March 20, 2017
by Karim Bibawi
How leaders are beginning to capitalize on the industrial internet of things.
As digital disruption continues to shatter traditional business models, CEOs of industrials are moving swiftly to carve out a stake in the Industry 4.0 era. Digital is clearly on the minds of industrial leaders in the US, EMEA, and Asia Pacific. In fact, according to PwC’s 20th Annual Global CEO Survey, CEOs across the power and utilities (46%); industrial manufacturing (49%); and energy (52%) sectors believe that technology will significantly disrupt their industries during the next five years.
While much has been written about digital transformation, it typically centers on the consumer side (e.g., the “connected home”), as few industrials have undertaken the formidable work of company-wide digital transformation. However, leading industrials are starting to make strong strides in harnessing the power of the industrial internet to enhance their operations, improve safety, and reduce costs. While change doesn’t happen overnight, you risk becoming a corporate artifact if you don’t start now. These six principles can help guide you on your ongoing digital journey. These build off of the principles of cultural transformation addressed in my last post.
- Establish your digital strategy. It’s difficult not to leap at innovations like connected devices, surveillance drones, 3-D printing, and robots that scuttle about the factory floor. But many digital transformations disintegrate into digital disasters if you take a technology-first approach without first defining your digital strategy. Before investing in new technologies, consider your digital maturity and set clear objectives. Evaluate customer needs within the context of their business strategies and core capabilities. Prioritize around efforts that will drive the greatest value, and ensure these align with your strategy. And enlist support: c-suite buy-in is critical—without it, your efforts will quickly stall, sputter, and fail.
- Banish the silo. Successful companies nurture creative thinking with cross-functional teams and consider issues through multiple lenses. At PwC, we apply our BXT (Business, Experience, Technology) method, which aims to foster cohesive, innovative, and outcome-driven solutions. One way we do this is with “sandboxes” that encourage people from multiple functional areas in the same company to come together and contemplate the same problem or issue. Our physical sandboxes—which incorporate 6,400 square feet, HD-interactive walls, nearly 800 square feet of white boards, and collaboration studios—are digital petri dishes in which diverse ideas are exchanged and innovation flourishes. For industrial companies, the multiple perspectives of strategists, operations managers, field service professionals, technologists, data scientists, and safety specialists are vital when strategizing for success.
- Create pilots in context of the vision. Pilots can be incredibly useful in demonstrating value early on to pave the way for broader adoption. The most effective pilots align with a clear digital strategy and are fortified with backing from the c-suite. When implemented within well-defined parameters and given clear objectives, successful pilots can illustrate holistic solutions that span the needs of people, process, and technology.
For example, one of our clients, a global power and utilities company, is embarking on a multi-year global digital transformation. During a planned pilot, our team will deploy asset performance management (APM) and boiler optimization software across select plants. We’ll also create standardized processes; identify best practices and establish metrics; collaborate with stakeholders across business units and regions to identify common and unique needs; and develop plans for change management and governance. Once we establish this groundwork, we’ll be well positioned to scale solutions across the client’s global enterprise.
- Select a cloud-based industrial internet platform. Successful industrial companies require highly specific capabilities like APM, digital factories, supply chain optimization, and field services optimization. They need digital platforms that are designed from the ground up to handle the unique rigors of asset-intensive companies. The industry’s first-movers are turning to cloud-based platforms designed specifically for the industrial internet to serve as the foundation of scalable enterprise solutions.
Connecting industrial machines through the cloud enables data analytics and asset optimization, simplifies business processes, and alters how work gets done. For example, Pitney Bowes is using GE’s Predix platform to help 1.5 million clients in 100 countries generate real-time insights and enhance operational performance. A growing number of partnerships among service providers are helping accelerate the adoption of cloud-based industrial internet solutions because it enables industrials to capture intelligence from their other cloud-based assets.
- Leverage digital twins. Major advancements in data and analytics are fusing physical and digital worlds to enable big gains in productivity. The digital twin allows companies to create, test, and build equipment—from engines to power turbines—in a virtual environment to predict and enhance outcomes. Digital Twins can also determine how an asset will perform before it’s deployed in the field. And they can establish the root cause of impending failures during an asset’s lifecycle.
- Use physics-based modelling. Physics-based modelling allows assets to be considered virtually under various conditions. For example, an aerospace company uses physics-based modelling to determine the difference in maintenance needs for jet aircraft engines that operate in a hot, harsh Middle East environment compared to those that operate in colder climates. These innovations are empowering industrial executives with real-time and predictive insights from data for better and faster decisions.
Regardless of where you are on your digital journey, the time to set your sights on your digital future is now. Many of our clients across industrial sectors are already realizing gains that were unfathomable only a couple of years ago. For a more detailed look at core principles for leading in the next industrial revolution, see our strategy+business article.
Follow Karim on Twitter at @KBibawi