Exploring the industrial metaverse

Although current adoption of edge computing, wearables, extended and mixed reality, and blockchain technologies is relatively low, their integration is likely to be important as industrial metaverse applications expand both within and beyond the factory walls.

The study shows that not only do most manufacturers seem to have a strong technology foundation in place, many of the surveyed respondents are already combining and leveraging these technologies today to implement industrial metaverse use cases and create value. 

Manufacturers appear to be driving toward industrial metaverse adoption

Nearly all (92%) surveyed executives said that their company is experimenting with or implementing at least one metaverse-related use case and, on average, they are currently running more than six. Building on their smart factory efforts and leveraging the foundational technologies already in place, the production ecosystem was the most common for use-case implementation, with more than one-third of respondents already integrating metaverse technologies, followed by the customer, supply chain, and talent ecosystems (figure 3).

Respondents then shared the primary use cases (see figure in the sidebar titled, “Use case definition”) they are implementing using metaverse technologies. Given their significant focus on the production ecosystem, process simulation and real-time monitoring/digital twin were the two most common use cases overall; the remaining production-focused use cases were also prevalent (figure 4). Immersive training ranked third, followed by supply chain management and immersive customer experiences, demonstrating a healthy distribution of use cases across the talent, supply chain, and customer ecosystems.

Surveyed executives were asked to indicate the primary benefit gained from the implementation of each use case (figure 6). Reduced cost was identified as a key benefit for all use cases. For virtual recruiting and onboarding, virtual plant tours, and immersive training, improved employee attraction and retention were the top choice. Operational benefits like higher throughput or supply chain performance were most prevalent for process simulation, factory simulation, and supply chain management, while respondents cited increased revenue as the most common benefit for customer-facing use cases like virtual aftermarket services.

Use cases in action

While this report highlights that manufacturers have already implemented a variety of industrial metaverse use cases, the analysis dug deeper and explored what these use cases look like in action. Figure 7 describes examples of industrial metaverse initiatives that companies have put into action for several of the use cases investigated in the study, along with the benefits realized.

Based on the study findings, six future-looking industrial metaverse use case examples were also identified. These examples are illustrated in the context of how a hypothetical heavy equipment manufacturer, Jakruv Heavy Equipment Inc. (Jakruv), employs them to solve common problems that the company faces. 

The use cases and case examples that companies have reported seem to demonstrate that manufacturers are deriving value today from implementing industrial metaverse initiatives. The next section explores how industrial metaverse leaders are generating value.

Metaverse pacesetters seem to be leading the way

Thirty percent of the surveyed base have been identified as “pacesetters”—companies that appear to be taking the lead in metaverse implementation. What sets them apart? How are they investing in their metaverse initiatives? And what strategies and approaches have they taken to be successful in implementation?

Pacesetters seem to have an innovation mindset, higher digital maturity, and are eager to invest

When it comes to technology-related business innovation, pacesetters typically identify themselves as leaders who are “first to innovate” and they often have a higher level of digital maturity compared to their competitors.⁴ They seem to understand that transformational change around the industrial metaverse will not happen all at once, and they tend to be focused on identifying, implementing, and expanding metaverse use cases with the best potential for a strong return on investment (ROI). On average, pacesetters are likely to invest in a total of eight or more use cases, notably higher compared to others, and are committing larger investments to their metaverse initiatives (figure 8).

Pacesetters generally leverage a diverse community of stakeholders across the organization

Pacesetters seem to understand that internal collaboration with stakeholders across functional areas is important for the success of metaverse initiatives. Extensive knowledge from several areas—including production/operations, information technology, leadership, and engineering—is required for successful implementation. Internal collaboration also tends to be important to integrate and standardize leading practices and create overarching governance rules and procedures.⁵ Pacesetters are generally engaging multiple leaders across the organization with diverse skills and perspectives.

As one leader explained, digital initiatives are all-encompassing, and they require involvement from almost every department in the organization.⁶ Another executive stated that driving metaverse initiatives involves both the functional and technological domains of the company and to achieve such collaboration, their company has developed a center of excellence to lead manufacturing through the digital revolution.⁷

Pacesetters often form external alliances and partnerships

Pacesetters tend to recognize that the knowledge, experience, and adaptive learning necessary to act on industrial metaverse initiatives commonly requires them to engage multiple external partners. The study highlights that pacesetters are using an ecosystem approach for their metaverse initiatives more than other companies and are tactical in identifying their key partners (figure 9).

