Opportunities and Barriers in Digital Transformation in Manufacturing

While customer-facing companies, such as retailers and consumer service providers have had to walk the frontier of digital transformation because of strong consumer preferences, business-to-business organizations have been more timid about the process. Digital services solutions provider Valtech recently partnered with Gartner (News - Alert) Peer Insights to tap into the mood of global manufacturing leaders about the current state of progress in digital transformation and the underlying challenges of making the change.  

The resulting report, titled “Customer Experience vs. Rising Operational Cost: Global Manufacturers Speak Out on Digital Transformation,” examined the current moods, priorities and internal decisions that manufacturing leaders are making to guide their companies forward through digital transformation. The report found that manufacturers are more than willing to change and modernize customer experiences, but they’re experiencing some significant barriers to doing so. 

When asked about their organization's maturity in creating helpful and flexible customer experiences, 91 percent have either enacted strategies and tactics to modernize their client interactions or are aware they need to change it. Sixty-two percent of companies say digital transformation projects are going well, and they are hopeful about future opportunities, or feel positive about organizational change. This points to an overall positive sentiment or willingness to embrace digital transformation.

While this is good news, significant barriers exist. A large majority of organizations are concerned about costs, and 79 percent cite rising costs of operations as by far the biggest threat to business success in transformation projects. Less cited, but still significant obstacles include changing customer expectations (42 percent), loss of control for pricing (37 percent), new entrants into the market (35 percent), multiplication of sales channels (33 percent), and supply chain management (32 percent).

Interestingly, it appears that manufacturers are aware that digital transformation cannot be a top-down decision driven from the C-suite. While organizations' digital transformations are overwhelmingly (74 percent) led by traditional IT departments, almost all (97 percent) report at least occasional or regular communication and collaboration among the IT, sales, marketing, and production departments on their projects.

"The survey shows that the appetite for digital transformation to enhance customer experiences has moved past the conceptual phase for many manufacturing companies, and is firmly into the implementation stage," said Charles Desjardins, EVP, North America for Valtech. "Embracing digital throughout any organization can be a challenge. From the survey, we see that organizations are realizing that the key to a successful transformation is that they need not only have buy-in at C-level, but also close collaboration and communications among all departments – not just IT, but also sales, marketing, and production."

Edited by Greg Tavarez