A well-managed industrial goods digital transformation has the potential to unlock average returns of 2.5 to 3.5 times the capital invested in as little as five years. This finding emphasizes the crucial need for businesses to be proactive and gain the competitive advantage. Despite this, relatively few organizations have taken the necessary strategic steps toward their own evolution. Meaningful progress calls for a 360-degree approach that considers people, processes, culture, ways of working, digital platforms, tools and the value pool.
The buzz of hot topics like generative artificial intelligence (GenAI) and the metaverse have dominated conversations in the last year, but many are now falling behind on accessing the game changing benefits that effective digital transformations have to offer. Major enhancements across product, design and manufacturing are a snapshot of the potential value, with the positive impacts of digital transformations extending to the entire value chain, including customers and third parties.
Heavily reduced costs and the introduction of new services await those in the industrial goods (IG) space that move swiftly and get digital transformation right. A successful approach calls for the adoption of a dynamic digital culture on the one hand, and the integration of innovative data management concepts on the other. In this article, we will explore the roles these features have to play in driving IG transformation and share other key guidelines that will help to ensure success.
Approaching application mapping
Many IG organizations are still operating with legacy application maps, often created in a siloed way with limited data and poor process integration. Over the years, departments have independently introduced new tools and features in a hurried attempt to address both minor and major business requests. In many cases, this has been done without effective end-to-end process redesign or an in-depth understanding of adapting digital tools for legacy processes. As a result, many are now suffering from a complex network of ‘spaghetti western’ architecture and a proliferation of point-to-point links, causing poor communication and widespread inefficiency.
This is where digital culture comes in. By shifting from an antiquated culture rooted in documentation, to one based on data and enabled by new technologies, a holistic view can finally be established that is critical for successful transformation. Achieving this builds the foundations for enhanced communication and visibility across an entire IG business, facilitating meaningful progress towards engineering digitization.
A powerful digital culture can transform the way you conduct application mapping, opening new avenues for collaboration and innovation. In turn, these advantages present the opportunity for the introduction of sophisticated data management that is pivotal for successful digital transformation. With the application engine renewed, a data manager or officer can be appointed to orchestrate the input and output of all applications. This important function will monitor and maintain quality and consistency, ensuring that the new process is effective and sustainable.
Empowering engineering in IG
To put the importance of digital culture and data management into perspective in the context of IG, we simply must look at what engineers need most today. Rising to meet and harness new technology and data disciplines is a primary challenge, including examples like data driven automation and Software as a Service (SaaS) cloud models. The second is managing the flow of information in an innovative way, which is becoming increasingly important as data volumes grow exponentially.
For IG organizations to succeed, their engineers must be equipped for today’s world, and that includes the following capabilities and traits:
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Improved computational performance – With new architectures in place, more data can be handled, and products can operate faster and more accurately.
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Semi-automatic and automatic design capabilities – Modern software enables intuitive design and automatic support for engineers on an ongoing basis.
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Co-working functionality – Guaranteed collaboration environments introduced via web applications.
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Managing roles and permissions – Providing an editable structure of roles and permissions to ensure that increased flexibility remains advantageous and controlled.
For these capabilities and processes to be introduced and sustained, a central data management system must be established, in combination with a comprehensive digital transformation roadmap. As part of this journey, a single source of the truth (SSOT) needs to be created for each application to leverage, and the application map should be integrated with the data management system to serve as a backbone. Taking these steps will provide a unique reference to the data structure, preventing departments from acting in a siloed way and causing complexity and inefficiency.
While it may seem tempting for IG organizations to adopt a monolithic platform that covers all applications, this fosters myopic strategies that limit the potential for future changes. This route would also prevent ‘Best of Breed’ applications from being identified within an organization, while also limiting the number of data types that can be effectively processed.
Showcasing the benefits
The convergence of a digital culture and powerful data management practices has the power to open access to centralized data that previously took a long time to locate and get hold of. In an era that demands rapid decision-making and outstanding user experience, data accessibility is a mission critical consideration.
Implementing data management and aligning the organization with a data culture also promotes the use of automation for processes that ordinarily require manual effort, delivering immediate cost and time efficiency gains. Other powerful benefits include the simplification of inconsistency detection, the creation of a common understanding of data, and a much shorter engineering change process.
Taking the next steps
Having supported numerous transformations, our expert BCG team has identified five guidelines for enabling strategic application success in IG. These include application map rationalization, pivotal systems restraint, SW OOTB maximization, cost minimization, and future enablement.
Whether you need support in bundling vertical streams to optimize modules within one ecosystem, replacing old solutions, or reducing process discontinuities, get in touch with us to discuss your requirements!
About the Authors
Combining experience in top consulting firms and major corporations, Gianfranco is highly successful in delivering complex IT transformation and restructuring. Gianfranco joined BCG Platinion in 2017 to lead the recently founded Italian branch. He is in charge of promoting the business objectives as well as the development of staff and office activities. Before joining, Gianfranco covered key leadership positions within renowned consulting firms, and held managerial positions as CTO for one major Italian Utilities and as COO for an Italian Telco operator. His professional experience is primarily dedicated to IT strategy, transformation and restructuring, IT application & infrastructure optimization, as well as digital architecture, cloud strategy and complex digital transformation programs mainly in the Energy & Utilities and TMT industries. Gianfranco received his degree in Economics with Honor from Università degli Studi di Bari, Italy in 1999.
Mario combines strong experience in the energy and Industrial Goods sectors through his passion for the digital world. His experience is divided between top consulting firms and executive roles in energy companies. He has become head of digital at one of Europe’s largest energy companies, and returned to BCG as Associate Director of Platinion in 2022. Mario currently leads the Industrial Goods practice for BCG Platinion in EMC region bringing for Italy’s largest companies complex digital innovation, restructuring and strategy projects. Mario received his degree in Engineering with Honor from Politecnico of Milan, Italy.
Filippo Magnani is an Senior IT Consultant at BCG Platinion in Milan, specialized in digital transformation and IT strategy global programs. His work spans insurance, industrial goods, and consumer electronics, with particular focus on strategic partner selection, operating model design, and business case development. Previously, he was a Technology Consultant at Accenture, focusing on digital platform projects. Filippo holds a BSc and MSc in Management Engineering from Politecnico of Milan.
Lorenzo Testa is a Consultant at BCG Platinion with more than three years of experience in Data science, IT & digital transformation projects. He joined the firm after a previous experience in another consultancy company focusing on banking & automotive sector. In his role as consultant in the consumer industry, Lorenzo has supported a digital transformation of a leader in grocery retailer, governing an ERP implementation, developing a data governance framework, rationalizing reporting and performing cost analysis
Francesco joined BGC and the beginning of 2023 as a Visiting Associate. He previously worked for another consultancy firm in Italy. At BGC Platinion he experienced the Industrial Goods sector on the digital side supporting an Italian client on the final selection for the technological provider of the engineering department. Francesco worked on the RfP drafting and the following strategy and he built the model and the tool to evaluate the vendors. Currently he is running a large cost reduction operations in an Industrial Goods plant. Francesco holds a Master’s Degree in Engineering at Politecnico di Torino.
