The Digital Enterprise, enabled by Digitisation or Digital Transformation is upon us and change is causing a revolution across every industry. However the fate of companies has never been more uncertain, organisations that suffer a digital stage fright, are unable or unprepared to adapt to changing market realities. The last decade has shown that companies that have embraced digital technologies are reaping the benefits, offering a greater customer experience and new innovative business models.
In manufacturing, the industry trends enabling a digital enterprise are identified as; Industrial Internet of Things (IIOT), Digital Twin, Industry 4.0, Servitisation, etc. In the fast moving pace of the digital age, customers expectations are outpacing many companies abilities to evolve or pivot fast enough. A great example of a business that transformed its business model to provide greater customer experience and value is Rolls-Royce Aeroengines. Rather than selling engines directly to airlines and making money through maintenance and spare parts, Rolls-Royce moved to “power-by-the-hour” contracts. Customers buy the engine power, therefore removing the complexity of capital expenditure and complex ongoing operating charges, thus transforming and simplifying the customer experience. This alignment with customer requirements led to a much greater focus on engine fuel efficiency.
Organisations are realising that their product is a platform that delivers a service. Automotive manufacturers are being forced to look at new business models, disrupting the traditional ownership models. Both Mercedes (Car2Go) and BMW (DriveNow) are heavily investing in Car Sharing schemes, where customers use an app to locate a nearby car, unlock with the app and simply drive to their destination and park pretty much anywhere without the need to pay for parking. In densely populated areas this new pay-per-use economy can make more sense than traditional ownership, as insurance and car maintenance are taken care of and therefore simplifies the customer experience. By building a platform for car sharing, both manufacturers ensure a market for their product (BMW DriveNow have more than 1200 cars in downtown Berlin) and will focus on emissions and fuel efficiency to maximise profits.
The technology is available to support the digital enterprise, from sensors for inclusion in manufactured products through to Machine Learning platforms ready to ingest your real-time data for analysis. In fact, many companies are already running live Smart Manufacturing platforms such as; ThyssenKrupp Elevators who analyse the data stream assisting predictive maintenance or Siemens AG with it’s completely automated Amberg factory. A larger number of manufacturers are building IIOT strategies and running trials. Of course, there are substantially more organisations that are like a “Rabbit trapped in the headlights”, suffering from digital stage fright and unable to get initiatives running or are delaying decisions until new IIOT standards and platforms emerge.
Moving digital is no longer optional, it needs to be a critical response to meeting the increasing needs and expectations of the customer. Offering a customised experience at scale is fast becoming the market expectation, customers won’t wait for long supply times if another supplier has a similar product immediately available, this is the new pace of business delivery. Forrester states that over 60% of executives believe they are “behind in their digital transformation”. Manufacturers must focus on enabling a digital enterprise, as priority number one, to ensure readiness for continuing market changes and customer needs.
At Product Innovation, a CIO-led learning community for manufacturers, we have covered how leading organisations are managing the transition to a digital enterprise. This content is available through our PI Membership subscription community, with curated content ensuring that manufacturers tackling the challenge will gain insights into effective strategy, implementation and the inevitable pitfalls that exist in getting there.
Paul Empringham, VP Research, PI – a CIO-led learning community for manufacturers. www.pi.tv