The Road to Digital Transformation
Published on : Monday 01-04-2019
Domain experts discuss the strategies for Digital Transformation and the impediments in the process in the Indian context.
The industry has a new buzzword, Digital Transformation. It is facilitated by the post Internet era of technologies unleashed by the information superhighway at breakneck speed – technologies like Big Data, predictive analytics, artificial intelligence (AI), mobility, IoT and cloud computing – facilitated by smart sensors and brought together on compact smart devices, enabling control on the move. In the process if there is a digital divide, technology also provides solutions to bridge this divide, offering a level playing field. This is a set of powerful tools for an enterprise not only to cause disruption but disrupt itself in the process and emerge in a new avatar – lean, mean and hungry – ready for the brave new digital world.
So what exactly is the state of Digital Transformation in India?
“In developed economies, Digital Transformation (DX) is disrupting the whole value chain and compelling companies to rethink everything they do; with labour becoming very expensive, digital transformation was the only solution. Companies like Siemens, Rockwell Automation and Schneider Electric, to name a few, started their own journey of DX and have since become the strongest solution providers today,” says Amit Bakhle, Manufacturing GM and Domain Expert, Consultant and Digital Transformation, Industry 4.0 and IIoT Enthusiast. “DX allows organisations to reduce the information asymmetry across the value chain and allow data-driven decision making which effectively reduces the resolution time and overall efficiency. But unless the fundamental and underlying process flows are defined, organisations will continue to face roadblocks in creating a truly digital culture,” stresses Sampath Kumar Venkataswamy, Research Manager, IDC Asia/Pacific Manufacturing
Is the Indian industry ready for this transformation with strategies in place? Or is it just a hype? “Well, it is true in both cases – while for some it is fashionable to just talk of Digital Transformation, one can see a lot of action also happening on the ground. This is inevitable from a strategic perspective and every organisation realises it is important to do that and a lot of digital drive is happening, which is a good sign. But I also feel it is an ongoing journey and not a destination that you reach by just doing a couple of things,” opines Benoy C S, Director & Business Unit Head – Digital Transformation, South Asia & Middle East, Frost & Sullivan.
Unfortunately, most of the firms do not have their Digital Transformation strategies in place, feels Sunil Joshi, Founder & CEO, DGTRA Consultancy Pvt Ltd. “We see companies talking about Digital Transformation because of two key reasons. One is Peer Pressure, where companies get super-excited about what their peers are using and without getting into details of what is needed for them, jump into deploying DX technologies. The other is, Self- Realisation, where few companies are looking inside-out to find out what are the inefficiency pockets in their business processes and then look at solutions to address them. These firms are on the right track for deploying DX processes and technologies,” adds Sunil.
“There are four stages in Digital Transformation for any large enterprise: 1. Discussion and Ideation Stage; 2. PoC/Pilot; 3. Pilot completed and results are yet to be shown; and 4. Seeing the benefits of RoI with digital projects,” says Murali Chandrahasan, Head – Digital Manufacturing Competency Center, Saint-Gobain India Private Limited. “Most of the large enterprises with global operations that have started adopting digital technologies are focused on design, manufacturing, operations & maintenance, supply chain and customer support, with large number of them are at stage 2 and equal amount are spread across stages 1 and 4,” he adds.
What are the impediments in the process of Digital Transformation in the Indian context? Is RoI the key concern?
According to Sujata Tilak, Managing Director, Ascent Intellimation, companies are struggling with effective strategy for Digital Transformation. “The biggest impediment is lack of strategy or business objectives, and a clear roadmap. Then there is issue of on boarding people. As DX touches practically every person in the organisation, acceptance by people is very critical,” she says. The return on investment is again linked to clarity on
strategy. “Realistic RoI estimation is definitely a challenge, but I won’t say it is a deal breaker. If business objectives are clear, one can surely identify RoI though exact quantification of returns and timelines may not be possible. This is simply because there are too many variables in that equation and how some of them play out is hard to judge,” says Sujata.
