Professional Documents
Culture Documents
Seminar
27 August 2014
The purpose of this seminar is to present our point of view on Digital Transformation, and
specifically what it means for the manufacturing industry
Objectives
Present some key insights from our digital
transformation research with the MIT
Present and discuss the impact on manufacturing
companies
Key questions:
- What is DT and why now?
Agenda
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
Manufacturing case examples
Breakout discussions and present back
Summary and conclusions
AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
Canada
Outsourcing
Consulting
Etc...
SECTORS
Public Sector
Australia
CAPABILITY UNITS
Technology
Financial Services
India
Morocco
Peoples Republic
of China
Taiwan
Vietnam
Philippines
Malaysia
Manufacturing &
Automotive
Mexico
Guatemala
United
Arab Emirates
Consumer Products,
Retail & Distribution
United States
Capgemini Consulting
in a segment of one
digital specialist
AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
The real effect of doubling phenomenon is not noticed before you reached the second half
of the chessboard
We are at the second half of the chessboard (Prof. Andy McAfee, MIT)
Electrification led to
innovation
such as assembly line
Machines replacing
muscle power
Machines replacing
brain power
No of users increasing
Bandwidth
3G / HSPA / LTE
CAGR 25%
Devices
Smartphone
penetration
Content &
services
Consume
Usage
Communicate
Consumerization of
technology
20
Smartphone users spend
128 min/day of which 22
min on talking and SMS
4,5
6,5
23
13
2011
1,2
2016
2012
2018
167 min / day desktop, 274 min on TV, 26 min /day newspapers
10
3,7
80%
1956
1982
2011
% of
Technology 3.3%
Companies 2
3.3%
27%
2010
2000s
33.3%
1990s
2,4
1980s
High proportion of
traditional
companies in both
1956 and 1982
5,9
4,8
% of tech companies
increased tremendously
1970s
100%
No major change in
the composition of
the DJIA between
1956-1982
5,6
Managers in the United States and in Great Britain ranks the business
value of technology and telecom investments. The scale is 1 to 7,
where 7 is extremely important
Source: Capgemini Consulting-MIT Analysis; Historical Down Jones Industrial Average Composition
1 DJIA stands for Dow Jones Industrial Average
2 TME , IT, and Semiconductor companies
11
A few industries have already felt the power of the digital wave
... In Media
... Photo
Share prices
300
BLOCKBUSTER
250
Blockbuster declined offers to
acquire Netflix in 2000 for 50
MUSD...
FUJIFILM
200
150
NETFLIX
100
50
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
... Telecom
1995
KODAK
... Music
REVENUE FROM RECORDED MUSIC ( bn)
2004-2005 Motorola
reaches its peak with
a 22% market share
Napster
(P2P)
2006 Q4 Sony
Ericsson reaches its
peak with a 9%
market share
iPod launched
IPRED law
Spotify launched
12
As all things get connected, business models likely to shift towards data, computations and
priority
Why Google et al are investing billions in networks and smart services
Connections
Business model:
Data
Eye balls
Business model:
Data
Computations
Priority
People
Approx. 23 Bn devices
2014
2020
2050
Time
13
For us, Digital Transformation is about utilizing new technologies to radically change,
improve and future-proof an organization and its business
THE DIGITAL WAVE AFFECT ALL TYPES OF INDUSTRIES AND COMPANIES - NOT JUST
HIGH-TECH PLAYERS ALSO MORE TRADITIONAL INDUSTRIES
COMPANIES THAT WANT TO RIDE ON - AND NOT BE WASHED AWAY BY - THE DIGITAL
WAVE HAVE TO ACT NOW
14
To truly understand the new challenges and opportunities in a digital world, we entered
into a research partnership with the MIT some 4 years ago
Capgemini Consultings partnership with the MIT
Capgemini Consulting and MIT are partners in the
study of digital transformation
15
Question 1
16
17
We have defined digital maturity along two different dimensions: Digital Intensity and
Transformation Management Intensity
Digital Intensity
Location-based marketing
Customer Service in Social Media
Connected Products
Mobile sales
Digital Design
Transformation Management
Intensity consists in creating the leadership
capabilities necessary to drive digital
transformation in the organization.
Digital Vision
New skills
Cultural change
Cross-silos coordination and governance
18
Beginners
Fashionistas
Digital intensity
What is the
organization doing
with Digital
Technologies?
