What would you do if your market disappeared overnight? It might be a scary proposition to consider what would happen if your customers didn’t buy from you tomorrow, but within the answer lies the start of your digital transformation.
If there is one clear takeaway from the Annual Manufacturing Report 2018, it would be that the argument to adopt digital technology has been definitively won.
Almost three-quarters (71%) of the industrial decision-makers surveyed agreed with the statement that, ‘We need to get digital technologies, so we can prosper’.
They also agreed – by a balance of 2:1 – that the future of (successful) manufacturing lies in leveraging the combination of established technologies and more advanced, cutting-edge developments.
However, there is still relative caution within industry. The case for adoption may be known, but a lag in companies actually pulling the trigger and investing in them persists.
This reticence is likely a result of either internal barriers (such as understanding how to get started and then maintaining momentum), technical barriers (a lack of digital skills, choosing the right technology partner/s, cybersecurity) or a mix of the two.
Yet, these barriers are by no means insurmountable, as demonstrated by the growing list of manufacturers successfully using technology to innovate business models, supercharge business growth and disrupt entire industries.
So, what’s the secret to a successful digital transformation? The Manufacturer sat down with Alan Smalley, Pointnext Intelligent Edge Lead for HPE, to find out.
Given the incredible pace of change, it seems that digital transformation represents a perfect example of where doing something is a better strategy than doing nothing. How can manufacturers more easily take those all-important first steps.
Alan Smalley: Moving from the drawing board to reality is often a daunting prospect, but the reward, certainly in this case, is absolutely worth the risk.
In their book, Leading Digital: Turning Technology into Business Transformation, McAfee, Bonnet and Westerman quote that companies who embrace digital transformation see almost a 10% rise in revenue and upwards of 25% in profit. Those are the sort of increases that make executive teams sit up and take notice.
Within HPE, Dr Tom Braddicich [vice president and general manager] has identified five steps to a successful digital transformation, and I think almost every company would benefit from considering them, regardless of what stage they are on in their digital journey.
First, create a long-term strategy. What do you expect the market or operational environment to look like in five years’ time, and what’s the journey your business is going to go on as a result? Industry can be disrupted very quickly, you need only look at what’s happened to the world of retail over the past decade for evidence of that.
You need to think long and hard about what would happen if there was no market for your product tomorrow. That can be scary, but it can also be tremendously liberating in helping you define your organisation’s digital transformation roadmap.
Second, think holistically. Don’t just focus on individual processes, consider how to improve the whole, rather than a small, isolated area. Aligned to that is the need to understand what outcomes you want to achieve and working backwards to identify what the levers are to realise those aims.
Third, encourage good behaviour. Digital transformation relies on teamwork, on sharing ideas, on IT and OT teams working together, understanding each other’s problems or concerns and working collaboratively to overcome them.
Fourth, become more agile. Business agility isn’t new, but it has certainly become more relevant – and desirable – in the past half-decade. The term ‘agile’ gets used a lot and can mean different things to different people. To me, it means coming up with ideas and rapidly prototyping them to determine whether they hold value or not.
Fifth, build a network. There’s a tremendous amount of knowledge out there, supported by reference material and case studies. Build yourself a network to understand who has done it before, learn from their mistakes, and – if possible – work collaboratively and share ideas.
What factors will companies need to consider in terms of their employees? How will their roles changes, what skills will come to the fore and what opportunities will become available?
We are living in an incredibly exciting time for both employees and organisations, particularly for those who are embracing digital transformation.
As artificial intelligence (AI) becomes more ever-present and increasingly undertakes simple human tasks or simple human thinking, human workers will of course have to adapt. There’s an assumption that jobs could be displaced because of that, but what’s more likely is that AI will enable workers to not only use their time more productively and perform higher value tasks, but actually create a whole suite of careers we haven’t even considered yet.
Alongside that, I think creative skills are going to become as highly valued as engineering skills. In fact, I believe that it will be the fusion of those two skill-sets that really starts to deliver success.
Ultimately, this is about moving from efficiency to effectiveness. Efficiency has been the goal of almost all manufacturers for decades and revolves around making a process or service more efficient; but, how do you make it more effective? How can we re-imagine those products or services?
Answering those questions is likely to see the rise of new business models, revenue streams and innovation opportunities; all of which will be predicated on an organisation’s digital transformation.
Integrating digital transformation: Lessons for leaders
Digital transformation programs are often problematic There are no “one size fits all” solutions, because every company has a unique starting point in terms of its digital maturity as an organisation.
Case in point: Nearly all companies need to maintain legacy IT systems because they house vital business data and intelligence.
So, how do you go about integrating new approaches while running your existing business? How do you reduce risk and increase your chances of success?
What should manufacturers look for when identifying suitable technology partners to support their digital transformation?
Put simply, creativity and capability. An innovative technology partner can help bring the agility your business needs, it can help prove the value of something quicker, can suggest alternative ways of working, can support new funding models and can even help share risk. All these factors are swiftly becoming business-critical.
They also need to be creative in terms of offering solutions to real-world problems, as opposed to visionary wish lists, solutions that lead to tangible value creation.
Capability goes back to your long-term strategy and the outcomes you want to achieve. A technology partner needs to support your destination and preferably help you get there quicker.
The ability to understand and react to what’s happening in real-time is changing the world; so, your partner also needs to demonstrate both creativity and capability in managing real-time data and analytics because that’s where the future winners are going to come from.
What steps can organisations take to ensure that once they begin their digital transformation, momentum doesn’t taper off?
Digital must become part of your organisation’s DNA and ‘thinking digitally’ must be encouraged across every level. Digital transformation must be driven from the top down, but everyone has to become more involved and take ownership for their part of the process.
It’s crucial that digital transformation isn’t just viewed as an IT initiative. This is a chance for the business to improve effectiveness, profitability and growth for the long-term, and should be ‘goaled’ as such by identifying and measuring well-defined, relevant KPIs.
We are already seeing many industries and professions disintermediate and that trend is only going to increase over the coming years. Therefore, organisations are going to have to successfully deliver a culture of collaboration, upskill or reskills their people, and ensure that ‘champions’ or ‘visionaries’ have a strong voice.
IoT is evolving from ‘science project’ to mainstream adoption
As such, businesses are increasingly challenging technology providers to move away from charging them for an implementation in a traditional way to start offering IoT solutions as-a-service.
To hear how HPE are rising up to the challenge, The Manufacturer recently sat down with distinguished technologist, Steve Fearn, who also offered some useful pointers on how to break down internal business silos in a secure, sustainable way.