Digital transformation has been a popular phrase around the manufacturing industry for the last decade, yet it is also something that few companies have so far achieved.
In 2018, Forrester surveyed 1,600 leading global companies to determine how those firms assessed their digital transformation.
Of those firms, just 21% believed that they had completed their digital transformation, and another 7% believed that they were improving, but not transforming.
The vast majority either admitted they were still investigating the concept, or that they were currently underway – though they stopped short of revealing just how much progress had been made.
Little wonder, then, that Forrester’s Ted Shadler branded these efforts “a sorry state of affairs” and pointed to a general lack of willpower on the behalf of the four out of five companies that had failed to effect their digital transformation.
Yet recently an analyst from a Forrester competitor, Gartner Inc., offered another reason why companies that seem so set on achieving a digital transformation might not find themselves truly transformed. This analyst told Cosmo Tech that companies might think they want to digitally transform but what they really need to do first is to digitally optimize.
Transformation is all about the new: new processes, new tools, new software, new products, and new markets.
But it can often mean new headaches, too.
Businesses that are already successful and that then set out to leverage new digital tools in an effort to transform run the risk of moving too far, too fast, and losing revenue and profitability in pursuit of the new. For every digital transformation success story there is at least one tale of failure, a company which was doing well but whose leadership was seeking transformation change that they could not achieve.
In a period of pandemic where budgets are being locked down and future plans are being scaled back what successful companies should be looking for first is optimization.
Where transformation is the embrace of the new, optimization is the embrace of the better.
It’s not a new process but a more efficient process. It’s not a new tool but a more productive use of existing tools. It’s improvements on existing products, carefully selected channels to enter adjacent markets, and while it likely means new software tools, these new tools integrate smoothly with existing, familiar software.
And in this time of crisis, it’s more important than ever to optimize strategies, operations, and every other part of a manufacturing organization, too.
As the analyst put it to us, optimization is about improving productivity, improving revenue, improving the customer experience, and all while using the tools, resources, and expertise that a company already has.
An Enterprise Digital Twin from Cosmo Tech can help a company achieve such optimization with its replica of the industrial or operational system, the chance to ask ‘what if’ questions and test the impact of decisions before they are made, and the opportunity to generate a ‘how to’ plan to hit corporate targets for efficiency, productivity, risk, and revenue.
Cosmo Tech’s Enterprise Digital Twin technology helps companies to unlock the value that is trapped in their systems, their processes, their workflows, and their human and physical assets. Manufacturers already leverage Cosmo Tech’s Enterprise Digital Twin solutions to optimize production planning and control, to optimize factory planning and scheduling, and to optimize their asset obsolescence management strategies.
And all of this optimization can help fuel an organization-wide digital transformation so that a business can exit the COVID-19 crisis with a plan to grow instead of just a plan to get back on track.
As the analyst explained to Cosmo Tech, digital transformation remains a necessary evolution for most companies, but it is also an expensive and potentially hazardous one.
This is why he advises clients to focus on optimization first, and then fund their transformation from the value they create in productivity gains, efficiency gains, and cost reductions.
The manufacturers that we are talking to today are definitely using this period of disruption to think about optimizing the strategies and systems they have in place. They’re asking how fast they can generate an ROI, how large a productivity gain they’ll achieve, and how much more efficient they’ll be after adopting a new technology. They haven’t stopped thinking about transformation, but these sorts of questions are grounded in optimization, and it’s what is going to see these manufacturers come out of the crisis ready to succeed.
For the four out of five companies that are yet to complete their digital transformation, then, the advice could not be clearer: first optimize, then transform.