Digital Transformation:

Strategies for Success

Jeff Botsch, Consulting Services Manager
The Value of Digital
The results that companies are seeing from the implementation of digital technologies are adding up.

BENEFITS OF DIGITAL TRANSFORMATION

MEDIAN EXPECTED % EBITDA UPLIFT OVER 4 YRS
TYPICAL INDUSTRY OPPORTUNITY

39% 9%

EBITDA Uplift from EBITDA Uplift from

All Digital Levers Smart Manufacturing
(product, R&D, marketing)

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Digital Transformation Challenges
Opportunity or Risk?

1. License to Operate
2. Future of workforce
 Disconnect between the
potential and successful
implementation
3 3. Digital effectiveness
4. Carbon footprint
5. High impact risks
Digital
6. Portfolio returns
 Risk of potential effectiveness
investments going nowhere 7. Cyber
Most mining/metals companies
still view digital transformation 8. Replacement of production
as a challenge. 9. Innovation
 85% of big data projects fail
10. Rising Costs

Source: EY

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Digital Transformation
Roadblocks
Digital transformation journey Have experienced
Defining or real successes
early phase

8%
22%
Stuck in pilot, Have made progress
Unclear results Company seeing value

13% 20%

ONLY

28%
of companies are reaping
the rewards of digital
transformation programs

How is the journey going? Not well.

Source:
LNS Research

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Roadblocks of Digital Transformation
Why digital transformation initiatives fail

By anticipating challenges before they arise, it’s more likely

that your digital transformation will be a success

Challenges explored:
1. Lack of understanding
2. Technology-thinking instead of problems-thinking
3. Digital transformation as a standalone strategy
4. No clear business case or return of investment
5. Lack of scalability
6. Difficulty integrating legacy infrastructure

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Lack of Understanding
Some companies don’t know what digital transformation is

The risk
Lack of understanding what

~70 %
digital transformation is
and is not
 Not a website, not a mobile
app, not social media and
say they wouldn’t be confident not going paperless
explaining the digital transformation
concept to someone else
Technology isn’t the only
Source: Salesforce survey answer to solve all
organizations’ problems

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Lack of Understanding
Best practice: Digital transformation enables companies to move
forward and reduce operational inefficiencies

Digital transformation
embraces the tools
Technology and processes
implemented to
support business
transformation

Process People Around people,

processes and
technologies

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Technology-thinking Instead of Problems-Thinking
Use of technologies without thinking if it is solving a problem

The risk

85 %
 Lack of focus on solving
customer or internal
problems, service
challenges, and making life
of time consumers spend on their easier for your personnel
smartphones are in apps, but or customer
only 5 apps see heavy use
 Overload of technologies
Source: Nielsen without a clear need

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Technology-thinking Instead of Problems-Thinking
Best practice: Innovation driven by business objectives

SAM PLE BUSINESS OBJECTIVES

Identified for technology to achieve

Identify business  Anticipate equipment failures rather than

increase maintenance activities
objectives before defining
the digital technology used  Reduce costs and provide better decisions
through predictability
to meet objectives.
 Reduce operational costs (fuel, electricity) by
optimizing the use of equipment
Clearly define how a new  Minimize the number of assets and resources
technology will address a required through more predictable processes
current problem or and better planning
challenge before adding.  Protect people in operations and increase
team productivity
 Manage operations and integrated chain in
real time

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Digital Transformation as a Standalone Strategy
Separate from the company strategy

The risk
ONLY

28
 Digital transformation

% strategy is not a segment

of company’s business
strategy
 A digital strategy that does
of executives and middle managers
responsible for executing strategy
not support overall
could list three of their company’s organizational goals
strategic priorities  Focus is not given to the
digital strategy

“
Source: MIT Sloan

Digital transformation only

makes sense if it supports your
organization’s overall strategy.”

CIO / IDG

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Digital Transformation as a Standalone Strategy
Best practice: Technology strategy must be consequence of the company strategy and market needs

Business Vision
Market trends /
Customer insights
Translate vision in
measurable Business Strategy & Objectives
objectives

Supports business Digital Strategy

strategies
People /
Processes
Supports digital
strategies
Enabling Technologies

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No Clear Business Case or Return of Investment
Some digital initiatives don’t have a clear business case behind them

Return of most lucrative

The risk

53
option not chosen

%  Weak ability to build a

business case to identify
– Return of chosen option
opportunity cost
believe that “quantifying ROI and  Obvious value of digital
= Opportunity cost
providing a clear use case” is their transformation shadows
#1 IoT challenge (#2 – Security)
associated risks
Source: Canonical

