Around 70% of manufacturing organizations in the U.S. and Europe have adopted a digital transformation (DX) strategy (according to the IDC research). These strategies vary widely in terms of quality and focus. Some companies (but not enough) understand that DX should cover both vertical and horizontal perspectives. Transformation should go beyond factory walls and impact the supply chain, the product and services portfolio, and the revenue side of the business.

At the other end of the spectrum, some companies (too many) implement more or less isolated digital solutions to address specific problems in operations and the supply chain. These companies can expect to see impacts and benefits rapidly. However, they are missing out on opportunities arising from end-to-end data management, contextualization, and analysis. Scalability is almost impossible without a solid digital infrastructure.

It's no surprise that the COVID-19 pandemic accelerated the deployment of digital technology across industries. One thing the crisis has shown, however, is that companies that were digitally mature before the outbreak handled the super-challenging situation better than companies that were lagging on their digitalization journey.

Forward-looking organizations also understood that the crisis offered an opportunity to redouble efforts to build a truly resilient organization in every aspect, from business and operations to the supply chain.

There are good reasons to put resilience at the forefront of strategic initiatives. Organizations focused only on the limited nature of business continuity planning may find themselves vulnerable to unpredictable disruptions. An unexpected bout of severe instablility could cost them dearly in terms of performance, revenues, and rebuilding. In contrast, a resiliency approach, based on transparency, flexibility, collaboration, and customer-centricity, best prepares an organization for major upheaval.

The tempo of disruptions seems to have accelerated in the wake of the pandemic: We've seen acute regional economic slowdowns, semiconductor shortages, skyrocketing commodity and transportation prices, even a blockage of the Suez. In many cases, DX strategies designed just two or three years ago are unable to effectively handle the flood of business, technology, and societal changes that are now upon us.

10 Reasons to Reassess DX Strategy Now

1. Cyberthreats in the manufacturing environment are increasingly sophisticated. Connecting machines to the internet has heightened the need for operational technology (OT) security. Cybersecurity remains among the top three IT/OT integration challenges.

2. New partnerships among technology vendors are emerging(e.g., Siemens and Google, SAP and Siemens). These synergies are providing the market with new products, services, and capabilities.

3. Systems integrators are gaining experience. They are becoming partners in the complex DXinitiatives of manufacturing enterprises and SMEs.

4. AI-powered models for predictive quality, predictive maintenance, and image recognition are becoming easier to deploy —and more scalable.

5. Remote work has become a new standard, even in manufacturing environments. Almost half of respondents to an IDC survey said they expect to continue work-from-anywhere policies for suitable positions.

6. Deployment of touchless operations is being driven by the convergence of IT, OT, and a new generation of physical asset and process automation.

7. Unfortunately, the digital solutions implemented by many organizations have created more silos, depriving them of the value of contextualization and scalability. Digitally mature organizations, however, are leveraging company-wide data platforms. These are enabling them to gain 10–15 percentage points in production throughput, cost of quality reductions, and machine availability.

8. In response to the demand shock caused by the pandemic, many organizations have developed new business models that leverage digital technology (e.g., IoT platforms, collaborative cloud-based solutions, remote monitoring, augmented reality). But these are mostly ad hoc solutions—they still must be integrated with the broader IT architecture.

9. The number of 5G use cases in the manufacturing environment continues to rise. However, the next-generation wireless standard, Wi-Fi 6, is emerging as significant competitor. Wi-Fi 6 is definitively worth considering for certain situations.

10. Understanding of the digitalization concept, its values and benefits, is growing in manufacturing organizations. This is providing strong momentum for significant change. Now is the time to renew reskilling and upskilling plans, taking care to ensure they align with new technology deployment and resiliency strategies.

Massive Changes are Occurring — DX Strategies Must Meet the Challenge

The COVID-19 crisis did not halt digital projects. However, organizational priorities often shifted to short-term measures. Infrastructural transformation projects were put on the back burner.

But short-term measures don't make organizations truly resilient. IDC worldwide surveys reliably identify customer satisfaction, operational efficiency, and employee productivity among the top business priorities. All of these should be part of a comprehensive business resilience framework.

Organizations must leverage digital capabilities to prepare themselves to rapidly adapt to disruptions. DX should help them position to both restore business operations and to capitalize on unexpected opportunities that may arise from uncertainty.

Markets and societies worldwide have utterly changed in the past 15 months. DX strategies must reflect the new business and digital resiliency concepts and the accelerating evolution of technology and data management approaches. The time for change is now!

Author:

Jan Burian, Senior Director, Head of IDC Manufacturing Insights EMEA and Leader of IDC Future of Operations Europe Practice