Service providers admit that drone technology is not a mature segment of their offerings (see Exhibit 1). As Industry 4.0 gets ever-closer, alongside defense, monitoring, and mapping applications, drones promise to improve the efficiency of logistics operations and automate and make safer emergency and disaster responses. Despite the promise of drone technology, the market remains stifled by regulation, privacy concerns, and operational headaches. Enterprises that want to make drones a core part of their operation can choose from a handful of providers with mature, albeit very different offerings; those who see the technology as something for the future are better placed, for now, co-developing solutions and strategies with the multitude of providers in our Industry 4.0 Services Top 10 who are in the development phase with drone technology.

Exhibit 1: Providers acknowledge that drone technology is not a mature offering in their Industry 4.0 toolbox.

Source: HFS Industry 4.0 Services Top 10 2019

There’s a drone market bubbling with use cases and providers looking to build up capability

Despite languishing low on the list of service providers’ maturity scales, drone-enabled billion-dollar growth and job creation are thought to be within reach, which could balance the inevitable cuts to traditional forms of transportation, logistics, and distribution in a fully-mobilized drone market.

• For defense, reconnaissance applications, weaponization, and simulating moving targets for training are being well-investigated and rolled-out.
• Logistics and cargo delivery improvements are being planned and piloted. Amazon is a well-known example and one of the key lobbyists for drone testing and R&D, pressuring both Congress and the FAA.
• Disaster management teams are looking toward drones to help with fighting wildfires, “hunting for hurricanes” by exploring for and monitoring their early signs, and providing disaster relief efficiently and directly to those in need without endangering staff.
• Aerial photography and landscaping surveys can aid with 3D mapping.
• Emergency services seek applications to improve surveillance for fighting crime, conducting search and rescue, firefighting, and delivering medical care.

While most providers in our Top 10 confessed to being in the development stage of their drone technology offerings, three came forward as mature, even if their services aren’t as obvious when it comes to their websites:

• TCS was the clearest of our “mature” drone tech service providers in offering what we could construe as end-to-end drone technology coverage. In combination with IoT (sensors, cameras, etc.) and analytics, its drone technology offerings come with an ecosystem approach to promote experimentation, scale-out, co-innovation, and co-creation of solutions. Its use cases primarily cover inventory reconciliation in warehouses, forest asset management, and asset inspection.
• LTTS doesn’t have obviously dedicated drone technology offerings, although several of its Industry 4.0 use cases in combination with its traditional engineering know-how show an ability to create or leverage drone technology across smart factory design. LTTS even created a solar connectivity drone by combining software and hardware capabilities— enterprises will have to push LTTS to find out exactly what it can offer.
• NTT DATA’s drone offerings come via its airpalette line of products for air traffic management and airspace safety. Again, not an obvious offering to find when browsing around NTT DATA’s expertise, it’s a dedicated arm that offers a lot for the aerospace industry.

Despite this bubbling market of applications and proactive providers and an expectation that drones will add $82.1 billion in job creation and economic growth, regulation delay alone is thought to cost the US $10 billion per year in financial growth… before considering all the other barriers.

Regulation, security, and operational constraints are stifling innovation and adoption of drone technologies

Drone technology remains hampered by a lack of technological and operating standards, alongside an absence of government regulations to accelerate their innovation and adoption throughout the market. They’re sanctioned for recreational, military, and research purposes but via different regulatory systems. Privacy concerns regarding government and corporate data collection appear to be the main drivers; for example, Amazon’s drones use a camera and GPS combination to navigate—63% of the public fears that drones will compromise their privacy.

Safety-themed barriers to full-scale drone employment involve, non-exhaustively, an inability to perfectly recognize other aircraft, criminal use by drug cartels smuggling products into the US, and insurance dilemmas surrounding property damage and liability. The FAA estimates that over $1 billion in damage is caused to aircraft by birds each year. Combined with an increasing number of drones, airspace starts to look cluttered without careful management; in 2015, 28 pilots in the US had to change course because of drone threats, while earlier in 2019 the UK’s Gatwick Airport was shut down by unauthorized drones—leading to a massive criminal investigation.

Limitations in terms of cost-effectiveness and range capacity also remain. Amazon’s efforts faced logistical troubles where seamless deliveries (without human monitoring) became tricky, while liability for goods also come into question. Delivery in busy city environments becomes difficult when considering apartment blocks or the high level of footfall below (another safety concern).

The Bottom Line: The service provider scene is nascent when it comes to drones; if you need them now, there are options, or you can go about co-developing solutions with providers currently in the build-up phase.

Enterprises looking to leverage drone technology now can find a handful of providers with established offerings. For those who look more toward the horizon, the vast field of providers developing their offerings is a better bet—co-innovate and co-develop the solutions and strategies of the future that will be ready to go once the barriers of regulation, safety, and operability have all been lifted.