“Digital transformation is on everyone’s lips in manufacturing, whether they are in automotive, food or metals,” Stephan Leblanc, VP Global Manufacturing at CGI told the Sales Filter CXO round table dinner on driving optimisation and innovation. The event featured CIOs from fast moving consumer goods (FMCG), retail, engineering, professional services and procurement leaders from automotive.
Leblanc shared some insights from the recent CGI annual review of the state of digital transformation. CGI find that across many sectors, but in particular manufacturing, IT departments are focused on reducing the cost base of the business; “but the business cannot wait and is going out on separate paths and that is exacerbating the issues IT face,” Leblanc said of the ease which departments can spin up applications and digital programmes without involving corporate IT. As IT teams look to reduce cost, Steve Howe, CGI Vice President for Oil Gas and Consumer Services said they are spending too much time on legacy technology issues.
“15 years ago there was a big wave of ERP implementations and that has transpired into a lot of customisation and that customisation runs the business, but it is not efficient,” he said. Leblanc and CGI see a great deal of application rationalisation taking place in the manufacturing sector. “IT is in a state of reflection”.
The CGI survey finds and the table concurred that one of the greatest inhibitors to digital transformation is cultural within organisations. “It is not the availability of technology,” Leblanc added.
A leading CIO from the FMCG sector explained that their organisation has no capex, he is tasked with reducing opex and has a demand to create digital services.
The speed of technological change is, understandably, increasing the speed that technology procurements become legacy and members of the table discussed how major investments in data technology can become defunct in under three years and the demands on data analytics increases year-on-year. Attendees also discussed how all areas of manufacturing were reliant on specialist suppliers, which adds another level “fragility” to a CIO’s strategy.
Matthew Grisoni, Vice President at CGI finds that data analytics is a higher priority with CIOs and CXOs across the world than innovation, though innovation is a close second. Grisoni’s analysis is that data analytics is enabling organisations to understand their “eco-systems, which is at the heart of digital transformation”. The VP believes that organisations are looking to “monetise their data in ways that improve asset utilisation, which means a CIO can gain a real success story from”.
“Part of the digital transformation is to enable a major integrated value chain,” and Grisoni says CGI is already developing this approach for clients in engineering and the energy sectors as part of its Industry 4.0 strategy.
Leblanc described Industry 4.0 as “the heart” of how technology is improving manufacturing through greater data leading to insight, better decision making, increased utilisation and therefore revenues for the organisation.
“We are seeing outsourcing deals slim down to one or two providers,” added Howe when asked how the supplier market is changing.