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Industrial Digital Transformation

By Shyam Varan Nath , Ann Dunkin , Mahesh Chowdhary and 1 more
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  1. Free Chapter
    Chapter 1: Introducing Digital Transformation
About this book
Digital transformation requires the ability to identify opportunities across industries and apply the right technologies and tools to achieve results. This book is divided into two parts with the first covering what digital transformation is and why it is important. The second part focuses on how digital transformation works. After an introduction to digital transformation, you will explore the transformation journey in logical steps and understand how to build business cases and create productivity benefit statements. Next, you’ll delve into advanced topics relating to overcoming various challenges. Later, the book will take you through case studies in both private and public sector organizations. You’ll explore private sector organizations such as industrial and hi-tech manufacturing in detail and get to grips with public sector organizations by learning how transformation can be achieved on a global scale and how the resident experience can be improved. In addition to this, you will understand the role of artificial intelligence, machine learning and deep learning in digital transformation. Finally, you’ll discover how to create a playbook that can ensure success in digital transformation. By the end of this book, you’ll be well-versed with industrial digital transformation and be able to apply your skills in the real world.
Publication date:
November 2020
Publisher
Packt
Pages
426
ISBN
9781800207677

 

Chapter 1: Introducing Digital Transformation

Industrial digital transformation is the journey that organizations undertake where they integrate business model change, process improvement, and cultural shift, often leveraging a number of digital and emerging technologies. We will refer to industrial digital transformation often in the context of companies from the commercial or public sector that deal with physical assets, factories, and field operations, generally dealing with business-to-business scenarios, and the transformation involves improvements in these products, equipment, and operations. On the other hand, when the transformation involves software or business enhancements for asset-light or pure tertiary services companies, including business-to-consumer scenarios, then we will refer to it as digital transformation. To include both, we will refer to it simply as transformation. Likewise, our use of the term industrial includes both the commercial and public sectors, in the...

 

Exploring industrial digital transformation

Industrial digital transformation may often bring a radical rethinking to the use of technology, culture, people, and processes in an enterprise. This can lead to a fundamental change in business performance and outcomes, as well as how the customers perceive the company. Figure 1.1 provides an easy way to look at the transformation. It shows that culture and technology changes go hand in hand with the business process and business model changes. Several books have been written on the broad topic of digital transformation, and some of these will be referenced here. George Westerman and Didier Bonnet wrote a book en titled Leading Digital: Turning Technology into Business Transformation, George Westerman, Didier Bonnet, Andrew McAfee, Harvard Business Review Press, published in 2014:

Figure 1.1 – Digital transformation

The technologies used to help drive an industrial digital transformation may include one or...

 

Identifying the business drivers for industrial digital transformation

The power of transformation applies to some or every aspect of an organization. It can generate business value, agility, and resilience. The importance of resilience is shown at the time of local or global crises. This book will focus on driving transformation in industries – in both commercial and public sectors – to accelerate business outcomes, by deploying the digital technologies in combination with transformative planning and shifts in the culture.

The different forces that help to shape the industrial digital transformation in an organization are shown in Figure 1.2. The industrial digital transformation often entails a series of big bets or bold steps, to achieve large-scale benefits or competitive advantage. This differentiates transformation from regular generational changes, which are often linear or a series of small and gradual steps. Humans climbed mountains through the historic ages...

 

The evolution of industrial transformation

Changes in the global landscape seen during the healthcare and economic crisis in the first half of 2020 due to COVID-19 (https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/Immunization/ncov2019.aspx) have highlighted the need to develop a deeper understanding and preparedness for transformation, not only for the government at different levels (federal, state, and local), but the commercial sector as well, across the board, be it a family-run business or a global enterprise. This book will cover some of the major crises the world has experienced in the last several decades and the lessons learned from each of them. This would allow us to see concrete examples where the industry has successfully identified an opportunity for transformation.

Let's look at some examples of past crises and the lessons learned in the following table:

Progressive companies take the approach that no crisis should...

 

The impact of industrial digital transformation on business

The internet, web applications, and the easy availability and low cost of massive amounts of computing power and storage have revolutionized the way that businesses operate and, in the process, have reset the competitive landscape. In some cases, industrial digital transformation is a competitive advantage, but in other cases, it is simply the minimum effort required to stay in business. For many organizations, digital transformation is a do-or-die proposition.

Industrial digital transformation can serve one or more of three purposes for business:

  • Improve internal processes, thereby reducing costs and increasing competitiveness.
  • Streamline the delivery of existing solutions within an existing business model to reduce costs or improve customer service.
  • Transform a business completely, resulting in new products and business models.

A true digital transformation is a disruptive innovation that fundamentally...

