Illumiti Innovation Blog

Is “digital transformation” just a buzzword? Thoughts from a tech CEO on how we can give meaning back to the phrase

Date: April 11, 2023
By: Larry Perlov

As I scroll through LinkedIn, my feed is filled with articles about “digital transformation.” I’m sure yours looks similar. But when you think about it, what does it really mean for a business to go through a digital transformation? The term has become so ambiguous that it effectively means less and less. But as companies look for a competitive advantage by leveraging technology, getting the right perspective on digital transformation is very important. 

In my many years in the tech industry, and now as a CEO, I’ve seen businesses miss out on opportunities because they didn’t understand the importance of embracing digital tools. Below, I’ll walk through what “digital transformation” means to me, and why I think you need to determine what that unique transformation looks like for your business to reach its goals.   

Pushing past the clickbait - determining what digital transformation means to you 

The truth is, digital transformation looks different for every business. In my eyes, it’s all about adding value by digitizing and automating processes. But you have to decide what it means for you and what you want to achieve, then find the solutions that support your vision. And there are plenty of effective solutions out there. 

One of the key benefits of technology like enterprise resource planning (ERP) is the automation of workflows and manual tasks. And yet, despite significant investments in ERP, many manufacturers still manually track information, which not only slows down operations but increases the chance of human error. In an economy where every opportunity to gain a competitive edge can make a material impact on a company’s success, most companies with extensive shop floor operations can’t afford delays or errors. Businesses that have the vision to increase speed and agility should consider automation tools that collect, aggregate, and analyze that data, and then communicate back to the shop floor with an appropriate response. The right solutions coupled with the right processes increase efficiency, reduce risk, and free employees to perform higher-level tasks that push the organization forward. Once the processes are automated, especially the end-to-end data flow and tracking, then you’re ready to use the intelligent analytics and predictability of outcomes to make improvements that ensure the business’ future health and success. That’s true transformation! 

Finding the hidden data  

Collecting and digitizing data is a huge part of digital transformation - but I find that most operations don’t go far enough. They digitize the data in the back office (finance, HR, procurement, planning, etc.), but the data on the shop floor remains analog or in islands of best-of-breed systems that are not integrated. This gap between the digital back end and the analog front end is the “final mile” of digital transformation. Closing this gap can be the key that unlocks a business’ competitive edge.  

Data exists everywhere in a business, even in places you might not expect. The temperature on the shop floor, the number of revolutions a machine has turned since its last service, and the sound a machine makes just before it fails - this is all data that is generally not digitized. Therefore, it’s not available for the intelligent enterprise to evaluate and make decisions upon. 

An integrated digital supply chain contains a multitude of insights that reveal correlations between data, facts, processes, and productivity. You can even find answers to the most oblique of questions, like whether an employee’s uniform color affects their efficiency. That may be a ridiculous example, but if you can collect that kind of data with a digital tool, why wouldn’t you? You never know what you might learn - or what direction that knowledge could take your business. 

Given the power of today’s data processing systems, we can run correlation analysis to look for patterns that give us insight into drivers for important business outcomes. We can also automate a response to be executed automatically on the shop floor or initiate a series of workflows in a proactive or preventative manner. Having data available for analytics equips us to make more accurate, fact-based decisions that drive value. 

Connecting across your workflows 

Knowing what true digital transformation looks like is a great start, but it isn’t enough. You need the right partner with the right mindset, experience, and methodology to start modernizing your business. SAP’s world-class suite of digital manufacturing and supply chain tools, including Digital Manufacturing Cloud (SAP DMC) and Industrial Internet of Things (IIoT), can help. SAP DMC aims to connect top-floor business systems directly to shop floor equipment to provide visibility and control of the entire value chain. Organizations can monitor operations down to the individual work center to quickly adapt to any specific needs or issues. 

What makes this solution so special is that it can connect to any intelligent Internet of Things (IoT) device, even outside the system. Whether it be a programmable logic controller, camera, thermometer, or cell phone, this solution can collect information to analyze the productivity of every aspect of your value chain. SAP’s machine learning and predictive analytics capabilities can detect patterns and anomalies so you can address any issues before they arise.  

For example, you can attach an IoT device that measures the number of vibrations a piece of machinery produces per hour and then, based on that number, predict when that machinery is going to fail. That information is the difference between facing unplanned downtime due to equipment failure and expediting preventative maintenance to avoid the outage.  

Only you and your team have a sense of what’s needed to help your organization achieve a higher level of performance. If digital transformation is part of the solution, you have to determine what that looks like for your operation, and then find the technology and partner to support it. Tools like SAP Digital Manufacturing Cloud can help streamline the “final mile” of your operation and equip you with the insights to make the intelligent and preemptive decisions required to reach your goals faster than the competition. 

So, while our feeds are filled with “digital transformation” think pieces, I urge you to consider what that could really look like for your business. And if you’re not sure, please reach out, and I can help you figure out how digitization can uplevel your operations. 

About the Author

Larry Perlov

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