The current scenario is driving to remotisation, automation, virtualisation
Published by : Industrial Automation
Dr Giovanni Traverso, Business Transformation and Management Consulting
After a decade of Industry 4.0 what is the extent of digital transformation in the manufacturing space in India?
In my job I frequently visit Indian manufacturers of electronic components and have seen many deployments of automation excellence in process monitoring, output control, and ERP integration. Over the last 3 years I noted an increase of such champions. At times, the small size of a company limits the potential of excellence that I see in their management and in the expertise of their people. I therefore think this industry still has to consolidate in order to express all competitiveness potentials that India has in the global market.
How should an enterprise begin the process? Is there an ideal roadmap to follow for companies beginning their digital transformation journey?
Success stories of digital transformations are alluring but we also see many failures. Leveraging others’ experiences – good or bad – is fundamental (as to avoid the ‘not invented here’ syndrome). Insightful analysis with examples can be found on a recent book by MIT-CISR that I recommend reading: ‘Designed for Digital’. From their study, 5 building blocks emerge for a successful digital transformation: Operational Backbone, Digital Platform, External Developers, Customer Insight and Accountability Framework.
First and foremost: avoid losing yourself in an ocean of initiatives and inevitably lose momentum. In one word – focus! In order to do that, you have to set your priorities – e.g., do you mostly need a ‘digitisation’ to modernise your Operational Backbone or a ‘digitalisation’ to transform your products and/or customer relationship? This will immediately translate into priorities for your supply chain among the rest. Next, get to the bottom of it by breaking down business wants and needs into capabilities that are required, who shall own such capabilities, who will get the value (including how it shall be measured), and who has to bear the cost/risk of investments. This will constitute the blueprint that you need in order to focus the organisation properly.
One way of doing that practically is to start with a digital a maturity assessment exercise, followed by strategic prioritisation of its findings. A good maturity model consolidates the whole industry’s experience, encompassing lessons learned from a variety of sources that one single organisation could never have. The best sources for such tools are associations/forums/standard bodies.
I participated in the design of several maturity assessment frameworks and recommend the one developed by the TMForum – https://www.tmforum.org/digital-maturity-model-metrics/.
Of course, the extent of effort will be proportional to the extent of an organisation’s complexity. That means that even Small-Medium Enterprises would get benefits from such an approach, though scaled down (and, again, leveraging communities rather than DIY).
What is the role for various stakeholders in the organisation in this endeavour?
It is important to realise that digital transformation is not (just) about technology. A common failure pattern is to delegate it to IT, while the rest of the organisation cares for ‘business as usual’ and awaits change outcomes. Digital transformation is meant for business, must make sense to business and must be driven by business. Even technology specialists: they must be aware of business implications in order to be effective. Sometimes a role in between is needed, called ‘Business Architect’ (typical but not exclusive focus is strategy to business requirements) or ‘Enterprise Architect’ (typical but not exclusive focus is business requirement to technical requirement). In any case, even if such ‘middleman’ role is there, it shall be more a facilitator than a delegated role, because the transformation is business responsibility.
Digital transformation is pervasive by nature, but it is also fragile in that its success depends on adoption. Therefore, the ideal recipe is: visionary leadership plus cross functional approach. In other words you need a visionary leader who must be empowered and recognised at the board level, but you also need to ensure ‘strategic fidelity’ (i.e., authentic interpretation of the strategy, shared among all stakeholders) across the organisation breadth and through all its hierarchical levels. From a program management point of view, since digital transformation needs adoption and behavioural changes, it must be centred on people – that is employees, customers, and third parties, since people will be the ‘make or break’ factor.
Change management is not just about communication of a vision from the top (that would be another common mistake): every stakeholders have their own perspective in the transformation, through their own perception of the transformation cost and value. They must be involved, listened to and taken into account in order to ensure effective solutions and gain active participation. Practical techniques are: ‘Design Thinking’ and ‘Journey Mapping’ (that’s another field where I have seen the ‘Business Architect’ role to be successful). Supply chain is no exception: you should not forget to involve your suppliers/channels/partners in the story, as appropriate since the start.
