Martin Hodgson, Executive Director Management Consulting at Expleo Group
Every industry is being re-shaped by technology. The last 20 years have seen the emergence of the 4th Industrial Revolution, kickstarting widespread digitisation across a range of sectors, with net positive effect on efficiency and productivity. In addition, digitisation enables organisations to track assets and individuals, helping to gain a better understanding of preferences, workflows and areas to improve.
Progress amongst industries has not been the same and some industries have been slower to catch up, such as manufacturing. According to IDG’s 2018 State of Digital Business Transformation, Financial Services and Healthcare lead the way in adopting a digital-first business strategy, but in other industries a variety of factors can hamper progress. The prevalence of analogue machinery and traditional siloes that are present within organisations serve as an impediment to new processes which favour openness and a willingness to collaborate. Where physical equipment meets the digital process, friction can be introduced as efforts to reconcile different systems can create unforeseen challenges. However, there is no escaping the factors driving the need for digitisation, making it a question of ‘when’ and not ‘if’.
The factors shaping digitisation – an industry view
In industries like financial services, the drive towards a digital approach is supported by customer demand. Users expect services to be quick, safe, always accessible and effective and tend to be intolerant of glitches or outages. Financial institutes simply cannot afford to have their services offline, especially at times of high demand. The negative impact on reputation and potential financial losses can be devastating. The key to achieving a quick reliable service often relies on the use of digital technologies to automate processes, create new products, improve regulatory compliance and transform the experiences of their customers.
Healthcare services are also driven by patient demand, especially with an ageing population, which places more strain on facilities – equipment and staff alike. Digitisation and advanced technologies are used to understand and track the status and position of patients, as well as help manage patient records. The overall aim is to improve patient services and experience, in a way that is cost effective without compromising patient care. Digital services also extend to directly interface with patients through online portals, providing access to historical records and empowering patients to take some ownership of their own schedule and care.
Regulation and environmental factors can be powerful in shaping how digital technology is used. The energy sector is a prime example where the pressure to produce energy at low cost and minimal environmental impact is significant. Regulation, industry standards and consumer expectations add pressure to digitise quickly. For example, the UK government’s Clean Air Strategy 2019 aims to cut the costs of air pollution to society by £1.7 billion every year by 2020. To achieve this, more emphasis must be put on renewable energy sources and generating energy efficiently. In addition, increased penetration of renewable energy generation and emergence of new connected devices (such as smart meters) is forcing the industry to transform quickly in response. To improve efficiencies and meet decarbonisation goals in the next 10-15 years physical assets must integrate with digital. Instead of costly updates to existing systems, implementing a new digital system that utilises intelligent technology to autonomously make decisions and implement changes, would be more cost effective.
In contrast, a different market landscape is seen in the automotive sector. Companies compete in a market on the brink of disruption from emerging technology (such as autonomous vehicles) and a shift to a service-based finance model. Rather than private ownership, consumers (particularly in urban areas) are focused on purchasing a service to get them from point A to point B. The rise of this ‘service economy’ has changed how vehicle manufacturers use technology and there is a clear need to elevate digital transformation efforts. Another aspect to consider is that the nature of the car itself has changed. Automotive manufacturers are no longer dealing with just machines but effectively computers on wheels. This combined with changing regulation and legislation in the sector – especially regarding emissions – accelerates the need for increased digitisation across a range of sub-sector specialties.
Reconciling the physical and digital challenges
The traditional siloed processes and analogue equipment still pose a significant challenge to digitisation. Despite clear evidence of the benefits, re-hauling processes and digital transformation still represent a significant investment and potential disruption. This can act as a barrier for some organisations, delaying progress. To counteract this, organisations should seek to work with technology partners who have a deep understanding of the industry and can offer tailored solutions as well as advise on the implementation phase.
For example, a large car manufacturer was exploring how it could incorporate automation and machine learning into its product development. The manufacturer needed a solution to reduce errors in testing its engines in prototype development to reduce errors and faults in future products. To address this, this organisation worked with a partner to came up with a solution that would help streamline and improve process management and control through automated testing through machine learning and robot process automation (RPA). Historically, multiple partnered companies were used to deliver this type of work, but by working with a single organisation there was a seamless experience across the organisation, making the speed of implementation faster with a better understanding of the customer challenges.
For example, in the energy and utilities sector, a large power generation service provider wanted to reduce concessions when stripping and building engines when undergoing maintenance, repair and operations (MRO) on gas turbines. By utilising a Lifecycle Cost Optimisation (LCO) solution, the organisation was able to identify opportunities to reduce costs over time and provide a retail price index (RPI) of 2:1. The application of digital technology– such as data analytics – to a physical process enabled the company to identify defects efficiently, gain improved quality reporting, a better overall product and cost savings.
Working with a partner to make digitisation easier
Digitisation is showing no signs of slowing down and as new innovations come to market, there will be opportunities to leverage them to improve efficiencies, increase cost savings, reduce environmental impact and ultimately provide a better product. However, identifying which solution is best (especially across a background of industry regulation and customer expectations) takes experience and expertise. Organisations should endeavour to work with a technology partner to help guide them through the process. In that way, the most appropriate solution can be implemented to yield the best result.