How can manufacturers put digital transformation into practice?

To ensure future success in the industrial sector, companies must find ways to transform business models by combining new technologies with human insights

Rob McGreevy
By Rob McGreevy on 21 February 2020
How can manufacturers put digital transformation into practice?

To maximise growth and profitability, executives must pinpoint the value drivers of their businesses and implement innovative new technologies to create business models that support them. An exciting example of a company that has done this successfully is Barghest Building Performance (BBP), a regional energy efficiency technology provider based in Singapore.

BBP has achieved outstanding growth by helping mall managers, building owners and factories across the Asia Pacific region to achieve their energy efficiency goals with innovative technology and attractive financing solutions. To do this, BBP has developed a system that enables live data about customers’ buildings to be piped into its unified control centre, where it is compared against regional and global best practices. Here, BBP uses patented algorithms to continuously monitor changes in the internal and external conditions of its customers’ buildings so it can adjust their equipment to optimise energy performance in real time. BBP’s advanced analytics further enhance the algorithm over time, resulting in significant energy consumption savings for clients with no operational risk. 

This marks a fundamental shift in BPP’s business model; now it can continuously serve its customers without investing in any additional equipment. Moving to this operational model required BBP’s workforce to develop different skills, including the ability to pitch the solution, build a trusted relationship, and drive and present the analytical results in a compelling fashion. 

BBP also had to develop an entirely different funding model. The service is offered as a fully funded solution, without any upfront cost to the customers, and BBP is paid via a portion of the savings it has achieved for the client. In fact, BBP only draws a profit once its customers have seen measurable value from their investment. Transformation of this kind is a complex challenge for industrial executives to activate, but the financial rewards can be immense if done correctly.

Accenture’s 2019 How to successfully scale digital innovation to drive growth study digs deeper into this idea of changing financial models by showing how established business planning based entirely on increasing market share is no longer valid for a digitally transformed industry. As demonstrated by BBP, implementation has jumped ahead of profitability. When operational efficiency is prioritised over profit, individual project economics are more important to business growth than scale.

Another example of transformative technology was showcased by Microsoft CEO Satya Nadella during his general session at Microsoft Inspire in Toronto, Canada in July 2019. Nadella played a video highlighting how AVEVA has worked with Australia-based water solutions provider WaterForce to develop a cloud-based industrial internet of things (IIoT) mobile control solution built on Microsoft Azure and Azure IoT technologies to enable farmers to operate irrigation pivots with greater agility, efficiency and sustainability. Using data collected by the IIoT solution, farmers were able to cut energy costs by 50% in the first season after implementation. 

In the cases of both BBP and WaterForce, the most crucial value driver was the need for the companies to empower their teams with the skills to adapt to their new operating models. As Ayesha Khanna, an AI expert and our keynote speaker at the 2019 AVEVA World Summit said: “You need the skills to connect the dots, look at a problem and the solution. The glue between them is technology.”

Certainly, the main differentiator for tomorrow’s successful industrial companies will be their ability to combine human insight with transformative technology, such as AI, to pinpoint their company’s value drivers and evolve their business model to support them.

The key phrase here is human insight. Technology by itself is just an enabler, so it’s easy to see why research firm McKinsey found that having digitally literate, talented people is the number one success factor for digital transformation. Accenture’s study similarly concludes that by fostering agile thinking and innovation, working closely with partners and using competitive insight, industrial companies can harness the power of technology to secure advantages for both their business and society. AVEVA is fortunate to work with companies who are driving this kind of innovation, and we learn from them every day. 

Rob McGreevy is the head of corporate strategy at AVEVA

This article was originally published in the Winter 2019 issue of The Record. Subscribe for FREE here to get the next issues delivered directly to your inbox.

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