Understanding Digital Transformation
Published on : Friday 08-05-2020
Adopt Digital or Face Extinction, says Hemant Patil, and presents an overview of the challenges in the process, also outlining the guiding principles for implementation.
We are all into the Digital Era of 21st century, wherein, ‘Digital Transformation’ is the buzz word. It has been incessantly transforming our lives by bringing in disruptive changes to our traditional ways of living. The Entertainment, Sports, Banking, Education and other such sectors are continuously being revolutionised out of this transformation. While the miniaturisation of electronics components, their ever-reducing costs, ubiquitous connectivity enabled by IoT & 5G communications are the underlying enablers, the likes of Social Media, Mobility and AR/VR have been instrumental in taking the ‘customer experience’ to the next level. IT technologies like Artificial Intelligence, Natural Language Processing are significant in adding the required brainpower to the mix.
A small gadget like smart mobile phone having merely 4-6 sensors combined with a set of smart applications have turned around the lives of people. ‘Simple to Use’ and ‘Easy to Interact’ features of these gadgets have made their way into the pockets of all economical classes of people requiring a minimal literacy level to operate and use the technology. The programming languages like Java, Python which support Open Source Coding, reduces the application development efforts through a collaborative approach helping build applications faster than before. Technology evangelists across the globe soon realised that, if a small set of simple sensors combined with smart mobile applications can do wonders in human life, applying this analogy to manufacturing would bring in tremendous value to the industry. This was the trigger for what we call the 4th industrial revolution, Industry 4.0.
Industry 4.0, an Information driven revolution, puts Data at the centre stage. The guiding principle of Industry 4.0 is, the data generated at different levels and at different times in the manufacturing business can be captured, stored, processed and analysed to gather useful insights. Data mining, Pattern recognition combined with Statistical modelling can help predict future scenarios enhancing the business decision making process from being conventionally Reactive to Proactive. Organisations that understand the importance of being able to predict future scenarios and be proactive in their decision making, can emerge as winners in today’s competitive world.
The core elements to realise Industry 4.0 are,
- Data – The digital asset of modern business, and
- Big Data – Structured and Unstructured data
“Information is the oil of the 21st century, and analytics is the combustion engine.”
– Peter Sondergaard, Senior Vice President, Gartner Research.
- IoT – Lets you connect things together, be it People, Processes or Machines
“If you think that the internet has changed your life, think again. The Internet of Things is about to change it all over again!”
– Brendan O’Brien
- Analytics - Capability to contextualise and process big data to extract useful information
“Torture the data, and it will confess to anything.”
– Ronald Coase
Digital Transformation goals for Manufacturing Industry
Most of the leading manufacturers across globe are aiming to achieve one or more of the below goals through their digital transformation strategies.
- Business model paradigm shift to become customer centric with on demand production of Personalised and Customised products
- Design and Build feature-rich, innovative products – e.g., connected car acting as payment gateway by integrating with Fuel, Food POS along the itinerary
- Execute quick and fail-proof product launches
- Customer delight with digital customer experience through Sales and Service life cycle
- Agile operations and resilient supply chain for Future proofing
- Adaptive factories with Fault-tolerant assets and Self-correcting processes
- Do More with Less – Plant-wide optimisations and work with ‘First Time Right’ principle
- Better working conditions – Safety and Sustainability
“At least 40% of all businesses will die in the next 10 years… if they don’t figure out how to change their entire company to accommodate new technologies.”
– John Chambers, Cisco Systems
Technology levers for Digital Transformation
Digital transformation process allows you to build Cyber-Physical factories wherein the physical processes being executed on the ground can be controlled by remote decision-making processes in the cyber space, through virtual modelling of the physical products & processes.
“As the Internet of things advances, the very notion of a clear dividing line between reality and virtual reality becomes blurred, sometimes in creative ways.”
– Geoff Mulgan
When it comes to the digital transformation of manufacturing industry, there are many more technologies than just Mobility, IoT, Social Media & AR/VR. While there are many technologies, their business value will depend on the actual business use case, however, key digital technologies which can be leveraged towards the transformation goals can be found below. There are enormous possibilities of applying digital technologies and building applications that would help transforming the manufacturing industry. Below are a few popular use cases of these technologies which could bring in better and quick benefits with some simplistic deployments. These can then be scaled and integrated with other technologies and applications forming the Digital Core of the future state of the organisation.
Challenges of Digital Transformation
While digital transformation seems to be a lucrative proposition or a ‘must’ for manufacturing industry, the Journey is not simple and straightforward for various reasons. The basic building blocks of Industry 4.0 can solve your problems and help you realise your digital transformation goals, however, there are no standard, ready-to-deploy solution packets with one-size-fits-all. MIT Sloan's George Westerman suggests that when digital transformation is done correctly, it's like a caterpillar turning into a butterfly, but when done wrong, "all you have is a really fast caterpillar”.
Challenges lie at both stages - strategy formulisation and implementation stages. Major challenges as published by various research institutes point towards the below:
- Lack of clear strategy definition with leadership commitment
- Lack of ownership
- Lack of coordination amongst different organisational units
- Organisational Inertia for disruptive changes
- Challenges in Identification and Prioritisation of opportunities, and
- Lack of a clear roadmap.
Overcoming the hurdles/challenges
While there are challenges for organisations in adopting and executing digital transformation projects, there are learnings from leading organisations, the Digital Masters that have succeeded in transforming. Below are key guiding principles to increase your chances of succeeding the transformation.
- Pick up the right transformation goals based on market analysis and assessment of as-is business model, define clear vision and future state business model
- Plan for driving with the top-down approach and assign clear ownerships
- Form digital transformation CoE to own and be accountable for the digital initiatives. CoE is a team of people to define standard processes, technology framework, provide leadership and drive organisational change management internally.
- Organisational Change Management – There is a fear in going digital. A successful transformation is a massive undertaking that changes culture, business practices and strategy and even the nature of the work being done. Therefore, it’s crucial that before transforming, leaders galvanise their workforce so that they all have the mind-set to withstand it
- Engage right set of consultants for feasibility study, selection of technologies and definition of future state technology stack
- Develop strong partner ecosystem for Infrastructure, Communications, Products, Services
- Define detailed multi-year roadmap with discrete use cases having realistic business benefit targets attached with each one of them
- Define robust IT and network security policies and apply them at the very beginning in the digital road mapping
- Organise trainings to address skill gap for knowledge workers, and
- Go with agile implementation approach over big-bang with ‘Think Big – Start Small – Scale Fast’ strategy of implementation. Finally, a key message to all CxOs, “Adopt Digital or Face Extinction”.
Hemant Patil currently heads the Global Centre of Excellence for Industry 4.0 at a leading Engineering & IT services organisation and is based out of Pune, India. Hemant is a Subject Matter Expert for Digital Manufacturing and is an evangelist for Industry 4.0 solutions for manufacturing. He carries 28 years of rich experience of design and deployment of Plant floor systems for different industrial domains using varied IT & OT technologies. He has served many manufacturing giants across the globe and has handled complex IT programs. His key strength lies in visualising solutions to manufacturing problems and architecting them optimally for the customers. Hemant completed his graduation in Computer Technology from University of Pune in 1991 and also represents advisory board of a reputed university in India.