Several executives interviewed stated that their respective companies are actively looking for external partnerships with software providers, systems integrators, and even with customers.⁸ An ecosystem approach can also enable organizations to respond to changing needs and opportunities in the digital landscape and learn best practices to mitigate risks and challenges that may arise.

Pacesetters establish appropriate leadership

Pacesetters seem to be engaging leaders across the organization for their industrial metaverse initiatives. Having a diverse set of leaders at the table can help to foster early buy-in and well-rounded decision-making. In addition, having a technology leader to champion and lead metaverse initiatives can help establish ownership, and likely provides the knowledge and focus needed to investigate new applications, drive projects over the finish line, and accelerate the pace of adoption.

One executive explained that they have appointed a leader under the chief information officer to lead all technical aspects of digital transformation related to manufacturing. This leader works in partnership with other functions to determine the direction the business needs but is ultimately responsible for identifying the technologies and getting the technical foundation and partnerships in place to implement the solutions.⁹

Pacesetters often embrace the industrial metaverse through organizational change

Pacesetters reported they are more likely to embrace organizational change to further their adoption of the industrial metaverse compared to others (figure 10). More than half of pacesetter respondents reported establishing a road map for implementing metaverse initiatives and are actively recruiting talent with the requisite digital skills and knowledge. In short, pacesetters seem to understand it is important to pivot to position the organization for disruptive transformation. This could be a key reason for their faster adoption curve and value realization.

Overcoming challenges and managing risk

While many manufacturers have celebrated successes with industrial metaverse initiatives, they may still feel that there are challenges and risks to overcome to move toward full adoption of the industrial metaverse.

Cost, talent, and interoperability viewed as key challenges

As is generally the case with capital investments, cost and ROI are primary considerations with industrial metaverse implementation. Fifty-one percent of surveyed respondents selected cost to implement as the key factor hindering the adoption of metaverse-enabling technologies (figure 11). One executive noted that their company has to prove the value and pay thorough attention to baseline costs to measure improvements.¹⁰

The second most prevalent challenge cited was lack of employees with the right skills and knowledge. The industrial metaverse is no different here than what is generally seen with other digital investments. One executive emphasized this concern—if the technology is implemented, where does a company find the workforce with the right skills to effectively use the technology?¹¹

Integration between existing technologies and systems was chosen as the third most important challenge. To create the immersive and collaborative virtual and virtual/physical environments of the industrial metaverse, people, processes, data, and systems should work together, establishing effective connections across manufacturing environments. Preparing and transforming data across complex workflows is often a key challenge to integration. One executive stated that his company already has challenges integrating existing systems across several plants.¹² Industrial metaverse initiatives are expected to only increase the demand for, and complexity of, marrying both similar and disparate technologies.

Pacesetters have demonstrated that technology sophistication and digital maturity can provide a foundation to elevate the ability and confidence of manufacturers to implement industrial metaverse initiatives. Companies surveyed generally understand that they should continue to invest in hardware, software, and digital infrastructure to create virtual environments that support large numbers of users as they move toward the industrial metaverse.

Cybersecurity and data protection are important risks to manage

Cyberthreats are pervasive and can have a disastrous effect on a company if not properly mitigated. Implementing the industrial metaverse will likely bring new challenges since it derives its unique power from making proprietary 3D data about parts, products, facilities, etc., available to a variety of internal users, customers, and suppliers. It does this by allowing users to access the data through a myriad of interaction technologies over the internet, such as AR/VR devices, tablets, and phones. 

One executive mentioned that because the metaverse will require significant data management, data protection, privacy, and security is a concern.¹³ In fact, more than 70% of the respondents agree that cybersecurity is one of the greatest risks associated with implementing metaverse-enabling technologies (figure 12). Rounding out the top four are respondents’ concerns about protecting data and intellectual property (IP), brand, and personal information, all of which can be compromised in a cyberattack.