--- hard stuff ---
6%
Beginners
65%
Digirati
Conservatives
Digirati
15%
Conservatives
Fashionistas
9%
6%
Revenue
-4%
-10%
26%
14%
9%
Profitability
-11%
-24%
12%
7%
Market valuation
-7%
-12%
Most companies now recognize that digital is critical ... But the pace is too slow
(unless youre the CEO)
When will it become critical to implement DT
across the organization?
27%
15%
11%
32%
78%
18%
33%
13%
5%
10%
25%
22%
About Right
64%
67%
38%
This Year
47%
3 years or more
11%
57%
CEO
C-Level
Managers
executives
Staff
20
Other 7%
The vast majority of employees
support the digital vision when
senior leaders share it
Agree
20%
Strongly Agree
73%
Shared their
Digital Vision:
36%
No "burning platform" /
39%
33%
Limitations of IT systems
30%
Roles and
28%
Lack of vision
28%
27%
Business units
24%
19%
...or a clear /
<25% aligned road map
Digiratis
>40%
Regulatory concerns
16%
9%
21
Question 2
22
1,880
Ensure xchannel
consistency
Enhance our
existing
products
services
Launch new
products and
services
Improve the
customer
experience
Customer Experience
1,260
Improve
internal
comms
Enhance the
productivity
of workers
Automate
operational
processes
1,090
Transition physical
products / services to
digital ones
Develop new
business models
Launch new
businesses
23
In our experience, companies have not followed optimal path to increase digital maturity
Fashionistas
Digirati
Optimal
Digital Intensity
Common
Beginners
Conservatives
24
Question 3
25
26
Digirati are far better than other types of firms at changing their business models
Digital Leaders have a common DNA 2(3)
27
Internal operations
Social Media
-
Investments in digital
technologies the SMAC stack
Monitor reputation
Promote & sell products &
services
Provide customer service
Build customer /ecosystem
communities
- Social
Process
Digitization
Analytics
-
Customer
Experience
-
Cross-channels consistency
Personalize the customer
experience
Offer self-service
Mobile Channel
-
Automating processes
Monitoring operations in
real-time
Adaptability to external
changes
- Mobile
Internal
Collaboration
-
- Analytics
- Cloud
Data integration
- Usually with cloud as a
change agent
Data Integration
-
Customer Data
Other data (finance, supply-chain, operations)
Analytics capabilities to
operationalize the data
28
Vision
Governance
Engagement
IT
Business
Digital Transformation needs to be shaped, driven and sustained from the top of the organization
Focus on the How more than the What
29
AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
30
In our research we concluded that the typical manufacturing company remains a digital
beginner in the context of Digital Transformation
Digital maturity by industry
Some industries are more mature than others...
Telecom
Digital intensity
Pharmaceuticals
High Tech
Retail
Banking
Insurance
Utilities
Manufacturing
38%
Banking
Bank &
Finans
35%
Insurance
Frskring
33%
TravelResor
& hospitality
& service
FMCG
High
High Tech
Tech
31%
Telekom
Telecom
30%
Detaljhandel
Retail
26%
Konsumentvaror
FMCG
Strong digital
governance
capabilities, but
cautious to investing
Regulatory worries and
a risk-averse culture
24%
Energi
Utilities
20%
Tillverkning
Manufacturing
Lkemedel
Pharmaceuticals
12%
7%
31
Digital manufacturing leaders are outperforming their peers, especially on the How
dimension
32
For manufacturing companies DT is blue skies ... but still have a limited view of what
they should do and how to do it
Neutral
Agree
Digital transformation is a
competitive opportunity for our 12%14%
company
74%
21% 12%
74%
67%
12%14%
Neutral
Agree
43%
23%
55%
17%
51%
26%
34%
28%
23%
We fear that most manufacturers are not yet realizing the potentially disruptive shift about to come
Copyright 2014 Capgemini Consulting. All rights reserved.
33
Question 4
34
Many manufacturing companies need to scale up capabilities on both the customer side
and the operations side and above all, become more data driven
Customer engagement
Disagree
Neutral
53%
60%
70%
Internal operations
Agree
Disagree
18%
29%
17% 23%
15% 15%
Neutral
19%
Agree
30%
42%
51%
51%
20%
23%
38%
26%
Digital Leaders are much more data driven than their peers
Copyright 2014 Capgemini Consulting. All rights reserved.
