There’s a meme currently circulating concerning the real driver behind digital transformation.
Jokes aside companies are looking for initiatives that can help them better position for growth in the recovery. No where is that more true than with digital transformation.
The idea of digital transformation is not new. Developed from the rise of cloud native development, and the move to the cloud, companies are increasingly adopting lessons learnt across a wide array of industries.
In turn this is driving a phenomenal growth in the electronics industry as traditional, often mechanical systems, are increasingly swapped out for more flexible, agile, cheaper digital ones that can not only talk to each other, to optimize they way the work, but also “call home” for updates.
This not only affects products themselves, but also the design processes that envisaged them and the manufacturing processes designed to make them. Increasingly “agile” is a key word. Small, nimble, vertically integrated teams, bringing together the core personnel and knowledge required to produce a particular system, are increasingly working on epics & user stories, in stand-up meetings, and scrums, against a development backlog. This is no longer limited to the trendier parts of California, London, Munich or Tokyo. It’s increasingly a focus across design, development and manufacture.
Don’t believe me? Then consider how Tesla has managed to get where it is in such a short space of time… It’s not just down to a cool trendy EV. Their working together in a fundamentally different way than their more traditional peers. Alternatively, perhaps consider how a recent software update enabled some of Tesla’s vehicles to improve their energy utilization and range. Other automotive companies have noticed. There’s now a lot of talk about software defined vehicles.
For those familiar with cloud native software development, this should all sound very familiar. Software defined infrastructure (SDI), Infrastructure as a service (IaaS), platform as a service (PaaS) or software as a service (SaaS), for example, are fairly well known and understood, at least in the electronics industry. As a result, the movement towards the digital transformation idea, was already “brisk”. However the challenges provided to us by COVID have recently turned “brisk” into a “sprint”.
A survey, in Oct 2020, from McKinsey, underpins this trend. McKinsey found that responses to COVID have speeded the adoption of digital technologies by several years, and that many of these changes could be here for the long haul…
Digital is now the main interaction method for customers, up from 36% (pre-covid) to 55% (post covid)
Most products are now partially, or fully digitized, up from 35% to 55%
Cost savings used to be one of the major impetuous for digital transformation. Now only 10% of executives think this. Innovation and competitive advantage are now the major drivers for change.
As McKinsey states “The COVID-19 crisis has made this imperative more urgent than ever. While the alignment on overall strategy and strong leadership have long been markers of success during disruptions or transformations, the extent of technology’s differentiating role in this crisis is stark. At the organizations that experimented with new digital technologies during the crisis, and among those that invested more capital expenditures in digital technology than their peers did, executives are twice as likely to report outsize revenue growth than executives at other companies.”
The lesson is clear. The COVID-19 crisis is a tipping point of historic proportions, the ramifications of which have still yet to completely play out.However we can learn from the steps already taken, and take the opportunity to act to ensure we emerge from this crisis, stronger and more resilient than when we entered it. If you’re not aware of some of the agile ideas, methods, processes and tools increasingly being used, now might be a good time to find out more about them!
In addition to the McKiinsey report, which can be had from their website, here, another great reading point can be had from a collection of insights we’ve brought together for NPI, from some of our leading electronics customers, here.