Digital Transformation Strategy

Digital Transformation Strategy
Digital Transformation Strategy

Manufacturing companies are continually on the lookout to improve their business, production and operational processes with the objective of maximizing revenues and profits. There are many ways to achieve these objectives, but the most common strategies include improving overall productivity & efficiency, maximizing cost savings, enhancing customer experience, adapting to market dynamics and reducing plant downtime.

Automation, from a technological standpoint, has been the driving force for continual improvement for many decades. We most often see this done through using operational technology (OT) systems (e.g. such as PLC &, DCS) and information technology (IT) solutions (e.g. ERP & SCM), robotics, and other types of coordinated control. In addition, companies also have been applying business process management methods, such TQM & Kaizen for many years. These approaches have proven themselves tremendously successful.

Through the application of OT systems, IT solutions, and their integration, companies have realized two things; one, that data and information are valuable assets; and two, that by using emerging digital technologies, they will be able to further automate various processes, improve their ability to capture information relating to their processes, contextualize, analyze, & share the same among the stakeholders, and thereby enhance their decision making & automating capabilities. These realizations propel them to seek further improvements through the use of emerging digital technologies.  

Leveraging industrial internet of things to achieve transformation

At its heart, digital transformation is driven by the collection and use of tremendous amounts of data. Lots and lots of data. Digital technologies, such as the Industrial Internet of Things (IIoT), edge computing, cloud computing, big data and analytics, artificial intelligence (AI), and others are excellent tools for creating, collecting, and analyzing this data. It is no wonder, therefore, to see more and more manufacturing companies take the path of digital transformation so as to leverage the power of these technologies. Digital transformation is the process of intentionally bringing about comprehensive changes, after due deliberation, by leveraging emerging digital technologies to  achieve overarching objectives, which, in the business context, often includes improving a company’s business, production, and operational processes, enhancing customer and shareholder value, becoming more efficient and productive, and such others. Through such transformation, companies can overcome market challenges, ensure customer satisfaction, improve performance, and become future-ready.

Manufacturing companies can greatly benefit by turning to their advantage the power of digital technologies.
These digital technologies also help information to be shared among different applications, databases, OT systems, and IT solutions without having to adhere to the traditional hierarchical architecture for information flow. Manufacturing companies, by using digital technologies can comprehensively & extensively marshal and analyze data / information and generate business intelligence and insights. 

Often, it is not a single digital technology, but rather a combination of digital technologies that are used for achieving the objectives of transformation. At the highest level, a manufacturing firm defines digital transformation strategy to effectively and comprehensively bring about the desired changes in their business & production processes and operations. It is a not only a prerequisite for a company to transition from the third era to the fourth era of industrialization, but also a requirement to continue to remain successful.

Prerequisites for digital transformation

The smooth progress of digital transformation initiatives depends on the availability of company’s data in digital form and company’s processes that are digitally managed and the right data, at the right time. In other words, data digitization and process digitalization are foundational to digital transformation. Digitization is the conversion or the process of converting information in the form of an image, sound, document, etc. into a digital format that can be processed by a computer. One example of this is the conversion of input signals from transmitters to the DCS from analogue signals to digital signals by using communication protocols, such as Fieldbus; another example is the conversion of paper documents or pictures into PDF documents. Digitalization refers to enabling or improving processes by leveraging digital technologies and digitized data. Given the above preconditions it is necessary for a company that wants to launch digital transformation program to ensure that necessary data are in digital format and processes are digitally managed. In other words, if the company wants to achieve digital transformation of plant floor operations then it must have in place OT systems such as DCS / PLC /MES or if the company wants to achieve digital transformation of supply side processes then it must have in place IT solutions, such as Supply Chain Planning, Supply Chain Management. Digitized data and digital technology managed processes are prerequisites to move forward with digital transformation program.

Companies implementing digital transformation project should bear in mind that in the long term what matters most is how well technologies are leveraged to achieve the desired changes and not just how much investments are made in dgital technologies. Digital transformation’s ultimate success is measured by the definitive improvements realized compared to what the company has set about achieving.

To quote Thomas H. Davenport, a research fellow at the MIT Initiative on the Digital Economy and George Westerman, a senior lecturer at MIT Sloan School of Management: “Digital is not just a thing that you can you can buy and plug into the organization. It is multi-faceted and diffuse, and doesn’t just involve technology. Digital transformation is an ongoing process of changing the way you do business.  It requires foundational investments in skills, projects, infrastructure, and, often, in cleaning up IT systems. It requires mixing people, machines, and business processes, with all of the messiness that entails. It also requires continuous monitoring and intervention, from the top, to ensure that both digital leaders and non-digital leaders are making good decisions about their transformation efforts.”

