It’s no secret that manufacturers have been aggressively pursuing Digital Transformation to compete and win in the marketplace. In 2018, manufacturers will ramp up this transformation to embrace new technologies that have the potential to change the industry landscape.
An outstanding user experience will remain a top priority for all digital businesses with manufacturers looking to scale it across all areas of the value chain. While this will be focused on expansion and efficiency, it won’t include radical changes to pricing models.
- Enabling the Future
Digital Platforms will become a central focus and a key enabler of new customer experiences and value chain efficiencies.
Integrating Digital Platforms into the underlying systems of record will continue to be a focus next year, as will security, but now they will be used in earnest to unlock new value. These digital platforms will be leveraged for both the enterprise value chain and the extended supply chain and will be critical hubs for the incorporation of key emerging technologies, such as 3D Printing, Blockchain and IoT-enabled products.
- Easy Ways to Pay
IT and value chain execution efficiency will be used to fund transformation.
The initial financial outlays for digital transformation may seem steep; but the costs associated with NOT transforming are detrimental to your business. CIO’s will begin to work with both existing CEO’s and newly appointed CDOs (Chief Digital Officers) to ensure value chain processes are aligned to strategy - and that applications directly support these requirements.
This will not completely fund the costs of digital transformation; but it will release 10% to 20% of IT application costs and allow a similar figure of enterprise resources to be redirected to the new digital groups from other areas of the business.
- Legacy is not bad
Legacy applications will be a necessary part of digital transformation.
Not all legacies are bad. Valuable processes, business logic, data stores, and digital histories exist within your legacy systems. Manufacturers will realize this in spades in 2018 as they look to replace aging applications with agile or nimble apps. Methodologies like microservices and devops will combine with bi-modal IT efforts in order to expedite the modernization of the monolith. To enable digitalization - without four to six years of replacing legacy systems of record - these applications will be accounted for and be part of a digital transformation.
- IIoT Gets Smart
Smart Manufacturing will drive manufacturers to new heights.
The IIoT has made it possible for manufacturers to smarten up and almost every manufacturer now has introduced Smart Manufacturing concepts and technologies to a plant or even a single production zone. However, most manufacturers have not yet fully scaled Smart Manufacturing technologies globally.
Enterprises will expand Smart Manufacturing practices with vigor and will move from small or single plant deployments to these practices becoming standard global practices. While predictive maintenance and energy management are typically the first initiatives pursued, the industry will see a greater focus on more complicated initiatives, such as in-line predictive production quality, that require complex algorithms and generate even greater benefits.
These AI-oriented implementations add new “smarts” to processes and offer benefits like faster cycle times, improved quality, zero downtime operations, lights-out manufacturing and labor cost savings.
- The Price is not Right… Yet
Connected products and services won’t be used to drive outcome-based pricing for most manufacturing segments... yet.
While medical devices and pharmaceutical companies may be moving to an outcome-based pricing model (whether they want to or not), purchasers of industrial equipment will still need to make capital expenditures for new equipment; they cannot yet rely on operating expenditures to fund new equipment acquisitions.
While the outcomes-based subscription model concept continues to be contemplated, discussed and is predicted to be an outcome of connected products, the company that is typically used as a model, GE, hasn’t seen its market share grow or its stock price increase. This will cause most companies to continue to examine the feasibility, but not implement the practice in the near term.
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