Dec 23, 2020The COVID-19 pandemic accelerated digital transformation. Enterprises will need to solidify digital foundations and ecosystems to meet near-term demands while building long-term resiliency and flexibility. The digital thread will be key to accelerating digital-transformation initiatives into the new year by uniting and integrating IT and OT data into a seamless flow of data. The digital thread of information will need to span the entire value chain—from market and customer insights to product design, to plant and end user—in order to deliver business growth, improve operational excellence and enable risk mitigation.
A key component of a digital thread's success is digital twins, which accelerate product-development timelines, cut costs and reduce risk by virtually modeling and piloting the entire supply chain, from requirements collection and design to factory layout, capacity, scheduling, processing, manufacturing and servicing in the field. Successfully leveraging digital thread and digital twins will be a key factor for success as manufacturers adapt to the new normal in 2021—and benefit from it.
COVID-19 Was the Match That Lit the Digital-Transformation Fire
Enterprises Must Catch Up Now or Be Left Behind Forever
In 2021, the window will close on digital transformation's competitive advantage. COVID-19 proved digital transformation's value, and companies that fail to tackle high-priority business problems with digital technologies now will see their competitors pass them by. Those that moved on digital transformation in 2019 or early 2020 are reaping the benefits of never skipping a beat since they sent their employees home in March. They know how to develop new and complex products from home with an integrated tech stack enabling digital twins. For products already in the market, they are turning on augmented reality (AR) or virtual reality (VR) remote-service offerings seamlessly.
We'll see enterprises that are on the verge of being left behind throw out their digital-transformation roadmaps, as none will prove worth the investment at this point in the game. Alternatively, we'll see these enterprises identify one or two high-priority business problems in innovation, productivity or risk management, then solve them with proofs-of-value in data science, smart connected products and operations, and digital product creation. Addressing a problem will show instant value, drive user adoption and create a new roadmap based on value rather than technology.
Digital Transformation Requires a Best-of-Breed Solution Ecosystem
An ecosystem of technologies, solution providers and architects will be key for powering successful digital-transformation initiatives in 2021. Organizations will favor open-architecture platforms to unite the best features of various IT, OT and engineering technology (ET) solutions over leveraging a single provider with a narrower tech stack, which can have limitations and impede results. This allows for the critical flexibility that digital-transformation initiatives require, enabling teams to quickly implement solutions and drive results.
What's more, by leveraging best-of-breed solutions and partners, businesses can create a closed-loop system to further improve outcomes by sharing input and output data across the ecosystem to continuously adapt to shifting conditions or constraints. By sharing information, organizations can minimize time, reduce effort and eliminate redundancy. To help guide partner decisions, successful enterprises will need to adapt a collaborative development strategy that includes defining the purpose for partnering, identifying the types of partners needed and developing a partner-management structure. This will deliver significant productivity, cycle time and efficiency gains and, ultimately, winning solutions.
Artificial Intelligence Will Become Less Artificial
Even with a vaccine for COVID-19 on the horizon, how people work and interact has fundamentally shifted. In the new year, remote work will continue, social-distancing requirements will remain and supply chains will continue to face disruption. This new way of life demands a new way for companies to continue operations effectively across the value chain, from product to plant to end user.
The use of artificial intelligence (AI) will be the standard for addressing these challenges, but without considering how humans will interact with and leverage these new autonomous systems, AI will fail. In 2021, enterprises will take a human-centered approach to AI initiatives, understanding user needs and values, then adapting AI designs and models accordingly—which will, in turn, improve adoption.
Enterprises must put the same focus on people and culture as the technology itself for AI to be successful. Organizational change management teams will be critical for driving digital transformation and AI forward, by bringing people along for the change journey and setting the organization up for measurable results. Proper change management is the most important—yet overlooked—aspect of any digital-transformation initiative.
Prescriptive Analytics Will Be Key for Digital-Transformation Success
Advanced analytics are becoming mainstreamed as businesses increasingly collect and analyze data across their organizations, with 35 percent of U.S. manufacturers deploying advanced analytics in the past three years. For AI to have a significant impact across the value chain, prescriptive analytics will be the catalyst to optimize performance. Prescriptive analytics will become an essential piece for scaling AI within organizations, by leveraging product and customer data to advise AI models on how to improve processes, adjust production and increase efficiency.
Prescriptive analytics enables constant improvement with an AI model, by continuously monitoring and adjusting based on evolving conditions. Prescriptive models can then enable decision automation, by which the models can take the best course of action based on prescriptions. Going beyond predictive analytics to prescriptive analytics will ultimately enable digital transformation success for manufacturers in 2021.
George Young is the global managing director of Kalypso, a professional services firm that helps enterprises discover, create, make and sell better products with digital technologies. George has more than 30 years' experience in business management and consulting, serving Fortune 500 brands across industries, and he co-founded Kalypso in 2004.
