6 Steps Towards Digital Transformation Adoption in Industry
04.08.2020 Marcellus Buchheit
Disruptive technologies are transforming all industries into digital industries and repositioning them to reap the benefits of Industry 4.0. In the industrial context, digital transformation (DX) is primarily a business objective. According to the Industrial Internet Consortium (IIC), DX is the innovative and principled application of digital technologies, and the strategic realignment of the organization towards the improvement of business models, industrial models, and processes, and ultimately the creation of entirely new ones. The road to transformation can be a hazardous journey, however, perhaps a do or die scenario for many companies.
The IIC has captured the many challenges and technological hurdles that accompany this journey along with guidance in their recently published white paper, Digital Transformation in Industry.
The paper targets business managers who are involved in setting the digital transformation strategy and journey for an organization, and technology managers who need to identify and assess how technologies can be leveraged to facilitate the DX journey itself. The white paper also addresses risk, security and safety managers responsible for implementing protection and mitigation strategies to minimize the impact of disruptions, attacks, errors and faults along the journey.
IIC notes that the driving force for DX in many cases is market pressure: competition or the threat of competition. If one participant in a market successfully implements a digitally transformative project, then competitors in that market will also feel compelled to transform – or risk losing market edge and share.
The journey is underpinned by three factors: business, technology, and trustworthiness. Industrial IoT is about connecting “things” to a network and capturing operational and contextual data (potentially big data) about these “things” with the purpose of controlling them and optimizing their operation. This opens the door to innovative use of a wide range of emerging (and some well-established) technologies that together enable the digital transformation sought.
Enabling technologies reviewed in the paper include cloud/edge, hyper-connectivity, data security, artificial intelligence and analytics, digital twin, distributed ledger, human machine interface, additive manufacturing, data sharing, IIoT, autonomous robotic systems, servitization, and several others.
The white paper also discusses the technical platforms that will enable new business models and payment mechanisms. For example, traditional industrial components are sold as physical goods before their usage. But by connecting such components to the Internet, the component provider can track component usage precisely. This permits business and payment models for such components similar to what we have today with software components in the cloud and on premise. These arrangements will be supported by a new concept unveiled earlier that the IIC terms industrial Internet monetization Model (I2M2 platform).
Trustworthiness also plays a role in the digital transformation journey of IoT-enabled systems. Trustworthiness refers to the degree of confidence that an IoT system will perform as expected, measured by the interaction of the key characteristics of safety, security, privacy, reliability, and resilience in the face of environmental disturbances, human errors, system faults, and attacks. A more in-depth look at Trustworthiness can be found in a complimentary IIC white paper, Software Trustworthiness Best Practices.
IIC emphasizes in the paper that digital transformation is not a project. It is a strategy, and a journey, led by a vision, powered by a committed program, which in turn is a set of related activities with long-term aim. They say the DX program must have a well-defined objective, charter, mission, and governance structure. The program must also be guided by a cross-functional team with a clear leader and a corporate sponsor, with active participation from several cross-functional stakeholders who must work together in a structured way to achieve the better outcomes. The key to a successful transformation, says IIC, is to minimize the attendant risks. They recommend the following first steps towards an adoption framework:
Find out what the leaders in your industry are doing. The first question is to determine what your competitors are up to, since competitors’ actions are likely to be the source of the most immediate threats and risks.
Investigate developments in comparable industries. Research digital transformation initiatives in comparable industries, and assess the potential impact of these for your own situation. While many industries might at first appear to be fundamentally different, there may be digital transformation approaches and solutions being pioneered in one that are potentially relevant to another.
Identify your key use cases. Benchmarking research has focused on analyzing real-world digital transformation projects, but these can be aggregated to a generic ‘use case’ level.
Deduce which DX technologies are most relevant to you. Identify the most critical enabling technologies for the identified use cases.
Identify key vendors. The key vendors for an individual industry user will have deep knowledge of the technologies most relevant to the user in question, and extensive experience of that users’ industry. Ideally, key vendors will also have experience across multiple geographies, so that ‘lessons learned’ from one geography can be more readily ported to the users’ home geographies.
The economic slowdown caused by the COVID-19 emergency has further exacerbated the digital transformation, and many vendors are using these critical months to design their DX strategy, accelerate their development efforts, and prepare for the new normal in industry. Join the webinar Digital Transformation – The Next Disruptive Wave Across Industries and learn about the potential impact of a wide range of technologies (such as Digital Twin, Data Security, Distributed Ledger, Servitization, AI, and Analytics) that are ready to enable digital transformation.
Co-founder of WIBU-SYSTEMS AG, President and CEO of WIBU-SYSTEMS USA
Marcellus Buchheit earned his Master of Science degree in computing science at the University of Karlsruhe, Germany in 1989, the same year in which he co-founded Wibu-Systems. He is well known for designing innovative techniques to protect software against reverse-engineering, tampering, and debugging. He speaks frequently at industry events and is an active member of the Industrial Internet Consortium. He currently serves as the President and CEO of Wibu-Systems USA Inc.