Digitalization has required manufacturers to drive collaboration between information technology and operational technology to create an effective cybersecurity approach.¹⁴ Companies should develop capabilities to identify and address risk in an information technology (IT)–operational technology (OT)–interaction technology (ET) environment. One executive explained that his company is working to establish OT security capabilities and standards for how to review equipment efficiently, following the company’s IT policies, so that the operations and engineering teams can more quickly pilot and implement new equipment. This includes ET, especially since they are typically low cost (<US$5,000) and don’t rise to the same level of review priority for IT as say a mutimillion-dollar software package.¹⁵

While cybersecurity risk may increase with the industrial metaverse, the study suggests that manufacturers generally believe the value it will deliver outweighs the risk, especially with the right mitigation strategies in place (see sidebar titled, “Cybersecurity approaches for the industrial metaverse”).

The industrial metaverse is likely to enable sharing of more proprietary, confidential, and sensitive information across a diverse set of internal and external players. A global footprint, broad customer and supplier bases, and multimodal communication technologies can open new avenues for data and IP theft and loss, beyond just cyberattacks. Contracts, IP agreements, and licenses can play an important role in managing data in external collaborations. Manufacturers can also consider several underlying strategies to protect their data in industrial metaverse initiatives and maximize their ROI (see sidebar titled, “Data and IP protection”). 

A paradigm shift that could transform manufacturing in the near term

A majority of manufacturing executives surveyed are bullish on the potential of the industrial metaverse in the near term. Nearly two-thirds of respondents indicated that it will fundamentally transform how organizations do business, interact, collaborate, or have value-added virtual experiences over the next five years (figure 13). These industrial metaverse proponents held a more positive view of how the metaverse could improve outcomes internally, with customers, in production, and with suppliers and partners.

More than 70% of all surveyed executives believe that in the next five years, the industrial metaverse will have a high rate of adoption in the manufacturing industry. Nearly 80% are confident that the metaverse will transform R&D, design, and innovation and enable new product strategies.¹⁶

Surveyed executives generally agreed that the industrial metaverse offers new ways to solve a variety of pressing challenges they face in the near term, such as attracting and retaining top talent, and building visibility and resilience into their supply chains (figure 14). They tend to view the industrial metaverse as a pathway to future value realization through improved new product introduction rates and new customer experiences and services. Respondents also expect a broad positive impact across the business and are confident that the industrial metaverse will improve key business outcomes such as competitiveness, market share, revenue, and costs, among others.

Respondents were asked to estimate the specific benefits that they believe can be gleaned from metaverse initiatives over the next one to three years. On average, executives anticipate an increase of 12% or more in several of their key performance indicators, including quality, throughput, and labor productivity (figure 15).

However, the study results indicate that manufacturers aren’t just betting on the future—they seem to be building it. Some respondents shared that they have already made significant investments in metaverse initiatives, and nearly three-quarters plan to increase their investments over the next one to three years (figure 16). Nearly four in 10 respondents indicated that they are planning substantial growth in their use of metaverse technologies across all four ecosystems (figure 17). 

Executives generally indicated that the industrial metaverse offers a wealth of opportunity for the manufacturing industry over the next five years, and many of those surveyed are planning significant investments to capture the potential value that it holds. But what is a leading approach for manufacturers as they move forward on their journey toward the industrial metaverse?

Unleashing the power of the industrial metaverse

A three-pronged approach can be used to identify, initiate, and scale industrial metaverse initiatives (figure 18). The approach can support a broad spectrum of companies on their industrial metaverse journey.

Final thoughts

The 2023 Deloitte and MLC Industrial Metaverse Study indicates that manufacturing executives seem not only confident that the industrial metaverse may hold great promise for the industry—some are already taking what’s next and transforming it into what’s now. In many cases, they are driving forward with metaverse use cases and appear to be deriving significant value across the organization. The use cases that manufacturers have implemented demonstrate that the industrial metaverse is here today, and that it can unleash new capabilities and efficiencies for modeling and simulation of production processes and facilities, virtual prototyping, training, design, as well as collaboration with teams, suppliers, and customers across the globe.