In our IDC Manufacturing Predictions for 2015, we identified seven essential drivers that shape the IT investments manufacturers are making in 2015. We believe they represent the current situation - the reality - for manufacturers today. These drivers are the keys to making short-term as well as long-term strategic decisions. Some drivers are naturally more impactful on investments and are likely to add the most complexity and cost in implementation, but all are relevant.
Seven Key Drivers
1 – Complex, dynamic value chains: Manufacturers participate in complex, overlapping value chains, with dynamic change, and an ongoing search for business improvement and new opportunities.
2 – Emerging market-emerging-market growth: Manufacturers continue to reshape supply chains and product strategies to support emerging market growth sourced from and manufactured in emerging regions.
3 – Traceability and transparency, brand and reputation: Manufacturers must take a stand on product quality and build up their reputations, and increased traceability and transparency are critical components.
4 – Demanding customers: Consumers and customers expect and dictate increasing levels of service, forcing business cycles to compress to meet customers' requirements.
5 – Converging technologies for manufacturing: Technologies - Operational Technology (OT), Information Technology (IT), and Communications Technology (CT) - are mandatory for manufacturers to design, manufacture, and deliver their product.
6 – Ubiquitous connectivity: Connectivity is ubiquitous, in devices, interfaces, and processes, and extends to the edge, with manufacturers assuming the communication infrastructure will keep up.
7 – Truth in data: Manufacturers are looking for the truth in data as they seek more valuable analysis of greater volumes and varieties of data and the information that will bring them closer to digital execution.
Most of these drivers represent conditions that have been building in the industry over the last decade but have become particularly critical in just the last few years.
Two Underlying Issues - Security and Employee Skills
We also believe security and employee skills represent two issues that manufacturers must address or acknowledge in everything they do. For security, we're referring to physical security as well as cyber security. And in the workforce, manufacturers continue to face two basic challenges:
- Shortage of expertise: an aging workforce, with a significant amount of expertise at or reaching retirement age, as well as stagnant or declining numbers of new graduates in manufacturing and engineering-related disciplines
- Technology-savvy: an incoming workforce that treats technology of all kinds as a natural component of the work process
These issues can become stumbling blocks or opportunities for manufacturers to distinguish their organizations.
We recommend that manufacturers take the following approach to ensure they are maximizing the value they derive from technologies:
- Adopt modern IT infrastructures and applications, and mature your use of 3rd platform technologies, as well as in the way your organization builds upon the combination of IT, OT, and CT.
- Put in place a group focused on process innovation, where newer 3rd platform technologies can be reviewed, incubated, and rolled out in the organization; where skills can be developed, and the organization educated on what the technologies can and can’t do. Keep evaluating innovation accelerators, such as 3D printing, robotics, and cognitive computing in this group as well.
- Work with partners to accelerate your IT capabilities and serve the line of business. Although we expect manufacturers to embed and apply more technology to how they operate, manufacturers must recognize that they need external resources and expertise, especially if they are going to move quickly.
Quite a few manufacturers have already achieved moderate success with 3rd platform technologies – including mobile applications, mobile devices, social tools, cloud, big data and analytics, and even IoT (Internet of Things). We expect leading manufacturers to be able to use a combination of technologies (IT, OT, and CT), with manufacturers embedding technology into the way they do business and into their products.
This year, more companies will also focus on combining newer technologies, because of the drivers we've listed above. Essentially, it's all about digital transformation.
Let me know which of these drivers are most influencing your digital transformation and your IT investments by emailing me at email@example.com or leaving a message on the IDC Community.