The Key to Unlocking Digital Transformation Value

Written By: Ernestine Tiongson
  • 11/23/2021
  • Read Time : 4 min
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In an ever-changing market, digital transformation initiatives are essential to remain competitive. As more companies realize the value of using the right digital solutions to transform physical parts of their business, organizations are making significant digital transformation (DX) investments. A recent PTC survey discovered that 80% of participants have invested at least 5% of annual revenue towards DX initiatives.

Most leaders agree that DX brings tremendous opportunities but the difference between opportunity and realizing value from investments is in the execution. The survey found there is enormous variation in the value companies are getting from DX, so we explored which aspects of their execution most impacted value gained.

When looking at DX initiatives through the lens of revenue and cost benefits, programs that beat return-on-investment (ROI) goals do so on average by 50%, while programs that miss, fall short on average by 30%.

The takeaway is that the company that beats its DX expectations will see more than twice the return as the one that misses. No matter the goal, how can companies pursuing DX mitigate risk of failure, improve their odds of exceeding expectations, and position themselves favorably against their competition now and well into the future? Our research points toward creating a digital thread.

A digital thread is a closed loop of digital processes and information that weaves together the physical and digital worlds. It creates seamless, uninterrupted digital connections across functions, assets, customers, production sites, workforces, and products. Teams across the enterprise benefit from multi-directional data sharing that supports better decision-making and improves how value is created across the company. Let’s dig deeper.

Unlock Siloed Data

Most leaders (80%) believe that their organization is very effective or extremely effective at facilitating an accurate, up-to-date flow of information across department boundaries to enable employees to make better, data-driven decisions.

However, when employees were asked to evaluate how effectively separate business functions share data to make customer-centric, responsible, and scalable decisions, only 12% report that collaboration is effective and that insights from one team impacts the work efforts of another team.

This reveals how leadership can overestimate their organization’s ability to leverage data across the organization. Even when capabilities are put in place to share data across teams, there is often a lack of understanding on how those capabilities add value to teams. This misunderstanding could reflect soiled systems, where there is a lack of cross-functional collaboration between the right teams and the right data.

With digital thread, business can put into place a data-sharing strategy to address siloed systems and counter pain points that arise from them, like out of date, inaccurate, or conflicting “sources of truth”. Without this key piece, the misunderstanding of how data flows through your organization will continue to undermine DX efforts and limit its impact.

Drive Better Collaboration

Forming teams is easy but forming productive and collaborative teams is another story. Cross-functional integration throughout a company’s product and service lifecycle is key to unlocking the value of DX.

Volvo CE, a leading international manufacturer of premium construction equipment, had a complicated and costly IT landscape based on four different product data management (PDM) systems.

Significant investment was needed to keep the old systems running and little or no investment could be put toward improving ways of working. Volvo CE recognized the opportunity to create a unified digital thread, enabled using PLM, to manage digital product definitions in one place through all stages of the product lifecycle (engineering, manufacturing, and service). By creating a consistent product architecture through a digital thread, Volvo CE enabled cross-functional teams to manage hardware and software complexity in one place.

With the structure of cross-functional teams that seamlessly share data, it is easier to align the right teams towards unified transformation goals that allow transformation efforts to be continuously reinforced across the enterprise in a closed loop. When thinking through digital transformation investments, design your teams to be able to scale alongside transformation initiatives from the very start.

Improved Decision-Making

When a digital thread drives better collaboration, more data insights is shared across teams, and leads to better decision-making as information generated by one department can be leveraged by all. For example, imagine being able to gather data on products out in the field via the Internet of Things (IoT) and feed that real-world data back to the engineering team so that that can make faster, data-driven decisions on product improvements and features. It could help teams innovate more quickly and speed up time-to-market.

Celli Group, a global company that manufactures and services equipment that distributes soft drinks, water, and beer, IoT to transform their business model while giving their beverage customers more visibility and control over their assets.

Celli Group created IntelliDraught, a connected beverage distribution system enabled by IoT that turns installed equipment into smart devices that unlock insights where beverages are dispensed. Celli’s customers were given access to powerful marketing data analytics, including information about consumption habits by time, geography, point of sale, and brands. This data supported the optimization of forecasting and production planning to make critical decisions. Through IntelliDraught, Celli’s customers experienced 14% more sell through of their products with increased engagement and a better understanding of purchases and churn.

Thinking strategically about digital thread is essential – identifying a variety of use cases relevant to your business and then choosing the one or two that will make the most impact on business goals is where enterprises are seeing the most ROI. Building a foundation of digital thread will help scale and support your digital transformation long term.

Final Thoughts

Organizations are at various stages of their DX journey, each with their distinct needs, priorities, and potential blind spots. Companies pursuing DX can mitigate risk and improve their odds of exceeding expectations by creating a digital thread which unlocks siloed data to improve collaboration and decision-making.  

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Tags:
  • PLM
  • Digital Thread
  • Digital Transformation

About the Author

Ernestine Tiongson

Ernestine Tiongson is a Rotational Analyst in PTC’s Rotational Leadership Development Program. Motivated by a ‘curiosity mindset’, her perspective on thought leadership in industrial enterprises draws from a diverse, research-based background in LLB Law from the University of Exeter and a Masters in Creative and Collaborative Enterprise from University College London.