By Nicholas Ismail, Global Head of Brand Journalism, HCL Technologies Ltd.
Digital is no longer a nice-to-have add on. It is a crucial part of any organization’s strategy.
Manufacturing organizations, including automotive, chemicals, discrete manufacturing, and industrial manufacturing, are realizing that consumers prefer interacting through digital channels. At the same time, digital channels provide the optimal way to fast-track revenue growth, enhance research and develop, produce, and distribute services and products.
The supply chain and scarcity of material resources caused by the pandemic and recent geopolitical tensions have accelerated the need to embed a digital-first strategy into operations across manufacturing segments.
Digital is no longer purely an enabler. Rather today it is considered as a critical part of the overall business strategy that adds value and serves as a cohesive part of their business.
What is a digital-first strategy?
A digital-first strategy means “manufacturing organizations should think about using digital for everything that defines their existence, across customers, consumers, staff, plants, workers, sales and marketing channels, services, and aftermarket channels,” said Anand Venkatraman, Vice President of Manufacturing at HCL Technologies.
According to Venkatraman, a digital-first strategy “should be pervasive and comprehensive, which means that it should be able to scale up and adapt to a wide variety of consumers, both internal and external to the organization.”
On top of this, “a digital-first strategy should directly link to the business benefits and transform the way manufacturing organizations do business today,” he added.
For the automation and data-intensive automotive industry digital is increasingly providing a digital-first experience to both employees and consumers. Tesla, for example, creates a digital simulation of every one of its cars, using data collected from sensors on the vehicles to upload to the cloud. This allows the company’s AI algorithms to determine where faults and breakdowns are most likely to occur and minimize the need for owners to take their cars to servicing stations for repairs and maintenance.
Implementing a digital-first strategy
To implement a digital-first strategy, organizations need to understand the capabilities that they possess, and the changes that are required from a business process and technology modernization perspective to achieve the business’ goals.
In terms of executing the strategy in manufacturing, "organizations need to start segmenting their thinking across different IT landscapes,” said Venkatraman.
These landscapes include:
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Information Technology (IT) – supports infrastructure and acts as the digital foundation that addresses service value chains.
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Operation Technology (OT) – addresses the asset value chain by supporting plants or factories, and industry 4.0 initiatives, such as digital twins.
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Business Technology (BT) – enables business imperatives that address the customer value chain.
“This segmentation allows organizations to decide on the best approach to take for each landscape when it comes to an effective digital strategy that is implemented at a grassroots level. But no one size fits all when it comes to digital strategy. These three areas – IT, OT and the BT – require different kinds of treatment,” said Venkatraman.
He added: “It is important for manufacturing companies to start rethinking IT, OT, and BT in the context of cloud security and data, while placing both at the core of their business strategy. Any digital-first strategy cannot reach fruition if organizations don't use these core building blocks.”
Who should lead the digital strategy in manufacturing?
Embedding a digital strategy within a manufacturing organization requires a rapid paradigm shift that aligns the parallel universes of IT and the business. It is a significant challenge for traditional industries that often carry huge levels of technical debt because of monolithic legacy systems that are not conducive to modernization or any forward thinking, new age agile technology type of development.
To overcome the hurdles and complexities of implementing a digital-first strategy, Venkatraman explained that organizations should “create a governing body just that focuses on driving and scaling digital strategy implementation”.
He continued: “Many organizations label this governing body as the digital [value creation] office, which is often led by a Chief Digital Officer. This governing universe is fully business driven with the sole purpose of driving digital initiatives and the adoption of those programs across internal and external universes. This function should act with a startup mentality and manage, change, recognize, articulate, and communicate business benefits and value of the change, consistently re validating and re certifying the business value of each transformation initiative.”
In manufacturing the Chief Digital Officer or CIO can lead the digital office and strategy depending on what capabilities the organization want to possess, or how they want to drive these initiatives.
Regarding qualities, “the leader should be forward thinking, business benefit driven, scale-oriented, and not afraid to move away from traditional ways of working,” said Venkatraman.
He added: “It is important for the digital leader to challenge norms, work cohesively with the business. Rather than focus on point solutions for problem statements, it is critical that this leader know how to drive towards an ecosystem-driven organization articulate by focusing on business benefit realization and quantification..”
The new normal is here
Looking forward, the cultural and technological hurdles to implementing a digital-first strategy are falling away.
Digital transformation is the need of the hour and to embrace this new normal, Venkatraman advised manufacturing organizations to rethink “their delivery methodologies, user experiences and key persona strategies, while reducing the reliance on physical assets and using the cloud as a key extension of the IT ecosystem”.
He continued: “Organizations will need to start thinking about using applications and infrastructure both as products that are interconnected and interoperable, introducing micro services as a way of getting data and core IP business logic from monolithic homogeneous systems.”
“Adopt modernization and transformation as a way of life. It's the new normal and the new normal is here,” he said.
To find out more about how your organization can embrace digital in Manufacturing, visit HCL’s MVision framework.
