Business leaders investing in generative AI and automation to reinvent physical operations: Report

Cloud company for connected operations samsara today released a report highlighting how organizations in industries that generate more than 40% of global GDP are revamping their physical operations.

THE 2023 State of the Connected Transactions Reportcompiled after surveying more than 1,500 physical operations leaders from nine countries, it reveals that these leaders are making substantial investments in digitization to improve their supply chains, upskill employees, and adopt sustainable practices, all of which have yielded positive results.

The challenges faced by operations leaders over the past year have attracted significant attention and sparked boardroom discussions around the world, according to the report. These challenges included rising fuel costs and inflation, labor and equipment shortages, and constraints in supply chains. However, they have successfully overcome these hurdles by embracing technology and finding ways to optimize efficiency.

Automation and generative AI in the pipeline

Leaders are reviewing their supply chains and technology budgets to address these challenges and build resilience. The study also found that leaders are now embracing generative artificial intelligence (AI) and automation, with 84% expecting to use generative AI and 91% automation to modernize their operations by 2024. In addition, 51% are already using or plan to use autonomous vehicles or equipment this year.

To further streamline operations, leaders are replacing traditional pen-and-paper processes with digital workflows, with 55% of their field employees predicted to depend on digital workflows to carry out their daily tasks by 2025 .

“We asked more than 1,500 physical operations leaders in nine countries how they are reinventing their operations. They have more than 3.6 million vehicles and assets under management and more than 6.3 million employees,” Samsara chief product officer Jeff Hausman told VentureBeat. “Our research found that two out of three leaders are increasing their technology budgets this year, indicating they are confident in the ROI of digital transformation.Leaders report benefits such as increased net income and security as a result of their investments to date.

To improve supply chain predictability and efficiency, 59% of leaders have planned to move their operations ashore, which means they will move them to their home country this year.

According to the study, real-time operations data held a competitive edge and was deemed crucial to decision-making by 90% of leaders.

“Leaders have predicted that by 2025, more than half of field workers will rely on digital workflows to carry out daily tasks. For employees in physical operations, digitizing workflows reduces administrative friction and adds more flexibility. It’s a significant change from paper-based processes and speaks to the evolution of technology built specifically for these roles,” Hausman told VentureBeat. “Manpower shortages continue to be a major challenge for operational leaders. He estimates, in the United States, the average driver turnover rate is about 90%. At the same time, digitization is changing the daily employee experience. So we’re at a tipping point: roles are changing and the talent pool is tight.”

Independent research firm Lawless Research conducted the 2023 State of Connected Operations Survey from February 6 to March 10, 2023. The surveyed audience included 1,525 physical operations leaders, including C-suite executives.

Invest in next-generation technologies to optimize efficiency

“Our research has found significant changes over the next 18 months. Leaders are investing heavily in digitization to improve supply chains, employee skills and sustainability practices. These investments are all connected to tackling today’s toughest challenges,” Samsara’s Hausman told VentureBeat.

Leaders predict that within the next two years, one in six employees will be in roles that don’t exist today. To address this impending change, over half (52%) of leaders prioritized equipping their employees with the skills they’ll need to navigate emerging technologies.

In particular, the organizations surveyed are expected to invest approximately $7 billion in 2023 to facilitate employee training, refresher and retraining initiatives.

“Optimizing your existing workforce and investing in career development is critical to setting up an organization for long-term success. Indeed, a key to retention is demonstrating to employees that they are essential to the future of the company and providing them with opportunities to build their careers,” Hausman explained. “Our research also found that leaders are discovering new ways to upskill employees with technology. For example, more than half will use augmented reality and artificial intelligence to upskill employees in the next two years.”

Samsara’s research also revealed that data plays a vital role in any digital transformation strategy, serving as a strong foundation for driving resilience and gaining competitive advantage. Technology gives organizations quick access to data, and leaders who possess accurate and timely insights are better equipped to anticipate and proactively address potential issues, thereby ensuring smooth operations.

“Nearly all of the leaders we surveyed (90%) said that having accurate, real-time operational data is critical to their decision-making,” Dana Chery, Samsara’s vice president of marketing, told VentureBeat. “They are devoting substantial resources to making sure they have the technology in place to make the most of that data, with two-thirds of leaders reporting increasing their technology budgets for 2023.”

Digital transformation for physical operations

Chery added that managing physical operations is complex, and organizations have historically struggled to collect and analyze data to make informed decisions. However, recent technological advances, such as plug-and-play digital sensors, wireless technology, and cloud-based AI data processing, have enabled significant digital transformation over the past decade.

“From driver safety to back office operations and customer service, it’s hard to find a role where technology can’t support better outcomes. It is a new era for these industries,” she said. “Our research found that physical operations leaders are excited to test technologies such as generative AI to see its potential – just 5% said they have no plans to adopt it. This demonstrates the universal need for technology to support the employee experience and increase efficiency across the board.”

The report also found that connected operations leaders, who possess the highest level of digital maturity, were six times more likely to exceed their financial goals by 25% or more.

The study found that these leaders are making substantial investments to strengthen their organizations and improve customer experiences. Many expect positive transformations and a favorable return on investment within the next 12-18 months.

Additionally, improving workforce productivity with new technologies is a top priority for 56% of respondents.

“We took a closer look at the differences between the organizations that reported the highest level of digital maturity — Connected Operations Leaders — and those in the early stages of digitalization,” Chery said. “Compared to organizations in the early stages of digitization, Connected Operations Leaders are five times more likely to rate their workforce productivity as ‘excellent’ and six times more likely to report exceeding their financial goals by 25% or more . The economic benefits of digitization are clear.”

Sustainability initiatives for a better future

Chery emphasized that even modest improvements in operations, facilitated by digitization, can produce significant impacts for organizations, for example in sustainability. Samsara’s research uncovered a growing trend in the adoption of electric and hybrid vehicles, with half of the leaders planning to buy or lease electric vehicles this year to mitigate their emissions. The more leaders invest in decarbonizing transport, the faster global emissions can be reduced.

“Decarbonizing transportation is a top priority, and one way organizations are reducing emissions is by adopting electric vehicles. Leaders predict that more than half of the vehicles in their organizations’ fleet will be electric or hybrid by 2025,” she said.

Chery explained that these opportunities arise from market demands, macroeconomic changes and the growing role of technology within organizations. A notable example is the rapid transformation brought about by the emergence of ESG (Environmental, Social and Governance) efforts.

He noted that roles like ESG officer were less popular just a few years ago. And we are currently seeing the emergence of even more specialized positions, such as Fleet Sustainability Manager.

“Their investments are leading to the invention of new revenue streams, such as paid or subscription charging stations, or reselling energy back to the grid,” Chery added. “These are just a couple of examples of how leaders are rethinking their sustainability initiatives to not only meet their sustainability goals, but to drive economic results as well.”