The path to fully digitized operations

Variously called “Industry 4.0”, the “Industrial Internet”, or simply “digitization”, the emergence of machine-to-machine interactions, human-to-machine interactions, robust data and analytics capabilities, and cheaper, more ubiquitous sensors is pushing the Internet of Things (IoT) into the core operations of more and more companies.

The key challenges facing companies will always be defining clear solutions with strong value propositions, developing the right set of capabilities, and finding the right talent to get the job done. Meeting these challenges will require putting together a strategic plan, including a well-defined road map for implementing the required technical, organizational and business process changes. It can be done in four crucial steps.

1. Validate the monetization plan

The digital operations journey starts with addressing questions about value, cost and risk. Companies will be able to answer these questions only after determining their business strategy and analyzing their current operational maturity. Begin with planned use cases and their respective value models, and then adapt them and validate their value propositions through detailed business cases that fit the needs of your company and current market offerings. Business cases should be based on thorough modelling and benchmarking exercises, and should include realistic operational and financial targets.

2. Understand the ecosystem

Companies must be able to define the solution or solutions they are looking for and understand the market landscape to determine the right solutions provider (or providers). These solutions will be significantly different from the traditional platform-centric models for ERP, CRM and the like, and instead require an entire ecosystem of platforms and communications and security systems. Moreover, the current technology landscape varies significantly for each use case. Take the time to understand the ecosystem specific to the use cases you decide to implement.

Partnerships and alliances will most likely be part of the process of determining and implementing the right solutions. Evaluate potential partners or allies in light of the long-term competitive landscape to ensure that you are buying into a platform or solution that will give you the highest level of intelligence, a competitive advantage, and security, and that will be around to provide value-added services in the long term.

3. Refresh the operating model and your people capabilities

The “people side” represents a commonly overlooked element in digital operations transformation, yet business leaders consider this a significant challenge in implementing digital strategy. Ask yourself who will own the new digital road map and who will use new information to make operational decisions. As with any transformation effort, owners, champions and subject matter experts must be identified and empowered to execute the implementation. At the same time, operations leaders must be champions of the solution and understand their new decision-making capabilities. Tomorrow’s digital operations leaders must be groomed for their new roles by being able to attain the right operations, technology and engineering skill sets.

4. Build the road map

Finally, the “Where do we start?” question is often where paralysis sets in. Leading companies tackle this issue by defining their strategy around what we call a “capabilities system”. This is made up of four or five distinctive capabilities — the combination of processes, tools, knowledge, skills, and organization that sets your company apart from its rivals and allows you to carry out your chosen way to play. Establishing clear links between the strategy and the capabilities system will drive that understanding down through the decision-making process of the overall transformation effort.

If companies are to take full advantage of the great promise of the Industrial Internet, they must develop an overall strategy for how to go about it, and then gain a full understanding of the ecosystem of solutions emerging around each of the four steps outlined above. Our experts can help your company identify, implement, and then develop the capabilities required to get you to your goal.

Reference used: ‘Connect and optimize: The new world of digital operations’

by Eduardo Alvarez, Steve Pillsbury, Mark Strom, Michael Kinder.

Follow PwC Canada