0 systems and their definitions.Research governing this topic is at the moment still quite limited.Because of this,it is beneficial to add to the existing research.The data collection was done by conducting interviews with selected interviewees.The interviews were based on a semi-structured questionnaire.The interviews were recorded in adherence to the agreement of the interviewee.Before the interviews,permission to conduct interviews with the intended interviewees were asked for.In addition,the necessary documentation and agreements regarding data collection and its usage were presented to the interviewees.In addition to interviews,data gathered from the company's ERP was included in the data collection.This data concern key performance indicators(KPI)regarding the case environment and they depict how the efficiency of the production has changed after the system implementation.The data gathered and interviews are discussed later on the methodology and analysis sections.The intended benefits of this research were mainly focused on demonstrating the benefits/lack of benefits for the company hosting this research,Stera Technologies Ltd.The results can aid in the strategic planning regarding the future of industry 4.0 solutions within the company.They can also deepen the company's insight in the options regarding their system architecture.The benefits for future research are related to the term definition made earlier and providing new research data on a relatively uncharted research territory of industry 4.0 system benefits.The main research gap concerning this thesis has to do with the elusive term industry 4.0.The term is not well defined in academic literature or even in practice.This thesis demonstrates one way to use this umbrella term and hopefully it adds to its definition in a meaningful manner.The thesis also aims to define how industry 4.0 systems create value.This area of research is somewhat poorly defined and researched considering the several uses of the term.This thesis studies one kind of industry 4.0 system,but the approach taken in the term definition should be applicable to the research of other industry 4.0 sy stems.All in all,the research gaps this thesis tries to answer are the discourse in literature and organizations when it comes to terms like industry 4.0 and IoT and how industry 4.0 systems lead to value creation.The societal implications of this research are furthering the understanding regarding industry 4.0 solutions and by extension their implementation.If we understand the benefits of adopting systems more clearly their adaptation will be easier and faster.By comparing different approaches to value creation and data collected,it was concluded that the case system has created value through BPR concepts.Seemingly the implementation of an industry 4.0 system as defined within the thesis leads to value creation through changes in business processes.This value creation is limited by the success of the system implementation process.The case system has not achieved its potential,since even if its implementation is over it is not utilized by all of its intended end-users.