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Digital transformation in Manufacturing & Utilities

In our first guide to digital transformation in manufacturing published on Information Age…

… we answered some of the most pressing questions ahead of CTOs in finance. Transformation initiatives do seem like the gateway to achieving business goals, but it does imply much more than a new technology implementation. Here is a summary of the key takeaways:

  • Breed a transformation mindset – look at your industry challenges as if they were new opportunities and go out of your comfort zone by thinking and acting like a visionary
  • Do your homework – make sure to get acquainted with innovation around you, you might discover not only sources of support but a plethora of competitors from different backgrounds
  • Go strategic – do not look at transformation as a one-time initiative, rather consider it a strategic organizational function, dedicating human power and external partnerships to it
  • Get stakeholders buy-in – whether it is storytelling scenarios to scale, formal onboarding or feedback through validation– you need the key people from within and outside the organization on your side

Why we thought it would help go one step further and address challenges in front of engineering-driven organizations? During the past 5 years we have grown technology partnerships with both startups and established companies in manufacturing, construction & utilities in Switzerland, Germany and France, serving millions of end users while going through challenges like cloud adoption, GDPR compliance and many others. Therefore, we have come up with an extensive list of reasons to be proactive and steps to ensure your digital transformation in Manufacturing is signed, sealed, and delivered.

How to ensure the success of your digital transformation in manufacturing?

The challenges calling for most urgent actions…

Change Management

Being a provider of application development and cloud enablement services for the manufacturing sector gives us a 360-degree exposure to considerations, valid for both SMEs and larger businesses. Collaboration with stakeholders from varying backgrounds is inherent to the nature of professional services, and it is advisable for you to apply the same integrated approach to solving challenges and consider every internal or external factor in the decision matrix. Here is what we mean by that:

One major aspect that production businesses face when it comes to innovation is organizational readiness, encompassing both people and processes. The shortage of high-class software development skills is apparent across the DACH region, but this also applies to the overall IT governance and provider management. 

There’s a fine line between contracting an outsourcing partner to tackle low-value-added operational tasks and engaging an end-to-end IT solutions consultancy to advise and deliver side-by-side the technology solutions that transform businesses.And this line is drawn by having the right organizational mindset.

When transforming business outcomes is on the agenda, looking at your process design quite often reveals signs of highly fragmented processes within manufacturing. Is there a flexible enough connection in managing input against output? Do you have visibility as to how well each link in a dispersed supply environment operates? The answers to these questions pose the need for agility, which enabler can be technology, together with a completely transparent and predictable production processes.

This leads us to the next challenge – securing data flows through the enterprise, quickly and in real time. This holds especially true for effectively managing construction sites or resource consumption within production plants using cloud technology. The endeavor often lies in designing a hybrid cloud approach to accommodate compliance with highest data security practices, and still benefit fully from having real-time insights about process effectiveness. With increasing regulatory requirements ahead of manufacturers and utility providers concerning data protection, stellar cybersecurity defense and sustainable facilities modernization – no wonder decision-makers are skeptical towards disruptive technology, and even more, incorporating it by relying on external help. Yet, today’s digital challenges require a strategy that didn’t exist yesterday.

The starting point appears to be – what is your organization’s driver for innovation? Is it a product of technology or market intelligence, or a move to gain competitive edge? In the words of Frank T. Piller, PhD, professor of Technology and Innovation Management at the RWTH Aachen University, it matters if it gives a direction of how to go into the future, essentially making every innovation strategic to the company performance. Read how you can leverage transformation, or else said…

Embrace disruptive technologies but stay true to proven process methodologies   

According to Deloitte’s latest Global Outsourcing Survey, more than half of the organizations surveyed are adopting, or considering adopting, disruptive solutions to drive performance, improve speed to market, and increase innovation.  The latter gradually becomes the main driver of building outsourcing partnerships, rather than the sole cost optimization factor of the past. In order for these relationships to work, however, it is advisable to balance disruptive transformation with carefully managed agile processes and strong communication between client and technology provider. Following best practices in delivery planning, retrospectives and documentation builds two-way trustworthiness and makes innovation achievable in a controlled environment. Established pathways for innovation management also lay the proper basis for the so crucial security compliance.   

Another factor are the diluted borders between industry and tech, in the shape of innovative branches or wholly independent providers of services to conventional industries like manufacturing, transportation and logistics. For example, Lufthansa has taken an extra step to transforming aviation services by investing in their own startup digital marketplace. IT helps airlines from all over the world engage in a single market for maintenance, repair and replacement of parts. This is a great demonstration of the so-called high commitment gate where traditional businesses look at innovation strategically, thus generate significant modernization to operations, resulting in transparency, savings, and better experiences for end users.

Evaluate technology partners according to their experience

But how do you assess the viability of a partner with whom you’ve neither worked before nor have any evidence whether their model fits your culture and operational processes? Prof. Dr. Markus H. Dahm and Carolin Joseph from IBM have very well outlined the methodology aspects of ensuring business relationship continuity in their Five Factors for a Healthy Business Relationship in ITO, BPO and SSC. Here are a few more subtle factors in the evaluation process that might make or break the success of your partnership.

When preparing your shortlist of IT solution providers, do consider their involvement in the community. What is very closely related to the compatibility between your companies is the engagement with industry associations and trade chambers. This serves as an evidence to the partner’s sectoral focus, indicates that they are aware of your domain and economic challenges, and signifies their compliance with service delivery best practices. Request references in the shape of recommendation letters, case studies, testimonial contacts etc. to be able to assess the impact of such relations on your business. You can find some for us at DesignRush

Besides industry knowledge, it’s technology expertise that should be driving a partner’s viability, so make sure to evaluate their overall attitude towards learning & development. Every kind of internal and external initiatives like workshops, lecture engagements, technical content production etc. evidence the commitment towards excellence and will surely reflect on the value delivered when working together.

In line with the recommendations above, it is crucial to gather impressions about the preselected companies’ mode of operation upfront, in other words -to look for a process partner and save yourself a mismatch in expectations. A solid foundation is laid by paying at least a weekslong visit to the potential supplier and getting to know their daily routine, means of communication and governance. An error-prone approach is to start with a brief pilot development phase, touching upon a mere functionality or upgrade of your system with the purpose of establishing connections to your eventual dedicated team by investing a relatively small amount of time and resources. Make sure there is someone committed to pursuing your product goals on either side – this puts the understanding of the user needs high on the agenda at any time.

All of the mentioned prerequisites wouldn’t work without the right relationship and risk management in place. A set of internationally recognized standards like ISO might seem like a given but they do ensure that the provider you choose is committed to 0 limitations to performance by information and quality gaps. Bring together IT management and compliance departments on both sides to design fitting non-disclosure and service-level agreements with effectiveness first in mind.

And finally, …

The message we wanted to convey throughout the article centers around the right attitude towards transformation in the mindset of a CTO. Coming from an engineering background and working in an engineered environment hides the danger of focusing on technology silos with little to no application to your business goals. Start from the business drivers behind the transformation, whether it’s service value, increased productivity, quicker time-to-market, or something else – change should encompass both IT solutions and governance. Ideally, transformation may lead to new models of working with partners along the supply chain, like outcome-based relationships which turn a supplier into a results-driven strategic partner. If you are leading that direction in building an innovation ecosystem around your organization, try how the approach outlined above works for you and start seeing the benefits of sustainable digital transformation in manufacturing.

Yana is a Marketing Manager at Accedia, helping build relationships that bring out the value of technology solutions. She is also a travel addict and baking enthusiast. If you’d like to learn more, get in touch via LinkedIn


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