IDC Custom Solutions

Reid Paquin

Preparing your Business for Manufacturing Digital Transformation (DX)

The manufacturing industry is changing faster than ever before. This has caused the industry to turn to digital transformation (DX) to better adapt or drive disruptive changes in its own operations, customers, and markets.

The opportunity for DX is so great that global organizations spent $1.2 trillion on digital transformation (DX) in the last year alone. This is especially true among manufacturers, as discrete and process manufacturers contributed almost 30% of this spending. While investment in DX is high, most manufacturers still approach it in a siloed manner, sticking to pilots or proof of concepts (POCs). Currently, less than 15% of all manufacturers have DX initiatives in production across the enterprise, which is the only way to truly transform.

One of the largest inhibitors to transformation is the infrastructure in place at an organization.  Manufacturers often deal with existing legacy systems that limit the ability of new technologies to drive innovation, opportunity, and engagement. For manufacturers, the issue is compounded by the fact that most are dealing with outdated and siloed IT systems. In IDC’s 2018 Vertical IT and Communications Survey, 42% of manufacturers indicated they are increasing their IT budgets to update or replace legacy systems.

To achieve transformation, manufacturers need to create a road map for system modernization by evaluating their existing systems against business, financial, and operations needs. They should seek out technologies that not only provide efficiency and effectiveness today but also enable future capabilities that support the company’s transformation strategy.  Digital technologies like cloud, mobile, big data and analytics, and the Internet of Things (IoT) have been drivers in the industry for years, and companies of every size must embrace these tools. System modernization brings a company’s existing application portfolio to a point where applications can maintain the pace of digital operations. Cloud deployment models are a key part of this modernization so that infrastructure is scalable and flexible. Portable interfaces that accommodate new user experiences such as mobility or augmented reality/virtual reality (AR/VR) are also important to consider.

DX requires considerable investment, but the opportunity for getting it right cannot be overstated. The people, processes, and technologies within an organization need to be assessed to ensure that it can transform into a digital enterprise. This isn’t just about applications, datacenters, and networks; it’s also about core enterprise architecture and infrastructure decisions, such as IT/OT integration and security.

Digital transformation can be a daunting task when taking the first steps, but it is important to remember that no company can transform on its own. Manufacturers that have seen early DX success have developed a network of partners to bolster their IT capabilities and serve the line of business. In IDC’s 2018 Vertical IT and Communications Survey, 66% of manufacturers said they will leverage partners to help plan and execute their DX strategy. It is important to think about how your company can stay agile and adapt as it evolves. Working with partners is a great way of accomplishing this goal.

To learn more about how your organization can prepare for the digital future, read the IDC Analyst Connection, “Organizing the Business for Digital Transformation in Manufacturing,” sponsored by CenturyLink.