Digital, the Internet of Things (IoT) and innovation are at the heart of board room conversations today. And chemical executives are no exception to this trend. In fact, four in five chemical companies think digital technologies will have a positive impact on their organization over the next five years. But what results are executives expecting as a result of digital adoption? What actions are they taking right now to keep up with the exponential pace of technological change? And more broadly, what are the key change agents in an industrial world that is quickly digitalizing?
Accenture recently surveyed more than 200 senior technology leaders from 16 countries—including Chief Information Officers (CIOs), Chief Digital Officers (CDOs) and Chief Technology Officers (CTOs) from across the chemicals, energy, metals, mining and utilities industries—to find out. The chemicals cut of this research provides critical insights into how decision makers in the industry are thinking about digital.
Like other asset intensive industries, chemical players have been known to be relatively slow digital adopters. However, investments in digital technologies across the chemical industry are growing slightly faster than those among the energy and utilities industries. In fact, 85 percent of industry executives say the size of their investments in digital technologies has increased in the past two years. Looking forward, chemical companies will likely direct their investments towards customer analytics and applications (apps), as 53 percent of executives said these technologies offer the most potential for business transformation over the next five years.
This is due to the fact that chemical companies stand to gain a deeper understanding of their customers’ requirements, and enhance their overall customer experience. Analytics and applications help enable the optimization of sales and margin, and also allow major players to enter into more advanced chemical product markets.
But while executives are increasingly seeing the benefits of digital adoption, what continues to hold them back from implementing new technologies? Cost was found to be the primary barrier to the adoption of new technologies in the chemical industry, followed by a lack of internal ownership. In the context of IoT adoption specifically, cultural barriers and organizational silos were cited as the biggest barriers to implementation.
All these reasons are compounded by the fact that executives are highly concerned about lagging behind competitors in digital technology capabilities, facing cyber threats and experiencing a lack of appropriate skills to engender change. People represent the most important factor in any transformation agenda, and 94 percent of chemical executives believe they do not have access to all the right skills within their organization for an effective digital transformation. More importantly, 74 percent of chemical executives believe their company is not making the investments in recruitment and training it needs, implying they will likely not have access to all the right skills tomorrow unless they take action today. Furthermore, as the need to digitalize becomes increasingly imperative, technology, data and security landscapes are concurrently becoming more complex, amplifying the need for the right people to support digital change.
To bolster digital adoption, CTOs and CIOs—identified as those bearing the most responsibility for identifying new digital transformation opportunities—need to take new approaches to properly evaluate the benefits of digital investments. Other organizational changes, such as better governance of technology investments and better technology awareness among senior executives, were also found to help realize digital transformation objectives significantly.
Moving forward, as technologies continue to evolve at pace, a culture of awareness will be vital. For example, while mobility was found to be the technology adding the most value to the chemical industry today, research shows that interactivity (including social networking) is expected to add the most value within the next five years. An open, innovative and collaborative culture is needed for chemical executives to enhance their knowledge of digital, adopt new technologies and eventually scale them across their organizations.
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This blog highlights the chemical industry findings from Accenture’s “Resources Industries Digital Transformation Research” conducted in September 2016. All figures cited above come from this research.