The State of the Industrial Digital Transformation

Nov. 13, 2019
The digital transformation of industry is often discussed, but not as frequently implemented. Presentations at the AVEVA World Conference 2019 provided insights on how to overcome the biggest mindset shifts required to successfully digitize your company.

Few people would question that technology is driving fundamental changes in business in much the same way as it is changing our personal behaviors. For evidence of this change to business, look at the transformation of the S&P 500. According to Reid Paquin, research director at IDC, over the past 50 years the average life span of a company on the S&P 500 has shrunk from 60 years to 18.

“With customer needs evolving faster than ever, survival is no longer based on size, but adaptability,” Paquin said.

At the AVEVA World Conference in Orlando this week, Paquin, along with Patrick Pando, Vice President of Cloud at AVEVA, provided a number of insights into the state of industrial digital transformation and how companies across multiple industries are dealing with this shift.

In their presentation, Paquin noted that the two biggest challenges companies face when making a digital transformation are integrating digital projects across the organization and building the right organizational structure to support a data-driven organization.

“Companies have to stop running projects in silos,” he said.

To effectively make this shift in mindset, Paquin pointed to four crucial elements critical to digital transformation success identified by IDC:

  • A single enterprise-wide strategy. Digitally determined organizations rally around a single strategy across lines of business and functional areas. Coordination across all parts of the enterprise is key to overcome internal rivalries.
  • Determination in making required organizational and cultural changes. Digitally determined organizations are two times more likely to embed digitalization throughout the organization, as opposed to having it reside in a central digital group. This demands a change in organizational flowcharts and a drastic shift in company culture.
  • A long-term investment strategy around technologies that are inherently valuable to the business. Digitally determined organizations are more likely to fund their digital transformation through a capital budget, as opposed to a short-term funding mechanism.
  • A single digital platform to scale technology innovations. Digitally determined organizations are focused on scaling digital operations and therefore are working toward a single digital platform. This platform is the future technology architecture that accelerates digital transformation initiatives for the enterprise, enabling the rapid creation of externally facing digital products, services and experiences, while aggressively modernizing the internal IT environment toward an intelligent core in parallel.

Paquin noted that companies who are well along their way toward a digital transformation are already experiencing significant benefits. More digitally advanced organizations are seeing a 16% increase in revenue, compared to a 4% decrease for digital laggards. Those digitally advanced companies are also seeing a 27% increase in profit increase compared to a flat margin for laggards.

“Change is the only constant,” Paquin said. In the face of that reality, businesses need to realize that a digital transformation helps with business adaptation. He also advised that, as companies progress toward their digital transformation, they should never lose sight of the fact that, for a digital transformation to be effective, it has to take place across the value chain. It cannot succeed when siloed to functional aspects of an organization.

Pando explained how AVEVA is developing and positioning its cloud services to support industrial companies’ digital transformation. “Our cloud strategy is to view it as a federation of systems—an end-to-end alignment of technologies across the product lifecycle to ensure that security and the underlying data layer become constants. This delivers a 360-degree view of operations, which is important because the user is no longer just in the enterprise, they could be supplier or customer.”

This 360-degree view addresses Paquin’s point that companies need to view their digital transformation as taking place across the value chain and not restricting it to any functional siloes. “Using the cloud—with its ability to assign users and data—redefines what the enterprise is,” Pando said. “Cloud-based projects allow people to spend time making decisions rather than managing data.”

AVEVA’s Cloud offering currently has 60,000 users at 1,000 customers globally. “We build our offering on the back of Amazon Web Services and Azure to ensure that it works globally,” Pando added.

Over the past year, AVEVA’s Cloud has experienced a 100% growth in users, underscoring the rapid adoption of digital transformation initiatives.

To highlight the impact cloud-based technologies can have in transforming operations and the entire value chain, Pando offered an example of an AVEVA customer in Singapore that was in the process of developing a new oil field. “In the past they would have assigned an engineering company to create documents,” he said. “This company would then hand over the documents to another to assess those documents and begin development. This process typically took 20 months. Now, with everyone working on one system, the project can be done in 10 months because everyone is seeing the same information and sharing input in real time.” 

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