Driving the digital transformation process is like undertaking a journey. The journey is in search of continuous business improvements and the destination is the horizon. While each step has a specific objective, the path may be meandering and strewn with unforeseen obstacles. However, with each step a new horizon comes into view and as Chris Murray has said ‘new, previously hidden, opportunities will come into view.’  Companies that chose to take this journey must realize that they are riding on technology, which is constantly & rapidly evolving, and that necessitates them to be in a position to respond quickly to the pace of changes.

Digital transformation journey, like all other journeys starts with a single step. The company that undertakes the digital transformation journey must upfront identify the business, production and operational processes whose improvements will enhance its performance, choose the specific goal to be pursued through either of the approaches - use-case or chart your own path - and start the digital transformation journey with a steady step knowing fully well that it is going to be long one with many more steps to follow.   To ensure success of the digital transformation initiative, a company should really adopt the agile project management methodology.

Approaches to goal selection

Use case-approach
There are many proven successful applications that can act as guideposts for companies that are initiating digital transformation programs. The adoption of predictive maintenance of equipment like pneumatic air compressor by some companies illustrates such use-case. Most process plants have pneumatic air compressors and other ancillary equipment that are periodically inspected and maintained involving downtime and loss of revenue. Some companies have embedded the air compressors with internet-enabled sensors, edge computers etc., that sense and process parameters (e.g. compressor frame vibration, temperature of pressure-packing case & bearing, etc.) and communicate the information to be processed either in the cloud or on-premise server.

Using the analytics software that resides in the cloud / on-premise server, the compressor performance is monitored to detect its deterioration and foresee possible failures. Based on the information generated and its analysis, plants decide on whether and when maintenance needs to be scheduled, what kind of work needs to be done on the equipment etc. Another example is power transformer application.  Power transformers are a vital part of electrical and distribution grids and their failures result in downtime with consequential financial costs.

Some power distribution companies have installed internet enabled sensors to remotely monitor various parameters of transformers, such as oil levels and temperatures, moisture ingress, voltages & currents and generate appropriate reports that provide information regarding the condition of the transformers, their status, locational details etc. Based on the information generated, predictive maintenance measures are initiated to forestall failures. Through predictive maintenance companies enhance plant’s profitability & performance, save time & money, and eliminate unnecessary work. This strategy can also easily be applied to other areas, such as control valves and other critical equipment.

Charting one’s own path approach
Yet another strategy is for a company to begin the digital transformation journey by identifying the plant’s physical asset / assets, whose improved performance can contribute to enhanced profitability & performance. Then, in consultation with the technical experts of the identified assets, the company has to decide on the additional monitoring & analysis that may be required for achieving the objective. It may proceed accordingly and convert the identified physical assets into cyber-physical systems for gathering the information required in digital form. Then, initiate the implementation process and set achievable milestones with each milestone having a specific objective, pursue them, evaluate the achievements, make course corrections as the journey continues, and set new objectives and pursue them. Having a system integrator / consultant, with operational technology and information technology skills and manufacturing technology knowledge, as an implementation partner will be of great help in ensuring the success of the digital transformation project.

Agile project management
According the association for project management, ‘Agile project management is an iterative approach to delivering a project throughout its life cycle.’ The association, states in its blog ‘What is agile project management,’ that APM approach involves several iterations or incremental steps towards the successful completion of a project. Iterations or incremental steps let the project team to make adjustments or course corrections rather then follow a rigid path. The blog highlights that ‘one of the aims of an agile or iterative approach is to release benefits throughout the process rather than only at the end.’ Agile was originally developed for the software industry to streamline and improve the development process in an effort to rapidly identify and adjust for development issues and defects.

The core tenet of agile methodology is to manage a project by segmenting it into a series of steps. It involves constant collaboration with stakeholders and continuous improvement at every stage. The focus is on the ultimate objective and cross-functional team collaboration—always prioritizing test-and-learn methods over rigid adherence to the laid-out plan. Continuous collaboration is vital among all stakeholders. Some of the principles of agile, as applicable to project management, are the following:

  • Highest priority is to satisfy the customer
  • The project team is provided with the necessary environment and support and is trusted to accomplish the project goals
  • The most efficient and effective method of communication with the project team and among the team members is face-to-face conversation.
  • Evolving requirements are integral to effective project implementation
  • Final working solution is the ultimate measure of success
  • Simplicity - the art of maximizing the amount of work not done - is an essential element
  • At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly
  • The best solutions emerge from self-organizing teams.
With its flexible approach, agile project management offers the project teams the quick means to minimize the impact of unforeseen hurdles on project progress. Higher levels of productivity, enhanced probability of achieving the objectives, higher quality of deliverables, and greater collaboration & satisfaction among stakeholders are some of the benefits of adopting APM approach.

