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3 Key Digital Transformation Challenges Facing EMEA Manufacturers

Identifying the challenges to be addressed in order to embrace the opportunities of digital transformation.

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Working with manufacturers in a wide variety of sectors and profiles, we are fortunate to get an intimate sense of the trends driving the industry. One thing that’s been particularly notable is how conversations around the topic of digital transformation have evolved in recent years.

Four or five years ago, our customers were largely in the phase of educating their internal stakeholders and making the case for a connected enterprise. Last year, companies had typically progressed to the planning phase or were starting to roll out pilots. This year, amid the turbulence that has affected us all, the focus is very much on implementation.

We see this also in the numbers. Our global survey canvased 350 industrial decision makers from across sectors including automotive, oil & gas, mining and life sciences. As you can see from the Customer Insight Report 2020 that you downloaded, we found that 93% of organisations have deployed some type of digital transformation project. In the EMEA region specifically, 54% of organisations are implementing and continuously improving their digital transformation journey, and a third are either fully scaling up and rolling out digital transformation strategies, or conducting pilot programmes to kick off digital transformation activities.

Despite these clear intentions to become digitally orientated businesses, manufacturers face some considerable challenges that require specific strategies to overcome. Through the research, we identified three main challenges that the sector is grappling with:

1. Cybersecurity

Cybersecurity presents a new frontier for manufacturing organisations. Conventionally, manufacturers operated based on operational technologies that didn’t touch the internet. Now, in a new world of cloud computing and internet-enabled devices, that separation has been blurred.

As a result, cybersecurity and risk mitigation are core drivers for digital transformation over the next three years. 74% of EMEA respondents said that improving IT security was their number one priority, closely followed by 66% who said that improved safety (increasingly a concern as IT and OT systems merge) was a major focal point.

The demand for cybersecurity initiatives may be attributed to a substantial increase in threats, such as malware, phishing, hackers, human error and high-profile data and security breaches. Cybersecurity investments are being prioritised with clear alignment to strategic business activities and are often aligned with safety initiatives.

Without clear parameters and protocols for maintaining the security of systems (and ultimately the safety of staff) transformation strategies and efforts will be significantly hindered.

2. Integrating Legacy Infrastructure

The manufacturing sector differs from various other sectors in their digital initiatives due to the high level of investment in physical assets. In other, more digitally orientated sectors, the focus of transformation often rests on remodelling and modernising data infrastructure and line-of-business applications. In manufacturing, these priorities are complicated by the need to integrate with existing equipment and industrial systems, which are likely to have been multi-year, or even multi-decade, investments.

Manufacturers often therefore need to take a two-speed approach to modernisation, seeking to add new digital capabilities while protecting their existing value and revenue streams. Strategies around rapidly evolving technologies, such as IoT and AR, have been critical in building digital ecosystems that run parallel to legacy infrastructure.

3. Competing Demands for Resources

As we enter a new era in manufacturing, the opportunities afforded by emerging technologies, such as machine learning, predictive analytics, 3D printing and VR, present a seismic shift in manufacturing operations. For executives in the sector, the question is rarely “would we benefit from these technologies?” and more “which opportunities offer the greatest ROI, here and now?”

Decision-making around digital investments also needs to be balanced with demands around maintaining the existing operations, such as repairs and upgrades. Additionally, there are significant considerations around the organisation’s readiness for new technologies, such as access to talent and retraining of existing personnel.

Transformation is therefore as much about balancing budgets and priorities as it is about ‘seeing the bigger picture’ on what their business can become.

Transforming in the Midst of Change

In order to embrace the vision and opportunities around digital transformation, executives in manufacturing should focus their attention on building strategies to make sure that these three challenges don’t risk derailing their broader modernisation programmes.

You can learn more about the road to digital transformation on the Management Perspectives hub. This is our exclusive programme for executives, designed to help accelerate your digital transformation initiatives. We want to share our insights, as well as expertise from our customers and partners, and help you unify your people, processes and technology to achieve better business outcomes.

Mike Loughran
Mike Loughran
Chief Technology Officer UK & Ireland, Rockwell Automation
Mike has a passion for working with companies to help them unlock the benefits of digital manufacturing, and is the Connected Enterprise ambassador. Throughout his career, he has worked with both large and small manufacturing companies to advise and help set their automation strategy in order to help them achieve their productivity and sustainability goals through smarter use of technology.

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