Taking digital transformation to the next level

Taking digital transformation to the next level

Microsoft’s Alfonso Rodriguez Lepage discusses a new survey from ARC and how manufacturers can accelerate digitalisation efforts

Amber Hickman |

Manufacturers are facing a ‘digital transformation mid-life crisis’. That’s the view of Greg Gorbach of ARC Advisory Group, one of the authors of a new report on digital manufacturing commissioned by Microsoft.

The industry has been “battered by the pandemic, conflicts in Europe, and economic instability; seen its supply chains slow down if not completely shut down; and confronted a labour shortage as one generation of workers retires and another generation has not yet filled the gap,” adds Alfonso Rodriguez Lepage, Microsoft’s director of product marketing for manufacturing. 

To build a greater understanding of manufacturing transformation, Microsoft commissioned ARC Advisory Group to conduct a factory digitalisation study. Released in December 2022, The Digital Manufacturing Journey – An ARC Global Analysis provides insights from a survey of 1,024 information technology, operational technology (OT) and engineering technology (ET) decision-makers from North America, Asia and Europe – all of whom have deep knowledge of their status and plans for factory digitalisation over the next three years. 

“The main takeaway is that most manufacturers are well on their journey to digitalisation, but continue to face complexities to scale out,” says Rodriguez Lepage. 

The ARC survey follows hot on the heels of the IoT Signals: Manufacturing Spotlight report by IoT Analytics, Intel and Microsoft published in August 2022, which provided a scope of manufacturing insights. With the Digital Manufacturing Journey survey, Microsoft wanted to take a deeper dive into the factory-specific challenges. 

“The ARC survey provided us with a way to see where there was alignment between the various geographies and decision-makers, and the different views on their digitalisation efforts,” Rodriguez Lepage told Technology Record. “We also wanted to know their thoughts on future investments as well as what is holding back scaling efforts across factories.” 

The industry cloud platform aims to simplify and accelerate manufacturers’ transformation journeys. It brings together leading-edge solutions and expertise from Microsoft and its partners, enabling manufacturers to bridge skills gaps and benefit from the opportunities the cloud facilitates. 

Since its inception in 2021, Microsoft Cloud for Manufacturing has made it easy for manufacturers to adopt the solutions they need to address pressing business needs – such as building more intelligent factories, creating more resilient and sustainable supply chains, unlocking innovation and improving the customer experience. 

One of the major issues impacting how far manufacturers have progressed on their transformation journeys is security.  

Rodriguez Lepage explains: “We asked whether they could show return on investment from their digitalisation efforts – and the results show that those further ahead are seeing more benefits and that they don’t see security as the big challenge. However, those that haven’t started the move to the cloud still list security concerns as one of the reasons they haven’t done so yet.” 

Working on their digital transformation journey with a trustworthy partner is common ground for the IT, OT and ET decision-makers. “They value industry knowledge,” says Rodriguez Lepage. “Yes, they want hyperscalers, but they’re mostly looking for those that deliver the industry cloud infrastructure and platform at scale. What they value the most is having an ecosystem of partners that are building on that common and shared platform, because that helps them with security, IT/OT convergence and overall scalability.” 

Survey respondents said employee security training (38.2 per cent), security monitoring and threat analysis (37.9 per cent) and a dedicated security policy (35.9 per cent) were essential to digitising factories. Rodriguez Lepage says this is especially true as manufacturers build their digital transformation on the cloud, with those in key OT roles showing the most concern about public cloud adoption. 

In addition to integrated security and being part of an expansive partner ecosystem, decision-makers across the board said they valued integration with standard productivity tools. “Most of our manufacturing customers are telling us that Microsoft Teams, and Microsoft 365 more broadly, is a mission-critical platform given the changes in the way they work,” says Rodriguez Lepage, referencing the rise in remote and hybrid working. Microsoft has a strong partner ecosystem and has the de facto office collaboration environment for manufacturers that value integrated security tools and being able to deliver integration with standard tools. 

One current struggle for manufacturers is the hundreds of different protocols. “Some will have thousands of different vendors, equipment, proprietary protocols and applications that they’re trying to stitch together,” says Rodriguez Lepage. “They’re all looking for help with digitalisation, with IT connectors to the enterprise systems and OT connectors to manufacturing execution systems (MES). 

“Connecting them and creating a unified and extensible factory data model also came out as a high priority for manufacturers to accelerate their digitalisation efforts. Ease of use in terms of interoperability with the standard tools is also important.” 

The report also focuses on issues such as the energy crisis and climate change.  

Rodriguez Lepage adds: “The energy crisis has put a spotlight on investments, but it’s also been good for sustainability. For example, how do you reduce your energy consumption or optimise it?” 

Future investment was a key point of the survey, as well as to help guide Microsoft on its next steps for the Cloud for Manufacturing. Executives were given a three-year horizon to look towards. “In terms of the IT, OT and ET responders, there is a lot of alignment on where we are today, but differing views on whether they’re going to stay on-premises or when they move to the cloud,” says Rodriguez Lepage.  

“The engineering executives understand PLM, the tools they use to design plants and solutions, so they have more comfort, but also want to keep it close – they want the private cloud. Similarly, the folks in the factory acknowledge there’s benefits to moving to the cloud, but when it comes to MES and SCADA applications, they are much more conservative. If they do, they want to make sure it is tightly managed and secure – there’s still that perception that the private cloud would be the immediate stepping stone.” 

“The IT/OT divide isn’t really a divide; it is a natural tension. IT has skills and responsibilities in terms of securing networks and access to systems and delivering things like the enterprise system tools at scale. They clearly understand that space. Similarly, when you look at the operational technology executives, they are more focused on outcomes in terms of quality of product, cost of product, outages and service levels. OT is much closer to the business impact in terms of the plant.” 

IT, OT and ET decision-makers are collaborating more than ever, with Microsoft well positioned to help with its strategy of partnership and driving adoption through a manufacturing ecosystem.  

“Our investments in Microsoft Cloud for Manufacturing will focus on these capabilities in terms of data model extensibility, composability in terms of low code/no code, making sure that our partner ecosystem is coming along with us, and making it easier to roll out those solutions to the cloud.”  

Partner perspectives

We asked a range of Microsoft partners about their views on Microsoft Cloud for Engineering and digital transformation in the manufacturing industry.

“As manufacturers look to respond to market disruptions, digital manufacturing systems are closing the business-to-plant collaboration gap and improving value chain efficiency,”  says Sree Hameed, consumer products industry specialist at AVEVA.

“Business models are blurring. Fuelled by omnichannel solutions, online marketplaces and rapid advances in logistics, many manufacturers are now distributors as well. Business-to-business firms sell direct to consumers,” says Matt Abbott, chief strategy officer at Cavallo.

“Sales have become increasingly complex and legacy processes have become more wasteful. A configure, price, quote (CPQ) solution streamlines the entire configuration and quoting process,” says Peter Willemse, vice president of product management at Experlogix.

“Cloud services provide engineering and management with a way to gather historical and real-time manufacturing data from across the enterprise, and then put it to use,” says Xavier Mesrobian, vice president of sales and marketing at Skkynet Cloud Systems.

Read more from these partners as well as Ansys, Avanade, HiveMQ, isolved and Orbus Software in the Spring 2023 issue of Technology Record.  

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