The National strategy Industry 4.0 appeared in Ukraine in Dec 2018. The development was done in the Association of Industrial Automation of Ukraine (APPAU), it is the founder of National movement Industry 4.0. Being non-profit NGO, APPAU had to validate the portfolio of the strategy with its members and it has been done in Jan 2019. The General meeting decided to support 5 projects from proposed 16. The year 2019 has showed that this decision was right, as we had no support from local government and just waiting for that would mean to lost a year.

So far, what are results of the 1st year in implementation of those projects? This overview is oriented to different stakeholders of industrial hi-tech development of Ukraine inside and outside of the country.

Current state of portfolio Industry 4.0

The current portfolio is almost unchanged from the original in Dec 2018. The only change, it is a new project, called Industry4Ukraine, it is the coalition platform created to ensure the steady dialogue between manufacturing associations, Government and science organization. During 2019 APPAU remained focus on 5 main projects (green triangles on Fig. 1).

Fig. 1. Portfolio of strategic project Industry 4.0

Hereafter these projects in the rate of success.

Renewed landscape of local innovators 4.0 (done on Ukrainian, the translation on English is planned on March 2020). In the 1st half of 2019 APPAU hold 3 main activities: 1) the market research, 2) reporting, 3) conference of innovators. It was the most successful project among others as it covers at once 3 strategic priorities:

• Analytics of landscape is the base for internationalization strategy. Any analysis or choice today can be based on the review.
• The review serves as a tool to drive local end users to innovators 4.0. They can see now the total landscape of innovations much better and to choose the relevant, local providers.
• The review is also useful for innovators themselves. In particular, it arises issues of weak innovative ecosystems, hype with startups and the need of better positioning by segments.

Fig. 2. Landscape of innovators 4.0 in Ukraine

Promotion of international standards is the project #2 by success rate. In the context of cyber-physical interaction of people, machines and processes, Industry 4.0 can not be implemented without respect to the common standards. APPAU launched the project of harmonization to Ukrainian norms of 5 international standards. The project is called aCampus and it is financed by German organization GIZ. The next standards are in focus of the project:

• ISO 22400, it the standard about manufacturing KPI.
• IEC 61508, the standards describe the safety norms.
• IEC 62443, the same about cyber security on Operational technology (OT)
• IEC 61512, the standards about management of Batch manufacturing processes.
• IEC 62264, it is about vertical integration (Control system – MOM – ERP).

To the end of Dec 2019 the project team accomplished the next scope of works:

• All 5 standards have been translated and harmonized with the local legislation.
• 5 white papers were created, they serve to basic education of target audience.
• 10+ promotional events has been hold, there are also tens of articles, blogs, interview and others.

The team also target the significant improvement in methodology of collaboration of Universities with system integrators and end users.

Strategically, this project is the most important, but also it is the most difficult. For today 1 mini-project has been completed (roadmap concept for Ukrzaliznytsia (Ukrainian Railways)), large one has been launched (AgriFood), a few small ones are in progress (Utility and Maritime), and there have been many interesting exchanges in Metallurgy. The areas of these industry developments include defining key priorities at a particular industry, building relevant digital transformation concepts, and educating customers in Industry 4.0 in this industry. The most significant achievements in these works are the following:

• We have developed a roadmap concept – an example of Ukrzaliznytsia can serve as a model for other industries. More comprehensive concept has also been worked out in the «Agrifood» project. This concept includes identifying business needs, holding innovative competitions and joint (with customers) development of industry roadmaps. Unlike existing corporate accelerator projects that are only available to large holdings, this project can cover tens and hundreds of small and medium-sized enterprises.
• We have seen that industry priorities are really different. For example, we have quickly diagnosed tracking food products as an important topic in food and processing industry. In metallurgy – the «digital leap» at the level of basic automated accounting and the mass installation of digital field devices is very important. Public Utilities is about the highest priority of scalability and availability of modern ІІоТ solutions.
• We have also seen that digital companies can be leaders in industry-wide initiatives. In particular, Mykolayiv MDEM has led an initiative group that is de facto reviewing the priorities of the entire maritime industry.

