The coronavirus pandemic has forced major upheaval on how every organization works—a forced transformation. Given the uncertainty of how long it will take for their businesses to rebound, every company is scrutinizing spend.
CEOs in every industry face the daunting task to reduce their costs, but also chart a way forward. Organizations are continuing to adjust in the COVID-19 era—adapting because they simply can’t afford to operate with the spend they had before the pandemic. Going into 2020, everyone had much bigger plans—they’re much smaller now. Manufacturers are well beyond their initial response stage, with their 2020 plans ripped to shreds.
Most organizations are now in some stage of planning a way out. I believe that way out is through a digital transformation to become more resilient—creating an organization that can continually adapt to a new tomorrow. IDC sums this up perfectly—their “vision of the future enterprise is an organization that is digitally transformed. Such an organization underpins business process with technology, is fueled by innovation, is platform-enabled and ecosystem-centric.”
One major trend that isn’t changing during the pandemic is that we’ll continue experiencing technological advances in a non-linear manner. This changes the way we live, how we work, and how we interact with cyber-physical systems. Any company that is going to be relevant in tomorrow’s marketplace is not going to get there by making products with small, incremental improvements in a business-as-usual mode. They can’t just cut spending, operate the way they always had, and expect to be relevant.
According to Gartner, “Over 80% of CEOs responding to our annual CEO Survey said they have a digital transformation program underway to make their companies more digital.” And, according to IDC, “Global spending on DX technologies and services is forecast to grow 10.4% in 2020 to $1.3 trillion.” This is still an overall reduction in IT spend compared to 2019, but a more focused digital transformation focused on the efficiency of the organization’s product innovation and digital thread.
Digital transformation is the key to successfully managing the ever-increasing complexities of today’s and tomorrow’s smart and connected products. But even I cringe when I read the words “digital transformation,” due to the massive failures that plagued companies over the past few years.
What you really want is a Digital Transformation Platform and a focused digital transformation strategy that results in greater business resiliency. Basing it on a platform provides a sustainable way to transform non-digital data, manual processes, and bad processes that were put in place to serve the limitations of technology, and it helps to break down both data and organizational silos.
A platform supports your digital thread by reducing manual hand-offs and, most importantly, adapts as your business needs change to respond to various threats and opportunities.
Most companies don’t have a platform, but instead a series of pillar products. Ask yourself, do they scale to accommodate the challenge of the exploding technologies required in the products you design and manufacture? Or do you instead try to deal with this complexity with reductionist thinking and siloed behavior? Is your digital thread open? Can it deal with data from other systems and other companies or have you locked yourself into a castle which limits how you operate? Do you have access to your data across your product’s lifecycle? Is your infrastructure scalable? Are you flexible—can you quickly adapt, change processes? And are your products easily upgradable? Can you trace data across your digital thread? If you can’t do these things, your organization isn’t resilient and not prepared to adapt. You need a platform that will significantly reduce your Time-to-Value in order to come out of the COVID era, stronger and more resilient then you entered it.
The way forward is focusing your limited resources on a digital transformation platform. Keep focused on that vision because it continually changes, and make incremental changes with quick wins, which not only improve ROI, but also create the momentum—the velocity every person needs to see that their own work is meaningful.
Digital Transformations can still fail with large budgets and committed leaders. Those are helpful, but not when you try to change processes that are tied to siloed pillar applications with siloed data, inside siloed organizations protecting their budgets. The first hiccup, and the natural reaction is to go back to the way things were.
This pandemic, however, is causing the need for real change, and if your organization doesn’t make it, you’re going to become inconsequential quite quickly. We tend not realize it, but change happens all the time, and this pandemic is forcing you to change, to get off old legacy tools and the processes that surrounded them. You’ll have to operate far more efficiently than in the past. So yes, spend will go down, but transforming to become more resilient is an absolute necessity.
