Embracing industrial transformation through digitisation
Two major trends are accelerating the pace of modern industrial transformation. Firstly, increased pressure to improve productivity and boost ROI; secondly the relatively low cost of IT-driven data acquisition and analysis. A recent LNS Research report indicated that 45% of industrial organizations surveyed are already engaged in industrial transformation. Furthermore, another 23% of companies expect to launch programs within one year. The research identifies the top 28% most active organizations as “Industrial Transformation Leaders” and indicates that these leaders are 53% more likely to focus on smart connected products as a channel for growing revenue and market share.
The LNS Research also identifies two “life lessons” gathered from the survey data. First, the primary focus of an Industrial Transformation program must be pursuit of business benefits, not testing technology for insight. Second, a broad focus and scope are critical for success.
Five reasons for embracing industrial transformation
According to a Schneider Electric blog, leading industrial organisations are now pursuing digital transformation (which has come to mean the same as industrial transformation, since the core initiative surrounds the digitisation of industrial processes) for five primary reasons:
Correction of operational inefficiencies
The focus has moved away from the remove and replace model, to extracting higher efficiency values from existing installed equipment. The emphasis is on tackling short-term operational inefficiencies before completely rebuilding the process. By adding IIoT-based systems and analytics and machine learning increases the yield of each asset and improves overall equipment efficiency.
- Creation of competitive advantage
New software tools that acquire and analyse connected device-generated data. Thus improving operational efficiency in areas such as asset performance, energy management, and smart machine performance. These improvements then open the door to new revenue streams and business opportunities, thereby enhancing competitive advantage.
- Elimination of inefficient processes
Having addressed the obvious operational inefficiencies, digital transformation also can help tackle the more complex process inefficiencies. This is an area where collaboration with external experts provides valuable guidance.
- Establishment of a stable IT/OT architecture base
Industrial and engineering software support closed loop digital views that enable increased efficiencies throughout an entire product lifecycle. This connectivity supports automated management of the business by analysing current and future operational requirements and comparing plans to actual performance.
- Creation of new customer value and new business models
Connected products across industries not only bring new value to end customers (like faster deliveries and higher quality products at less cost), but also prove valuable at introducing new business models. Many customers are not interested in buying machines, but in the output the machines produce, leading to new business models. With performance-contracting, customers only pay for output or energy savings resulting from using a high efficiency variable speed drive. Digitisation tools can now measure these outputs so that both buyers and sellers can trust the contracting arrangement.
Across boardrooms, executives are now involving technology vendors in business discussions. Having understood a business problem, they introduce technologies to extract data, treat data, and translate data into dashboards and advisors. The current wave of industrial transformation is about connecting and enhancing existing systems to achieve a business benefit. Connectivity platforms like EcoStruxure provide an open framework for enabling new ways to solve business-driven challenges across industries.
Schneider Electric sponsors studies by LNS Research to help users understand and implement digital transformation of their industrial enterprise. Download a detailed eBook or attend an on-demand webinar.
Recent blog posts