People Are the Foundation of Digital Transformation for Forward-Looking Enterprises

Written By: David Immerman
  • 11/28/2018

While technologies might grab the headlines of digital transformation (DX), ultimately enterprises’ people are the foundation. Cross-departmental DX initiatives require large-scale employee buy-in to make use and benefit from the implemented technology and its accompanying business processes.

Enterprises are aware of this. Seventy-one percent of respondents to IndustryWeek’s “Digital Transformation & the Workforce” report cite the workforce as either very or extremely important in supporting their digital transformation strategy. Some of the primary areas for investing in the workforce are skills training, performance management, and employee recruitment.

Further digging into the crossing intersections of these manufacturing employee initiatives, there are pragmatic technologies and solutions readily-available that are playing increasingly crucial roles in DX. Many are positioned to solve industry-specific pain points; there is an estimated 2m skills shortage in the manufacturing industry over the next few years, due to a large employment base nearing the retirement age and industry challenges on attracting young talent.

Attracting millennial talent is a necessity through industry-wide initiatives, such as national manufacturing day, but digital technologies are also attracting younger personnel because they are more comfortable leveraging and interested in using them. Building on this are even more innovative technologies finding homes in the manufacturing sector such as augmented reality (AR). AR’s impact can be revolutionary for personnel as both a recruitment tool and as an empowering mechanism to capture and transfer knowledge and expertise of the workforce nearing retirement.

There isn’t a single technology that unlocks digital transformation

Digital transformation initiatives encapsulate an array of stakeholders as well as legacy and nascent technologies. This requires both cross-departmental collaboration and integrations of technologies in-place with these new tools.

For example, manufacturing respondents in IndustryWeek’s report cited quality management systems, demand planning/forecasting systems & product data management as the most important technologies for digital transformation initiatives. More emerging technologies lower on the list include Industrial Internet of Things (IIoT), SaaS/cloud computing, additive manufacturing, and wearables. This isn’t to say the “most important” technologies will remain at the top in the next five years; adoption trends and buyer needs shift with emerging technology becoming more mature, lowering in price, improving in functionality and expanding in use cases.

This long- list of DX-enabling technologies for manufacturers stems back to the need of open partnership ecosystems. Enterprises and providers who can link the likely already implemented but important legacy technologies, with emerging yet potentially revolutionary ones, will be the ultimate winners of DX.

Manufacturing adoption is leading the DX charge

The fundamental nature of how products are designed, manufactured, and delivered is drastically changing as product-as-a-service, smart manufacturing, digital twin, and other strategic initiatives are driving operational efficiency, differentiated product and services offerings, and improved customer experiences, among other benefits.

Several sources are reporting manufacturers as the largest current adopters of digital transformation technologies and initiatives, driving major opportunities for technology providers and manufacturers alike. IDC puts manufacturing as the largest opportunity for digital transformation; it anticipates total enterprise spending will hit $1.9tn in 2021 and amount to about $300bn in manufacturing. Sixty-eight percent of 451 Research’s manufacturing respondents claim to either be evaluating or executing on digital transformation strategies.

The benefits of digital transformation for manufacturers are seemingly endless. However, as in most things in business, success is measured on financial metrics. Eighty-one percent of IndustryWeek’s survey respondents anticipate increasing revenue by somewhat or dramatically, while 50% anticipate are seeing costs decrease somewhat or drastically from their digital transformation initiatives.

Final thoughts

Many industries are undergoing substantial competitive pressures where, due to digital technologies, the leaders of ten years ago are not the same leaders today. A Dell study shows that 78% of business find digital startups a threat, either now or in the future. DX’s enterprise-wide impact on people being equipped with a breadth of enabling technology is proving a necessary investment to propel enterprises and transform their role in their respective industry.

Related Articles:
  • Augmented Reality
  • CAD
  • Industrial Connectivity
  • Industrial Internet of Things
  • PLM
  • Automotive
  • Additive Manufacturing
  • Connected Devices
  • Digital Transformation
  • Digital Twin

About the Author

David Immerman

David Immerman is as a Consulting Analyst for the TMT Consulting team based in Boston, MA. Prior to S&P Market Intelligence, David ran competitive intelligence for a supply chain risk management software startup and provided thought leadership and market research for an industrial software provider. Previously, David was an industry analyst in 451 Research’s Internet of Things channel primarily covering the smart transportation and automotive technology markets.