РFig. 4. At a meeting of the initiative group at MDEM in Mykolayiv

Creating roadmaps is the most important trend of all projects in the portfolio, but at the same time – the most difficult

Its importance is simply explained – this is where full synchronization with manufacturers of a particular industry occurs – from defining common development priorities to closing specific gaps in digitization. There are enough experts at APPAU, but we lack motivated manufacturers, coordination and leadership in groups and, ultimately, funding to perform such work in parallel. The motivation of group leaders, engineering firm directors can be damped down quickly, while hiring outside consultants or ongoing coordination work requires money. However, the movement towards the development of industry roadmaps continues – the question is how to ensure its continuity.

Industry4Ukraine platform – the project that was added to our portfolio in June 2019 due to the work of another Industry 4.0 lobbying project from the Agency of European innovations. The platform serves as a location for dialogue with industry associations and unions on the one hand, and on the other with the authorities. The group of organizers, in addition to APPAU, included the CMU Office, SE «Ukrpromzovnishekspertiza» (UEX)), Agency of European innovations, The Ukrainian Chamber of Commerce and Industry (UCCI), The Institute for Economic Research and Policy Consulting, The Council of Entrepreneurs under the CMU, the Industrial Policy Department of the MEDT and other organizations. The first major conference took place in June, more than 40 associations and industry mergers joined the platform in July, and the second Industrial Week took place in November. Overall, this project remains controversial among other Industry 4.0 projects. On the one hand, we have some undisputed achievements, such as:

• The appearance of the Industry4Ukraine Manifesto – a list of the basic conditions for the development of the newest Ukrainian industry, which by its conciseness and focus on the main things has no analogues in Ukraine. This Manifesto is a real checklist, a kind of «barometer» for all policy-makers that makes it easy to check the course of the next Government.



• Better synchronization with similar European initiatives – there is a slow but gradual and very important integration with similar (in the same format) EU initiatives for Ukrainian enterprises.
• There was a second attempt to influence the regional government stakeholders (regional state administration) – Discussions of the current state of the industry and prospects for development with the inclusion of digital agendas issues were held in fall in 5 regions (and in total – in 18 regions).

In 2020 APPAU will be more persistent in pursuing a policy of joint focus on top priorities. These are the provisions of the Manifesto and their decomposition – detailing in specific projects, – as in the already defined Industry 4.0 portfolio.

Development of the regional network of Industry 4.0 Expertise Centers («Centers 4.0») – was also quite difficult in 2019. In 2018, two centers were opened in Odessa (at the Odessa National Academy of Food Technologies (ONAFT)) and in Kharkiv (at the National Aerospace University «KhAI»). In 2019, the Center of Industry 4.0 were opened in KPI (National Technical University of Ukraine named «Igor Sikorsky Kyiv Polytechnic Institute»), and another two centers were planned for opening in fall – in Sumy and Zaporizhzhia.

Overall, all Centers 4.0 showed high activity and the following points should be included in the positive balance of 2019:

• Activation by KPI – the country's main technical university. In December, it hosted the second conference, which brought together many members of our community.
• Active involvement of KhAI and KPI, as well as 3 other universities within the framework of the aCampus project. All universities have confirmed the high level of their specialists, discipline and quality in the implementation of the project. It should be added that a series of translations of white papers and the standard on robotics were made in the Center 4.0 from Odesa. For the first time since 2012 we have received a systematic, focused stream of high-quality content and it is generated in universities. Thus, the thesis that universities can be generators of educational and useful content for the market is proved.
• Introduction of a portfolio of our own projects related to Industry 4.0. In particular, Aliot is a project of Internet of things in KhAI financed under Horizon 2020. «MiRONAFT» (Center 4.0 in Odesa) has continued to expand the largest prototyping center in Ukraine on its premises.

