Not surprisingly, most of my 2020 predictions were off the mark, as I didn’t account for the COVID-19 pandemic. However, I was on track with my prediction that most CIOs were far too ambitious and defocused with their digital transformation initiatives and would fail to achieve their desired goals. Instead, I suggested a primary focus of all transformations should include business resiliency because we can’t accurately predict the future. It is, by definition, an unknown. That being said, let’s take a stab at predicting what 2021 might have in store.
In 2021 we will begin the difficult recovery to a different economy. Some of the changes in our behavior as we adapted to the pandemic will persist in our new economy. To some degree, we’ll continue to work from home and travel less because it works. Industries that were impacted due to social distancing, such as air travel, hospitality, brick and mortar retail, commercial real estate, and others will take much longer to recover. The biggest change will be in the increased adoption of digital services, which will keep expanding. If your business has a high amount of sunk costs in a post-pandemic economy, it’ll negatively impact your ability to compete. Large industrial companies with a high amount of technical debt in legacy systems and a heavy reliance on on-premise data centers, will find themselves at a disadvantage when compared to more nimble cloud based competitors that were more focused on resilience and agility.
Digital Transformations Become More Focused
When 2020 started, CIOs had great expectations for transforming their companies into digital ones with plans to take advantage of many emerging technologies, such as AI, machine learning, augmented reality, and many more. To some extent, all companies were deploying software to make themselves more digital and, theoretically, more competitive. And then the pandemic disrupted everyone’s plans—a forced transformation to keep our employees safe, cut costs, work remotely, and refocus on only what mattered to keep the business healthy.
Now, armed with less money and resources, companies will spend less on digital transformations, but many will actually find they can achieve more, despite having fewer resources.
You can’t ask all departments to cut cost and do nothing, and then expect to ride out the storm. This blunted approach didn’t work in the great recession and won’t work now. Leading companies will make the hard choices, dramatically simplifying their infrastructures and focusing their spend on transformation efforts.
Transformation really never ends, but effective transformation is focused on what must change, with more clearly defined achievable outcomes, and an incremental approach that results in better time-to-value and a faster ROI. When tied to the product ecosystem and the digital thread, this can create momentum and result in a more collaborative organization.
The Emergence of Digital Threads
Heading into 2021, many companies will have a laser focus on their sustainable digital thread—one that can adapt as their business requires. Companies will focus on the end-to-end productivity and efficiencies that impact their bottom line. They will aim for improved quality, a faster rate of innovation, and enhanced collaboration across their product lifecycle, extended supply chain, and with their customers and assets in the field. Rather than focusing on all the bells and whistles associated with industry 4.0 technologies, or pouring more money into their legacy systems, many organizations will accelerate their focus on streamlining their product ecosystems end-to-end across a continuous digital thread. They will sunset the older, more expensive technologies that can no longer adapt with the speed their business now requires.
Cloud Platform Adoption Increases
According to Gartner, worldwide public cloud revenue is forecast to grow by just over 18% in 2021 to $304.9 billion. However, cloud adoption in the PLM market has grown at a relatively slow rate compared to other areas. CIMdata estimates that less than 10% of the global cPDm market is from cloud.
The three primary reasons for this are the perceived security risks, the scaling required, and the inability to handle the customizations required by large complex businesses.
I’m not going to argue security concerns with SaaS multi-tenancy cloud offerings, except to say that some vendors, such as Aras, protect a company’s data sovereignty and never comingle their data.
Most SaaS Cloud offerings push new releases onto their users, which is problematic. The key is flexibility to handle your customizations and guarantee they’ll be upgraded on your schedule, not on the vendor’s.
Lastly, companies don’t want to move to the cloud only to find out they have issues gaining access to their data or scaling to meet their needs. I encourage anyone going to the cloud to understand how you’ll own and control your data.
The Cloud offerings in PLM are quite diverse. With Aras you can customize existing applications or develop new applications in the Cloud in any part of your PLM ecosystem, and be guaranteed that Aras will upgrade it because it is based on an industrial low-code platform. Aras Innovator, which disrupted the PLM industry before, is doing it again by bringing the platform to the Cloud. Taking advantage of an industrial low-code platform, Aras Innovator’s platform services enable a truly powerful and global end-to-end PLM that has no limits to sustainable customization along with the ability to develop enterprise applications based on those same platform services. Aras Innovator’s next generation platform allows a company to be flexible, more efficient, more innovative, more collaborative and truly resilient and agile.
I think the industry will see an uptick in cloud adoption as 2021 progresses and will see it continue to increase in 2022 and beyond. This will lead to greatly simplified operations and to a better utilization of resources.
Greater Resiliency in Manufacturing
Manufacturing companies once primarily targeted their processes to produce product for the least cost. The trend started in the 1970s and is known as “globalization,” or the offshoring of manufacturing. It is based on profit and gave rise to many economies around the world, such as China. The idea was that manufacturing without labor and environmental regulations could overcome the cost of shipping the finished product.
However, the combination of increasing trade wars, tariffs, and finally the pandemic, has given rise to companies beginning to re-shore or near-shore some of their critical manufacturing facilities and focus on more automation and just-in-time manufacturing methods.
While some of this may occur, the pandemic won’t stop the world from getting smaller, so I don’t see this as a major move of manufacturing sites back to countries like the U.S. and Germany. Large global manufacturers will focus on reducing single points of failure and instead invest in flexibility and resiliency in their manufacturing operations and in the digital threads that connect them.
Smart manufacturing isn’t about the rigid automation of one thing for decades to come, but instead about how fast you can adapt to manufacture something you didn’t manufacture last quarter. During COVID, companies had to come up with ways to safely manufacture their products. In the future, it’s clear this is going to continue to shift toward managing production floors remotely.
PLM Becomes Core to Digital Transformations
For years, Product Lifecycle Management software has been core to product development, but not the entire product lifecycle. Product Lifecycle Management is not a software technology. You can’t buy it from a vendor. It’s a strategic business approach. Companies will turn more to transforming their product ecosystem into more flexible end-to-end processes—a digital thread that will enable greater collaboration across the lifecycle, the supply chain, and with their customers and assets.
Historically, the issue with the adoption of digital twins has been that a performance digital twin was not tied to an up-to-date configured digital twin with accurate as-maintained data and parameters, along with a digital thread across the product lifecycle to provide useful insights. It’s previously been focused on performance IoT data disconnected from “configured” digital twins. Aras has released Digital Twin Core, which manages configured digital twins of the physical assets, along with Dynamic Product Navigation, a platform service that enables you to visually render your product based on PLM data—regardless of your many originating CAD models. This allows service technicians, and those in any other discipline, to view their product in terms they understand and collaborate in context with other domains, anywhere in the lifecycle, across a visual digital thread. Many companies are beginning to make investments in real digital twin and as-running operations.
As we begin to see light at the end of tunnel in 2021, we’ll begin to recover to a new, uncertain, and different economy. The primary goal of most businesses should be to make focused investments to enable greater resiliency—to be ready to pivot, to react to unforeseen change, and take advantage of opportunities as they arise.