Analog is becoming digital, so all areas must be able to interact with each other in a network. This ranges from product development, design, production and the supply chain through to customer service. Digital approaches such as a central database and cross-departmental collaboration on a platform play an important role here. As part of a study sponsored by Dassault Systèmes, IDC asked over 200 industrial companies in Germany and Switzerland about the challenges they face when digitizing their business processes and how they are mastering them. The results show: The path to a digital future has often already been taken, but there is still a long way to go for many companies.

Status quo of the digital transformation

The global economic situation did not just cool down as a result of the coronavirus crisis. Many companies have already noticed a significant slowdown in growth in recent years. Among other things, this can be attributed to structural changes in a wide range of industries and the decline in productivity. Other factors such as the Covid-19 pandemic are further reducing the productivity of internationally active companies - supply chains have been disrupted and the switch to remote working is affecting day-to-day business.

For these reasons, many industrial companies are under even more pressure to operate profitably. According to the study, 55% of those surveyed will focus primarily on reducing costs in the next two years. For just under half, the innovation of new products and services is the second most important priority. However, this forward-looking approach poses various challenges for many.
Insufficient coordination between specialist departments and IT as well as the growing volume, variety and complexity of data are the biggest hurdles for product innovations in the further development of business models and value chains. Companies should also keep an eye on the increasing complexity of products, including service and data components.

Igniting the development turbo

A holistic and end-to-end digitalization strategy has a positive impact on product development, as it enables industrial companies to achieve cross-value chain effects. Innovations can be identified more easily and implemented more quickly - and costs are reduced in the long term. The study shows, for example, that a digitalized company can develop and market new digital services up to 100 times faster. Many companies today recognize the value of a digital strategy and are aligning their investments accordingly: In the next five years, more than 50% of all IT expenditure will flow into the development of digital innovations and digital transformation.

According to the study, product development is the top priority for 45% of decision-makers. The aim is to be able to develop more products in less time. The second most important priority for 44% is the individualization of products. The reason for this is that customers have higher expectations of products and their functionality.
The third most important business priority is therefore not surprising: improving the customer experience.

The opportunities of a standardized IT platform

The study also asked how far digital collaboration along the value chain has already progressed. The picture differs depending on the processes and departments. The respondents agreed that digital collaboration needs to be intensified over the next 24 months.

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A standardized IT platform, such as the 3D Experience platform from Dassault Systèmes, is the core element for sustainable digital success. It is the technological basis for a 'single source of truth'. Data management is of particular importance here - it builds the bridge between the internal and external value chain in product development. In addition, such a platform helps to react agilely and flexibly to new conditions. It provides a company-wide overview of networked products, systems and machines, production, supply chain, service and customers. Many companies currently have islands of innovation that first need to be networked with each other and integrated into the existing IT environment.

In addition to a central platform, a harmonized database is a key success factor for digital transformation. Only on the basis of a 'single source of truth' can the digital collaboration of all project participants - whether internal or external - be guaranteed. A holistic data model is therefore not only part of a new business strategy, but also a success factor for manufacturing companies: Only when engineering, product development, production and other interfaces 'speak the same language' can customer expectations of digital products and services be met and innovations created.

The reality is still different today: Although 59% of respondents are convinced that a central database is essential for the successful further development of their business model, only 16% stated that they use a consistent data model for all areas. Only 23% of the industrial companies surveyed are able to design cross-departmental processes. 67% of those surveyed stated that they intend to implement this in the next 24 months.

Implement step by step

Overview of the ten biggest challenges in the digital transformation of processes: Inadequate coordination between the specialist departments and IT is at the top of the list.

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With the help of the Value Engagement methodology, the digital transformation can be carried out step by step - from the definition of corporate goals and KPIs (Key Performance Indicators) to the derivation of fields of action and the required IT support through to practical implementation.
Industrial companies must first comprehensively analyze the current situation as part of a business assessment. This involves finding out where there is the greatest need for action and optimization, which expectations need to be met and which areas of the company or processes need to be changed. Based on the evaluation, companies can derive precise objectives and define clear KPIs. This ensures that everyone involved is pulling in the same direction and that the success of the digital transformation can be measured.
The next step is planning: the central element here is a digital platform. It is used to work out necessary process improvements and forms the basis for subsequent implementation. Once industrial companies have successfully mastered these steps, nothing stands in the way of transforming their business processes.

Shaping a successful future

Companies are urged to take the first steps towards digital transformation today rather than tomorrow. The latest market developments show that the economy will not improve in the foreseeable future - disruptive innovations and business models are therefore becoming increasingly important. Industrial companies should see the digitalization of their day-to-day business as an opportunity to shape a successful future and remain competitive even after the crisis.

Implementing the digital transformation in four steps

Value assessment: The first step is to identify potential levers within the company. To do this, business processes must be analyzed holistically in order to identify meaningful fields of action and potential. At this point, companies create the decision-making basis for measures that will sustainably strengthen their goals.

Value definition: Based on the previous evaluation, precise objectives can be derived from the existing potential and clear KPIs can be defined. This ensures that everyone involved is pulling in the same direction and that the success of the digital transformation can subsequently be measured.

Value commitment: The necessary process improvements are worked out together and the course is set for the implementation of defined standards.

Value delivery: The company can implement the new processes in line with the previously defined objectives and priorities and thus digitalize its business model.

The author

Dr. Barbara Holtz is an Industry Business Consultant at Dassault Systèmes.