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DIGITALISATION Digital transformation – Way forward

Mar 6, 2020

The Indian manufacturing industry is a promising one, which assures to be one of the most established sectors in the following years. With this, digitalisation is one of the main elements that will help the sector move forward and change it for the better. The article discusses the various trends in digital transformation, challenges and opportunities encountered and how successful digital transformation can be achieved. - Rajkumar Paira, Senior Analyst, ARC Advisory Group, India

As per the ARC definition, digital transformation is the transformation of industrial products, operations, value chains and aftermarket services that are enabled through the augmentation of people and knowledge, through the expanded use of sensors, data and analytics, automated and crowdsourced.

Digital transformation on the move and the next several years will bring this in manufacturing industries. This transformation will be widespread and far-reaching. Information Technology (IT), Operational Technology (OT), Engineering Technology (ET), supply chain, asset management, services and customer-facing systems will all be impacted. Discrete manufacturing, process industries, utilities, energy, infrastructure and more are already beginning the transformation.

Digital transformation trends

It will surely take many years to fully realise digital transformation, but it is already happening faster than many expected. Some of the key digital transformation trends are -

  • Artificial Intelligence

  • Advanced analytics

  • Augmented Reality

  • Virtual Reality

  • Operations performance management

  • Asset integrity management

  • Digital twin and digital thread

  • IT/OT Convergence

Primary operational challenges for the industry

Also, while organisations are finding it exceedingly difficult to answer simple questions, lots of operational challenges are faced, such as -

  • New projects are larger and more complex

  • Situational awareness

  • Eliminating unplanned downtime/incidents

  • Migration and modernisation

  • Stranded diagnostics

Top hurdles to overcome

Despite a great deal of industry activity, some real progress and growing comfort with the cloud, issues related to cybersecurity, data security & privacy and confidentiality still lead the list of hurdles to be overcome.

Another group of leading hurdles or obstacles relate to technology issues arising from the fact that today’s plants aren’t highly connected yet. It’s a big part of the digitisation work to be done. These include -

  • Lack of strategy for dealing with legacy systems & equipment

  • Limited availability of machine health data

  • Complexity of potential solution space: where to focus?

The other leading hurdles are not about technology but are normal business issues, as follows -

  • Lack of industry standards (over 41%)

  • Lack of budget (over 38%)

  • ROI or business case for digital transformation (over 38%)

Digital transformation opportunities

  • Business transformation

    According to a survey by ARC, over half of the respondents see creating new markets as one of the important aspects to start with the digital transformation journey. Over 40% of respondents also see growing existing markets, opportunities for improving business responsiveness and agility, new services based on smart connected products and opportunities for new business models and revenue streams as very important aspects. ARC frequently sees this expressed as ‘moving closer to the customer’. It is sometimes realised through new service offerings based on connected products or other customer needs. For example, in the paints and coatings market, companies have begun offering online design services to help customers select and visualise colour schemes in advance. An element of creativity and innovation is needed to bring about a business transformation.

  • Performance improvement

    It is useful to examine the expected performance improvement opportunities from the perspective of the respondent. If we look at the top performance improvement opportunities identified by those whose focus is either business, supply chain, operations or engineering and maintenance, from a business perspective, plant operating performance tops the list, but inventory optimisation, demand forecasting, sustainability & compliance and warehouse operating performance are also important.

Towards successful digital transformation

For successful digital transformation, one must abide by the following -

  • Make honest assessments: One must be realistic about the organisation’s readiness to support digital transformation – both willingness and ability

  • Account for the human element: Organisations need to lead workforce and culture change. The focus on human-centered questions should start in the initial phase.

  • Have a cohesive strategy: Projects should be connected in scale and ROI. Issues arise if planning is too technology-centric or when not considering changing processes and job roles.

  • Connect strategy and reality: One must make sure that strategy accounts for reality and reality doesn’t hold back strategy. There should be rationalised decision-making processes at all three phases, from strategy through execution.

  • Be flexible: One should be willing to change philosophies to data management and cybersecurity. As organisational gaps are uncovered and initiatives are prioritised, the organisation should evaluate the benefits.

  • Measure success: One should identify the metrics to measure success, including time and cost budgets and clarify accountability.

Making the manufacturing industry future ready

While digital transformation has a different meaning for different people, India will have to embrace it, simultaneously with the rest of the world. Digital transformation is influencing businesses and reducing the typical ways of functioning, clearly making it the way forward for the Indian manufacturing industry.

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  • Rajkumar Paira

    Senior Analyst

    ARC Advisory Group, India

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