Digital Transformation Maturity: How Industries Are Stacking Up

Written By: David Immerman
  • 3/10/2021
  • Read Time : 5 min
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Digital transformation is a journey where adopters seek a pace of innovation rather an ending destination. Where companies are on that maturity spectrum varies from company-to-company as well as industry-to-industry.

In our latest State of Digital Transformation report, we dissect this spectrum into three stages.

  • Planning: Forming a business strategy and case internally to initiate a digital transformation program. Initial evaluation of aligning digital use cases to top business pain points and evaluation of external partners to support a potential program. 
  • Piloting:  Pilots are a formal test to prove if the project will work in production.   Includes ‘proofs of concepts’ (PoCs), which are projects demonstrating or ‘proving’ the feasibility and value of digital transformation.
  • Rollout:  The actual implementation of one or several digital transformation use cases into production environments, whether it’s across the internal value chain or in customer-facing form. 

We’ve formed a benchmark for the current ‘state of DX’ from more than 350 senior-level respondents. These respondents self-designate as 41% being in rollout, 31% in piloting, 21% are planning, and 7% have yet to form a DX strategy.

In this blog, we’ll look at the intricacies of these digital transformation stages in different industries, where there are notable differences in maturity, spending, and goals.

digital-transformation-industries-graphic

 

Note: This industrial market survey data is not an exact representation of PTC’s customer base and respondents who said they are ‘not planning’ a DX strategy were omitted from this analysis.

Aerospace and Defense 

Manufacturers of aerospace and defense (A&D) equipment, machinery, systems, and supplies were by far the most frequently cited as not having (29%) a formal DX strategy. A&D also has the highest proportion of respondents in planning (29%) and lowest in rollout (24%) across all industries.

While these indicators point A&D being laggards in DX adopters, they are some of the highest spenders with 38% spending more then $5m annually (more then any other industry). The majority (63%) of A&D respondents target cost-oriented DX goals including reducing costs of goods sold and workforce productivity.

Case Study: US Navy’s digital transformation is improving its operational visibility and the productivity of its workers across its global operations.

Automotive

Automotive manufacturers and suppliers’ respondents mention rollout (39%) first with piloting (36%) at a near second.

Automotive is similarly a cost-intensive industry, with a constant focus on improving margins, so it makes sense that nearly half our respondents cite having a cost-focused DX program. Rapid decision-making and actions are needed to minimize downtime, which can run up to $22,000 per minute for automakers. Improving the efficiencies of factory assets, the productivity of the employees within these industrial environments, and the costs to service products out in the field all have massive impacts on financial sheets for global automotive OEMs.

Case Study: Toyota is reducing operational and travel costs by implementing a Digital Transformation strategy with an AR Remote Assistance platform at the center. The program empowers seamless collaboration between its globally dispersed experts and many different plants.

Chemicals & Pharmaceuticals

These two segments of process manufacturers have a nearly even distribution of respondents in planning (30%), piloting (30%), and rollout (35%).

Chemicals & Pharmaceuticals have the highest number of respondents (42%) in growth-focused DX strategies. Getting existing and new products to market (or reduce time to market) is major competitive criteria in these customer-centric industries. Product quality was also cited as a major DX goal and is sensible for adhering to the highest compliance standards regulators impose on these industries to protect consumers.

Case Study: Pfizer, a pharmaceutical giant, cited workforce as a key productivity driver and determined its DX program would improve their methods for learning and accessing information to increase manufacturing efficiencies.

 

Consumer Packaged Goods

Consumer Packaged Goods are different types of physical merchandise that is typically frequently replenished. The manufacturers in this industry have a balance between those in rollout (40%) and piloting (38%), and few still in planning (17%).

CPG is split fairly evenly between cost (36%), growth (30%), and quality (34%) DX goals. Ensuring product quality is the highest cited DX goal with their products having frequent consumer engagement. Top growth goals include increasing throughput/yield in manufacturing facilities and reducing time-to-market for new and existing products.

Case Study: 19 Crimes, a beverage manufacturer and distributor, is better engaging with their customer through an AR-enabled marketing experience improving brand recognition and differentiation of its wine products.

 

Electronics & High-Tech

Electronics & High-Tech manufacturers create a variety of silicon-based electronic subcomponents and digital products. This industry capitalizes on its highly innovative nature, gravitating towards leading adopters with 40% in rollout, but still has 33% in piloting and 23% in rollouts. This fast-paced industry values growth (39% cite as a DX goal) with introducing new products and reducing time to market as primary value drivers.

Case Study: Semiconductor manufacturer GlobalFoundries replaced its paper-based standard operating procedures with a more standardized and scalable digital platform through augmented reality capturing workflows across its global locations improving productivity.

 

Industrials

This category includes manufacturers of heavy-equipment and machinery that operates in industrial environments around the world. These companies report the highest totals in rollout (57%) with significantly less still in piloting (30%) and planning (15%).

Product differentiation has always been a competitive necessity for these industrial manufacturers, which is why many have quickly turned to digital as the next frontier for innovation and cite introducing new products as a top goal for growth. Many of these companies are also fine-tuning their service models for differencing value propositions where improving service quality and mean time to repair are top goals.

Case Study: Howden, a manufacturer of air and gas handling systems, has formed a digital field maintenance called Uptime. The OEM is enabling its customers with real-time performance data of their products, which is driving service improvements for customers (reduced downtime) and its own operations (fewer truck rolls).

 

Other Discrete Manufacturers

Our segment of other discrete manufacturers includes medical devices, durable goods and apparel. They have similarities to industrials including a high proportion in rollout (44%) and relatively similar list of DX goals across cost (30%), growth (30%), and quality (40%).

Product quality is paramount for medical manufacturers whose systems provide mission-critical functions to patients. For healthcare facilities and professionals to effectively serve their patients, they rely on this equipment to regularly operate as intended.

Case Study: Elekta is a manufacturer of cancer and brain disorder machines who serves over one million patients annually across more than 6,000 medical facilities. The Swedish OEM’s digital transformation revolved around ensuring this commitment to its customers by remotely resolving 30% of equipment issues and carrying out over 600 preventative service actions annually.

 

Final Thoughts

While different industries fluctuate with the maturity of their digital transformation programs, value is readily achievable across all when following practical guidance. Read our State of Digital Transformation to determine what’s best for your company based on your unique criteria.

 

State of Digital Transformation

Read the full report to benchmark your DX program and gain strategic guidance to put your business on the path to success.

Tags:
  • Digital Transformation
  • Augmented Reality
  • Industrial Internet of Things

About the Author

David Immerman

David Immerman is a Senior Research Analyst on PTC's Corporate Marketing team providing thought leadership on technologies, trends, markets, and more. Previously David was an industry analyst in 451 Research’s Internet of Things channel primarily covering the smart transportation space and automotive technology markets, including fleet telematics, connected cars, and autonomous vehicles. He also spent time researching IoT-enabling technologies and other industry verticals including industrial. Prior to 451 Research, David conducted market research at IDC.