August 2023

Accelerate Future Manufacturing Transformation With The Industrial Metaverse

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A Forrester Consulting Thought Leadership Paper Commisioned by Microsoft

Table Of Contents

In volatile market conditions, manufacturers must become quicker, smarter, and greener to survive.1 The transformation of traditional — often conservative — manufacturing firms must involve more than just making existing physical processes more efficient.2 Business and technology leaders must work together to build future ft organizations that are adaptive, creative, and resilient, unlocking more sustainable and profitable customer relationships as a result.

In this transformation journey, the growing importance of the industrial metaverse cannot be overlooked. In fact, the industrial metaverse may be closer than previously thought, as many manufacturing firms have already completed the essential first steps and are starting to lay the groundwork of their strategy. But many manufacturers are still questioning what the industrial metaverse journey looks like and how they can take next steps.

Microsoft commissioned Forrester Consulting to evaluate the state of the industrial metaverse within manufacturing. Forrester conducted an online survey with 758 global decision-makers at the director level or higher who are responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs to explore this topic. We found that the makings of an industrial metaverse strategy are in the works for many manufacturing firms as they endeavor to leverage new technologies, such as AI, mixed reality, and digital twins, to bring digital worlds and physical worlds closer together. And, while these strategies aren’t without their challenges, the expected payout is significant.

Project Team: Brett Chase, Senior Market Impact Consultant Jenna Bonugli, Associate Market Impact Consultant

Contributing Research: Forrester’s Technology Executives research group

Key Findings

  • icon
    Manufacturing is evolving, underpinned by the further integration of physical and digital technologies.

    Economic disruption has most manufacturing decision-makers looking to better understand, optimize, and automate their physical world. Two-thirds of respondents consider the industrial metaverse important to achieving their organizational goals, but only around one-third have a strategy in place. The industrial metaverse is seen as a tool that enables support for the workforce and provides broader reach for organizations.

  • icon
    Manufacturers have much to learn but should prepare themselves to reap industrial metaverse benefits.

    Available industrial metaverse technologies provide connectivity, automation, and immersive modeling/visualization experiences. However, as an emerging category, its nascent capabilities, low organizational maturity, implementation costs, and a lack of internal skills inhibit organizations from maximizing their investments in this space.

  • icon
    Manufacturers can advance their industrial metaverse strategies to realize value with help from strong partners.

    Less than half of surveyed manufacturing leaders feel prepared to deliver on industrial metaverse goals, but believe these investments are needed. Unsurprisingly, these investments must impact an organization’s productivity and bottom line to be deemed successful, which early adopters are experiencing. Most organizations seek partners with strong technical expertise and integration strategies to ensure implementation success, given the complexity and potential value from converging technologies.

NEXT SECTION: Manufacturers Must Continue To Transform In Order To Thrive

Manufacturers are familiar with disruption. Supply chain issues, materials shortages, fluctuating commodities costs, the conflict on the eastern edge of Europe, and surging energy prices continue to impact operations and processes.3 However, manufacturing leaders are now also grappling with large organizational challenges — namely insufficient access to skilled workers, modern equipment, and dependable partners — all while needing to better leverage operational data that could help assess workflow, optimize production, and reduce costs (see Figure 1).

Figure 1

Which industry challenges is your organization prioritizing to drive transformation or impact?

Implementing the appropriate data standards, integration patterns, protocols, and configurations Harmonizing data and workflows from initial product design through to manufacturing Having proper security and identity and access management capabilities (e.g., being able to effectively secure models and share data across partners) Having sufficient resources and equipment to design and maintain technology Working with industrial OEMs Working with product lifestyle management (PLM) vendors Collaborating between different departments (e.g., IT, Operational Technology, and Engineering Teams) Managing multiple vendors Data collection from different vendors

Click to see data


Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 157 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 109 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 310 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

In response, manufacturers are resetting organization priorities with an eye toward the future and initiatives focused on integrating digital technologies with physical products to develop a balance between automation (inclusive of hardware and software) and their workforce. We found that:

  • 57% of surveyed manufacturers have set these new priorities to help overcome supply chain issues.
  • 56% indicate it is to address the workforce challenges through technology and automation
  • 42% are hoping the shift will create a more connected ecosystem through data and technology.

