How Industrials Can Maximize the Value of Digital Operations

Summary

It's been inspiring to see how technology has accelerated innovation in the Industrial Products (IP) sector. By helping companies maintain operational excellence and positioning them ahead of the competition, IP leaders understand the impact the right tech investments can drive. Despite this, many are still struggling to realize the full potential of their investments in operations and supply chain.

In fact, PwC’s 2024 Digital Trends in Operations survey found only 32% of IP respondents indicated their operations technology investments had delivered the expected results. This statistic is staggering and shows there’s a lot of work that needs to be done to combat underperformance.

A question I get asked often by leaders who know their tech is not living up to their expectations is: how can I course correct to get my investments on the right path? This starts with asking yourself three important questions:

• Why aren’t my digital transformation investments delivering the results I'm expecting?
• What are the biggest roadblocks when it comes to digital transformation implementation and value creation?
• How can I overcome these roadblocks and capture the full value from digital transformation?

By diving into why their investments aren’t working and specific roadblocks that may be hindering progress, IP leaders can create an action plan to get their investments back on track.
 

Linking the business case to value capture levers

In my conversations with clients, it’s clear that IP leaders believe in the rationale and business case for digitizing operations. And our PwC research supports this with only 13% of IP respondents cite the business case as a reason for their operations technology investments not fully delivering expected results, and only 5% identify it as the main reason for underperformance.

However, this shows we may need to think of business cases differently. This is where the importance of value capture levers comes into play. By linking the business case to clearly articulated value capture levers, IP leaders are well-positioned to make better informed strategic decisions about their digital operations investments.
 

Evolving your business model

When it comes to digital operations, most IP companies have three main objectives:

• Boosting growth
• Reducing costs
• Making more informed decisions

In a highly competitive sector with razor thin profit margins, it’s no surprise that efficiency and cost reductions are top of mind. Increased margins can also mean more room to invest in research and development and capital expenditure for further growth.

But even with the desire to innovate, our research shows a higher percentage of industrial companies (23%) have no plans to implement changes to their operating model compared to other industries (13%). We see a preference to opt for incremental improvements instead of making sweeping changes. However, top-performing industrials are driving larger technology driven transformation to meet the shift in demand for software embedded products.

And although incremental improvements may feel like the safer route to in theory reduce risk, it could introduce new challenges to your operations and limit potential impact. This could also lead your organization to miss out on key drivers, including new market opportunities and ways of working, as well as capitalizing on emerging technology and allocating enough resources to your operations.  For most companies, it's about finding the happy medium–striking a balance between gradual improvements and more transformation initiatives.
 

Looking ahead

Most IP leaders find themselves tasked with contributing to their company’s efforts to successfully help navigate digital operations transformation.  Here are five tangible ways to support in that journey:

• Use digital operations transformation to help create new sources of value and stay ahead of competition.
• Understand all the key success factors and identify roadblocks that may hinder progress.
• Reassess the business case for digital operations to help establish alignment with strategic goals and operational challenges.
• Identify and quantify value capture levers with clear links to the business case to help measure and improve ROI.
• Align digital operations investments with broader strategic objectives to drive value.

By implementing these strategies, IP leaders are setting themselves up for success and paving the way for long-term success and growth.