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

Connected operations cloud firm Samsara today released a report that highlights how organizations in industries that drive over 40% of the global GDP are revamping their physical operations.

The 2023 State of Connected Operations Report, compiled after surveying more than 1,500 physical operations leaders from nine countries, reveals that these leaders are making substantial investments in digitization to enhance their supply chains, improve employee skills and adopt sustainable practices, all of which have yielded positive results.

According to the report, challenges faced by operations leaders in the past year garnered significant attention and sparked discussions in boardrooms worldwide. These challenges included soaring fuel costs and inflation, shortages of labor and equipment, and constraints in supply chains. However, they successfully navigated these obstacles by embracing technology and finding ways to optimize efficiency.

Automation and generative AI in the pipeline

Leaders are revising 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% planning to use generative AI and 91% automation to modernize their operations by 2024. Additionally, 51% are already using or planning to use autonomous vehicles or equipment this year.

To optimize operations further, 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 across nine countries how they are reinventing their operations. They have over 3.6 million vehicles and assets under management and over 6.3 million employees,” Jeff Hausman, chief product officer at Samsara, told VentureBeat. “Our research found that two in three leaders are increasing their technology budgets this year, indicating they are confident in the ROI of digital transformation. Leaders report benefits like increased net profit and safety as a result of their investments to date.”

To enhance supply chain predictability and efficiency, 59% of leaders have planned to onshore their operations, meaning they will relocate them to their country of origin this year. 

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

“Leaders predicted that by 2025, more than half of employees in the field will rely on digital workflows to perform day-to-day tasks. For employees in physical operations, digitizing workflows reduces friction in administrative aspects and adds more flexibility. It’s a significant change from pen-and-paper processes and speaks to the evolution of technology purpose-built for these roles,” Hausman told VentureBeat. “Labor shortages continue to be a major challenge for operations leaders. Consider, in the U.S., the average driver turnover rate is about 90%. At the same time, digitization is shifting the day-to-day employee experience. So we’re at an inflection point: roles are shifting, 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 audience surveyed comprised 1,525 physical operations leaders, including C-suite executives.

Investing in next-gen technologies to optimize efficiency 

“Our research found significant changes are underway in 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 combatting today’s toughest challenges,” Samsara’s Hausman told VentureBeat.

Leaders anticipate that within the next two years, one out of every six employees will be engaged in roles that don’t exist today. To tackle this upcoming shift, over half (52%) of the leaders have prioritized equipping their employees with the skills they will need to navigate emerging technologies.

Notably, the surveyed organizations are projected to invest approximately $7 billion in 2023 to facilitate employee training, upskilling and reskilling initiatives.

“Optimizing the existing workforce and investing in career development is critical to setting an organization up for long-term success. In fact, a key to retention is proving to employees they are essential to the future of the business and providing opportunities for them to build their careers,” explained Hausman. “Our research also found leaders are uncovering new ways to upskill employees with technology. For example, over half will use extended reality and AI to upskill employees in the next two years.”

Samsara’s research also revealed that data plays a fundamental role in every digital transformation strategy, serving as a robust foundation for fostering resilience and gaining a competitive edge. Technology empowers organizations with expedited access to data, and leaders who possess accurate and timely insights are better equipped to anticipate and proactively address potential issues, thereby ensuring seamless operation.

“Almost every leader we surveyed (90%) said having accurate, real-time operation data is critical to their decision-making,” Dana Chery, VP of marketing at Samsara, told VentureBeat. “They’re dedicating substantial resources to ensure they have the technology in place to leverage that data to its fullest, with two-thirds of leaders reporting that they are 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 advancements, such as plug-and-play digital sensors, wireless technology and cloud-based AI data processing, have enabled a significant digital transformation in the past decade.

“From driver safety to back office operations and customer service, it’s difficult to find a role where technology can’t support improved outcomes. It’s a new era for these industries,” she said. “Our research found that physical operations leaders are excited to test technologies like generative AI to see their potential — only 5% said they had 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 highlighted that connected operations leaders, who possess the highest level of digital maturity, demonstrated a six-fold greater likelihood of surpassing their financial goals by 25% or more.

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

Additionally, Improving workforce productivity with new technologies is a critical priority for 56% of those surveyed.

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

Sustainability initiatives for a better future

Chery highlighted that even modest enhancements in operations, facilitated by digitization, can yield significant impacts for organizations — in sustainability, for instance. Samsara’s research discovered a growing trend of adopting electric and hybrid vehicles, with half of the leaders intending to acquire or lease electric vehicles this year to mitigate their emissions. The more leaders invest in decarbonizing transportation, the quicker global emissions can be reduced.

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

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

She noted that roles like ESG officer were less prevalent just a few years ago. And we are currently witnessing 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 pay-per-use or subscription charging stations, or by selling 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 bottom-line results.”

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