The terms ‘digitalization’, ‘digitization’ and ‘digital transformation’ are gaining more and more popularity as companies discover the benefits that come with automated processes and enhanced interfaces between people and data.
In this blog, we discuss the importance of digitizing data and implementing digitalized processes and offer tips on how to build an Industry 4.0 strategy that works for your organization.
What is the difference between digitalization and digitization?
Digitalization, also known as Industry 4.0, is the use of digital technologies to enhance business processes allowing a company to generate value-producing opportunities. Digitization is the process of transferring information/data into a digital format.
In short, we digitize data, and we digitalize processes. The combination of the two enables an organization’s overall digital transformation.
A quickfire list of the benefits of implementing digitalized processes:
- Automated workflows = less room for human error
- Increased data accuracy
- Faster data collection
- Meet your CO2 emission targets helped by digitalization
- Forced compliance (can’t skip processes)
- Digital archive of your asset throughout its lifecycle from manufacturing, installation, commissioning, late life, to decommissioning – with everything in the form of digitized information rather than paper – this helps from auditing to utilization
- The ability to access accurate and up to date real time information
- Enhanced proficiencies
- Asset optimization
- Production optimization
- Achieve operational excellence
- Save money – through efficient, streamlined processes
Why is digitalization not being addressed as a priority?
Change is often something that can be feared. When an organization has been doing the same thing for decades, it can be difficult to rationalize the implementation of procedural change. There is also the fear that new digital processes and technologies could cause redundancies, however this is not the case – they instead allow people to complete tasks more efficiently, allowing for time to be spent on other aspects that may normally be building into backlog. Lack of digital literacy/fluency and paucity of training can cause these misconceptions.
There are various transitional and transformational challenges, such as poor data quality and data trust gaps. It is almost impossible to achieve enhanced data analytical capabilities in the absence of quality data, which will make the digital transformational journey very turbulent. Issues with interoperability, where your systems are struggling to speak to each other, alongside the use of paper-based or conventional technologies (for example Excel sheets for data input/collection/enrichment/analysis) can be extremely time consuming, leading to organizations working in firefighting mode with no time to implement new strategies.
Overall, a smoother running process and smarter workflow will benefit the users more by mitigating errors and ultimately provides people with more flexibility so that they can spend less time worrying about data issues and errors.
The importance of strategy
When it comes to a digitalization strategy, there is no ‘one size fits all’. Different organizations face different transitional challenges, making each transformational journey unique. This means the planning and strategizing phase is the most important part of the journey. It’s imperative that organizations design their strategic transformational journey meticulously
It is essential to view your Industry 4.0 or digital transformation journey as a strategic initiative rather than something to implement during spare time. When you don't strategize your implementation, you could be using great technologies, but they don’t solve your problems. At day-to-day levels, the lack of strategy undermines the potential benefits that the implementation of Industry 4.0 could unleash and hinders the progress digitalization could make. For example, it might be prudent to strategize and identify areas where digitalization could reap the most beneficial results instead of wasting resources on assets in their late-life operations or soon to be decommissioned.
How to build your strategy
Organizational culture is the key to transformational change, so if you are facing digital transformation, it is important to lean on your company’s core values. If innovation or digital transformation is on your agenda, it must be customer centric. Brainstorm your main aims and highlight the ones that will help achieve efficient processes that provide your customers with solutions to relieve them of the challenges they face.
Industry 4.0 or digitalization at its core will always be a long-term strategic initiative, but you should incorporate short-term and mid-term strategies within this.
This may seem daunting, so what would be the starting point?
- Plan your short-term strategy first, covering the first year.
- This will then feed into and help develop your mid-term strategy, which should cover two to five years.
- The mid-term strategy will then feed into your long-term strategy and help develop the next five to ten years.
This approach is based on the concept of the Continuous Improvement Process AKA the Plan, Do Check, Act (PDCA) cycle. You have to implement your Industry 4.0 or digitalization efforts in a step-by-step approach, steps that build on learnings from previous stages to create more tailored efficiencies for your organization.
Let's look at the strategic phases a little closer:
- To develop your short-term strategy, begin by assessing your current processes and procedures, this will help you identify areas that require action
- Once you know what your current processes are, and you've identified what actions are required, this will allow you to prioritize tasks and allocate resources towards improving certain areas. By this point, you should also have a desired digital maturity level that you would like to be at in the next five years to allow yourself to envision your future and start working towards that. You can then start taking a step-by-step approach to achieving this.
- Once you reach your five-year strategy goal, the most important part is to anchor those chains. You have created the urgency; you have created those short-term wins and you have reached those mid-term stages, bringing you to a relatively mature digital state. Now you must ensure that those changes and strategies continue with momentum. Industry 4.0 and digitalization has to be deep rooted in your corporate strategy to for it to hold, and if it is not, then the potential for failure skyrockets.
When to seek help?
- When you need to digitize paper based or conventional technologies and create a digital archive of the data to be used for digital transformation purposes
- When you’re facing interoperability problems because your systems (such as Maximo or SAP) are not talking to each other and hindering your transformational journey
- When you need a software that integrates with your workflows and removes manual processes to save valuable time
- When you require bespoke training modules directed towards solving the problems faced by your clients
- When you need to build foundational data, enrich and gather master data and ensure that your data is fully accurate
- When you need to migrate data from a legacy system into a new platform, or combine multiple systems together into one full ecosystem of information
- When you need to extract and collect data and improve the quality of data insights
To reiterate, there is no ‘one size fits all’. If you're just starting your digital transformation journey or if you're mature within it, Add Energy’s software and service offerings can help with every pain point listed above.
From the initial data capturing, data gathering, data cleansing and ensuring data accuracy, training and digitalizing processes, our suite of turnkey software solutions and consultancy services can help you throughout your full digital transformation journey.
We have also developed an Industry 4.0 Readiness and Digital Maturity Assessment Tool (I4.0-RDMAT), which was developed during doctorate research funded by Add Energy in collaboration with the ECITB, that could help organizations assess their current processes, identify areas requiring action, and envision their digital future.