35
New players
New business
models
Virtualized networks create an opportunity for Ericsson to leverage its unique assets to offer cloud serv
New business
processes
New entrants
Revenue
growth
Software
New
battlefield
and clashes
APIs
Apps
Office
Platform
Windows
HD, processor,
Infrastructure
network
CIO
Telco / other
Opportunity for
new
Telco / other
entrants to disrupt
the
Software & data
centers
Network / infrastructure layer
$
Hardware /
equipment
Hardware
telecom spaceTelco
Network virtualization
creates a potential
conflict of interest and
mandate bw. CIO & CTO
Current leaders
Profit
squeeze
36
Manufacturing leaders focus on cloud enabled common platforms for their operations
48 %
43 %
38 %
integrated view on
customer data
56%
100 %
Top-performers
(Digirati)
37
Over time, the vehicle and manufacturing industry to move into more advanced services
requiring more capable infrastructures and platforms
Vehicle and manufacturing leaders to develop
capabilities required for future digitization
Maturity &
complexity
5 yrs -
Autonomous
machines & V2V
communications
2 yrs Now
Capability examples:
Infrastructure with
elastic networking,
supporting vehicle to
vehicle and close to the
edge compute &
communication
Advanced security e.g.
signature services, to
manage end to end
SLAs
Compliance to
regulations / policies
Standardization and
interoperability
Opportunities, examples
- New revenue possibilities primarily on the software side
- Need to leverage e.g. installed base
- Need to build an ecosystem
- Open or closed
- Software-led or hardware-led
38
Question 5
Fashionista
Digital intensity
Beginner
Management skeptical of the
business value of advanced
digital technologies
May be carrying out some
experiments
Immature digital culture
Digirati
Strong overarching digital
vision
Good governance
Many digital initiatives
generating business value in
measurable ways
Strong digital culture
Conservative
Overarching digital vision
exists, but may be
underdeveloped
Few advanced digital
capabilities in place
Strong governance cross silos
Taking active steps to build
digital skills and culture
39
AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
40
41
Background
Real-time sharing of operational data
to customer and manufacturer is not
sufficiently provided
Operated trucks, especially with the
refrigeration unit, are not centrally
integrated from the customers point
of view
Solution
Telematic tools deployed in the trucks
track maintenance-status, weightload, cargo-temperature and the
location
Two-way communication between the
truck and both customer and
manufacturer as a continuous data
link
Benefits
Better integration of connected
support services such as efficient
truck maintenance based on proactive servicing
Enhanced item demand forecasting
to further improve supply chain
efficiency
Improved product development
based on detailed insights on truck
performance and actual usage
patterns
Copyright 2014 Capgemini Consulting. All rights reserved.
42
Background
Intention to offer innovative remote
services
Renew and expand the IT platform to
offer / extend value added services
Create a better customer experience
Solution
Definition of function, role and
process requirements for operating
the remote service portfolio
Design of a target IT architecture for
digital service management
Implementation of an advanced digital
service management platform
Benefits
Business structure and IT perfectly
respond to business needs
Deliver innovative service offerings
through highly automated and
efficient processes
43
Easy-to use tools are available through cloud-based platforms, from solutions for idea
generation and crowdsourcing up to complex engineering activities
Extended Innovation | Use Case
Background
When benefits are difficult to
quantify, decision-makers are
reluctant to invest into new
platforms or tools
But integrating the surrounding
network of customers, suppliers or
partners into the idea generation
and product development process
requires structured tools
Solution
Cloud-based, enterprise-grade
innovation and collaboration
platforms are now easily available
They provide functions such as
SharePoint integration, CAD
capabilities, social media analytics,
content sharing
Examples: Local Motors, AutoDesk
360, SpigitEngage, IdeaScale
Benefits
Enables Extended Innovation in
variable intensity, as needed
Integrates a multitude of possible
channels
No heavy up-front investments
required
44
Background
Need to globally collaborate all along
product life cycle with more
suppliers and partners
Real time collaboration of internal
and external users around digital
mock up must be improved
Communication must be facilitated
Partners and suppliers dont have a
direct access to product
configuration
Solution
Implementation of collaborative
solutions based on TeamCenter
Unified Architecture (TCUA) to share
configurations and digital mock up
with external partners and suppliers
Definition of product data model
Reengineering of modification
processes in order to find the right
balance about the rhythm of
evolution into digital mock up and
PLM corresponding configurations
Benefits
Global transparency about demand
and resource availability through
consolidation across all levels of the
network
Validation of plans by checking sales
plans against network planning
quantities
Reservation of agreed quantities to
ensure delivery reliability
Triggering the investment process at
an early stage
Copyright 2014 Capgemini Consulting. All rights reserved.
