How digital transformation is shaping industries

Digital transformation is creating an opportunity for innovation across all industries that is nothing short of a renaissance. From retail to life sciences, we are seeing a complete reinvention of products, services and experiences being delivered to the market.

In May of this year, The World Economic Forum said in their Digital Transformation report, “to succeed in the digital era, (companies) will need to become digital enterprises, rethinking every aspect of their businesses.”  Many companies have already begun the process of becoming a digital enterprise. They are automating and streamlining business processes. They are investing in Artificial Intelligence and machine learning. They are trying to keep their mission critical information from downing in the Data Lake that has been created across the company. 

Depending on the industry and the size of the company, some businesses are still experimenting while others are building to scale.  According to a Gartner survey of businesses around the world across 15 industries, 47% of CEOs are being challenged by their board of directors to make progress in digital business, and 56% said that their digital improvements have already improved profits.  So, every industry is either at or near an inflection point for digital transformation.  The only question for CEOs is whether they’ll be ahead of the curve or behind it.

Leading the pack

Digitalization may sound like a perplexing concept to some, but let’s demystify it; and in particular, let’s distinguish between electronic data and digitalized data. Essentially, digitalized data is live. Most people are benefiting from this distinction every day as they use mobile applications Not so long ago, trips to the airport required a paper boarding pass.  Printing your pass at home or the hotel became a modern convenience. Electronic boarding passes improved things. You could carry the barcode on your phone, but they were still static. What if something changed – a departure time, a gate, etc. You wouldn’t know about the change. Now, because of digitalization, when the plane scheduled to take you from LAX to Boston gets hung up at SFO, the system routes you to another plane, and that information automatically shows up on your phone.  From on-demand ride services to context-aware home thermostats and security systems, digitalization is already a pervasive concept once you unpack the definition of the word.

But the true essence of digitalization is the transformation the world of work.  Senior executives want to understand how digitalization can transform their companies and give them a competitive edge.  Why? Because digitalization provides visibility and control of business processes and product innovation from idea to design, all the way through production and customer support.

It’s fascinating to watch how the successful digitalization of a business can disrupt the entire industry and rewrite the rules in a way that leaves their competitors playing catchup.  Certainly, an industry that’s seen significant disruption from digitalization is the aerospace and defense sector. Industry leaders like Boeing are all-in on digitalization throughout their entire operation.  They recognize that digitalization is crucial to maintaining a global supply chain with hundreds of thousands of parts and variables, as well as enabling effective collaboration across a global organization.

Digitalization is also enabling Boeing to embrace cutting edge technologies into their manufacturing processes.  Boeing has been an early adopter of additive manufacturing, from extensive use in their satellite designs, to using the world’s first 3D printed structural titanium parts for its 787 Dreamliner, which is expected to reduce to cost of each plane by $3 million. But bringing these advances in material science from the test lab to the runway is a long and complicated process of design, simulation, testing, and process improvements, and would be impossible to do at scale in a traditional ‘siloed’ enterprise.  In an industry where weight is money, digitalization is allowing teams of engineers, designers, and manufacturing experts to collaborate in real time to jettison weight from the planes. This is only the beginning of digitalized additive manufacturing’s role in aerospace and defense, and the race is on to see which company can scale the fastest.

A digital twin for the win

In the energy, process and utilities industry, McDermott International recognized the need to transform their entire business in order to stay competitive. In an industry not known for embracing unfamiliar technology, McDermott took the plunge and rebuilt its business processes from the ground up.  By having their entire engineering, procurement, construction, and project management processes digitalized and standardized, McDermott has full visibility into a project across the organization, with everyone looking at a single source of data.

With that single source of data in hand, McDermott found one of the most effective ways to ensure business success was to watch themselves in a mirror.  By creating a ‘digital twin’ of their production facilities, pipelines and subsea systems, McDermott can get real-time data from web-connected sensors and compare what’s actually happening to what should be happening, and quickly correct any discrepancies. 

The next generation assembly line

Long-time industry leaders can’t afford to stay comfortable with the business processes that have worked up until now, and that’s especially true in the highly-competitive transportation and mobility sector.  Honda was a long-time user of 3D designs of their cars but realized that uncovering new efficiencies in the manufacturing processes would have an enormous impact on their bottom line.  So, Honda set out to not only digitalize their manufacturing processes but integrate them with their legacy set of 3D design data.  Similar to McDermott, Honda quickly recognized the value of creating a digital twin of their manufacturing facilities to help visualize not only what was being assembled, but how it was being assembled.

Honda was able to create a step-by-step assembly process, simulated in a 3D environment to ensure each sequence would produce cost-effective results.  With a digitalized business feeding data into its assembly line, Honda can account for the different characteristics of each manufacturing plant, and ensure parts are being delivered on time and each assembly step is optimized for efficiency.

An important point to keep in mind is that digital transformation is not a goal unto itself.  Instead, focus on what digital transformation can allow your business to accomplish.  Because the businesses that win in the 21st century won’t be the ones with the largest collections of IoT, virtual reality, artificial intelligence and 3D printing technologies, while still producing new iterations of the same products. The businesses that win will be the ones that use digitalization as a means to embrace whatever technologies they need to create entirely new categories of experiences for entirely new categories of customers.

Digital transformation is creating an opportunity for innovation across all industries that is nothing short of a renaissance. From retail to life sciences, we are seeing a complete reinvention of products, services and experiences being delivered to the market. Digital transformation breaks down the information silos of an organization and enables collaboration across the organization.  When the knowledge in your company is unlocked and combined with business technologies that weren’t possible to integrate previously, that’s when an industry can be truly transformed.

[Disclosure: the companies mentioned in this article Boeing, McDermott and Honda – are all customers of the author's employer, Dassault Systèmes.]

This story, "How digital transformation is shaping industries" was originally published by CIO.