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    Digital Success: A Holistic Approach to Digital Transformation for Enterprises and Manufacturers
    Digital Success: A Holistic Approach to Digital Transformation for Enterprises and Manufacturers
    Digital Success: A Holistic Approach to Digital Transformation for Enterprises and Manufacturers
    Ebook348 pages4 hours

    Digital Success: A Holistic Approach to Digital Transformation for Enterprises and Manufacturers

    By alasdair gilchrist

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    About this ebook

    What is Digital Transformation, why is it so important and why do so many transformation projects fail? More importantly, what can we do to make our transformation initiative succeed? These are a few of the profound questions that we seek to answer in this book.

    The anomaly between the number of digital transformation being undertaken and the high failure rate may be due to not enough transformation initiatives taking a holistic approach that encompasses people, culture, organisations, processes, business strategy and objectives into the overall mix instead they are focusing largely on the technology. Therefore in this book we contemplate a holistic approach to digital transformation across the entire spectrum of the business from the perspective of an enterprise or manufacturer. Hence we start with people, culture and the need for agile business development when transforming processes, products and services or business models. We examine the how and why we align and tightly couple business objectives to transformation initiatives. Importantly, we examine the need for company-wide collaboration and integration of data, knowledge, processes and systems and the huge benefits initiatives such as data-democratization can deliver. Then we delve deeper into the specific drivers for successful transformation across a very broad range of business functions from the perspective of IT and Operations, Finance, HR, Sales & Marketing, Manufacturing, Inventory, Supply chain and Post-sales service. We also examine how technology and processes such as the IoT and advanced data analysis have brought about Industry 4.0 and the Smart Factory not through technology upgrades and point solutions but through a holistic approach to digital transformation.

    A holistic approach to digital transformation, places people, culture, knowledge, capabilities, and decision-making as the pillars supporting the overall organisation's business strategy, objectives and mission values that are built upon a foundation of technology and processes. Successful digital transformation initiatives do not lose their focus on the overarching business strategy and company objectives being the goal, it's not about technology it is about creating new business value at the strategic level. And in this book we will show you how to do it.

    LanguageEnglish
    Publisheralasdair gilchrist
    Release dateNov 4, 2018
    ISBN9781386846482
    Digital Success: A Holistic Approach to Digital Transformation for Enterprises and Manufacturers

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      Book preview

      Digital Success - alasdair gilchrist

      Digital Success

      A Holistic Approach to Digital Transformation for Enterprise and Manufacturing

      ––––––––

      Copyright © Alasdair Gilchrist 2018

      Table of Contents

      Digital Success

      Chapter 1 – Why is Digital Transformation important?

      Defining Digital Transformation

      Customers

      Employees

      Suppliers

      The Era of Digitization

      Why do most Digital Transformations fail?

      Top Hurdles to Overcome

      Chapter 2 – Reframing Digital Transformation as Digital Business Transformation

      Modernization trends in technology

      Trends in Customer Behaviour

      Key Drivers for Digitalization

      Business Transformation

      Performance Improvement

      Why Digital Transformation

      Digital Transformation Vision & Maturity Model

      The effect of emerging technologies

      Too much focus on technology

      Chapter 3 - Concentrate on why not how

      It is not about the technology

      Business Strategy vs. Enterprise Architecture

      Creating Digital Capabilities

      Chapter 4 – Building a Digital Culture

      Why instilling a digital culture matters

      The core elements of a digital culture

      Articulate, Activate, and Align

      The culture-performance payoff

      Delivering Value via Transformation

      Culture as DNA

      Chapter 5 – Adopting an Agile Approach

      Rediscovering an Agile Approach

      The Pressure to Evolve: Digital Transformation

      Agility, with Emphasis on Business

      Creating the Proper Balance

      Agile Leadership is Essential

      Domains of Business Agility

      Practices, Methods and Frameworks

      The Agile Journey

      Chapter 6 - Business Process Management (BPM)

