IT in Manufacturing

Planning for digital transformation

May 2019 IT in Manufacturing

In recent years, much of the content at ARC Advisory Group’s annual Industry Forum in Orlando, Florida has revolved around IT/OT convergence and the digital transformation of industry, infrastructure, and cities.

As we’ve learned, digital transformation can be a challenging, if necessary, journey. At each year’s Forum, we learn more about how pioneering companies are overcoming these challenges and the associated operational and business benefits. This year, one of the key Forum takeaways was that culture, rather than technology, is often the barrier to digital transformation; other discussion threads centred on cybersecurity and data ownership.

For those of you who could not attend the 23rd annual ARC Industry Forum at the Renaissance Orlando at SeaWorld in Florida, videos of most sessions are available on ARC’s YouTube channel.

In his general session presentation, Mike Guilfoyle, research director at ARC Advisory Group, provided some perspectives on planning for digital transformation based on ARC’s research, consulting, and collaboration activities in this area. Not surprisingly, many of these thoughts resonated with those provided by the previous keynotes.

Mike made it a point to emphasise that “You can’t do anything digital without cybersecurity”. He also called attention to the many Forum workshops, sessions, and panel discussions that relate to cybersecurity, digital transformation, and digital technologies (IIoT, machine learning, virtual and augmented reality, digital twins, etc.) and encouraged end-users to participate in future meetings of the ARC-sponsored Digital Transformation Council.

The imperative

As Mike explained, “Whether it is disruptive technology, ongoing market innovation, billion dollar governmental pushes, or some combination of the three; all industries and populations are feeling pressure to transform.” This makes it clear that every industrial and infrastructure related organisation needs to understand how to embrace and execute digital transformation.

The scalability challenge

What makes careful planning so critical is that organisations expect to reap massive, game-changing benefits from digital transformation. Yet, as Mike explained, many continue to be confounded when it comes to ROI and scale. He referred to statistics that indicate that more than 80 percent of industrial companies are now undertaking digital transformation initiatives, but less than 11 percent are seeing sustainable success. “Many industrial users suffer from ‘pilot paralysis’, while others are unable to scale up to maximise the benefits,” he explained. “I don’t need machine learning to know that something is wrong with this picture.”

Common missteps

Mike explained that common missteps include: numerous possibilities without direction; pursuit of technology, and managing cultural impediments. All are related.

Digital transformation offers a plethora of possibilities, but much less direction. This leads to the pursuit of technology for technology’s sake. And, of course, as he emphasised, “The cultural barrier, the elephant in the room, underpins all others. No one wants to take on the cultural barriers to change.”

Possibilities without direction

Digital transformation presents many possibilities, which can be both challenges and opportunities. Some are understood, but still difficult. Many simply cannot be foreseen, yet the organisation must be prepared to deal with them. When examining all these possibilities, it becomes exceedingly difficult to answer the simple questions, what needs to be done, why, and when?

Pursuit of technology

Without a good compass to provide direction, many companies gravitate toward viewing digital transformation as a pursuit of technology. That is a pretty natural progression. However, it just adds to the problem. Given all the technologies and marketing behind them, it is very difficult to understand differences in solutions so that vendors can be compared in a meaningful way.

Managing cultural impediments

“When they are able to get off the ‘hamster wheel’ of technology, there is often a eureka moment that concentrating on the business needs will solve the problem. What typically happens though is that everyone starts out excited and focused, but then they encounter or foresee organisational impediments.

Rather than deal with these, they simply avoid them, thus constructing limits on innovation. Mike explained that this often results in incremental, rather than transformational change: The business need is important, but don’t focus on it too early in the process.”

Digital transformation initiatives must find a way to create connective tissue between strategic objectives and the specifics of each project executed. This enables organisational adherence to a cohesive business strategy at all levels and throughout the entire transformation process. According to Mike, this ensures that:

• Priorities can be established.

• Decisions have rationale and the people that make them have the authority to carry them out.

• Management is fully informed by operational realities for buy-in, scale, and long-term success.

This connective tissue between strategy and how projects are executed also accounts for people, the roles they need to fill, and how they derive purpose and value as change occurs.

ARC’s three-step planning process

To ensure this alignment, ARC recommends a three-step process for clients that are planning digital transformations:

1. Assess your organisational maturity and capacity for change.

2. Determine where to start applying technologies. This provides a meaningful way to develop a framework to consider the role of technology and pilots in terms of how to select, deploy, and scale them within a strategic framework.

3. Determine how to execute based on your current readiness to align the framework to tactics.

Mike concluded that many organisations would prefer to skip step one because that is where all the cultural barriers exist, but that this would be a huge mistake.

For more information contact Paul Miller, ARC Advisory Group, +1 781 471 1141,,

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