INVESTOPEDIA

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No Clear Business Case or Return of Investment
Best practice: Digital transformation is a journey that starts with pragmatic strategy development that involves
analyzing, planning and understanding business needs, available technologies and commercial opportunities

Operational Corporate Business Business Technical Digital

assessment alignment case architecture architecture roadmap

01 02 03 04 05 06

| Strategy development | Detailed design | Deployment

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No Clear Business Case or Return of Investment
Best practice: Project prioritization is a critical step in selecting which projects to start, continue or stop

Risk
Lower value / Higher Risk Higher value / Higher Risk 5 Years NPV

Chart our digital transformation D

project values and risks.
C
F
Prioritize projects based on
greatest value and lowest risk

B
G
Emotion is no longer a deciding
factor when pursuing digital A
transformation
Lower value / Lower Risk Higher value / Lower Risk

Opportunity

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Lack of Scalability
Some projects stay isolated and never multiply across the company

The risk

78 %
of enterprises fail to scale
 Best practices and
successful projects
across the company
cannot be duplicated
their digital transformation initiative  No scalability plan
 Innovation islands
Source: New Everest Group

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Lack of Scalability
Best Practice: Scalable platforms allow the expansion and integration of different projects

Toolbox approach instead of

standalone proprietary systems:
Fit to purpose apps development Ventilation Asset Environmental AR Fuel
Single IoT Platform
under the same platform Control Monitoring IoT Experience Telemetry

Supports simultaneously several

standard data collection
protocols (IoT and IIoT)

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Difficulty Integrating Legacy Infrastructure
Integration of IoT data into legacy systems is a barrier of implementation

The risk
 IoT is growing in many
ONLY

50
different directions with

% many different technologies

 Deployment of additional
hardware and software
when connecting devices is
of all manufacturers have business
systems that adequately manage
required
their business processes  Many companies still use
Source: Manufacturing Performance Institute legacy ERP systems with
limited access to information
and functionalities

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Difficulty Integrating Legacy Infrastructure
Best practice: New technologies aim to facilitate the integration of legacy systems

Other systems Social ERP Human interface Visualization

More integrated platforms and

collaboration between suppliers help
the integration of technologies and data
collection of dissimilar / legacy systems

Increased role of programmable

controllers as edge gateways of
Mining Power & Other Telemetry IoT sensors
legacy of industrial systems technical automation industrial & devices
software devices

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Digital Transformation
Success
Are you Embracing Digital Transformation
Digital transformation represents the application of digital technology to enable strategy.

Successful digital transformation involves disrupting the

organization through digital technology being used to
empower people to take action.

DIGITAL
• Transformation TECHNOLOGY • People most
is about • New digital be aligned with
changing the technologies the digital TRANSFORMATIONAL
TRANSFORMATI
business allow for strategy CHANGE
ONAL CHANGE “Transformational change
change is about proactively
BUSINESS EMPOWERED
EVOLUTION PEOPLE creating the future
organization”

“
Miller 2013

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Navigating Digital Transformation with a Roadmap
“A roadmap is the governing document that dictates specifically how technology will support the business
strategy and help drive businesses priorities over the next 3-5 years” – CIO Magazine, 2015

Defines Strategy with a list of business priorities

Defines OT/IT Goals with a potential timeline

Has executive level support and buy-in

ROADMAP
CHARACTERISTICS Has Consensus in the business

Has Actionable Projects with owners, value, cost, and payback

A roadmap addresses the traditional approach of providing point solutions that create pockets of value that tend to resist
integration with the neighboring value-chain functions.

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Complexities of Developing a Roadmap
Digital transformation is not a traditional capital equipment project. It represents a program of changes that
allow the business to learn how to use machine data and analytics to improve and support operations.

Key Challenges…

Manufacturing operations are unique and what works for one does not work for all
 Details of digital transformation are self-defined…

Digital transformation often requires significant investment in infrastructure and software

 The payback comes from bundling technology and solutions…

Long-term benefits of digital transformation come from building a data driven organization
 Digital transformation represents a culture change…

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Picking the Right Partner
Some partners focus on selling rather than problem-solving

The risk

1000
Suppliers not ready for
+ partnerships
 Unwilling to educate users
vendors with applications and platforms  Focused on sell the
describe themselves as artificial
solutions instead of solving
intelligence (AI) vendors, or say
they employ AI in their products problems
 Lacking the right skills Suppliers must broaden
the relationship by thinking

“
Source: Gartner

in terms of the business impact

of integrated solutions rather
than the technical benefits of
products and services.”

BCG

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Picking the Right Partner
Best practice: Partners focused on business outcome and problem-solving instead of selling

A partnership focused
on finding solutions

Partners that understand

how their solution fits into the
big picture

Experienced with the latest

digital technology

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Thank you
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