      BPM compliments Digitalization

      Getting them to work together

      Cycle of continuous improvement

      Types of Process Handling

      Identifying and Categorising Data

      Using BPM to uncover innovation

      BPM as an enabler of digital transformation

      Chapter 7 - Knowledge Management

      Harnessing Data and Information

      Data Democratization

      Laying the foundation for data democratization

      Cultivating Collaboration

      Chapter 8 - Building the Digital Ecosystem

      Cloud Services

      Where cloud doesn’t suit

      Creating a Cloud Strategy

      Advanced Technologies

      Connected Vs. Converged

      The Business Case for a modern data architecture

      Chapter 9 – Building a Single Source of Truth

      Business Intelligence evolution

      A modern approach to BI

      Building a System of Records

      From tables to cubes

      The need for a Data Warehouse

      Planning a Data Warehouse

      Data Warehouse Infrastructure Architecture

      Chapter 10 – Enterprise Asset Management

      Where the old becomes new

      Mobile communications

      IoT-enabled assets

      Machine learning

      Mixed reality

      Predictive Maintenance

      The Digital Twin

      Chapter 11 – The OT & IT Conundrum

      Why they have autonomy

      OT & IT Convergence

      How the Internet of Things brings IT and OT together

      Aligning IT Operations for Digital Business

      Bridging the Operational Gap

      Merging the technology

      Bridging the Cultural Divide

      Organizational culture

      Planning for Convergence

      Chapter 12 – The Smart Factory (Industry 4.0)

      Process efficiency:

      Customer experience

      Smart Products

      New incremental revenue streams

      Products-as-a-service:

      Business transformation

      Chapter 13 – Service 4.0

      The evolution of service provision

      Customers have Enhanced Expectations

      Service 4.0 is Digital Transformation

      Technologies that enable Service 4.0

      Big Data and Analytics

      Ubiquitous Connectivity and the Internet of Things

      Cognitive Computing

      Advanced Self-Service

      Targeted Marketing

      Proactive Maintenance

      Enhanced Planning

      How to Evolve to Service 4.0

      Who benefits most?

      Chapter 14 – Sales & Operations Planning

      Defending Against Disruption

      The Impact of Digital Transformation on Sales

      Towards a new paradigm

      Problems within the S&OP

      The digital business planning approach

      Dealing with Complexity

      The balance challenge

      Digital business planning and MEIO

      Technology drivers for Digital Business Management

      Trusted data

      Demand planning and sensing

      Chapter 15 – Human Resources

      HR needs to reinvent itself

      The Role of HR in the Digital Economy

      Global talent war

      Change in brand expectations

      Pressure of employee engagement

      HR’s strategic role at the executive table

      Digitalisation relies on people – who is in charge?

      Digitalization is about people not technology

      Change Management

      Managing internal communities

      Making the old and boring new

      It’s not about Millennials

      Chapter 16 – Finance & Accounting

      Trends in Accounting

      Machines Complement Human Brain Power

      Accounting tasks machines can do

      Accounts payable/receivable processing:

      Supplier onboarding

      Procurement

      Audits

      Monthly/quarterly close process

      Expense management

      Account and Billing Queries

      Chapter 17 – Risk Regulation and Compliance

      Why no invite to the party?

      A reluctance to participate?

      The question of risk

      Threats and Change

      Bridge building

      Data sharing and Data Marts

      Chapter 18 - The Digital Supply Chain

      Smart Digital Supply Networks

      A Connected Community

      Intelligent Networks

      Supply Chain Visibility

      Making SDSN an integral part of business strategy

      Where to play and how to win

      Trade-offs to customization

      Digitally Transforming the Supply Chain

      Think big

      Start small

      Act fast

      Chapter 19 – Logistics 4.0

      Integrated planning and execution

      Logistics visibility — seeing into the network

      Track-and-trace technologies

      Procurement 4.0 — sourcing on demand

      Smart warehousing — robots at work

      Efficient spare parts management — with 3D printing

      Autonomous and B2C logistics — robotic transport

      Chapter 20 – Transforming Post-Sales Service

      Digitizing the after-sales supply chain

      Key Technology Components

      Data Processing and Manipulation

      Cloud Services

      Automation

      Post-Sale Control Tower

      Analytics

      Chapter 21 – Not a Road Map but some Useful Tips

      Apply Master Data Management.

      Establish data governance practices

      Understand the data lineage

      Support multiple data types

      Build a Digital culture

      Build scalable infrastructure:

      Support on-premises and cloud infrastructure:

      Plan for geo-distribution:

      Use Standard APIs

      Support containerization:

      Use multiple machine learning frameworks

      Build a DevOps Culture

      Prepare an application migration plan:

      Assess network architecture:

      Adopt orchestration

      Don’t forget training:

      Conclusion

      Chapter 1 – Why is Digital Transformation important?

      We live in an age that has gone digital in a big way. C-suites across industries are frequently using words like digitization and digital transformation. Moreover, business and industry consultants such as McKinsey report that 75% of S&P companies will be gone by 2027 if they don’t transform digitally soon enough.

