There is no end to digital transformation journey but continuous evolution
Published by : Industrial Automation
Deepak Keni, Executive Vice President – Special Projects & Enabler, Deepak Fertilisers And Petrochemicals Corporation Limited.
After a decade of Industry 4.0 what is the extent of digital transformation in the manufacturing space in India? The adoption of Industry 4.0 in India is lower compared to global adoption in countries like Germany. The promise of Industry 4.0 to a fully autonomous capability is quite far away in the Indian manufacturing landscape. There are practical challenges which are technical and commercial in nature with both brown field industries and green field projects. For brown field industries retrofitting with new Industry 4.0 – both from Operational Technologies (OT) and Information Technologies (IT) capabilities – presents significant interoperability and operation challenges. While for green field (new projects) the Industry 4.0 ‘additional cost’ very rarely find its way into the Capital Expenditure. More so, organisations which want to expand new manufacturing capabilities, will make limited investment on cutting edge Industry 4.0 capabilities, because they want a more or less common platform and architecture on technology landscape (both OT and IT) when it comes to common Standard Operating Procedures across various manufacturing facilities. On the commercial front, our cost of capital as compared to cost of capital in Germany coupled with lower labour costs and abundant availability of skilled labour, make it economically unviable to invest in such technologies where return in investment (RoI) is not clearly visible or much longer in nature (when compared to internal cost of capital or payback period and guidelines).
Having said that, some oil and petroleum industries and continuous manufacturing (assembly line) industries have made better inroads with Industry 4.0 technologies at least in the areas of connecting the dots and having a good end-to-end visibility across the operations, with some basic advanced analytics in place and moving towards an autonomous journey with predictive capabilities and self-optimising systems.
How should an enterprise begin the process? Is there an ideal roadmap to follow for companies beginning their digital transformation journey?
With 25 years of experience, my view is that there is no right or wrong way to approach this. I have seen some approaches are better than others but have to be customised to the organisation. Ideally an organisation should aim to become an agile, self-learning organisation at the end of the digital transformation journey with sustainable culture change. This is an oxymoron because there is no end to digital transformation journey but continuous evolution.
How fast can your organisation adapt to changes in the external factors (industry, market, customers, suppliers, competition, etc.,) and have they built the internal capabilities to self-evolve to changing needs, because while consultants will give a broad view of industry and best practices, when it comes to specifically changing the organisation, it has to be internally designed with limited support from consultants. My view of an ideal roadmap to begin the digital transformation journey should start with internal retrospection. What are core internal competencies which need to be strengthened and which ones are adjacencies that need to be built and which ones are ideal for partnership and collaboration with external ecosystem. A strategic vision to guide through the journey along with high level strategy, a broad enterprise architecture and roadmap of initiatives to start with, followed by a carpet bombing approach of simultaneously executing smaller projects across the value chain or the organisation can ideally boost the digital transformation journey. Once the internal transformation engine has jump started, some medium complexity projects can be picked up. This momentum should be self-sustaining for couple of years, post which the strategy would require correction any ways and the organisation would have built a certain level of maturity and capabilities with respect to agility and self-learning to accelerate along this never ending journey of digital transformation.
What is the role for various stakeholders in the organisation in this endeavour?
The stakeholders both internal (employees) and external (customers, suppliers and external agencies/bodies) play a vital role in this digital transformation endeavour. The internal stakeholder roles vary from sponsors, to champions, to leaders, to managers, to implementers, to adapters, to sustainers – all of them driving transformation and change in various capabilities and capacities. The external stakeholders could define the policies, or drive industry/market change which can act as a trigger for the transformation and change.
In general, what are the key challenges to overcome in the process?
Some of the key challenges observed are with respect to analysis-paralysis, inertia/resistance to change, expectations of quick results, speed of execution, prioritisation and resource alignment. Sometimes significant time is spent in analysing the situation and conceptualising the project, so much to the extent that requirements have changed, market/industry has moved ahead, or in some cases the project could have been quickly executed in the same time frame. Most organisations have inherent resistance to change especially in the manufacturing setting where any technology intervention is considered a hindrance. Similarly the expectations of quick results may potentially derail the project and lead to sub-standard design and execution. Also, most digital transformation projects generally never get top priority because change in ways of doing business ‘gets’ in the way of normal business routine and operations. While on paper resources are aligned and such projects get prioritised, they most probably end up playing second fiddle to business as usual. The good thing is with the current Covid scenario the definition of business as usual has changed and such Industry 4.0 and digital transformation initiatives will get more attention – at least in the short term.
Will the current scenario act as a catalyst, or rather the companies use this opportunity?
There is a combined reaction to this current Covid scenario. While some companies are struggling to survive and focusing on business planning and continuity, other companies are finding opportunities in the marketplace to capitalise on this situation. Manufacturing companies are trying to be less dependent to human interventions paving the way for more digital interventions. Similarly, the stringent needs to compliance when it comes to Environment Health and Safety is forcing companies to deploy and adopt digital technology. Some companies are enabling operations through Industry 4.0 and digital technology like remote monitoring, remote sensing, location-based services (for all assets, including people) and many such cases. On the other side manufacturing capabilities are evolving horizontally or vertically with new product lines, or product extensions or digital wrappers (around core products and services). Some companies will not survive this situation, while others will have to redefine themselves and transform themselves. Ideally companies which have become agile and self-learning will have highest chance of survival and the opportunity to convert this ‘bust’ into a ‘boom’.
Deepak Keni is a visionary senior executive focused on growth, innovation and transformation with over 20 years of experience as a management consultant and veteran leader with entrepreneurial mind-set and global experience in markets including USA, UK, Middle East, Africa, India, ASEAN, APAC driving Strategy & Transformation, Business Development & Sales, Corporate Development, M&A, growth & diversification, agile digital transformation, operation excellence assignments with CEO/CXO and Board of Directors.
#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