As other industries are reduced to flaming ruin by digital disruption, the industrial sector remains hesitant to invest in digital transformation. While industries like retail and travel have spent the last decade in a digital arms race, the industrial sector continues with business as usual, notes Hexagon PPM Director of Pre-Sales, APAC, Supratim Mukhopadhyay.
To Supratim, there are several issues. For one, digitization is unlikely to strike the heart of oil & gas, mining, construction and others in the industrial sector.
“Because their core business isn’t going through the change, the technology isn’t driving things the same way as in other industries,” he said.
Engineering processes developed over many years are unlikely to see direct impacts from digitalization. The long-term project-oriented view is also to blame, with companies unlikely to want to disrupt processes with so much at stake. With billions on the line, it makes sense for so many businesses in the Asia Pacific region to be conservative.
Supratim also points to the impact commodity prices have on industrial business practices, with companies talking far more about digital transformation when oil prices are low. When commodities are generally cheaper, businesses need to wring every bit of profit out that they can, but with commodities up, there is less concern, which poses additional challenges because during the lean times funding is an issue.
‘Digital transformation means pain’
Digital transformation isn’t necessarily a new concept, observes Supratim. Instead, it’s just a new buzz word for achieving the ongoing goals of lowering costs and increasing productivity.
According to a recent Frost & Sullivan white report, 56% of APAC businesses haven’t started digital transformation efforts, a statistic Supratim finds troubling. “The technology revolution is happening whether we like it or not and whether we use it or not,” he said.
Given the potential costs and disruption to day-to-day business practices, it should come as no surprise that most organizations want to put off digitizing as much as possible, and that’s only the first step.
This could be a flawed viewpoint, however, as Supratim notes that, “digital transformation means pain,” but that pain isn’t without benefit. The long-term value of digital transformation is clear – reducing maintenance overheads, maximizing up-time and increased worker safety, to name a few.
The most relevant comparisons are the changes in manufacturing that have occurred as a result of automation. However, it’s a hard sell to businesses that either don’t see the immediate value or worry about surviving to the end. For these companies, Supratim advises working on what he views as one of the obvious first steps of digitization: operational safety.
By making the right information available to the right people at the right time, Supratim notes, you can start down the digital pathway. Start with creating a digital twin for the core operational processes and then build from there; compartmentalize the transformation into phases, focused on achieving the key business outcomes.
A new relationship
With digitization looming for the industrial sector and many organizations in a ‘wait and see’ mode, how will progress be made? For the engineering veteran, the answer is two-fold.
The first is a change of perspective on the part of business leaders in industrial organisations. They need to focus more on long-term goals and holistic processes and less on short-term return on investment, he argues.
ROI is an oft-cited metric for those who seek to eschew digital transformation, who argue the cost of adoption isn’t justified with an increase in revenue. While Supratim agrees that ROI is still a valid measure of many of an organization’s actions, it needs to be viewed holistically, saying, “companies need to look at ROI from an overall business impact perspective, not based on how many man-hours a modelling system has saved.”
By looking at a business from a holistic perspective, he argues, the value of digitization becomes far more apparent. Digitization is about increasing an organisation’s overall competitiveness and shouldn’t be viewed as a fixed-rate investment with an easy-to-understand quick returns.
This leads to Supratim’s second solution for helping digital transformation – a new relationship between vendors and businesses.
The relationship he imagines will involve organizations putting the technological burden on vendors, allowing both groups to concentrate on what they do best. He even proposes new terminology for the relationship, preferring the term ‘partner’ to vendor.
“If you use technology companies only as a vendor, you will only get the software … which will ultimately not drive digital transformation, which requires application and adoption of the software to achieve your business goals,” Supratim notes.
He envisions a world in which APAC industrial organizations will create roadmaps based on key work processes they want to improve for best gains and then turn to technology partners to enable these improvements through technology, to help achieve the milestones on that roadmap.
While this version of the future may not happen precisely as the industry veteran envisions, it’s clear that businesses need to start looking towards digitization as a problem that needs to be solved sooner, rather than later. Supratim knows this, paraphrasing the old proverb, saying, “Five years ago was the time to start evaluating investing in it, but now, it’s high time for digital transformation to start happening.”
Discover insights into the digital transformation stats and strategies of some of the region’s biggest players in our Leveraging Digital Transformation for Growth report.
Sasha is the Content Strategy Lead for Hexagon’s PPM division in Asia Pacific. She works from PPM’s office in Sydney, Australia.