 

Quantifying business outcomes and shareholder value

The decision process in large public or private organizations is often driven by strategic goals or value of investments to its stakeholders while making the organization stronger and sustainable. As a result, any new initiatives beyond the incremental efforts to preserve the business goes through a business case of Return on Investment (ROI) analysis. As a result, it is important to understand the key benefits of the industrial digital transformation to the business. The desired outcomes of digital transformations are often as follows:

  • New digital revenues
  • Productivity gains
  • Corporate social responsibility

In Chapter 10, Measuring the Value of Transformation, we will look in-depth into how to quantify these outcomes. Let's understand these outcomes qualitatively here.

New digital revenues

In this scenario, transformation is used to drive new lines of business or new digital revenues for an existing...

 

The phases of the digital transformation journey

Let's look at an example of a phased approach to digital transformation using the example of the automotive industry. In recent decades, we have experienced phases such as going from gas to electric cars to the use of driver-assisted technologies on its way to the different levels of autonomous driving. This journey continues and next, we may witness unmanned taxis and possibly flying taxis in the future.

In this example of autonomous cars, it is important to think through the breadth of the impact. As autonomous cars become mainstream, it has an impact on how roads, traffic signs, and even cities and airports are designed. Likewise, it may have a profound economic impact not only on the automotive industry, but also on the utility providers, due to electric vehicles, and finally, on employment via the automobile and the trucking industry.

Finally, auto insurance and the department of motor vehicles would have to adapt to...

 

Summary

In this chapter, we learned about the importance of the cultural, technological, and business drivers for industrial digital transformation. We learned about the history of such large-scale industrial transformations to understand how to identify and select transformation initiatives going forward. Part one of this book will go further into the details of these topics and part two will show detailed examples of industrial digital transformations at work.

In the next chapter, we will explore the capabilities necessary to enable successful digital transformations. A digital transformation simply cannot be accomplished with existing staff with existing skills in the existing culture. We will discuss how to create the right culture for transformation as well as the skills required. We will discuss the rise of the chief digital officer and their role in implementing a digital transformation.

 

Questions

Here are some questions to test your understanding of the chapter:

  1. What are the main drivers of industrial digital transformation?
  2. Are there major differences in the commercial sector compared to the public sector for transformation objectives?
  3. What is the role of digital technology in driving transformation?
  4. What are the benefits of industrial digital transformation to an organization?
  5. Why is it important to understand the history of the industrial revolutions in order to understand industrial digital transformation?
About the Authors
  • Shyam Varan Nath

    Shyam Varan Nath is a Specialist Leader, with focus on Telco, Media and High Tech (TMT) industry at Deloitte. Prior to this, he worked for Oracle, General Electric, IBM, Halliburton and Daleen (a Telecom revenue services provider). He is the primary author of three books, Building Industrial Digital Twins, Industrial Digital Transformation, and Architecting the Industrial Internet. His expertise involves IIoT, Digital Twins, cloud computing, databases, AI/ML, and Telecom billing. He has worked on driving digital transformation at several large companies. He is a Distinguished Toastmasters (DTM) club and very active on Twitter (shyamvaran). He is the founder of the analytics user group called AnDOUC (formerly BIWA). He has an undergraduate degree from IIT Kanpur, India, as well as an MSc (in computer science) and an MBA from FAU, Boca Raton, Florida. Shyam is part of the Program Committee of IoTSWC and a regular speaker at large technology events.

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  • Ann Dunkin

    Ann Dunkin, P.E. is a Chief Technology Officer at Dell Technologies. She has over a decade of experience as a Chief Information Officer, including as the CIO of the US EPA in the Obama Administration. She has led digital transformations in large organizations and has written and spoken extensively on the topics of technology modernization, organizational transformation and digital services. She serves on a several non-profit and for-profit boards and has received numerous awards for her contributions to government digital transformation.

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  • Mahesh Chowdhary

    Mahesh Chowdhary, Ph.D., is a Fellow and the Director of Strategic Platforms and the IoT Excellence Center at STMicroelectronics, based in Santa Clara, CA. He leads the effort on the development of solutions and reference designs for mobile phones, consumer electronic devices, automotive and industrial applications that utilize MEMS sensors, and computing and connectivity products. His areas of expertise include AI/ML, MEMS sensors, IoT, digital transformation, and location technologies. He has been awarded 24 patents. He has spoken extensively internationally about ML, smart sensors, and IoT. Mahesh received his Ph.D. in applied science (particle accelerators) from the College of William and Mary in Virginia. He is also an adjunct professor at IIT, Delhi.

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  • Nital Patel

    Nital Patel, Ph.D., is a Principal Engineer responsible for advanced manufacturing systems research and development at Intel, Corporation. He has spent his career contributing to digital transformation activities and projects across the manufacturing spectrum as well as in the areas of enabling agility in the enterprise supply chain leveraging data fusion, machine learning and AI. He is the lead inventor on 11 patents, has published over 50 journal and conference papers and serves on the Editorial Board of the IEEE Transactions on Semiconductor Manufacturing. In the past he has been an Adjunct Professor at the Arizona State University and has been awarded the Mahboob Khan Award from the Semiconductor Research Corporation for mentoring university research students.

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Industrial Digital Transformation
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