However, APPAU expected better results for the development of Centers 4.0 in 2019. None of the existing Centers has met the challenges of accounting the innovators 4.0 at the local level. Consolidation and collaboration in local ecosystems are poorly performing and except for aCampus results and some of the works of KhAI and ONAFT it is difficult to give something to the credit for educational activities. The results of numerous vendor investments in Centers Lab 4.0 are unclear. There is much concern about communications – even about the serious and significant achievements of Centers 4.0 we (and obviously the whole community) find out by accident. Altogether, this has led to the suspension of the APPAU deploy program the Network of Centers 4.0. All Centers 4.0 and other universities – candidates for accession – should understand that the investments of APPAU and our commercial members in the development of universities should be profitable, and within the framework of the signed Memorandums there should be reporting.

This criticism is less relevant to individual executives – Departments, but much more to the level of rectors – vice-rectors, as well as Ministry of Education and Science officials. It is obvious to us that Centers 4.0 continue to operate as solely volunteer structures of 5–10 people, which cannot even be supported by their own leadership, let alone central or regional executive bodies. And it is equally obvious that in 2019 we saw the resource constraints of these small teams. Therefore, we should take a pause, think better about the results and plan corrective actions together. The latest event in the KPI gives us hope for common progress.

The list of our actions within the national strategy was much larger, in fact we initiated or tried to respond to any opportunities that gave us a chance to move forward faster. Hereafter some of promising new projects.

First, it is worth mentioning the progress on exports. APPAU has won the grant for national booth at Hannover Messe, that is world exhibition №1 in Industry 4.0. In this project, the most important thing is not the fact that a common booth of our innovators 4.0 in Hannover appears. But much more – the processes of consolidation, analytics, profiling, training and experience sharing, broad communications that will precede and continue the Hannover Exhibition. Actually, that's why the name of this grant project – «Hannover – as a catalyst for the industrial hi-tech development». This project should significantly raise the level of our innovators, improve their positioning in the international arena and attract the attention of numerous internal stakeholders to Industry 4.0.

Another important project, called Trans4mation has been initiated by the leader of the local movement 4.0 in the IT-Developer category, IT-Enterprise company. The forum brought together more than 600 visitors, was rich in international exchanges and attracted the attention of the media. Events of this scale were the first time in Ukraine and this is definitely a great step forward for the whole community 4.0. Mass enlightenment of the market and involvement of Ukrainian customers, their best connection with the potential of local developers remain the top priority of movement 4.0 since 2016. However, so far we have not had such initiatives till now.

The creation of the Ministry of Digital Transformation of Ukraine and the Committee of Digital Transformation of the Verkhovna Rada was yet another mark of changes in policy-makers arena. Even they were focused just on public services, these groups have big potential for new reforms on overall digital legislation landscape.

Still, we look forward to changes in 2020.

