What role do suppliers play in digital transformation
initiatives and how important is openness?
Let's talk about that next.
So, there's been a lot of activity recently with digital transformation initiatives.
We are seeing a lot of adoption of these types of efforts by companies of all sizes. And actually
we conducted some research on this recently and let's talk about some of those findings.
So, at the end of 2020 Lifecycle Insights conducted a research study called the ROI of
Digital Transformation and one of the things that we really wanted to do was to compare and contrast
groups of companies that were very aggressive with digital transformation with those that are not.
So, what you see on the left hand side - least progressive, moderately progressive,
most progressive - these are the different groups that we kind of organized respondents into.
The next column over you can see the total number of initiatives that each group pursued on average.
So, for example, most progressives pursue 12.5 of these digital transformation initiatives;
some are product design, some product manufacturing, some are in service,
but compare that with 3.5 for the least progressive, you know, very very interesting.
Far more active, far more, you know, pursuing lots of different efforts there.
Now the other thing to look at here is the next column over which is the corresponding number
of technology investments. So, you can see that the most progressive also invested in 9.9,
essentially 10, technology areas to support those digital transformation efforts,
and you can see how that compares to the other the other cohorts.
So, it's very clear that the most progressive not only are investing in
these initiatives but investing in technologies to enable them
and empower them and that's crucial, because what you see over on the right,
this is in terms of the charts there, the bar charts, you can see that the least progressive,
a lot of times and this is in terms of margin, they would hit some of their targets or
exceed some of their targets with 35% at the top but 37% had a shortfall in terms of margin.
Now compare that with the bottom, with the most progressive. You know, there's a 10% difference
in the percent of projects that fell short in terms of margin goals.
So, let's stop and talk about this for a minute because this is pretty crucial, right? So, the
the key takeaways here are that: number one the most progressive are pursuing a lot of initiatives
but they're not just people and process changes, they're investing heavily in these technologies,
it is a digital transformation initiative, as a way to empower those efforts.
And they're seeing returns. In this case, it was for margin but we have a lot of other
findings that were that we're including in a report that will be coming out soon.
So, the key takeaway here is that, yeah
the most progressive are far more active than others but it's not just people in process change,
it's technology change as well and that's very very important.
So, that covers what's going on inside a single company
but what often happens is no company is working on a digital transformation initiative alone,
right? There's often you know a pretty big supply chain or other partners and customers
that companies will work with. Sometimes they're working on the same digital transformation
initiative, sometimes they're not. But the key thing is is that, you know, technology is this
crucial enabler to those whether it's defining a digital twin or empowering a digital thread.
And what happens is that becomes the basis of collaboration
where suppliers can work with one another, right? They exchange these digital definitions. They use
digital workflows to empower notifications and better decisions and things like that.
So, and that's where you see a lot of exchange of different information, so
there is this reality that yeah across a supply chain you're going to have a
lot of activity around digital transformation initiatives that are enabled with technology.
So, this is where openness comes into play, you know, the likelihood you can get an entire supply
chain standardized on a single set of technologies is very low, right? Because suppliers are going to
be working with many different clients and that goes all the way down the line and this has been
tried before but it's very hard to get an entire supply chain to standardize on one set of tools.
So, instead this is where openness is important. You need to have tools not only you know working
on the digital twin with digital definitions but also working with digital threads, you know,
tools that are going to enable you to digitize your workflows and decision points and
information that you make accessible to different people. It's important to have openness there
so that these different systems can exchange information and work together across the supply
chain because that's how you get more synergy between the digital transformation efforts,
between suppliers, which gets you a network effect, right? It's like an amplifying factor
on top of what you're just doing within your own company.
So, that's why openness is a critical characteristic of
the technologies that you use to empower your digital transformation initiatives.
That's it. Take care and talk soon.