Manufacturing Leaders Consider The Industrial Metaverse To Be An Important Component Of Their Organization' Continued Evolution

Manufacturing leaders are looking to the industrial metaverse to bridge the physical and digital worlds to address current challenges. While Forrester’s research states that metaverse maturity is still years from realization, companies can still benefit from implementing metaverse precursors (e.g., augmented/virtual worlds and development tools, etc.) to prepare for future opportunities.4 In this study, we found that 66% of manufacturing leaders consider the industrial metaverse (and its preceding technologies) important to achieving their organizational goals, but over 50% still acknowledge the fact that the timeline to start executing their industrial metaverse strategy is at least three years away or more (see Figure 2).

Figure 2

How important are the following technologies to your organization’s industrial metaverse strategy?” (Showing “Somewhat important” and “Very important”)

IoT XR (augmented reality, mixed reality, and virtual reality) AI/ML 5G Cloud-to-edge computing Digital twin

Click to see data


Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 157 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 109 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 310 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

There are three specific categories where manufacturers expect the industrial metaverse to drive improvements:

  • Technology that offers greater connectivity.

    In industrial environments with hundreds of moving parts, connectivity is paramount. New capabilities connected by the internet of things (IoT) and 5G networks are important enablers of this connectivity and are essential for most companies’ ability to implement a successful metaverse strategy. Our survey found that IoT capabilities are already deployed at 53% of respondents’ work sites on average, making it an easy starting point. 5G was the second-most technology currently being used, reported at 42% of respondents’ worksites on average.

  • Technology that offers greater simulation, modeling, and environment engagement.

    Manufacturing leaders see great value in leveraging extended reality (XR) (e.g., augmented reality, mixed reality, and VR) as a way to train and empower employees. This may include creating digital twins for certain machines or environments. For example, 42% of surveyed manufacturers intend to use these technologies to simulate expensive or dangerous operations before carrying them out in real life. Fifty-eight percent want to use these tools for employee training and 43% see use cases for providing product and service demonstrations to customers.

  • Technology that offers greater automation and computing power.

    Repeatable manufacturing processes can benefit from automation (commonly powered by artificial intelligence and machine learning [AI/ ML]). Seventy-fve percent of respondents note their companies consider AI/ML an important component of their metaverse strategy. Over 40% see operational benefits with these technologies, such enhancing work processes and instructions with AI to guide employees through complex workflows. Meanwhile, roughly two-thirds consider cloud-to-edge computing to be important. This technology enables manufacturers to control bigger machines more carefully at a local level, while machine learning models optimize machine performance in the cloud.

    Interestingly, those assessing an industrial metaverse strategy are more likely to consider several supporting technologies to be important to their strategy compared to those in the process of creating one (see ). This finding indicates that manufacturing leaders are often bullish towards these technologies at the onset of this technology journey, but their perceptions change as they learn more, understand more, and experience what’s possible for their own organizations. It’s during this phase when manufacturing leaders need the most help deciphering the value these technologies deliver.

NEXT SECTION: Successful Industrial Metaverse Investments Require A Thoughtful Strategy

The alluring promise of the industrial metaverse has most manufacturers questioning where to start. Most manufacturers are still formulating what their strategy looks like as just over one-third note they have one in place, and 57% don’t feel prepared to deliver on industrial metaverse goals.

POLL

“Does your data platform perform any of the following functions?”

POLL

“Does your organization currently have an industrial metaverse strategy?”
Yes, my organization has a strategy and is in the process of executing it. Yes, my organization has a strategy, but it hasn't executed it yet. No, but my organization is in the process of considering or assessing a strategy. No, but my organization is in the process of creating a strategy.

Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

Most manufacturers are still formulating what their strategy looks like as just over one-third note they have one in place.

POLL

How prepared is your organization to deliver on your industrial metaverse goals?

POLL

How prepared is your organization to deliver on your industrial metaverse goals?
Very prepared Somewhat prepared Neutral Somewhat unprepared Very unprepared

Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

57% don’t feel prepared to deliver on industrial metaverse goals.

