The second annual ARC Industrial Digital Transformation Top 25 report continues to highlight companies that are succeeding at integrating digital technology into all areas of business, fundamentally changing the way they operate and deliver value to customers. Based on a rigorous process using financial indicators, transformation indicators, and collective community intelligence, this report identifies and ranks leaders in this complex space. Methodology changes were introduced in this year’s report, including the addition of the ARC sustainability index, which is an expansion and replacement of the ESG index reported last year, a reduction in the weighting of the financial indicators and an increase in the weighting of the transformation indicators. Eight new companies joined this year’s list. Seven companies dropped off the list and several companies moved either up or down in this list. This movement is an expected outcome, especially given the year over year changing dynamics, and shifting weighting of the three main components of the analysis - financial indicators, transformation indicators, and collective intelligence.
Digital transformation leaders can be found across many different industries, sharing common traits and visions, helping them overcome complex challenges to innovate and stay agile. The companies mentioned in this report not only have their transformation initiatives well underway, but they also have their eye to the future tackling the next set of challenges on their journey. What do these leaders know that others have yet to discover?
Industrial Digital Transformation
Industrial companies face many challenges and will continue to do so in the future. Whether it is political unrest, climate disruption, pandemics, or global macroeconomic uncertainty, manufacturers are concerned about their operational resilience, agility, and efficiencies. At the same time, manufacturers face pain points and cost drivers such as energy costs, supply chain disruptions, materials shortages, order backlogs, rising prices, workforce dynamics, sustainability requirements, and more.
Transforming to an organization where constant change and adjustment define normal operations is still very conceptual for some industrial companies. While they may have a similar end goal in mind such as competitive excellence, they may have different strategies and tactics, based on their pain points and priorities. One thing is clear: there is no straight line to define the path of a digital transformation journey. Even though some companies may be ahead of their peers, simultaneously they may still be struggling in many areas of their business and operations.
Successful industrial companies modernize their operating practices and technologies to successfully compete in today’s more dynamic and continuously evolving marketplace. Leading companies take a strategic approach, integrating digital technology throughout their value chains. Design and engineering, production operations, maintenance, logistics, supply chain, business systems, customers, products, and organizational structure are subject to innovative change as companies examine and update processes and deploy new tools and technologies. With a digital transformation mindset, the core business model by which a company produces and/or offers services to the marketplace can be replaced by new business models that more fully leverage analytics, digital twins, predictive technologies, or other technologies that enable the company to expand their worldview, embrace competitive excellence as a goal, and thereby move beyond production efficiency to a much more dynamic, responsive, and resilient business model.
Today, some companies are “born digital” and may grow rapidly to overtake existing competitors. These companies are not encumbered by legacy systems, of course, but more importantly, they are unencumbered by legacy thinking and the need to overcome resistance to “the way we’ve always done it.” They can build systems and processes better from the start, and not plan for incremental improvements to eventually achieve top performance.
The Top 25 Industrial Companies
This report identifies the global industrial digital transformation leaders. For this research, digital transformation is defined as: “The integration of digital technology into all areas of business, fundamentally changing the way companies operate and deliver value to customers. The organization is typically charged to innovate and improve across multiple dimensions such as: digital/disruptive technologies, culture and leadership, operational agility, workforce engagement, customer experience, environmental, social and governance, and competitive performance.” It’s not straightforward to identify leaders in such a complex space, but ARC developed a rigorous process based on financial performance, a community intelligence based ranking system, and software and sustainability data. Publicly available financial information, ARC primary and secondary research, data from ARC’s market database, and the opinions of members of ARC’s community of end users were all factored into the determination of the Top 25 Industrial Companies in Digital Transformation. The result is an analysis and listing of the Top 25 companies together with their scores in various categories, profiles of each of the leading companies, details about the research methodology, and more.
Analysis, Trends, and Findings
This year’s Top 25 companies include many who made the list last year, together with some new companies. Several key trends were identified: importance of sustainability, actively seeking to scale solutions in multiple dimensions, benefits of focus and prioritization, empowering the operational front line, recognition that culture change is required, and active outreach to others.
Methodology changes were introduced in this year’s report, including the addition of the ARC sustainability index, which is an expansion and replacement of the ESG index reported last year, a reduction in the weighting of the financial indicators and an increase in the weighting of the transformation indicators.
This year eight new companies joined the list – Danaher, Novartis, Ford Motor, GlaxoSmithKline, Vale, HP, Philip Morris International, and Abbott Laboratories.
Several companies shifted position in this year’s list compared to last year. This movement is an expected outcome, especially given the year over year changing dynamics and shifting weighting of the three main components of the analysis: financial indicators, transformation indicators, and collective intelligence.
When looking at the tabulated results of this research, there are some instances where a high or low score or voting results clearly pushed a single company forward. However, looking at the collective results, no single metric, at least at this point, pops out as a key indicator of digital transformation success. In fact, there are instances where what seems like obvious success simply is not obvious upon closer examination.
Table of Contents
- Executive Overview
- Analysis, Trends, and Findings
- Top 25 Companies
- The Top Ten Companies
- Companies 11-25
- Companies of Note
- The ARC DT Top 25 Team
- Looking Forward
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