      In fact, a consensus of opinion amongst business leaders is that the need for businesses to have a digital strategy is not to gain a competitive edge but to survive in this volatile and fast-paced environment. The technology and processes that are driving the accelerating wave towards digitization are capturing the imagination of leaders across business, commerce and industry. In droves they are commissioning and undertaking digital pilot projects that introduce hyped emerging technologies within their businesses but with mixed understanding, purpose, expectations, and inevitably results. Indeed, most business leaders still mistake digital technology upgrades with digital transformation. And this may go a long way in explaining the anomaly between the amount of digital technology pilots undertaken and the level of confidence amongst business leaders.  Despite the high levels of activity within the digital landscape across industries, around 59% of them believe it is too late for them to start their digital transformation journey. So what does this term Digital Transformation mean?

      Defining Digital Transformation

      Conventionally speaking, digital transformation is the process of integrating digital technology into all functions of an organization to fundamentally change how it operates and delivers value to its customers, whenever and wherever they need it.

      Therefore there are many definitions of Digital Transformation such as:

      "The transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies that aligns with organizational strategy with present and future shifts in mind."

      But these types of definitions fail to stress the importance of the pursuit of new revenue streams, products and services through new business models. For without new business models that utilize the mix of digital technologies in order to create these new revenue streams, products and services there is only augmentation of existing services via technology. Therefore, a more comprehensive definition may be:

      "The transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies that aligns with organizational strategy in pursuing new revenue streams, products and services and business models with present and future shifts in mind."

      The problem that many businesses face today is that they are going through digital transformation initiatives that are actually Digital Optimisation or Digital Augmentation, which are only technology upgrades for existing services and processes. Hence, it is common to find the upgrade of customer touch-points such as the introduction of a mobile app being described as a digital transformation when of course it is optimisation. Similarly, the delivery of a product in digital format is also not necessarily digital transformation as it is more augmentation of an existing product or service. Indeed it is very likely to cannibalize the existing physical products market share. Consequently then we must be careful how we measure digital transformation maturity and progress as it has such an ambiguous definition even amongst business leaders.

      A good barometer for digital transformation progress is within industry or to be more precise manufacturing. Manufacturers have traditionally been more hesitant to invest in the latest hyped technologies without a clear and definable business purpose. This is due to long asset lifecycles – circa 20 years - and well established business and industrial processes. Hence manufacturers see little benefit in investing in operations or process upgrades due to a lack of an attractive return-on-investment. Nonetheless, a recent National Association of Manufacturers (NAM) survey of more than 500 manufacturers reveals that 65 percent plan to increase capital spending during the coming years. This raises the intriguing question as to where this investment will be made. Some experts predict most manufacturers will look toward revamping their facilities for the fourth industrial revolution or smart manufacturing, which will move manufacturers from mass production to customized production via a digital supply network.

      Industry commentators believe that digital transformation, which is a conflation of new technologies such as the internet of things (IoT), advanced robotics, artificial intelligence (AI), and 3D printing, is expected to generate more than $370 billion in net global value during the next four years, which is certainly an ROI to whet the appetite. Nonetheless, while digitization is able to get more out of manufacturers’ materials and machines, what are the driving forces behind transformation that can generate these prospective profits as there must be more to it than process automation?

      Customers

      According to a Harvard Business Review study of 75,000 people, the most important factor for customers when evaluating a product is its capacity for reducing effort. The customer values convenience so they want the products they interact with to be designed to make their life easier but also to be simple and intuitive to use and information to be available online when they need it. These customer expectations of a product relate to the concept of the least viable product, which is a product with the minimum features and clutter that is still fit for purpose. These expectations are changing the way customers’ view traditional products and brands, opening the door for competing manufacturers that have embraced the digital transformation. As a result manufacturers have to change the way they design and deliver their products to stay ahead of the curve, keep existing customers happy, and attract new ones. Consequently, manufacturers must innovate faster and create products that are software-enabled, connected, and driven by intuitive user interfaces. But keeping up with shorter product life cycles (PLCs) is also of the utmost importance. Today, a typical life cycle between electronic variants and generations is going from 12 to 18 months to less than one year for many products. This trend is evident in the smartphone market where PLC is less than a year and even in the automotive industry, where PLC has gone from nine to five years for the vehicle but less than two for the in-car infotainment systems. With PLCs getting shorter, manufacturing processes must get faster, and digital transformation is seen as being the vehicle to lead the charge.