Like other nascent technologies, several adoption barriers stand in the way of organizations maximizing value from their industrial metaverse investments (See Figure 3). Sixty-three percent of surveyed leaders cite costs as an issue, while 48% cite lack of necessary skills as a problem. Organizations particularly struggle to optimize or adopt industrial metaverse technologies when lacking a clear and relevant business strategy. Over one-third of unprepared organizations experience difficulty training employees, lower operating margins, and ineffective collaboration — leading to reduced productivity — when exploring industrial metaverse technologies.

Figure 3

What are the main challenges your organization has experienced with using these technologies? (Select up to three.) (Showing top six.)

Cost of implementation Lack of internal skills to maximize the value of the technology Lack of third-party skills to support adoption and usage Bugs with technology itself Technical limitations, such as poor battery life Lack of internal skills to enable proper adoption

Click to see data


Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 157 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 109 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 310 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

Strategy or not, most manufacturing organizations are already using many industrial metaverse foundational technologies to support employee education, operations planning, innovation, and connectivity. What’s lacking for many respondents is a focused vision on how this technology will drive positive returns; however, we see that positive outcomes are obtainable from early adopters that have a clear strategy.

63%

of leaders cite costs as an issue and 48% cite lack of skills to maximize the value of the investment.

NEXT SECTION: Prepare Your Organization To Achieve Its Industrial Metaverse Goals

Given their challenges, manufacturers acknowledge the need to make organizational changes to continue or realize true business transformation with the industrial metaverse (see Figure 4).

  • Increasing technology investments.

    Nearly 60% of manufacturing leaders state that greater investment in technology is a key change they need to make to achieve their industrial metaverse objectives. Forrester predicts that in 2023, investment in industrial metaverse initiatives will double.5

  • Increasing employee training/upskilling.

    Manufacturing leaders see employee training and remote assistance as a keyway in which industrial metaverse technologies will be leveraged in the future. Nearly 50% of manufacturing leaders surveyed consider employee training to be a top-three metaverse technology use case.

  • Increasing data integration.

    Forrester anticipates that manufacturing will lead the way in moving beyond today’s metaverse precursors toward more integrated environments, ranging from collaboration solutions (with or without VR) to rich digital twin capabilities.6 As well, data gathered from metaverse tools and experiences will provide organizations with valuable information for improving existing processes and driving innovation, which is a top outcome for 38% of manufacturing leaders surveyed.

Figure 4

What changes does your organization need to do to achieve its goals with the industrial metaverse? (Select up to three.) (Showing top seven.)

Investment more in technology Increase employee training/upskilling Improve customer marketing Increase data integration Enhance security and identify and access management Reorganize its operating model Improve vendor relations

Click to see data


Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 157 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 109 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 310 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

POLL

How does your organization plan to leverage industrial metaverse technologies going forward to achieve its future ambitions? (Select your top three.) (Showing top eight.)

POLL

How does your organization plan to leverage industrial metaverse technologies going forward to achieve its future ambitions? (Select your top three.) (Showing top eight.)
Employee training Remote assistance/support Querying Getting all physical operations right the first time, having simulated and anticipated problems digitally Product/service demonstrations Remote commissioning/audit Connecting separates plants and workforces Research and development (e.g., prototyping future offerings)

Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

Manufacturing leaders see employee training and remote assistance as a keyway in which industrial metaverse technologies will be leveraged in the future

Partners Can Make Metaverse Investments More Effective

Rather than trying to address every challenge on their own, manufacturers recognize the important role that partners can play in helping them address industrial metaverse use cases. Most notably, respondents in our survey claim technical expertise and integration capabilities as most valuable criteria when selecting an industrial metaverse partner (see Figure 5). Manufacturers need partners who understand the technology and can provide guidance on how to best integrate it within their complex manufacturing ecosystems.

Figure 5

What’s the most important criteria to consider when your organization selects industrial metaverse partner(s)? (Select your top three.) (Showing top eight.)

figure

Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

NEXT SECTION: Key Factors Of Industrial Metaverse Success

Business leaders expect any business investment to deliver positive outcomes or returns (See Figure 6). Investments in the industrial metaverse is no different, even though its maturity is several years of. When asked which outcomes were driving their industrial metaverse investments and strategies, the top responses from manufacturers were:

  • Increased profitability.

