Industrialist Blog

Five tips for industrial digital transformation

August 23, 2021

When we talk to our clients, they obsess over digital transformation: “How should I start?”, “Where do I start?”, “How can I fund this transformation?”. They all recognize the need to digitize their company more fully. Some have run pilot programs. Yet their digital programs still lack traction. They lack some key principles in their efforts.

Here are our tips on how industrial companies can have better success shift into high gear:

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1. View digital transformation as business transformation

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Customer needs should be top of mind in any transformation. Companies should start by identifying the key friction points that customers may be facing—whether in equipment sales, parts, service, or elsewhere. By resolving and monetizing these friction points companies can improve the customer experience and increase their revenue and profits. Start on those solutions that are not “moon shots”! You don’t have to solve for the entire customer journey.

For example, a large truck manufacturer was looking to grow market share across its dealer network. We identified over a dozen key opportunities to improve, one area at a time. Cumulatively by investing $60M over five years in digital solutions—online product configuration, e-commerce, and IoT-driven predictive maintenance—the company will realize a tenfold return in recurring revenues.

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2. Break down organizational barriers

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A focus on the customer challenges enables the breakdown of functional silos. It generally takes multiple functions, Marketing, Sales, Service—to share information and solve for a quality customer experience. This is when digital platforms—where data can be shared—will enable Marketing, Sales and Service to work together.

Consider a typical large heavy equipment sale. After the initial sale, there will be multiple users of the equipment. How can you improve the process for handing over the keys to each operator, including user guides, and providing timely parts and service when needed? Digital platforms and mobile apps can smooth the process and provide huge value to fleet managers that have thousands of pieces of equipment across a broad geographic region.

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3. Cultivate your partner ecosystem

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Collaboration also includes better relationships between original equipment manufacturers (OEMs) and their industrial ecosystem partners, like dealers. A recent study of partners in the high tech and software segment found that 89% of partners are looking for new sources of growth and operational effectiveness. We have heard the same sentiment in our partner interviews in the industrial industry, too – partners want growth, so how can OEMs help with lead generation, streamline sales transactions, and offer more attractive service contracts? Where can OEMs implement digital tools and capabilities to inject value into these processes? What’s the most economical way to do so? When OEMs and dealers work collaboratively, they can ensure the customer gets the best possible service without the dealer carrying as much cost.

This may require a fresh look at the OEM-partner relationship to identify what each party can do best, e.g. product fulfillment and service by the dealer—versus what the OEMs excel at, such as optimizing lead generation to feed dealers the highest-margin deals, or implementing an e-commerce platform focused on an untapped used parts market. The key is to focus where each one can activate value in the partner ecosystem to make it most cost-effective. One European automotive company is taking an unprecedented approach with its dealers by making showroom sales staff agents of the OEM.

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Building high impact partner ecosystems

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4. Adopt an agile approach to digital transformation

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Agility is the key to experimenting with digital transformation. An agile approach will require creating a business culture where experimentation is encouraged, and innovative ideas can flourish. The use of minimum viable products to test solutions before scaling enables rapid learning while reducing risk.

One example is an initiative Accenture launched with a major client for developing new ideas for product offerings such as predictive maintenance tools along with asset monitoring capabilities. In time, the organization built a “center of excellence” or Digital Service Factory, where cross-functional teams collaborate on everything from designing and testing potential new offerings to deploying and scaling them. As a result, the client was able to bring new digital solutions to market in less than eight months, compared to a more typical three-year cycle.

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5. How to fund digital transformation?

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Funding digital transformation is a complex process that is best approached one step-at-a-time. In the short-term, start with an end-to-end view of digital opportunities and requirements across the customer journey, and choose a challenge that fits your desired investment and pay-off opportunity. This should also leverage technical and organizational capabilities that are in place already–at least partially. Then build the organizational “muscle” to solve these customer challenges digitally. Over time, build a “Digital Service Factory” to focus talent, technical and business capabilities in order to support digital initiatives across the organization. Larger initiatives that require technical infrastructure to be built-out can be planned as part of the annual budgeting process.

Digital transformation is a big financial commitment and thorough planning is essential. In all our projects over the past years, we have identified and estimated investment and returns for multiple solutions along the customer journey. We prioritized and road mapped the sequence of projects to create both excitement through quick wins and to help fund future elements of investments.

Industrial digital transformation is unavoidable.

As we know from recent Accenture research, industrial customers now expect an Amazon-like experience and 90% of OEMs recognize the benefits of digitizing their B2B sales processes. Our clients realize this too and may have even tried to start on this journey, but the challenges can be significant. Hopefully, these suggestions can help and we are eager to assist, so that your digital transformation gets off the ground or into high gear. Let’s talk.

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