Prediction 2021: Manufacturing Digital Transformation Balderdash
Despite COVID-driven tech investment, many manufacturers will fail at digital transformation through 2022. COVID has accelerated many manufacturer’s investments in technology such as robotics, automation, augmented reality/virtual reality ( AR/VR), artificial intelligence (AI), and machine learning (ML), and advanced analytics much more than predicted at the beginning of 2020. Despite this rush to technology to deal with the supply chain chaos that COVID created there have been remarkably few examples of true digital transformation in manufacturing. Yes, there have been successes in dealing with COVID-induced disruptions, but transformative business shifts are so far, not occurring, and will likely not occur for at least another couple of years, until late 2022 or early 2023. There are three fundamental reasons this is the case:
- Digital Transformation, Overhyped & Overused
- Architecturally, the IT/OT issues are not well understood to those responsible for Digital Transformation
- Manufacturing’s OT Technology is mostly oriented to automation
Digital Transformation, Overhyped & Overused
From my recent LinkedIn blog post I note that “Digital Transformation has become the marketing term of choice used by virtually every hardware, software, and services provider trying to convince users to buy digital technology. Ai and machine learning are becoming like the snake oil of the 1800 wild west. It is being touted as the cure-all for every business problem. The problem is not the technology, nor is it that people won’t or can’t use the technology. The problem is every application of technology is trying to be characterized as TRANSFORMATION. According to Webster again, “transformation: an act, process, or instance of transforming or being transformed, and transform: 1a: to change in composition or structure, 1b: to change the outward form or appearance of, 1c: to change in character or condition“ The vast majority of Digital Transformation stories today do not and were never intended to truly transform a business. Yes, there have been transformative projects done such as where an air compressor manufacturer shifts from selling compressors as capital goods and restructures to sell compressed air as a service, but the number of these examples is pretty limited.”
IT/OT Architecture Itself Complicates Digital Transformation
In most organizations, either the CIO or the Chief Digital Officer leads the digital transformation efforts. In service industries, financial services, education, and other non-manufacturing or asset-intensive industries, their operational technology or OT is traditional IT that is owned or managed by the CIO. In manufacturing and asset-intensive industries, the OT is generally owned, managed, and maintained by an engineering or other operational group. This creates an architectural challenge in that the people, processes and technology often are not well linked and integrated, so the real potential of true transformation is difficult to visualize, let alone accomplish.
Manufacturing’s OT Technology is Mostly Oriented to Automation
The investments that enterprises are making in AI and ML, AR/VR and advanced analytics on the plant floor are mostly oriented to either automating or incrementally improving existing processes. Part of the problem is that the supplier community tries to position everything as transformational when the reality is it just is offering these incremental process improvements. This sets the scene for massive under-delivery. When executives hear transformation, they expect large and business-changing results. When all they get are some cost savings or slight productivity improvements it leads to the statistic so often cited that “more than 70% of digital transformation initiatives fail”.
So How to Drive Digital Transformation in Manufacturing?
- Again, going back to my LinkedIn post “Don’t’ be a Politician because Politician’s notoriously “over promise and under deliver”. If more investments in technology were positioned as process improvement, agility enhancement, or just plain profit improvement, it would be a lot easier to show positive results. The challenge with this is that there needs to be a lot of up-front work to truly define the benefits technology investments will provide and putting in place the plan to achieve those goals.
- Instead of grandiose promises, good engineering and sound business planning are needed. Instead, be a scientist because, in many ways, science is the opposite of politics. scientists regularly “under-promise and over-deliver”.
- The path to true Digital Transformation will require a shift in thinking that is not likely for several years, unfortunately. But, it can happen once enterprises begin to stop the hype, craft IT/OT architectures that truly enable transformation, and technology is leveraged to change the way business is done, not just improve how it is currently being done.