My personal example is that I used to love to drive a two-seater sports car, which I thought I’d never give up. I’d been told that, logically, sports cars were not the best choice as I am 6’6”. Nonsense—we all justify subjective decisions. And I did. There was no way I’d give up my sports car. Until the arrival of my firstborn, who I drove home from the hospital in the two-seater, then returned to the hospital to retrieve my wife. I didn’t need to be told, although I’m sure I was, that I was now in the market for a new, more practical form of transportation. The point is, we can all defend past decisions when we have the budgets and people to operate less efficiently, but when you’re disrupted, you need to change—all options are on the table.
Every organization can benefit by digital transformation that has executive leadership backing it and, even better, those that have cross-departmental leadership on board. And everyone benefits if you have champions within vertical departments and champions driving change across your enterprise. You need an organization that can get work done (business as usual) and one that drives change. But, I maintain all of this can still fall short. You could do this in a big bang approach, fund it to the hilt—still nothing. You could instead go for incremental wins, communicate those wins, and get real ROI, and even more important: change people’s views so their own internal ROI causes them to believe that they’ll work and make a difference. If you do all these things, your odds of success are starting to rise, but I think you can still fail. The real goal is to transform to an organization in a state where it’s ready to adapt. To do so, you must keep your eye on the holistic vision, which will keep changing. You’ll need a platform that allows you to incrementally change with the ability to pivot as required. Here’s an interview with Peter Bilello, the CEO and President of CIMdata done by Jennifer Moore on Minerva TV. Peter does an excellent job describing what is required.
While any combination of the things I mentioned could foil your digital transformation, the main reason they fail is your legacy infrastructure. When you customize an application, not architected for resiliency, you’ve created “Instant Legacy,” which I review in this short vlog. These products that can’t easily be customized or upgraded are the real landmines to your digital transformation. Your best efforts get slowed to a crawl because these legacy products dictate certain processes that must be followed, creating bottlenecks and roadblocks to an efficient digital thread. They kill momentum, drain any enthusiasm from users, drive cost overruns and ultimately end far short of their intended target, but worse—leaving you no better off in terms of being truly resilient.
Ask yourself, are the IT tools the same before COVID as they are now? Are they the same cost? Are your processes optimized to be as efficient as you need them to be or are they dictated by legacy products? You can reduce the number of people you have, but you’re not going to become a more efficient organization—you can’t adapt to tomorrow’s realities built on yesterday’s technology. It doesn’t allow for change, nor does it allow your processes to be optimized as needed. If you’re using the exact same legacy tools, then you, my friend, are driving that two-seater sports car.
"The notion of a unified digital platform that connects all organizational domains inside and outside the company has never been more important. For the manufacturing organization that wants to be resilient and flexible across its business, for future disruptions including potential pandemics, this digital platform approach will remain critical. It's a simple truth that individuals and organizations are at their best when they collaborate and innovate together," said Jeff Hojlo, program director, Product Innovation Strategies at IDC.
To find a way forward, organizations require digital transformations based on a digital platform with digital and organizational resiliency in mind. A platform that enables users to collaborate across disciplines, supply chains, and across your product lifecycle, and is flexible enough to support an organization that must continually adapt to new market realities.
Product innovation requires more software, electronics, and hardware. The only way to accelerate their development and create a real-time feedback loop on what is succeeding or failing is through an adaptable, flexible platform—a real platform, which incorporates a product innovation ecosystem within it.
Aras is the only major PLM vendor that supplies an open platform with end-to-end PLM capability—the only PLM vendor that guarantees your upgrades as part of the subscription price and the only PLM vendor that provides a basis for your digital thread. That platform, Aras Innovator, is an enterprise low-code platform that allows you to expand upon your enterprise digital platform to make your organization more resilient, more efficient, and able to cost-effectively adapt as circumstances warrant.
If you’re looking for a more sustainable way to transform your business in these difficult times, let us prove to you that the Aras platform can help you find a better and more resilient way forward. www.aras.com