By Kimberly Knickle, Research Vice President, IDC Manufacturing Insights
Technology is reshaping the relationship between business and IT. Manufacturers want to work smarter using digital technologies in their products and processes and throughout the value chain. But digital transformation – using new technologies to create new ways of operating and growing the business – is much more than just working smarter and more efficiently. Even now, manufacturers that are able to apply new technologies to pull away from the pack experiencing double-digit growth in productivity, market share, and revenue, while others are flat or declining.
In addition to digital transformation, key themes woven into our worldwide manufacturing top 10 predictions for 2017 include the need for new ways of innovating, more integrated IT and operational technology (OT), business security, and rethinking the future of work. While the predictions largely focus on 2017–2020, the impact of many of these will be felt for years to come.
Our predictions are:
- Prediction 1: By 2018, Only 30% of Manufacturers Investing in Digital Transformation Will Be Able to Maximize the Outcome; the Rest Are Held Back by Outdated Business Models and Technology
- Prediction 2: By 2019, 75% of Large Manufacturers Will Update Their Operations and Operating Models with IoT and Analytics-Based Situational Awareness to Mitigate Risk and Speed Time to Market
- Prediction 3: By 2018, 60% of Large Manufacturers Will Bring in New Revenue from Information-Based Products and Services, While Embedded Intelligence Will Drive the Highest Profitability Levels
- Prediction 4: By 2020, Manufacturers Will Capture 20% More Aftermarket Revenue by Using Product and Service Quality Measures to Enhance Customer Experiences
- Prediction 5: In 2019, 40% of G2000 Manufacturers Will Use Design Democratization and Collaborative Innovation to Meet Corporate Targets for Revenue from Newly Developed Products and Services
- Prediction 6: By the End of 2020, 50% of Manufacturers Will Derive Business Value from the Integration of Supply Chain, Plant Operations, and Product and Service Life-Cycle Management
- Prediction 7: By 2020, 60% of Plant Floor Workers at G2000 Manufacturers Will Work Alongside Automated Assistance Technologies Such as Robotics, 3D Printing, AI, and AR/VR
- Prediction 8: By 2018, a Proliferation of Connected Information, Instrumentation, and Decision Cloud Ecosystem Networks Will Drive Manufacturers to Redesign Their Security Architectures
- Prediction 9: By 2019, 35% of Large Global Manufacturers with Smart Manufacturing Initiatives Will Integrate IT and OT Systems to Achieve Advantages in Efficiency and Response Time
- Prediction 10: By the End of 2020, 50% of All Manufacturing Supply Chains Will Have the Capability, Either In-House or Outsourced, to Enable Direct-to-Consumption Shipments and Home Delivery
We believe that business leaders who successfully apply digital technologies to their industry, customers, partners, suppliers, and business practices stand to gain substantial advantages over their competitors. Manufacturers are rethinking and reimagining products, services, and processes. 3rd Platform technologies (cloud, big data / analytics, mobile, social) and innovation accelerators (3d printing, robotics, IoT, next gen security, cognitive computing, and augmented / virtual reality) are essential to supporting these changes. But manufacturers must continue to innovate and create value from their tech investments to solve business challenges and enable new revenue streams. The coming years will greatly alter the technology landscape for business functions in the manufacturing industry.
A few of our recommendations for manufacturers include:
- Establish your starting point by evaluating your relative maturity in the adoption of 3rd Platform technologies and, more importantly, your ability to translate those technologies into business value and digital transformation. Ensure that IT and line of business are collaborating as true partners in the selection and implementation of new technology.
- Review your foundation to make sure it’s ready for increasing levels of digitally enabled products and processes. Today, your foundation includes components such as your core applications, datacenters, connectivity, cloud, and mobile devices. But as manufacturers become increasingly sophisticated in their use of technology, what is “nice to have” increasingly becomes “must-have.”
- Cultivate your IT talent. As manufacturers ramp up their investment in 3rd Platform technologies, we’ve already seen manufacturers adapt their enterprise architecture, IT service delivery, IT innovation, and even software development. Make sure your IT organization is ready to maximize the value from those investments.
- Look to your employees, suppliers, and customers for innovative ideas for the use of new technology and best practices in terms of implementation and use.
- Create a single source of the truth for your business. Data within your enterprise and from connected products, supply chains, and assets will increasingly be the starting point for new initiatives.
- Work with small and large partners to accelerate your IT capabilities and serve the line of business. External resources and expertise can help you move quickly and effectively, which is essential in today’s global marketplace.
Kimberly Knickle, Research Vice President, IDC Manufacturing Insights
As a research vice president, Kimberly Knickle is responsible for research and analysis of business and IT issues for manufacturers. She leads the IT Priorities & Strategies program, which focuses on hot topics that are changing the way manufacturers buy and use IT, such as big data and analytics, cloud, IoT, mobility, social, and sustainability. The program also includes research based on IDC survey data related to manufacturers’ IT investment priorities and plans. Knickle also manages the Product Innovation, Service Innovation, and Connected Products research. Ms. Knickle contributes regularly to the IDC Manufacturing Insights Community (https://idc-community.com/manufacturing) and tweets (@kimknickle) about business issues relevant to manufacturers.