      Employees

      Traditional manufacturing is still walking in the deep shadows of past industrial conflict. In these businesses there are strict hierarchal lines linking management and employees and these are deemed essential in the separation of strategy and execution. However there is also a hierarchy between profit generating departments (Manufacturing, Sales & Marketing) and the support services (IT and HR) that persists even to this day. However, even the traditionalists are beginning to acknowledge that disconnected employees lead to job dissatisfaction. Moreover, it is recognised that digitization helps manufacturers get the most out of their employees, and helps employees get the most out of their jobs. Digitization breaks down information barriers and departmental thinking, allowing employees to do their jobs more effectively. Interestingly, when Siemens was building their Smart Factory they ran a bonus scheme open to all employees for suggestions that would provide long lasting value and benefit to the business. What was surprising was that the majority of prize winners those that suggested long-term value generating ideas came from the shop floor. They were not data scientists or subject matter experts but the employees that ran and supervised the actual processes on a daily basis. This is a clear indication that employee engagement is not just some social experiment but a real profit generating process. However, even if the business is motivated to engage employees, there often is a lack of digital talent in many manufacturing facilities due to the predominantly analogue nature of most manufacturing shop-floors and their Operational Technology domains. For the small and medium-sized manufacturers (SMMs) this lack of digital expertise creates tremendous pressure to bring in tech-savvy employees who understand the digital realm. To do otherwise would leave the company vulnerable to competition from start-ups and other more agile companies that do manage to attract young digital talent. Subsequently, the hiring of new tech-savvy employees is the catalyst for change as they build internal pressure and an irresistible push towards modernisation via digitization.

      Suppliers

      Globalization has increased the pressure on manufacturers to streamline their supply chains. They need to do this to stay agile, resilient, and responsive. Hence, manufacturers need to be able to communicate and collaborate effectively with suppliers and partners at a global scale. Today, driven by concepts such as Supply Chain 4.0 modern manufacturers are also extending their value chains to external collaborators for everything from product design and development to sales and service. However, for most manufacturers many of these functions still operate within a silo rather than working together harmoniously as part of an integrated digital supply chain. In recognition of this failing many manufacturers are recognizing that digitization is a strategy for bringing down those walls, so that their suppliers, collaborators, transporters, and even customers, become one seamlessly integrated value producing ecosystem that is fully transparent.

      There are three main ways the digital transformation will change the supplier relationship:

      • Procurement: Closer symbiotic connections can be formed with suppliers and partners to aid the planning process, improve sourcing, actively manage supplier risk, and boost collaboration. This helps support the manufacturer’s long-term plans for growth, innovation, and sustainability.

      • Transparency: Manufacturers will not just react to disruptions but be able to anticipate them, modelling the network, creating what-if scenarios, and adjusting the supply chain immediately as conditions change.

      • Analytics: With immediate access to data, manufacturers gain a clear understanding of how well they are handling operations with metrics related to speed, inventory, and finances. Many organisations have already noted spectacular results using predictive analytics to reduce machine maintenance costs.

      The digital transformation age is upon us, it has transcended hype and become a reality and it is giving SMMs the opportunity to build their own smart facilities to better serve their customers, engage their employees, and collaborates with suppliers. Such is the importance of digital transformation that for those companies that embrace this revolution— Industry 4.0 or Smart Manufacturing—are sure to thrive, while those that don’t may be left behind. It is therefore essential that businesses consider reinvesting through digitization, and start manufacturing smarter, not harder.

      The Era of Digitization

      The next several years will bring about the Digital Transformation of the manufacturing industry. Indeed there will be few areas of a business unaffected by digitalisation as existing systems, jobs, and business processes are instrumented, redefined, and optimized with artificial intelligence. This transformation is already becoming widespread and far reaching and we are witnessing disruptive changes in Information Technology (IT), Operational Technology (OT), Engineering Technology (ET), demand-driven supply chain, asset management, product-as-a-services, and customer-facing systems but many others will also be impacted. Such is the proliferation of this revolution that discrete manufacturing, process industries, utilities, energy, infrastructure, and more are already beginning the journey towards transformation. But it is not just industry behemoths that are changing for companies of all sizes and disciplines are using technology to transform their operations, respond more quickly to customer demands, and enable new business models.

      A study by 451 Research shows that manufacturing as always lags somewhat behind the early adaptors of technology. Indeed more than half of all retail, financial services, and healthcare organizations have already launched a formal digital transformation initiative across the entire enterprise. Another 20 to 25 percent are taking a siloed approach, transforming one element of the organization at a time. This year they’ll spend nearly $1.3 trillion trying to operate more efficiently, innovate faster, improve the customer experience, and stay ahead of all the competition - other digital start-ups. But nearly three out of four large-scale transformation initiatives won’t actually reach their stated goals, according to McKinsey & Co.

      Why do most Digital Transformations fail?

      The reasons that many digital transformations fail are myriad. The most common is that it is mistaken for modernisation of the infrastructure or simply a technology upgrade. The other common issue is with companies addressing point solutions such as deploying digital touch-points for customers in ecommerce, mobile in sales and video-chat in customer services. But that is just individual technology upgrades. A true digital transformation initiative would have identified the individual needs of each department and deployed a unified communications solution across the entire organisation. A technology that

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