As Equipment-as-a-Service models gain critical mass in manufacturing, there is no doubt that digital transformation becomes a stepping stone to success. There is a catch, though: When adopting digital technologies, the company’s business strategy is often on the sidelines as the focus shifts to finding the best technological solution. In other words, the business should drive the technology and not vice versa. This is extremely important in the first stages of the transformation journey, especially when considering pilot initiatives.
Following the rise of Industry 4.0, manufacturers have embraced pilot projects as a way to determine success in a controlled setting. These initiatives might lead to optimized costs and improved quality when scaled, but in the majority of cases, such projects lack scalability and never reach the full roll-out stage. Let’s take Artificial Intelligence (AI) projects as an example.
The International Institute for Analytics states in its report that model deployment rates are becoming a big issue – barely 10 to 15% of companies deploy results of what they created. There is a reason for that. Businesses tend to perceive AI projects as an experiment, and not as a long-term goal. Thus very few companies end up deploying AI at an enterprise scale. It is a vicious circle since a prototype never turns into a production deployment, which eventually hinders the transformation process.
Why is it so hard to escape the pilot purgatory? According to McKinsey’s research, many organizations embark on a digital manufacturing journey that cannot create enough value to justify its cost. Less than 30% of the companies participating in the McKinsey Digital Manufacturing Global Expert Survey had achieved a broader roll-out of their solutions after the pilot phase.
The root of the issue lies in the very early stages of the digital transformation journey. Unlocking the value of digital in manufacturing has been centered around disruptive technology and tools rather than business outcomes. Another reason for struggling with broader roll-out is the human factor – lacking the resources to plan and implement new solutions and the experience to know which devices and what data to collect. As a result, companies are struggling with their digital transformation efforts and experience the pilot purgatory in all its severity.
Start with the outcome
There is no silver bullet to escape the pilot purgatory and succeed in digital transformation. It all depends on the clear vision and road-map in the early stages of the undertaking. Adopting a holistic approach which encompasses business strategy, leadership commitment, talent, and strong partnerships, paves the way for a successful transformation of the entire business model. Business transformation goes hand in hand with digitalization. We can view it from this angle – transforming the business is the goal, while digital is the tool. Starting with the business outcome in mind and mobilizing the whole organization have never been so critical for success. If you want to learn more about how to move beyond the pilot phase, download our new white paper on business transformation in manufacturing.