How do companies create value when digital is impacting all parts of a business? Robert Gjetsund, Nordic Lead Energy Consulting at Cognizant, shares his advice on how to boost your digital DNA.
How do you successfully make the shift from traditional to digital business? To accomplish it, there are six main rules to follow:
Rule No. 1. Put Humans at the Centre
To be able to use technology for simplifying and streamlining tasks, it is critical to understand what drives people’s behavior. The best way to do this, is by watching people in their natural environment – on the oil-rig, at the design workshop, in the manufacturing plant and so on. What do they do? What decisions do they need to make? What are the pressures they face when getting things done? What will make their tasks easier? Only by watching people and conducting first hand research, you can truly understand the people and their everyday tasks.
Rule No. 2. Make Digital & Physical Work in Harmony
Make sure to harmonize the physical products and digital services, as one does not exist without the other. An example: Norwegian engineering company, Aker Solutions, has been appointed by Wintershall to build a complete digital replica (a digital twin) of the Nova production system to enable data driven engineering, production and maintenance decisions. This way they are able to look at how the field productivity can increase by shortening time to respond and increase quality of maintenance by doing “first time right”. The digital replica also delivers cost reductions by reducing labor cost and spare part consumption as well as travel time.
Rule No. 3. Operate and Iterate at Speed
The ability to operate at speed, is one of the greatest challenges that large organizations are facing. Why? Because legacy and rigid structures are hindering companies to develop software or to make quick decisions to be able to release new developments in days rather than weeks or months.
It’s clear that digitally-native companies are able to operate more effectively and therefore boost their competitiveness and swiftly respond to market changes at a higher speed. This is why many organisations strive to work in an agile way. Agile is not only about developing software quickly, but about making decisions more rapid, working in smaller teams, evolving and iterating using a product mindset, and learning and feeding back into your cycles.
There are different ways to do this. Start a “garage” in a cool part of town, create and evolve a new division to work differently, or to evolve and change from within. It’s all about changing the way you work. It’s critical to create teams of people that have done this before and are comfortable working in a “product” rather than a “project” environment.
Rule No. 4. Become a Software Business
Software is increasingly a part of everything we interact with, play with, work with and enjoy. Mark Andreesen (Founder of Mosaic/Netscape) wrote his famous Software is Eating the World article in 2011. It is true now more than ever. We see software everywhere and it will only increase. This means that software is going to increasingly become a part of your business no matter if you are in manufacturing, production, exploration or something else. You need to master software as part of the business.
You have probably heard of Vipps, Kolonial.no, Tesla and maybe also Otovo. But how many know Flir, Greenbird and Trecker? These companies use digital technology to change the value chains in their respective industries. Flir is creating military minature drones, Greenbird is managing the integration complexity for utilities and Trecker is revolutionizing the agricultural industry by bringing fact-based decision making to the farmer. These companies are of course only the tip of the iceberg ...
Rule No. 5. Connected Things Create Value
With the growth of software, increasingly more things will be connected. Soon, almost everything will be connected. According to Forbes IoT Forecast, the global IoT market will grow from $157B in 2016 to $457B by 2020, attaining a CAGR of 28.5%. Discrete Manufacturing, Transportation and Logistics, and Utilities will lead all industries in IoT spending by 2020, averaging $40B each.
Grundfoss is a great example. As a global leader in pump manufacturing, the company is on a transformation journey by building a number of vertical solutions like Waste Water Management, Fire Connect, “pumping as a service” on top of their hardware, to take to market. By doing this, they are transforming from a hardware OEM to a software enabled solutions provider and this is how they can achieve operational excellence.
Rule No. 6. Build It All Around AI and Analytics. Artificial Intelligence along with analytics, act as a backbone that helps companies in this digital transformation. As of now, the AI market is steadily growing and is poised to grow exponentially after 2021. Executives need to put on their “paranoia hat” and envision where AI has the potential to disrupt their business, or even their entire industry. Now is the time to have this discussion. In three to five years it may be too late.
Like Kevin Kelly at Wired expressed it: “The Future = X +AI”. Everything will be touched by AI, in some way. It’s important we embrace and understand it to maximize the potential. As an example, we have teamed up with a global pump manufacturer, to help them decrease the overall maintenance costs and reduce the turnaround time for maintenance by developing an intelligent system using AI guided diagnostics, voice driven knowledge navigation and real time knowledge capture. This is allowing non-experts (who are less expensive) to perform complex maintenance tasks.
In isolation, the six rules might all appear obvious, but the combination of all of them is critical for a business to be successful in the digital economy. If you’d like to discuss this further, please drop me a line – I’m happy to help.