Why a broader interpretation of digital transformation has to focus on business value

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For many manufacturing organizations, the digital transformation journey, during its short history, has proven to be a rocky road. According to Boston Consulting Group (BCG) research, a surprising 70% of digital transformation projects fail to deliver real business value. Reasons for a disappointing return on investment include misdirected funding, neglecting input from shop floor-level employees, and lack of clear roles, goals, and expectations − to name a few.

At Schneider Electric, we work with global customers across process and discrete manufacturing environments to provide electrical, process automation, and building management solutions. We also advise clients, based on their stated business needs, on how to drive more efficient and sustainable operations. Having launched digital transformation initiatives across all 200 of our global plant and research sites over the last three years, we have developed a transformational approach that has proven to drive industrial efficiency across the global, regional, and local levels of our operation.

A successful digital transformation methodology makes the invisible visible

When implementing digital transformation projects and programs across our manufacturing sites, we recognized that three best practices helped us to gain visibility into the root causes of our business challenges. Our first discovery was that, without data, we were blind when it came to implementing any tangible improvements. Our approach for dealing with both data and process improvement issues (including interfacing in a more sustainable manner with supply chains) consists of three important steps:

  1. Release and capture data from process silos – When working with both our internal stakeholders and our clients seeking guidance in launching digital transformation initiatives, the first step is to identify which process improvements are needed to better support the business goals. This can include standardization methods for breaking down silos and capturing and governing global data, developing the ability to analyze that data to drive resilience and agility, boosting productivity, and cutting carbon emissions. In the book, The Silo Effect, author Gillian Tett clearly explains how business silos and fragmentation in the way people organize themselves, interact with each other, and imagine the world to be, can seize control of an organization and lead to institutional blindness.
  2. Demonstrate what is possible to drive aspirational thinking – We opened the minds of the people involved in the transformation by bringing them to what we call Schneider Electric Lighthouse sites. These are sites that the World Economic Forum has singled out for achieving their “Advanced End-to-End Lighthouse” designation, exemplifying successful digital transformation. By seeing how our sites are run, corporate clients can compare the benefits of a highly digitized plant to their own more traditional environments. Such visits help them clearly identify which areas of their operations need to be optimized to achieve their business goals.
  3. Embrace a program approach – When the digital transformation challenge involves dozens of different sites, it becomes important to launch change initiatives that embrace not only digitization but also more global aspects, including sustainability, cybersecurity, and supply chain integration. Instead of treating these areas as separate work streams, building a more holistic and inclusive program establishes business value beyond just digital transformation.

For example, consider a business that wants to be much more energy efficient. Its first step in achieving this goal will be to develop an ability to measure energy consumption. However, once the geographically dispersed assets that will drive the data collection are connected, there is a global cybersecurity question to consider. Therefore, the solution is not just limited to metering equipment and a database. A holistic view needs to be taken that involves addressing the greater business problem of both business continuity (via proper cybersecurity safeguards) and higher sustainability performance.

digital transformation

Mindset changes are key

A critical point throughout the execution of these three steps is enabling a transition to a different mindset for the people involved in running and operating the plant environment. Fostering this transition means connecting corporate business requirements to regional needs and local plant sites, so that all involved recognize the impact on the bottom line of their transformational efforts. Achieving that alignment is only possible once both the risk and benefits are defined and once strict rules are established for which changes are mandatory and which are elective.

For more information

In this age of digital transformation, no one company can do it alone. Companies like Schneider Electric can help not only with the consultative aspects of building successful transformative programs, but also with the execution of digitally-driven solutions that address changing business challenges.

For more information on how to jumpstart your business transformation journey, contact Schneider Electric Business Transformation Consultant Rik De Smet.

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