Digital Transformation and Industry 4.0 in 2023

As a raft of economic pressures continue to bite, digital transformation remains one of the dominant strategies in mitigating these, and supporting business strategy.

By definition, digital transformation is the adoption of digital to digitise non-digital processes, services or operations, with a view to increasing value via efficiency, innovation and/or the customer experience.

However, while digital transformation once depicted a single, or series of events, the concept, accelerated by the pandemic years, has evolved.Tangible benefits from early use cases were often difficult to come by, and as such projects often fell short of expectations against a backdrop of hype, mis-matched perceptions, and over-promising. Thankfully, things have evolved, and digital transformation has come to represent a cohesive strategy which puts digital at the centre of business goals and outcomes, and follows a longer-term vision comprised of incremental steps and stages.Through breaking the strategy down into smaller steps, value is easier to demonstrate and deliver, therefore business cases and C-level buy-in are much more straightforward.

While this shift has been organic, there is no doubt that the drastic changes to the way in which we work and operate businesses as a result of the pandemic accelerated this shift substantially. In fact, according to a global survey by McKinsey, 85% of respondents in a 2020 stated that their businesses expedited their use of digital to enable digital employee collaboration

The future of digital transformation

Looking ahead, agendas have, overall, converged, to share a number of common priorities when evaluating options for investment. Programmes which deliver risk reduction, cost savings, and agility will dominate spending, while leaders can’t afford to take their foot of the pedal when it comes to initiatives focused on customer experience and innovation. Cloud migration will continue, with Industry 4.0, machine learning and AI commanding increasing amounts of attention as the value of the intelligence and insights they bring is recognised as a key source of competitive advantage.

Setting the right pace for change

The pace of change across different industries, and organisations, will typically take place at different speeds depending on the level of digital maturity. Lego is a great example of a company at the forefront in this space, embracing digital transformation to enhance its overall operations and proposition. The company does everything from product design and development, manufacturing retail, wholesale, supply chain, logistics, brand building and consumer engagement. According to an interview between its Chief Data Officer, Orlando Machado, and McKinsey, the company is putting in place technology which will allow data to flow effectively across the organisation connecting data producers with data consumers in a marketplace model, rather than a traditional model based around having a central team to do everything. Lego’s data strategy has also resulted in the creation of its AI-infused app, LEGO Life which allows consumers to upload images of their creations and uses AI to filter the content.  

For manufacturers in particular, Industry 4.0 is expediting action. This is because Industry 4.0 is focused predominantly on the early stages of transformation which typically involve the optimisation of operational processes, and automation, with a view to enhancing productivity. With this foundation in place, organisations can then leverage the real-time insights to establish a deeper understanding of customers from which to supercharge CX and expand profitability.

The fabric of the future of business

With the pandemic having put industry’s foot on the pedal when it comes to digital, the focus for most organisations now is on creating the kind of digital culture necessary to thrive in the modern economy. This means that transformation must be perpetual, with a focus on maintaining a true digital environment which has the resilience, scale and flexibility to navigate market uncertainty, and encompasses projects which facilitate value across the entire organisation, from the factory floor to the warehouse, and throughout the entire customer journey.

As business models shift to accommodate rising costs, shifts in demand, volatile supply chain and inflationary pressures, digital, Industry 4.0 in particular, will continue to represent a priority for industrial enterprises in the years ahead.  

Agility and resilience are core currencies of business today, and it is only with the right digital transformation strategy in place that organisations can ensure relevance and thrive against these principles.