At the beginning of each year, tech observers pen down the trends expected to define industrial endeavors for the entire year for enterprises. These trends have become a New Year resolution landmark of sorts as enterprises rely on them to create strategies and implementation timelines to drive revenue growth. A cursory look at Forbes, Microsoft, and Gartner’s expected trends for 2020 will show that they all have one thing in common; high hopes for digitalization and digitizing technologies.
This article will discuss:
What digitalization and digital transformation are about
The importance of digitalization to enterprises
The different applications and business cases digitalization supports
What is digitalization?
Digitalization is the process of converting information in any format into its digital form using digital technologies. This makes it possible for computer systems and electronic devices to understand the converted information. With this in mind, it becomes easier to see why trends such as IoT, the digital twin, artificial intelligence, and augmented analytics rely on digitalization. For the emerging technologies to function or be integrated into business strategies, information from diverse physical processes must first be digitized, which gives IoT devices, the digital twin, etc. the data they work with.
This brings us to digital transformation. The digital transformation refers to the process of using digital technologies to enhance or transform business and other human-related processes. This means digital transformations simply take digitalization to its logical conclusion, which is to enhance or transform traditional methods of doing things.
In one form or another, almost every enterprise or non-governmental organization makes use of digitalization to handle diverse tasks. These activities include simple tasks such as using digitalization for data conversion, storage, and capture. In terms of going further with digitalization, by the end of 2020 approximately 98% of manufacturing enterprises intend to implement a digital-first business strategy.
This shows that digitalization is one of the important trends most enterprises are planning to integrate into their everyday business processes, leading us to the next section which focuses on the added value proposition of digitalization.
Analyzing the importance and benefits of digitalization
In brownfield manufacturing facilities, maintenance tasks are generally executed when equipment is at the brink of failure, with potential to cause downtime that shuts down entire operations. Examples from CNC machining outfits put this experience into perspective. One scenario is that of a manufacturing enterprise receiving an order for machined parts which was to be delivered within a specified timeline. During the rush to fulfill the order, a couple of CNC machines broke down due to extended use. The result was missed delivery timelines and financial loss.
To eliminate these challenges, the manufacturer turned to digitalization which involved the use of edge computing devices to track machine status. In this case, sensors where integrated into the machine to capture vibration, temperature, and the router/tool bit speed data. The captured data made it possible to analyze the health of manufacturing equipment on the shop floor and plan maintenance activities around it. In this scenario, the benefits of digitalization include:
A data-driven approach to maintenance
Integrating predictive maintenance into traditional manufacturing facilities to eliminate downtime
Understanding machine capacity through overall equipment efficiency analysis, and optimizing its use
Reducing the capital and resource waste that comes with equipment downtime
This example highlights how digitalization helps with understanding machine capabilities through historic and real-time data. It shows the importance of predictive maintenance and how solutions such as edge computing can enhance productivity.
Another simple but important example that highlights the benefits of digitalization is the role it plays in developing strategies and implementing them. In this case, cloud computing and other interrelated technologies help with developing strategies and test-running them before any physical implication. An example is the use of simulation software to create logistics and production schedules on industrial cloud platforms. These schedules can then be digitally analyzed before implementing them within manufacturing facilities.
Digitalization provides manufacturers working within agencies where confidentiality applies a way to secure sensitive manufacturing data. An example is the use of on-premise cloud solutions by third-party contractors that manufacture components for the Department of Defense. Here, the integration of encryption and security licenses by cloud vendors ensure manufacturing data is more secure compared to manual storage processes. The success digitalization brought to securing manufacturing data led the US Department of Defense to develop its own strategy for digitalization. Here, the applicable benefits of digitalization include:
The ability to capture legacy data and store them securely
Enhanced security of sensitive information
Enhanced versatility where innovation is concerned
A new method to train staff and validate business concepts
In manufacturing, digitalization and its interrelated digital technologies have also created new platforms and processes that increase revenue. The digital twin and IoT are two examples of the successes of digitizing shop floor data. With these technologies, manufacturers have been able to automate manual processes, better understand complex production processes, and manage operations. Other technological solutions such as edge computing and digital simulation are also offshoots of digitalization. This is because they rely on digital data and applications to execute their specific operations.
Industrie 4.0 is also attributed to the integration of digitalization. Here, the ability to capture data from every corner of an enterprise and analyze them using digital technologies has created diverse business models for enterprises. These models are data-driven concepts which deliver the following benefits to every industrial niche:
Increased productivity levels driven by data optimization
AI-assisted processes which have reduced workplace accidents
Interconnected facilities which drive productivity and supports a customer-driven approach to service delivery
Reduction in the total manufacturing cost of producing a product
The ability to turn shop floor data into business assets while introducing new revenue streams
The examples highlighted here show the benefits of digitalization and how it influences business strategies across diverse industrial niches. Today, these benefits are recognized across every industry, which is why its adoption rate in service-based industries such as e-commerce is at 95%. Other industries such as the Banking and Finance sector also boast of an adoption rate of 93%, while 92% of enterprises in the healthcare industry have adopted digitalization.
The monetary benefits are also reasons why digitalization has been widely embraced by enterprises and, today, 56% of CEOs attribute increased revenues to digitalization. Thus, to remain competitive and profitable in the digital age, integrating digitalization is a concept that no enterprise can overlook.