45
Product
definition
Production
Systems
Production
Services
Purchasing
Services
Assembly
Services
Quality
Mgmt.
Services
Delivery
Services
Maintenance
Services
Erection &
Installation
Services
Background
Hitherto, production planning and
control processes are rigid,
centralized and decoupled even from
the intra-company ERP system
The layout of production facilities is
equally obtained through rigid,
hierarchically structured planning
processes
Solution
Formulation of systematic production
processes to be run on modularized
production lines
Automated reconfiguration of
production modules in response to
market demand
Production lines are connected in a
cross-company network
Benefits
Plug & Produce capability of
production modules allows for
dynamic integration in production
cycle
Under-utilization and resulting
excess capacity may be transferred
to business partners
46
Chip manufacturer Intel designed and implemented a data-driven chip testing process
resulting in significant operational cost savings
Data-driven Operational Excellence | Case Study
Techniques of big data analysis
applied on core value processes can
lead to annual savings of several
million USD
Background
Highly automated production
facilities generate about 5 TB of data
every hour
In the past, the potential arising from
this data was not leveraged to drive
its core competency of high volume,
precision manufacturing
Solution
Intel initially launched several pilot
projects to discover the potential
arising from data
By this, a business analytics solution
was designed that optimizes test
procedures of a specific production
line
Previously, all produced chips were
run through an extensive series of
tests
Added value
The model results were leveraged to
significantly cut down the number
of conducted tests
This led to cost savings of
USD 3 million within the first year
By rolling out this solution to all
production lines, annual savings of
USD 30 million are expected
47
Question 6
48
The future manufacturing business model will focus on customized, smart products,
supplemented by highly targeted services, delivered in open ecosystems
The Future Manufacturing Business Model
49
AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
50
Breakout: instructions
Purpose
To have a joint discussion and understanding of the importance of DT to Volvo and its implications
2 perspectives: external and internal
What
Time
30 min parallel discussions within each breakout group
4 x 5 min present back from each breakout group
2 x 5 min joint reflections and discussion (per perspective)
51
Ambitions
(strategy)
External
change
(CuEx)
52
Ambitions
(strategy)
External change
(CuEx)
53
External change
(CuEx)
54
Ambitions
(strategy)
Internal
change
(OpEx)
55
Ambitions
(strategy)
Yes to a certain extent.
Great opportunity for developing services for
our sales operations.
Within manufacturing we are quite mature.
Key objectives:
Grow business from digital driven service
solutions
Stepwise improvement of our operations by
implementation of improved techinal
solutions (Lync etc)
Big data management for improvement
Internal change
(OpEx)
Technology:
Reduce the number of systems
Fit the systems to the service oriented
company
Skills:
Improve knowledge from data to learn about
our customers business/industry
Governance
Improve measurement cross organization (big
data)
Adherence to our process
Organization
56
AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
57
REALITY
TRANSFORMATION
EVERY INDUSTRY
58
Concluding discussion
Feedback
How was the seminar overall?
Good
Room for improvement
Did we meet your expectations?
YES
To some extent
NO
Discussion & qualitative feedback (no poll)
Benefits? What was good / interesting?
Concerns? What should we have done
differently?
59
Concluding discussion
Feedback
How was the seminar overall?
Good
Room for improvement
Did we meet your expectations?
YES
To some extent
NO
Discussion & qualitative feedback (no poll)
Benefits? What was good / interesting?
Concerns? What should we have done
differently?
Thank you very much for the opportunity to be here, and the interesting discussions!
Copyright 2014 Capgemini Consulting. All rights reserved.
60
Go to capgemini-consulting.com ...
61
Ulf Jansson
Karl Bjurstrm
+46 703 78 14 76
ulf.jansson@capgemini.com
+46 706 80 46 23
karl.bjurstrom@capgemini.com
62