Digital Transformation in Industries

By now, most leaders understand the importance—or, increasingly, the inevitability—of digital and AI transformation. But fewer executives are clear about how to knit systems, people, and processes together in the most productive way. The digitalization of industrial organizations and operations have been lagging retailers and B2B companies, but the recent 2020 pandemic has, in a way, forced many industries to adopt more digital solutions to reach customers and continue delivering services without compromising safety. In the 2020 survey (Statista, COVID impact on digital transformation speed 2020 | Statista) , as many as 97% of the respondents stated the pandemics sped up the industrial digitalization in their organizations. Spending on technologies and services that enable digital transformations of business practices, products, and organizations has increased from $2 to $3 trillion globally. For businesses, this revolution heralds the need for a radical reimagining of the end-to-end operating model.

What is digital transformation in industries? Like many commonly used phrases, “digital transformation” has devolved into a catchall term that means different things to different people. That’s a problem. Digital transformation is critical for organizations to not only compete but survive. If leaders can’t be clear about what a digital transformation is—and align their organization around a specific program—they can’t expect to be successful. Industrial digitalization, also called digital transformation or sometimes even falsely as digitization, is the process of integrating digital tools, workflows, and approaches into every aspect of the business within an organization.

Yes, digital transformation is often aligned with programs and echnologies like Industry 4.0, Industry 5.0, Industrial IoT (Internet of Things), smart manufacturing, Artificial Intelligence (AI), Augmented and Virtual Reality, Big Data, robotics, and machine learning (ML). However, digital transformation goes way beyond the plain adoption of digital tools. This process also need to heavily affect other aspects of the business, including the people, processes, and technologies. ? All industries and verticals are adopting these processes to become more agile, efficient, sustainable, and value driven. Digital transformation is the rewiring of an organization, with the goal of creating value by continuously deploying tech at scale.

That is why industrial digitalization can be regarded as a radical rethinking of how the people work in every department; a shift that transcends traditional roles and causes everyone to accept continuous changes and to work in a more connected way across the entire organization. Digital transformation is the fundamental rewiring of how an organization operates. The goal is to introduce a fundamental change in how an organization functions and how it interacts internally and externally with its customers resulting in a significant improvement in business performance including the sustainability KPI’s.

It’s been clearly proven, on high level, that the level of "digital maturity" of the company effects directly the company performance. In the end, those who do not evolve, get out of the business, or suffer sub-peer level performance and valuation. Therefore, digitalization has become an imperative for all organizations.

At the same time, there continues to be a high percentage of failed initiatives and projects that have not been able to provide bottom-line results as expected. There are quotes and studies saying that over 70% of digital transformation projects fail. According to McKinsey 90 percent of companies have launched some flavor of digital and AI transformation, only a third of the expected revenue benefits, on average, have been realized. There are also clear bottle necks identified across industries in achieving the digitalization levels at scales as aspired. Many companies thus continue struggle to decide on where to focus, and what is the best way to continue the digitalization journey, to achieve the bottom-line results and efficiency improvements driving the sustainability KPI’s.

So, how can organizations successfully integrate new digital technologies and advanced automation, and harness them to create value? Let me continue on that one on my next article.