9 step digital transformation strategy 

A manufacturing company that wants to achieve digital transformation must clearly identify upfront the business objectives it wants to realize and layout a broad plan to accomplish the same. Since there may be many objectives, it is good to develop a vision document that starts with a single well-defined goal. Ensuring cooperation & support of all stakeholders and availability of necessary resources & skill-set are essential for the success of digital transformation initiatives. If necessary, engage system integrators / consultants who have necessary skill resources and successful digital transformation project experience to work with the in-house project team.

The 9 steps of the digital transformation strategy are establishing a collaborative and empowered team; developing the vision document; ensuring resource & skill availability; identification of business goals, setting DT objectives and prioritizing them; develop implementation plan taking into account the priorities; initiating implementation of identified goal/ goals; regular monitoring and evaluation  of progress; if necessary initiate need-based corrective actions; celebrating success; and moving forward pursuing the next objective/s.

The vison document inspirationally describes the compelling idea for the digital transformation initiative and its objectives including benefits. The commitment of the team leading the digital transformer initiative and collaboration among the team members are extremely important for the initiative’s success; this must be taken into account while constituting the team.

Also, the team has to be broad-based so as to represent the viewpoints of the various functional / business groups, empowered, and CEO led. The team members must have open-minded attitude towards technology and change and be endowed with soft skills & effective communication abilities. Digital transformation involves the use of evolving digital technologies for achieving business objectives. Industrial internet technologies are at the core of digital transformation which aims to improve processes relating business, production, & operational processes and enhance the capabilities of operational technology systems & information technology solutions. Therefore, the skills and competencies required to drive transformation are wide ranging and covers all the above mentioned technologies, processes, industrial software systems relating to OT and IT, and system engineering. Most companies may have to complement their in-house resources for the project to succeed.

The digital transformation team aided by the subject-matter experts will have to evaluate various desirable objectives and arrive at specific goals to be pursued to begin with.

The specific goal / goals can be set either by studying and evaluating the many proven successful industrial applications, which can act as guideposts, or by identifying the company’s assets and processes whose improved performance can contribute to enhancing profitability & performance. After deciding on the specific goal / goals to be pursued it is necessary to develop the implementation plans / strategies. Implementation plan documents in detail the steps necessary to achieve the goal / goals. It also sets the timeline for completion of each step and the sequence of steps so that the project team stays on track and the project progress can be monitored and evaluated. It is necessary for the digital transformation team to regularly monitor and evaluate the implementation activities and progress. This helps in identifying bottlenecks and hurdles which can be further studied and analyzed to initiate need-based corrective actions so that implementation-process progresses and project goals and objectives are achieved. It is the time to celebrate when the set goal is achieved and it is important. Celebrating success inspires & motivates the team members and establishes strong bonds among them; imbibes enthusiasm and success mindset in the team; develops confidence to set new goals, pursue them with confidence, and succeed in accomplishing them. Digital transformation involves successfully pursuing a series of developmental and improvement goals and achieving them.   

To ensure the success of the digital transformation initiative, a company that wants to undergo digital transformation should be willing to learn about the complexities of digital transformation from the experiences of other companies which have attempted it. There are also numerous published reports about the complexities involved in successful implementation of digital transformation. It involves bringing into play external intelligence and its acceptance calls for mindset changes. Such changes do not come about easily and the digital team has to be cognizant about this unique nature of the digital transformation efforts. Recognizing upfront the complexities involved will go a long way in ensuring project success. Adopting the agile methodology is a good approach to implement digital transformation.

The core tenet of agile methodology is to manage a project by segmenting it into series of steps. It involves constant collaboration with stakeholders and continuous improvement at every stage. The focus is on the ultimate objective and cross-functional team collaboration—always prioritizing test-and-learn methods over rigid adherence to the laid-out plan. Continuous collaboration is vital among all stakeholders.

About The Author

Rajabahadur V. Arcot is an independent industry analyst/columnist and digital transformation consultant, a life member of the International Society of Automation (ISA) and member of ISA's Smart Manufacturing & IIoT Division. He is an ISA accredited mentor and trainer, and authors industry and technology trend articles, market research reports, case studies, white papers, and automation and operational technology insights.

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