Among industrial companies globally, the momentum behind digital transformation is increasing. It’s no longer an abstract concept or an initiative to address sometime in the future. The digital age is here, the Industrial Internet of Things (IIoT) is powerful and the benefits from creating digital operations are real.
As industrial companies mobilize for the digital age, many are charging line management executives with responsibility for digital industrial transformation in addition to, or as an evolution of, their current position. As they tackle this new endeavor, they wrestle with issues that range from how to govern and fund the transformation to where to apply digital technology for the most impact right now.
If you are an industrial company in the midst of structuring your digital industrial transformation, there are important questions to address, such as:
- Where should digital industrial transformation sit within our organization? Should we have a centralized strategy or allow different divisions to adopt an approach that is in line with their individual markets?
- Should the chief information officer also be the chief digital transformation officer, or should these roles be separate? What skills should a chief digital transformation officer possess and how should the role be resourced and supported?
- How should we develop a capital allocation methodology that estimates the desired level of investment needed to achieve becoming digital?
- How do we balance our investment in digital industrial transformation with the existing, on-going investment needs of our individual divisions?
From an operations perspective, examples abound of companies driving machine reliability and resource productivity from digitizing processes. To be sure, these are important foundational opportunities to capture. As you do so, remember that digitalization is an ongoing journey and can have widespread impact beyond immediate operational savings.
Here’s one example: the real-time management of jet engines will increase reliability and optimize maintenance. However, it will also change the way that organizations deploy and train their people because employees who are no longer performing routine activities will have more time to focus on high-value activities such as innovation or generation of new insights though data interrogation. As another example, with real-time data and powerful analytics, organizations will be able to respond more swiftly than ever to changing customer demands which can increase customer satisfaction and, more broadly, lead the company to entirely new services and into new industries.
[Digital transformation:] a journey to a world where physical operations intersect with physical science, data, and advanced analytics.
GE is a great example of an industrial company that is in the throes of digital transformation, which Bill Ruh, former CEO, GE Digital, describes as “a journey to a world where physical operations intersect with physical science, data, and advanced analytics.” Transformation has already delivered higher productivity, shorter manufacturing cycles and reduced machine downtime at GE. But GE says this is just the beginning of its productivity gains, with additional long-term and significant benefits resulting from digital industrial transformation.
To me, the single most exciting thing about digital industrial transformation is that we don’t quite know where the journey ends. We are heading toward a future where productivity itself becomes a service that industrial companies can offer to their customers. Take autonomous vehicles, for example. They will be far more than just a means of getting from A to B; they will also be comfortable environments in which we can work undistracted and therefore raise our productivity. There will also, undoubtedly, be numerous other ways in which industrial companies capitalize on digital technology to change society for the better. In fact, it’s quite likely that the product or service that most transforms the world within the next 20 years hasn’t even been invented yet.
Through our global, strategic alliance, EY and GE Digital help clients gain ground-breaking insight from IIoT, increase productivity and efficiency through data and analytics, and transform their business through digital innovation.