In general, what are the key challenges to overcome in the process?
Besides the considerations about stakeholder involvement, explained above, consider that cost of correction grows exponentially with project advancement, hence digital transformation deployment should happen incrementally in small steps that are measurable and manageable individually (the motto is ‘fail-fast’). Your transformation plan should be designed to avoid long ‘foundational’ initiatives, but rather structured into rapid cycles associated to tangible changes with tangible immediate impacts.
In this regard, measurement is key: an accurate modelling of the business upfront will allow early detection of issues as well as capture of produced value, which in turn helps to motivate any stakeholders and keep momentum.
A special remark is due about the emerging challenge of cybersecurity and its implications on privacy and safety. On one hand, the introduction of digital technologies such as cloud, mobile connectivity and IoT is increasing the ‘attack surface’ exponentially; so much so that nowadays the classical approach of ‘perimeter protection’ is no longer adequate. On the other hand, availability of skilled resources on the market is falling short of the increasing demand. AI plays a double role of enhanced threat and enhanced defence means as well. Cybersecurity failures may originate privacy breaches that legislation will sanction; this translates into complexity of compliance assurance that go beyond the capabilities of medium enterprises.
Even more threatening is the fact that increased pervasiveness and autonomy of digitalb systems interacting with physical world tends to export cyber risk into safety risk: think of IoT devices whose malfunction (regardless malicious or not) can pose risk to humans interacting with them.
On this topic I suggest reading the book: ‘Click Here to Kill Everybody’, by Bruce Schneier. So do not engage in a digital transformation if you cannot rely on qualified resources (might be external) to support cybersecurity since the design phase and then in operation. Cybersecurity industry is evolving rapidly, solutions proliferate, blend and overlap continuously so that pick-and-choose the right vendor is one of the challenges for supply chains. Again, solutions must be chosen starting from a deep understanding of the business needs, not starting from what this or that technology can do. Here is a brief contribution for beginners: https://www.slideshare.net/gtraverso/data-protection-industry-landscape-positioning-productsservices-in-a-digital-business-context
Will the current scenario act as a catalyst, or rather the companies use this opportunity?
The current scenario is obviously driving to remotisation, automation, virtualisation; think for instance of smart working, virtual presence, digital twins, IIoT, cloud, autonomous systems… This drive is pulling an accelerated introduction of digital technologies, and the challenge originates opportunities for those who embrace the change. India is well posed to gain from such trend as: recognised capabilities in IT and service industry, available source of skilled and highly educated though cheap labour, alternative to China for de-risk of supply chain. At the same time, digitalisation acts as a catalyst of servitisation (enabling the creation of new business models). India is an ideal place for deployment of capacity for managed security services. India’s share of global economy is still small so India can potentially grow by gains on market share even if the global economy is not growing.
Dr Giovanni Traverso held leading roles in R&D, Product Management, Supply Chain, Business Transformation and Management Consulting, working in the high-tech industry for 30+ years. As a GM at Alcatel he led performance turnarounds, products delocalisation, large teams foundation, outsourcing, M&A.
As a consultant Dr Traverso founded the Business Architecture practice at Huawei, as a means to drive complex transformations and for Telcos deploying their own digital transformation. He published several contributions to standards and industry forums regarding digital transformation, Business Architecture and customer experience management. He also cooperated with PwC and is now scouting the Indian electronic components market for Bitron, a global manufacturer of electronics, headquartered in Italy.
#July 2020 Magazine Cover Story
Digital Transformation – The Next Wave The Covid-19 pandemic has achieved what CEOs and CTOs failed to do – struck a blow for Digital Transformation like nothing else did The only constant in life is change, wrote Heraclitus of Ephesus (circa 500 BCE), who famously asserted that Life is Flux, and to resist change is to resist the essence of existence. Yet, most people spend a better part of their lives resisting change. The concept of digital transformation dates back to the time PCs became mainstream and digitisation began, paving the way for digitalisation and then, transformation. To read the full cover story Please click here