    Thirty-nine percent of respondents say that increased profitability is a top desired outcome for their industrial metaverse strategy. Of those in our survey who are currently executing on an industrial metaverse strategy, most are seeing success with their strategies, yielding benefits from employees and customer alike. In fact, 55% report industrial metaverse technologies enabling frontline workers, and 55% also state that the technology architecture provides a great user experience for customers as well.

  • Improved operating margins.

    Through automation and better integration and communication, leaders expect that new technology investments will drive down operating costs — 40% use operational costs as a primary ROI measure for industrial metaverse technology investments.

  • Increased productivity.

    Many of the intended use cases for industrial metaverse technologies focus on enabling and supporting frontline and service-line workers. With the proper training and enablement, 40% of manufacturing leaders surveyed expect to see positive returns by way of a more efficient workforce.

While adoption continues, early returns indicate that these investments are paying of. Expectations from those in the process of developing their own strategies are also high. Manufacturers on the front edge of the industrial metaverse path today are in prime position to reap the benefits now and tomorrow

Figure 9

What outcomes are most important to achieve through your industrial metaverse strategy? (Select all that apply.) (Showing top eight.)

Increased operating margins Increased productivity Increased profitability Improved quality of work Improved customer experience Increased employee engagement/collaboration Improved employee experience Reduced carbon footprint from travel, etc. Reduced employee turnover

Click to see data


Base: 758 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 157 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 109 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023 Base: 310 Global Director+ decision makers responsible for making decisions around the apps/tools/platforms employees use within their organization to do their daily jobs.
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, May 2023

NEXT SECTION: Key Recommendations

The industrial metaverse will change the way manufacturers operate. Cutting-edge firms with industrial metaverse strategies in place are seeing early returns on their investments, with those in the drafting process anticipating tangible benefits. Before manufacturing organizations can unlock the value of the industrial metaverse, however, they must prepare their organization.

Forrester’s in-depth survey of 758 global decision-makers at the director level or higher, who are responsible for making business decisions around the applications, devices, and technology employees use throughout their workday, yielded several important recommendations:

NEXT SECTION: Appendix

Appendix A: Methodology

In this study, Forrester conducted an online survey of 758 C-level, VP-level, and director-level respondents responsible for making decisions around the apps/ tools/platforms employees use within their organization to do their daily jobs in the United States, Canada, Australia, the United Kingdom, China, France, Germany, and New Zealand to better understand the current industrial metaverse journey that manufacturing organizations are experiencing, and how it may evolve in the future. Respondents were offered a small incentive as a thank-you for time spent on the survey. The study began in May 2023 and was completed in June 2023.

Appendix B: Demographics

Country
United States 18%
Canada 15%
Australia 13%
United Kingdom 13%
China 11%
France 10%
Germany 10%
New Zealand 10%
Manufacturing Vertical
Automotive 21%
Consumer product goods 18%
Food and/or beverage 15%
Energy 14%
Pharmaceuticals 14%
Semiconductor 12%
Aerospace 6%
Number of Employees
500 to 999 employees 16%
1,000 to 4,999 employees 41%
5,000 to 19,999 employees 30%
20,000 or more employees 13%
Type of Manufacturing
Discrete manufacturing 59%
Process manufacturing 59%
Respondent Level
C-level 11%
Vice president 36%
Director 53%
Respondent Departments
IT 37%
Operations 27%
Marketing/advertising 14%
Digital 11%
HR/training/EX 10%

Appendix C: Endnotes

1 Source: “The Future Of Manufacturing,” Forrester Research, Inc., September 9, 2022.

2 For this study, we defined manufacturing firms as organizations within discrete and/or process manufacturing. Specifically, manufacturers in auto, food and beverage, semiconductor, aerospace, consumer packaged goods, energy, and pharmaceuticals.

3 Source: “Predictions 2023: Smart Manufacturing,” Forrester Research, Inc., November 2, 2022.

4 Source: “The State Of The Metaverse,” Forrester Research, Inc., March 29, 2022.

5 Source: “Predictions 2023: Smart Manufacturing,” Forrester Research, Inc., November 2, 2022.

6 Ibid.

This study was conducted by Forrester’s Custom Content Consulting Practice. Get in touch to discuss your custom content needs and goals. Learn more about all of Forrester's consulting capabilities.

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© 2020, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to forrester.com.

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