There is a false assumption that manufacturers are struggling to get digital transformation projects off the ground. It’s not starting pilots that is causing headaches, however, it’s scaling the most valuable ones. Here’s how to keep that from happening in your business.
In their global research, McKinsey describes the phenomenon as ‘pilot purgatory’. Bain & Co offer more detail thanks to their survey of 600 high-tech executives, noting that many businesses have struggled to implement some early digital solutions and they now believe that it will take longer to reach scale than expected.
The fact is, most manufacturers have already started their digital transformation journeys, even if that’s just taking the first initial steps.
These journeys are never uniform, straightforward or the same as everyone else’s, but almost all have the same end goal – to increase productivity under growing market pressures.
Modern technology, particularly digital technology, is dynamic and potentially transformative, so it’s little wonder that businesses are ambitious about embracing it.
But at the same time, they’re being bombarded with possibilities, from drones to digital twins, augmented reality to blockchain, edge to the cloud, predictive maintenance to machine learning.
“Our experience is that many companies dabble, but quickly find themselves bogged down in proofs of concept or pilots that never take off,” says Deborah Sherry, senior vice president & chief commercial officer for GE Digital Europe.
Tips for scaling
Organisations may be unique but there are often commonalities in the challenges they are having around identifying and scaling the most valuable digital pilots.
“Large companies, especially multi-site enterprises that have acquired plants from multiple acquisitions, typically lack standardisation at the data level,” notes Deborah. “This lack of standardisation could be across many different levels – data, production, processes, even standards themselves.
“These companies need to harmonise their data structure to be able to scale, and we propose doing that at site level, rather than in the cloud, because it can be carried out locally at a lower cost.”
Deborah also suggests businesses invest in solutions that are proven to scale.
“Many IT departments invest in local solutions tackling specific problems. This often results in very specific or ‘point’ solutions that become hard to scale across heterogenous systems and processes.
“It’s like adopting Microsoft Office versus trying to build a similar package in-house and then having to maintain and invest in continually developing it. It’s not always efficient to build a custom solution if there’s a pre-made solution that’s been proven to scale. Hemingway didn’t build his own typewriters – he focused on what he was good at and that is what businesses should do too.
“Even if the up-front cost may appear higher, it can mean substantial savings in the long-term. But you can’t determine that unless you conduct a thorough ‘build versus buy’ analysis.”
The secret to a successful Digital Transformation? It’s not where to start but where to focus
Since the dawn of the Industrial Revolution, businesses have been looking for ways to boost productivity. The most successful businesses do more with less.
The term ‘digital transformation’ has become a catch-all term for a wide array of technologies. Any one of which offers the opportunity to increase productivity further, but the plethora of choice means it can be hard to focus on what’s most needed.
“To understand which one is best for your business, you must understand the organisation’s immediate and long-term objectives,” says Deborah. “The key is understanding how to get from where you are to where you want to be, tying investments in digital technologies back to business strategy.
“Keeping focused with your purpose always at the foreground of decision-making is vital. Take Gerdau, for example, the largest producer of long steel in the Americas. The digital transformation journey they embarked on with GE Digital was part of a bigger strategy to reduce overall maintenance costs by 20% by 2022. They achieved full ROI in only nine months – half the time they initially expected.”
Based on the success of an initial Asset Performance Management (APM) pilot, the solution – which helps predict maintenance issues BEFORE they take place – was scaled up to 12 plants.
By optimising their service strategies and avoiding unplanned downtime, Gerdau is saving $4.5m a year on their maintenance bill, a huge contribution to their overall target.
Many of the conversations surrounding digital transformation focus on the technology, relegating the human element to an afterthought. People, however, will make or break any digital initiative – no matter how big or small.
One common stumbling block businesses encounter is a lack of digital skills – both internally within existing staff and externally in the labour market.
Given that businesses are being urged to digitally transform today and not tomorrow, how can managers ensure their current workforce has the skills and mindset to operate in a digital industrial environment?
There are three time-frames businesses should focus on, notes Deborah:
Short-term – Once you have reviewed the technologies available today, and where they are on the ‘hype-cycle’, go back to your business strategy. Instead of creating a ‘Digital Strategy’, start with looking at how new digital technologies can support your existing strategy.
From there, you might identify other opportunities to test new business models. It sounds obvious, but business strategy should always drive the digital strategy.
Medium- term – When rolling out any change or transformation programme, it’s essential to bring people with you. Involve them in understanding why the change is needed and not only how it will impact them but how they can impact it.
Consider how you will invest in training. Reskilling your experienced talent and using their skills to complement new data science skills can be more effective than taking software ‘natives’ that don’t understand the ‘physics’ of your business.
Long-term – To maximise the potential of the digital economy, we will need to nurture a new skills pool, not only by training more people in STEM subjects and data sciences, but also by upskilling our existing workforce – after all, two-thirds of workforce in 2030 has already left full-time education.
Industry and governments must ensure that all workers can develop, hone, and upgrade the right skills to thrive in a world where work is increasingly exposed to automation, software and AI.
“Closing the skills gap will require the realignment of both the private sector and educational institutions,” adds Deborah, “so that the workforce of tomorrow can meet the realities of the quickly evolving jobs market.”
Summary – How to get your digital transformation started again:
- It’s not where to start, but where to focus
- Know where you’re going
- Thorough ‘Build versus Buy’ analysis
- Select the technologies that will scale
- Turn data into value
Procter & Gamble: Delivering manufacturing of the future
Such an organisational structure meant that P&G needed an integrated system that would allow technicians to interact with data in real-time and at scale.