As other industries are reduced to flaming ruin by digital disruption, the industrial sector remains hesitant to invest in digital transformation. While industries like retail and travel have spent the last decade in a digital arms race, the industrial sector continues with business as usual, notes industry executive Supratim Mukhopadhyay.
To Supratim, there are several issues. For one, digitisation is unlikely to strike the heart of oil & gas, mining, construction and others in the industrial sector.
“Because their core business isn’t going through the change, the technology isn’t driving things the same way,” the executive notes. Engineering processes developed over many years are unlikely to see direct impacts from digitisation.
The long-term project-oriented view is also to blame, with companies unlikely to want to disrupt processes with so much at stake. With billions on the line, it makes sense for so many businesses in the Asia Pacific region to be conservative.
Supratim also points to the impact commodity prices have on industrial business practices, with companies talking far more about digital transformation when oil prices are low. When commodities are generally cheaper, businesses need to wring every bit of profit out that they can, but with commodities up, there is less concern.
‘Digital transformation means pain’
Digital transformation isn’t necessarily a new concept observes Supratim. Instead, it’s just a new buzz word for achieving the ongoing goals of lowering costs and increasing productivity.
According to a recent Frost & Sullivan white paper, 56% of APAC businesses haven’t started digital transformation efforts, a statistic Supratim finds troubling. “The technology revolution is happening whether they like it or not and whether they use it or not,” he remarks.
Given the potential costs and disruption to day-to-day business practices, it should come as no surprise that most organisations want to put off digitising as much as possible. This could be a flawed viewpoint, however, as Supratim notes that, “digital transformation means pain,” but that pain isn’t without benefit.
The long-term value of digital transformation is clear – reducing maintenance, maximising uptime, and increased worker safety, to name a few. The most relevant comparison is the changes in manufacturing that have occurred as a result of automation.
However, it’s a hard sell to businesses that either don’t see the immediate value or worry about surviving to the end. For these companies, Supratim advises working on what he views as one of the obvious first steps of digitisation: operational safety.
By making the right information available to the right people at the right time, Supratim notes, you can start down the digital pathway. Start with creating digital twins for core operational processes and then build from there.
A new relationship
With digitisation looming for the industrial sector and many organisations in a ‘wait and see’ mode, how will progress be made? For the engineering veteran, the answer is two-fold.
The first is a change of perspective on the part of business leaders in industrial organisations. They need to focus more on long-term goals and holistic processes and less on short-term return on investment, he argues.
ROI is an oft-cited metric for those who seek to eschew digital transformation, who argue the cost of adoption isn’t justified with an increase in revenue. While Supratim agrees that ROI is still a valid measure of many of an organisation’s actions, it needs to be viewed holistically, saying, “companies need to look at ROI from an overall business impact perspective, not based on how many man-hours a modelling system has saved.”
By looking at a business from a holistic perspective, he argues, the value of digitisation becomes far more apparent. Digitisation is about increasing an organisation’s overall competitiveness and shouldn’t be viewed as a fixed-rate investment with an easy-to-understand return.
This leads to Supratim’s second solution for helping digital transformation – a new relationship between vendors and businesses.
The relationship he imagines will involve organisations putting the technological burden on vendors, allowing both groups to concentrate on what they do best. He even proposes new terminology for the relationship, preferring the term ‘partner’ to vendor.
“If you use technology companies only as a vendor, you will only get the software…which will ultimately not drive digital transformation,” Supratim notes. He envisions a world in which APAC industrial organisations will create roadmaps based on key work processes they want to digitise and then turn to technology partners to implement the improvements.
While this version of the future may not happen precisely as the industry veteran envisions, it’s clear that businesses need to start looking towards digitisation as a problem that needs to be solved sooner, rather than later. Supratim knows this, paraphrasing the old proverb, saying, “Five years ago was the time to start investing, but now it’s high time for digital transformation.”