The keys to driving operations transformation with digital technology

Subo Chatterjee Partner, Digital Operations and Supply Chain, Industry 4.0 and Operational Automation, PwC Canada 18 June, 2021

When it comes to digitizing and transforming operations, many organizations may not know where to start or how to measure return on investment. They think emerging technologies, like the Internet of Things (IoT), augmented and virtual reality (AR and VR), predictive modelling, artificial intelligence and robotics, sound great in theory but wonder if they’re really worth the investment.

Often, operations improvements have focused on traditional methodologies like Lean coupled with large-scale technology implementations. But over time, it has become clear that these traditional strategies may offer only marginal returns. Organizations need to rethink how digital technology can drive a step change in throughput without significant capital investment and how they can adopt a more iterative, agile approach while delivering a faster return on investment.

Choosing the right solution for your business

In the past five years, the cost of emerging technology has gone down, as many small and medium-sized companies have gained prominence on the market. We now see increased evidence of the benefits of digital technology, which was harder to justify in the past due to limited real-world applications. Events of the past year have intensified the need for businesses to be able to manage operations remotely, move from an instinct-based to a more data-driven culture and make efficient use of operational teams. How can they do this effectively, especially in asset-intensive industries? And with so many new technological solutions on the market, how do you choose what’s best for your business?

Begin by identifying the problem you’re trying to solve, so that your transformation is guided by your business strategy and enabled by technology, rather than trying to adopt trendy solutions. It’s critical to be able to sort through the noise of the market to determine which solution will best fit your needs and offer the most value. You can deliver that solution through a proof-of-concept approach, where you can test and adapt new ideas before you roll them out at your organization.

The benefits of an agile, on-demand operations innovation platform

I understand that some operations leaders are skeptical about new technologies or hesitant to embark on large-scale digital transformations. Isn’t the technology expensive? Are the benefits and improvements worth the investment? A proof-of-concept approach can help you build a solid business case and avoid unpleasant, costly surprises.

By adopting an innovation platform, businesses can start with a smaller scope to test solutions and iterate multiple proofs of concept. Based on your business issue or concept, you work with a team of technical architects, data scientists and other skilled professionals to develop a model for your operations on the innovation platform before you commit to a licensing model or scaling it across your operations.

This agile approach helps you experiment in a safe environment, and at lower cost, before adopting the solution more widely. In one instance, a successful proof of concept for a large railroad showed a high return on investment from track-and-trace solutions. In another case, a successful proof of concept helped a power generation company use artificial intelligence and machine learning to automate the scheduling of maintenance tasks. In both examples, the proof-of-concept approach led to ongoing improvements to the solution from business case development to quantifying the return on investment.

Introducing the transformation architect

In our current era of Industry 4.0—a world of integration of physical and digital ecosystems in which leaders need to break down traditional silos separating business expertise, operations and information technology—there’s a growing need for what we call a transformation architect. This is someone who understands the business, operations and emerging technologies and can work with both the chief information and chief operating officers to guide organizations through their operations transformation.

With the rapid speed of change, it’s important to be able to understand how all emerging technologies can best be applied (if at all) to your organization. It’s difficult to navigate the sea of solutions on the market and easy to be seduced by new technology without considering all aspects of the problem you’re trying to solve. Too often, I see organizations that adopt the latest and greatest technologies jump into partnerships with a product company but then fail to achieve the benefits they had expected.

The key to success is to fully understand your business issues, filter out market noise, pick the best solution, use the proof-of-concept approach and support its implementation. We’ve seen great results from this approach. I’ve worked with companies that have significantly expanded the business case for a technology investment by looking at dimensions of their business that they hadn’t previously considered.

Now is the time to rethink your approach to emerging tech

It’s time for operations leaders to rethink emerging technology. Costs have gone down, and in this era of unprecedented disruption, the need to transform has become urgent. Apply a business lens to your situation and ensure your transformation is truly business-led and technology-enabled—and not the other way around.

We’ve seen many examples where an outside eye with extensive experience across industries can bring a broader perspective and innovative ideas. Our advisors can provide the business knowledge and technology expertise to support you in this process.

Reach out to me if you want to talk more about our approach. By understanding your pain points, we can identify the right solution for your business, help you maximize its value and, through our innovation platform, ensure that it’s the best fit for your organization’s growth.