Exploring industrial digital transformation

Industrial digital transformation may often bring a radical rethinking to the use of technology, culture, people, and processes in an enterprise. This can lead to a fundamental change in business performance and outcomes, as well as how the customers perceive the company. Figure 1.1 provides an easy way to look at the transformation. It shows that culture and technology changes go hand in hand with the business process and business model changes. Several books have been written on the broad topic of digital transformation, and some of these will be referenced here. George Westerman and Didier Bonnet wrote a book en titled Leading Digital: Turning Technology into Business Transformation, George Westerman, Didier Bonnet, Andrew McAfee, Harvard Business Review Press, published in 2014:

Figure 1.1 – Digital transformation

The technologies used to help drive an industrial digital transformation may include one or more from the Internet of Things (IoT), cloud and edge computing, Artificial Intelligence (AI), big data and analytics, blockchain, robotics, drones, 3D printing, Augmented Reality (AR) and Virtual Reality (VR), Robotic Process Automation (RPA), and mobile technologies. New technologies continue to emerge, so this list is not meant to be an exhaustive one. The main goal of these transformations is to gain a competitive advantage, drive new revenues, improve productivity and efficiency, as well as enhance customer and stakeholder engagement. The term technology, or digital technology, in the context of industrial digital transformation is not limited to software or IT only. It may include physical, chemical, or biological/life sciences-related technologies as well. For example, in the context of autonomous vehicles, it can be Light Detection and Ranging (LIDAR) or a more efficient car battery. In an industrial safety context, it can be a sensor or a system for fall detection or a thermal scanning camera for infectious disease detection or prevention. These emerging technologies that often accelerate industrial digital transformation will be covered in detail in Chapter 3, Emerging Technologies to Accelerate Digital Transformation.

According to the Customer Insights & Analysis group of the International Data Corporation (IDC), the worldwide investment in industrial digital transformation-related initiatives is expected to exceed $6 trillion over the next 4 years (2020–2024): see (https://www.businesswire.com/news/home/20190424005113/en/Businesses-Spend-1.2-Trillion-Digital-Transformation-Year). Smart manufacturing will account for a large part of this spending. Other sectors, such as finance, retail and logistics management, and transportation, will also undergo a large-scale industrial digital transformation.

In April 2020, while delivering the quarterly earnings of Microsoft, their CEO, Satya Nadella, said We've seen 2 years' worth of digital transformation in 2 months. Interestingly, this book has been written around the same time frame and has captured many recent transformative initiatives. In the next section, we will learn about the business drivers for industrial digital transformation.