Is too much emphasis laid on RoI without considering the long term benefits? “The Indian context to digitalisation is quite different from the global. Here we see ‘Technology’ as an added cost and NOT as a tool to enhance productivity. Top management is looking at short term RoI and ‘low cost’ quick fixes. Additionally, we are a services economy and the human skill is relatively more affordable here. Hence we tend to equate technology cost to people cost in certain areas,” says Nimish Danani, Director, Hitachi Consulting. “Technology and people are not always mutually exclusive. We need to strategically think of re-deploying people and NOT reducing people. Digital Transformation will give newer opportunities to people and they will need to upskill and join the digitalisation wave,” he asserts.
In fact, Subhro Mukherjee, Senior Consultant, Deloitte Digital, feels more than anything it is mindset that poses the main obstacle on this road. “Mindset, in my opinion, is the biggest challenge in Digital Transformation in the Indian context,” he proclaims. “There is also a challenge in expectation management across different stakeholders, right skillset who can deliver transformation programs, and also not giving the right amount of importance to adoption programs. I believe we need to evaluate a lot of additional challenges that actually hide behind the word ‘RoI’ and constantly challenge our status quo if we truly want to be drive any transformation,” says Subhro without mincing words.
Santosh Tatte, Country Manager, HMS Industrial Networks India Pvt Ltd, also concurs with the observation of mindset as the main hurdle, and feels RoI is definitely one of the concerns. “Sometimes it becomes difficult to predict the direct RoI within a time frame. But there are indirect RoI such as improvement in quality, manufacturing flexibility, reduction in rejection, lower machine downtime, avoid breakdowns, lower operating cost, predictive maintenance, improved efficiency, proactive decision making and many more,” he states.
“RoI is a key concern specifically in the Indian context as we have tough industrial policies, which bring dramatic changes and rewire the efforts taken by the management so they have less bandwidth to take any risks,” says P Praveen Rao, Management Consultant and Domain Expert. “RoI is a concern as companies are not patient with Digital Transformation. They pull the plug even within a few months when they don’t see any returns. Digital is like a newborn baby that takes a year to walk and hence companies should continue with their digital initiatives for a longer time to show some results,” feels Sandeep Raut, Founder & CEO, Going Digital.
No discussion can be complete without addressing the concerns of the SME sector, which is one of the main drivers of the economy. Is the SME sector ready for this transformation?
How should the SMEs prepare for it? “Today, due to the explosion of cloud technologies, low entry cost, subscription business models and mobile technologies have eliminated the need for heavy investments on hardware and software, which were pre-requisite in the past. SMEs are well placed to leverage these opportunities and adopt this transformation,” says Sunil Joshi, who is helping the construction industry in its Digital Transformation process.
For Sujata Tilak, whether large companies or SMEs, it is about following the right stages in terms of Strategy, Roadmap, Planning, Implementation and Post-Implementation. Planning is essential. “Create a cross functional team to lead the initiative. Plan for budgets, resources. Designate owners/champions for each initiative. Evaluate and finalise solutions. Create metric to measure success of each initiative,” she says. “The SME sector is at the centre stage of the economy and it is difficult to generalise the maturity. However several government initiatives have enabled the sector with the right ammunition and it will definitely be at the forefront of driving a truly digital Indian economy. Democratising digital has changed the game for SMEs and we are definitely ready for a positive change,” asserts Subhro Mukherjee.
“For SMEs, having a reliable and right partner with proper solution and transparency is the key for proper implementation. It is equally important that the solution partner understands the SME objectives and offers an adequate, robust and reliable solution. The SMEs can focus on basic essentials such as ‘Quality and Productivity in Manufacturing’. Flexibility in manufacturing can follow,” emphasises Santosh Tatte. “First and foremost SMEs should be aware of what exactly Digital Transformation is, and how it is going to impact their business. Who are their customers and how much technical savvy they are? Accordingly, create the customer journey maps which will help in a systematic way of creating the digital initiatives which will impact the customer experience most and eventually benefit the company,” advises Sandeep Raut, who has been ranked among Top 10 Digital Transformation Influencers to Follow Today by IDG.
