GE’s New Digital Industrial Evolution Index Hopes To Spur Digital Transformation

There’s a lot of buzz around the Industrial Internet of Things (IIoT), and for good reason: It has huge potential to bring efficiencies to a vast number of industries, allowing these firms to gain a competitive advantage. Many organizations see it as a ticket to rapid automation and growth.

Indeed, a new study from GE reveals that 80% of American business executives believe IIoT will be transformational to their companies and industries. Even more consider digital industrial transformation to be important to their competitiveness.

However, while IIoT adoption may be top of mind for companies, only 8% say that digital transformation is ingrained in their businesses, while 10% don’t have a digital transformation plan in place.  “Within companies, digital readiness and transformation is lagging,” says Jas Klotia, GE Canada’s chief information officer. “It’s been sprung on people very quickly – it’s moved very fast over the last two years.”

To help measure the rate of digital adoption, GE created the GE Digital Industrial Evolution Index. It will track the real progress of digital transformation, which examines not only a firm’s view of digital transformation, but how well it carries out these objectives.

The Index, which launched in October, finds that while outlook for the industrial Internet is strong, scoring 78.3 out of 100, company readiness lags, scoring 55.2 out of 100. The Evolution Index only tracks U.S. companies, but IDC Canada has found similar results. A study it conducted earlier in 2017 found that 89% of Canadian executives are aware of the digital economy, but only 38% are executing on any digital transformation-related strategies.  

Why the disconnect? Because many companies don’t know where to start, says Tony Olvet, group vice-president of research at IDC Canada. “There are too many choices right now,” he says. “They’re getting bombarded by all these niche vendors and they’re trying to make sense of all this.”

Many companies also worry about the costs of automating, however, waiting too long to transform can be an expensive proposition as well. “There are heavy investment costs to get into the game,” adds Klotia. “But if you don’t keep up the pace, one day you will be overtaken.”

Harnessing IT experts
Another reason for the gap is that there seems to be a divide between executives inside and outside of IT on the importance of digital transformation. IDC found that 57% of IT executives say IT transformation will be “somewhat” or “very” disruptive to their business, while only 22% of business executives feel the same way. “It’s not like the executive teams outside of IT don’t want to change,” says Olvet. “They just might not see it in the same way. They’re focused on their tasks – branding and marketing, or their service level agreements.”

However, IT professionals do recognize IIoT’s opportunity, which means they should be talking up the benefits of digital transformation and helping outline  how to make it happen. “They are seeing the potential of applications in emerging technology and scenarios which will really impact their business liability,” says Olvet. “IT execs can provide the guiding path to success.” 

Still, IT teams can’t do it alone. IIoT adoption requires buy-in at all levels of the organization. “IT executives want to apply that innovation internally,” says Olvet. “But they can’t do it alone. There must be a partnership with marketing, finance and operations.”

Making IIoT adoption happen
While there may be a gap now, eventually it will close, says Klotia. However, it won’t occur by itself. Here are several things that companies must do to make IIoT adoption happen.

Have a fearless leader
All too often, senior executives can have a false sense of complacency, says Olvet. They feel that they will not be overtaken by competitors, or they don’t have the tools or skills to adapt. “Sometimes you need a champion who may have a vision that’s independent of day-to-day operations,” he says. “You need someone who wants to bring business and IT together.”

Look internally
Everyone in your organization also must be committed to IT transformation for success to happen, says Klotia. “Every player has to be on board,” he says. “If one link fails, it’s going to slow the process or potentially derail what you’re trying to do very quickly.”

Bring IT expertise to every level of your organization
“Digital transformation leaders need to be hired in every department,” says Klotia. That allows all facets of the business to be aligned in its technological mission. But with this restructuring, organizational changes may have to be made. Klotia says businesses should be aware that if employees need to be let go, competitors are also making these difficult decisions.

Look at big data and analytics
Many firms are sitting on a mountain of data they don’t know what to do with. They need to look at that information to give them insight on how to transform their operations, says Klotia. “What does that really mean to your organization?” he asks. “What are the analytics and tools that can help you? Can digital really help your processes?”

Pull things back
Too many companies have outsourced too much of their business, says Klotia, hiring outside firms to oversee their back office, clean up their enterprise resource planning and perform IT functions. It’s causing firms to lose a sense of control over their operations. Companies should reevaluate what they outsource and do more in-house, he says. When hiring, companies must identify where they need IT talent to help them transform.

Harness the power of the Index
GE’s Industrial Digital Evolution Index can point companies in the right direction and help map out their digital objectives. “It’s really a toolkit that will help you understand the potential of digital transformation. How can you do things more leanly, more smoothly and get more output,” says Klotia.

Klotia says that just randomly bringing in technology and not having a plan can seriously backfire. “You may have the best tool in the world, but if your organization is not aligned to it, then it’s not really going to add any value or increase your profits,” he says. “Digital transformation really has to happen from within an organization.”

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