1. APPAU has once again confirmed its status as the leader of the national movement Industry 4.0. But if we have been going somewhat spontaneously since 2016, without a clear formalized strategy, now we are talking about a focused and systematic course. APPAU community is the only one who has taken responsibility for the implementation of 5+ projects, and most of them have been successful. We have proven our institutional capacity to carry out such projects with extremely limited resources. Many thanks to all our members and close partners who expressed confidence in the APPAU Executive Directorate and supported this activity with their financial contributions as well as human resources.
2. Instead, further inaction and passivity of central Government looks alarming. The situation where an individual business-association assumes responsibility for projects of state and national importance, and which are essential to the growth of the country's economy – and the Government avoids this responsibility seems absolutely unacceptable for business. After all, it's just not effective! – the Government has ten times more possibility and resources to at least coordinate national programs, not to mention their funding or industry involvement. APPAU once again calls on the Government to make up their mind, appoint responsible persons and launch, finally, government support programs for Industry 4.0
3. APPAU Association, our members, close partners and their support are the main assets and resources through which most of mentioned projects are implemented. This is another testament to our commitment to the principles and policies of the #ActionablePartnership that APPAU has been implementing since 2017. In these strategy implementation results we have the honor and opportunity to once again thank the management of the companies that have made the greatest contribution to the implementation of the national strategy projects:
• Industry 4.0 Landscape – we thank GIZ-Ukraine management for supporting the analytical review printing and HUB 4.0 for helping to host the July conference for innovators.
• Technical standards – in addition to GIZ-Ukraine (the project's main donor), a number of involved organizations provide expert and other assistance: IT-Enterprise, Metinvest Digital, Interpipe, «Indusoft-Ukraine», Softprom by ERC, DTEK, «Danon-Ukraine», Red & Blue team, HUB 4.0, «Schneider Electric Ukraine» and other members of the community.
• Industries roadmaps for a digital transformation – the main agents of change here are the companies «Railwayautomatic», MUK, «Vostok-Engineering», MDEM, Smartico, Novus-Cybernetic, IT-Enterprise, and also our industry partners – such associations as «Ukrsudprom».
• Industry4Ukraine – we are grateful to the Agency of European Innovations thanks to which the funding of the events that led to the creation of the platform took place. We also thank all involved organizers and participants of the Second Ukrainian Industrial Week. There are dozens of them together with the departments of regional administrations.
• Development of the Network of Centers 4.0 – despite all the difficulties, we keep moving. Therefore, gratitude and respect to colleagues from KPI, NUFT, KhAI, KNURE, ONAFT, ONPU, NU «Zaporizhzhia Polytechnic», SSU (Sumy State University) and DUT (Dnipro University of Technology).
4. The implementation of the national strategy Industry 4.0 also points to some major challenges. Of course, it is about a better cooperation with the Government. This is project funding. It is also a traditional challenge to achieve a better balance of resources and better consolidation with other communities, we have written and said a lot about it earlier. Among the new challenges in the implementation of national strategy projects, we point out 2 relatively new ones. The first one is about the relative passivity of major international brands and large Ukrainian customers. Among the latter, except for Interpipe and less Metinvest Digital, it is difficult to name at least one company that has seriously supported us in these initiatives. Meanwhile, all these strategic projects would seem to be aimed at business development of Ukrainian enterprises. The companies listed above represent much more small and medium-sized businesses from developers, vendors, and integrators. So, it turns out that the strategic development of Ukrainian industry today is funded by small businesses and international organizations, doesn't it? The second challenge logically follows from the first - it is about the growing difficulties of the Executive Directorate to successfully combine strategic projects of national importance with the individual service of our single members. In most cases, small businesses and commercial organizations – «are too busy for (can't deal with) lofty matters». They want a clear, simple proposal for how they can improve their business and «just tomorrow». Meanwhile, with the exception of Landscape 4.0, which is directly related to exports, all other projects are medium- and long-term initiatives. This balance of interests rather difficult to keep. Accordingly, most of Industry 4.0's projects are still at risk – without funding and government support, without the mass involvement of industrial enterprises, APPAU does not make much sense to pursue them on a permanent basis.
5. After all, we cannot fail to mention here the Hannover Messe project, which will obviously set the main vector of our actions for the first half of 2020. This also has to give a strong impulse to all of our export activities that we have been dreaming of since 2014. Work in this direction has already begun.

This report is part of the general reporting that the APPAU Executive management prepares for the Board and General Meetings, which are traditionally held in January. The Executive management conclusions form the basis for discussion, decisions and plans of the association for the next calendar year. Summing up the results of the 1-st year of National Strategy 4.0, we note that the implementation of 4 strategic projects by the association efforts, one more project – together with partners (Industry4Ukraine), and the entry into new perspectives of international cooperation, in our opinion, is a good result. At the same time, the optimal balance between the strategic, long-term goals of a nationwide development and the short-term, commercial interests of our community members has not been reached. The year 2019 shows us the exacerbation of this issue, but at the same time the ways to solve it. Only international donor assistance with better involvement of government entities and better cooperation at different levels can ensure this balance. In the absence of them, strategic projects for the Industry 4.0 development will have to be phased out.

We express our anticipation and hope that 2020 will be a year of growth and we will be able to achieve a better balance, reach a new cooperation level, including with government entities.

The APPAU Executive management, December 2019