According to Amit Bakhle, most SMEs due to fierce competition now realise that in order to survive and grow they need to transform their organisation. However, they need to have a clear definition of what is digital and should be able to connect their digital strategies with business. SMEs should decide why they must go for transformation, what are their priorities and strategies. “Once decided, the DX project needs to be broken down to micro projects. Areas that are the most painful need to be identified. Areas with low hanging fruit should be implemented first so that the results bring in the RoI much quicker and this provides fuel for further transformation,” he says.
Finally, it is also a matter of data safety, where all companies – large or small – have varying concerns. Are privacy and cyber security concerns regarding the cloud exaggerated? “Cybersecurity is one of the most important things today and the threat is real, and there are also a lot of technologies developed to ensure security. But more than technologies, it is how you implement security in the organisation – more about educating the users and stakeholders and how they treat it. If these measures are in place then I think we are in a position to avoid or prevent any major threat,” says Benoy C S.
According to Sampath Kumar Venkataswamy, the security concerns around cloud by default have been addressed and organisations are quite confident around the data and information security measures provided by the cloud players. “Though, instances of ransomware such as wannacry and LockerGoga have raised questions around the file sharing and hosting security, but given the flexibility and scalability advantages, cloud-based applications will continue to experience a double-digit growth,” he adds.
“Cloud is the future and any organisation has to be future ready. In India still we have not reached to acceptance level of cloud especially when it comes to privacy and security. It will take some more time for Cloud Acceptability and the process has started,” says P Praveen Rao. According to him, recently the Maharashtra government has come up with a new cloud policy and is trying to migrate all information to their own cloud in collaboration with various cloud platforms like Google, Amazon and Microsoft.
“Industrial cybersecurity plays an important role in Digital Transformation with plant operational IT systems integrated with enterprise IT systems across the firewall. And large enterprises should have standard reference architecture and minimum security rules enforced for IT-OT integration and edge device connectivity,” says Murali Chandrahasan.
However, Nimish Danani has a slightly different take when he maintains that in the Indian context where adoption is quite slow, the privacy and security concerns have not yet ballooned. Experts are definitely looking at the adoption and the data sensitivity and are rightly saying “be careful”. “Cloud adoption is not an option in many ways; as a manufacturing industry you may not be able to hire and retain an IT team to manage your infrastructure and maintain it. This is all-the-more true for the SMEs. Using a reputed platform with secure connectivity should keep SMEs afloat. For larger organisations they are seeing better RoI in investing in the infrastructure. They prefer everything “in-house”, they get “capex” budgets and already have a team in house managing other applications and infrastructure. As more OT data gets exposed to the internet, the risks will proportionately increase; having a strong security policy and infrastructure becomes a must,” he says. Transformation Market is estimated to reach US$ 710 Bn by 2024, registering a CAGR of 74.7%, during the forecast period, on the back of increasing adoption of Internet of Things (IoT) in all spheres, and the surging manufacturing industry. This opens up a huge opportunity for all the stakeholders. The report also states that increasing adoption of IoT in India is a key factor driving India Digital Transformation market. IoT helps to build smart products through new functionality, reliability, greater product capabilities, and product utilisation. Indian companies are considering IoT to be a strategic tool for business scalability, and is helping businesses to generate new and innovative user experiences. As a result, companies are moving toward digital transformation.
The Digital India initiative of the Government of India launched in 2015, and the Smart Cities initiative, coupled with the plan to digitise government processes is further aiding this growth. So Digital Transformation is no longer an option. It is the only road to growth. (Note: The responses of various experts featured in this story are their personal views and not necessarily of the companies or organisations they represent.)
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