Essential Elements of Digital Transformation

Author photo: Peter Reynolds
ByPeter Reynolds
Industry Trends

Industrial organizations are entering a period in which new digital technologies have the potential to augment people and processes to an unprecedented degree. New, commoditized computing resources in the cloud combined with advanced systems suc as artificial intelligence (AI) are changing how people work. Many refer to this period as the fourth industrial revolution. Consortiums such as Industrial Internet of things (IIoT) or Industrie 4.0 have helped pave the way for industrial manufacturers to assemble enterprise-wide digital transformation programs to realize the benefits of disruptive digital technology.

Digital Transformation of Industry Underway

Digital Transformation (DT) involves the transformation of industrial products, operations, value chains, and aftermarket services. This transformation is enabled by augmenting people and knowledge and through expanded use of sensors, data, and analytics. DT already has some broad adoption across the global process industries, with an overwhelming 85 percent of industrial manufacturers already actively piloting advanced technology.

However, many companies today tend to focus efforts on technology, and not the full organizational impact of digital transformation approaches or technologies. ARC research shows only a mere 5 to 8 percent of industrial manufacturers are ready for a digital transformation program and many are not prepared to scale up any pilots that are in progress.

$20 Trillion Contribution to GDP

The World Economic Forum estimates that Industrie 4.0 has the potential to contribute more than $20 trillion to global gross domestic product (GDP) by 2020.  However, DT will not be realized without a considerable and well-focused effort that includes preparing the workforce, implementing the appropriate IT infrastructure, and adjusting business processes. Industrial companies can utilize the Elements of Digital Transformation identified here to ponder the following questions and begin to transform.

  • What is the role of the emerging Digital Organization?
  • How can we leverage existing data without compromising security?
  • How can we ready employees for digitalization?
  • How can we use digital to accelerate knowledge and competency?
  • How can my organizational scale-up and become agile?


Elements of Digital Transformation

End users should assess their organization using these elements and help the workforce be comfortable with the inevitable change and disruption by investing in people and change leadership.

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