We see a pressing need for transformation in the market driven by digitalization. Every day, we hear news about booming market capitalization for innovative, digitally enabled companies, contrasting with the challenges faced by those executives who struggle to cope with a revolution they failed to foresee.
IDC predicts that by 2018 a third of leaders across industry will be disrupted by 3rd Platform competitors. This means that either you are the disruptor or you are going to be disrupted.
Why is digitalization so disruptive? First, it makes customers increasingly impatient as they grow used to having access to anything (almost) immediately, with just a finger swipe on a screen. They also realize that their power has increased, so they expect the fulfillment process to be centered around their needs: quick, cheap, convenient. To meet this expectation for increasingly responsive and personalized service, speed of business is everything. Companies in every sector are finding it hard to incorporate this need for speed into their current, tightly tuned, efficiency-driven business processes.
In manufacturing, for example, we are seeing Industry 4.0 moving away from a first phase focused on product and process improvements within the enterprise, to a second phase focused on an ecosystem view, enabled by the development and adoption of IoT, cognitive analytics, and industry clouds.
On top of that, companies are already delivering products to market that contain new levels of intelligence. The best of these smart, connected (or soon-to-be-connected) products will provide valuable data: autonomously reporting their own health, requesting service calls, identifying future design improvements, and validating warranty claims.
We are already seeing that, as digital transformation (DX) becomes less of a buzzword and more of a business initiative, companies are willing to take action. According to IDC’s DX Practice Survey 2017, DX has become a top-down initiative, usually driven by the CEO. As a result, the majority of European manufacturers (67%) are already knee-deep in digital transformation, and 20% are about to get started in 2017.
Figure 1: Planned DX Business Transformation Efforts in 2017
Four job roles impacted by DX
Companies have different organizational structures depending on the industry they operate in, their target market, or business strategy, but there are some functions that are generally present in all organizations. In a recent whitepaper (Realizing IoT’s Value – Connecting Things to People and Processes), IDC explored the key processes and DX-related challenges in four key job functions that are usually present in a typical product-focused organization:
- Manufacturing, in the person of the chief operating officer (COO)/plant manager
- Supply chain, in the person of the chief supply-chain officer
- Creation of digital products and services, in the person of the chief digital officer (CDO)/product and service manager
- Marketing and customer-facing activities, in the person of the chief marketing officer (CMO)/chief customer officer/sales
For the COO/plant manager, DX means ensuring asset availability, achieving holistic energy management, balancing efficiency with agility, blending proprietary and outsourced manufacturing networks, and merging planning and scheduling with execution.
In supply chains, the key initiative is around creating “thinking,” demand-driven supply chains, optimizing inventories to balance cost with service targets, ensuring a seamless and dynamic flow of components and materials throughout the chain, enabling end-to-end transportation visibility, increasing visibility of suppliers, and achieving end-to-end track and tracing capabilities.
The main challenges for CDOs, on the other hand, are to drive corporate digital strategy and support the creation of compelling digital experiences for their customers. A big part of that entails the delivery of connected products to benefit from profitable service activities and enabling outcome-driven business models.
The marketing department also has a key role to play by realizing successful omnichannel customer experiences, achieving visibility over promotion impacts, and enabling effective content delivery.
Never before in fact has the opportunity been greater for companies to stay with their products and customers throughout the entire lifecycle of their products. Companies that make use of IoT sensor data coming from products and processes, in combination with analytics, can improve and accelerate product development, enhance service quality, and improve the customer experience.
How real is IoT in European manufacturing today?
IoT is one of the key technologies shaping DX, with IDC forecasting that 80 billion IoT devices will be online by 2025, creating 180 zettabytes of data. With IoT on its way to becoming one of the most significant technology developments of the decade, adoption patterns are set to increase. IDC research shows that no manufacturer is unaware of IoT, with 80% familiar or very familiar with the concept. IoT is perceived to be extremely or very important for 70% of companies, with virtually no company considering it to be not important at all.
Nearly every company surveyed is now engaged in an IoT project (such as asset tracking or supply chain visibility) with about 30% of manufacturers already having one or more IoT initiatives ongoing, while nearly all of them (90%) have plans to invest in IoT in the short term (over the next 12–24 months).
Organizations’ view of the value of IoT differs, however. For 22% of organizations, IoT is considered tactical: it solves a specific business problem with a single solution. For the majority (59%), however, it is considered strategic: it helps organizations compete more effectively with their products and services by reducing costs and improving productivity.
Figure 2: Expected Business Impact of IoT
Across business lines, each job role can benefit from numerous use cases, but it’s important to identify and prioritize the use cases where IoT can deliver benefits across the board. The whitepaper drills down into and prioritizes a wide range of use cases and how IoT can contribute to them across all lines of business.
An introduction to the IoT platform
IDC research shows that manufacturers are concerned with the collection and dissemination of data, and with conflicts among opportunity, security, and privacy. Keeping connected products secure, whether they are in the hands of their customers’ customers or in their own operations, will become a daunting task without the right technology in place. Also, companies can feel overwhelmed by the complexity of a multidisciplinary initiative such as IoT.
Given that, the role of a reliable platform within the IoT ecosystem cannot be underestimated. The IoT platform acts as the “brain” in an IoT solution as it manages all the other important organs and, most importantly, creates the value-add. The ability to provide business insight by integrating large volumes of data with existing enterprise back-end applications is also a vital function of any IoT platform, as is the ability to support the development of new applications that can underpin better and faster decision making.
What companies need to consider to accelerate IoT innovation:
- In the IoT world, no process is isolated. To fully benefit from the potential of IoT-enabled technology, consider the opportunities provided by a unified platform that is scalable to support multiple use cases.
- Identifying the right use cases is key. Not all use cases are relevant to each organization. Identify and prioritize the areas where IoT can be best put into use to deliver immediate results.
- From change management to managing change. IoT transformations are time- and resource-intensive, which can entail quick wins but also unknowns and failures in multiple areas. To be successful, leaders should instill and promote an entrepreneurial culture to help exploit IoT-enabled opportunities and reduce fear of failure.
If you would like to learn more about the potential of IoT, how it impacts business processes and job roles, and, most importantly, how to extract the most value out of it, register now for our webinar on September 28 or download the IDC whitepaper “Realizing IoT’s Value – Connecting Things to People and Processes.”