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Digital Transformation in Manufacturing

Seminar
27 August 2014

Transform to the power of digital

The purpose of this seminar is to present our point of view on Digital Transformation, and
specifically what it means for the manufacturing industry

Objectives
Present some key insights from our digital
transformation research with the MIT
Present and discuss the impact on manufacturing
companies
Key questions:
- What is DT and why now?

Agenda
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing
Manufacturing case examples
Breakout discussions and present back
Summary and conclusions

- What signifies digital leaders?


- In what way are manufacturing companies
impacted and how do they respond

AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing

Manufacturing case examples


Breakout discussions and present back
Summary and conclusions

Transform the power of digital


Copyright 2014 Capgemini Consulting. All rights reserved.

Capgemini Consulting is the management advisory part of the Capgemini Group

Part of Capgemini Group: global leader in


consulting, technology, outsourcing
Global consulting firm with strong local presence

Canada

- Largest consultancy of European origins

All over Europe

Outsourcing

- Capabilities across sectors

Consulting

One of the worlds foremost providers of Consulting, Technology


and Outsourcing services
We enable our clients to transform and perform through
technologies

- Global competency and operating model

Business Model Transformation


Customer Experience
Operational Excellence

Etc...

SECTORS
Public Sector

Australia

CAPABILITY UNITS

Technology

Full service consultancy

Financial Services

Group Workforce: 130,000


Singapore
Brazil
Revenue: 10,092 million
Global footprint
Chile
Strong
performance,
stock +50% since Jan 2012
Argentina

- Some 4,000 mgmt consultants worldwide

Telecom, Media &


Entertainment

India

Energy, Utilities &


Chemicals

Morocco

Peoples Republic
of China
Taiwan
Vietnam
Philippines
Malaysia

Manufacturing &
Automotive

Mexico
Guatemala

United
Arab Emirates

Consumer Products,
Retail & Distribution

United States

Digital Transformation is at the heart of Capgemini Consultings value proposition

Leader in Digital Strategy & Transformation


Top rated capabilities within digital strategy

Capgemini Consulting
in a segment of one
digital specialist

Leader in digital transformation research,


joint research programme with the MIT

Partnerships with technology companies

Top rated thought leadership


Since 4 years, Capgemini Consulting and the MIT Sloan School run
a joint research program to identify how digital leaders manage
or have managed successful digital journeys

Driven by the work of its Digital Transformation Research Institute


and consultancy team, Capgemini Consulting was ranked in the top 5
best consultancies in the world for thought leadership in the second
half of 2013; a rise of 10 places from the second half of 2012.
Capgemini Consultings first significant Digital Transformation study Digital Transformation: A road-map for billion-dollar organizations conducted in collaboration with the MIT Center for Digital Business
in 2011, as part of a three year industry research program, was
ranked in the top 5 thought leadership publications of the last
decade by Source.
Source: Source, a leading market analyst firm for the consulting industry

AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing

Manufacturing case examples


Breakout discussions and present back
Summary and conclusions

Transform the power of digital


Copyright 2014 Capgemini Consulting. All rights reserved.

The real effect of doubling phenomenon is not noticed before you reached the second half
of the chessboard

Do you know the legend of Sissa?

... and Moores law?

The data capacity doubles


every 18 months. We have
now gone through 32
doublings!

We are at the second half of the chessboard (Prof. Andy McAfee, MIT)

Accelerating processing power we are approaching the Singularity

Accelerating pace of change ...

Exponential growth in computing power ...


... By powers of 10
.... Now progressing more each hour than
it did in its entire first 90 years

... Will lead to


the Singularity

A study of different AI expert predictions found a wide range of


Singularity dates, with a median value of 2040
Copyright 2014 Capgemini Consulting. All rights reserved.

The world is in the middle of the Digital Revolution

Electrification led to
innovation
such as assembly line

Digitization leads to the remodeling of products,


capabilities, and business
models

3rd Industrial Revolution

Machines replacing
muscle power

Steam Power led to


industrialization
2nd Industrial Revolution

Machines replacing
brain power

1st Industrial Revolution

Copyright 2014 Capgemini Consulting. All rights reserved.

Digital technologies are part of peoples lives


Bandwidth, devices, content in place for mobile internet usage
Usage increasing

No of users increasing

Forecasted minutes per day spent on mobile device:


time spent doubling, shift towards consumption

Bandwidth

Number of smartphone users


expected to reach 4.5 billion by 2018.

3G / HSPA / LTE
CAGR 25%

Devices
Smartphone
penetration

Content &
services

Consume

Usage

Communicate

Consumerization of
technology

20
Smartphone users spend
128 min/day of which 22
min on talking and SMS

4,5

6,5

The web, applications


and mobile sites

23
13

2011

1,2
2016

2012

2018

167 min / day desktop, 274 min on TV, 26 min /day newspapers

10

Technology is changing the business landscape and leaders views

% of Companies Surviving in the DJIA 1956-2011

More and more leaders agree that technology


is crucial for businesses
Max 7

Significant change in DJIA


composition as several
traditional companies lost
dominance

3,7

80%

1956

1982

2011

% of
Technology 3.3%
Companies 2

3.3%

27%

2010

2000s

33.3%

1990s

2,4

1980s

High proportion of
traditional
companies in both
1956 and 1982

5,9

4,8

% of tech companies
increased tremendously

1970s

100%

No major change in
the composition of
the DJIA between
1956-1982

5,6

Managers in the United States and in Great Britain ranks the business
value of technology and telecom investments. The scale is 1 to 7,
where 7 is extremely important

Source: Capgemini Consulting-MIT Analysis; Historical Down Jones Industrial Average Composition
1 DJIA stands for Dow Jones Industrial Average
2 TME , IT, and Semiconductor companies

11

A few industries have already felt the power of the digital wave
... In Media

... Photo
Share prices

300

BLOCKBUSTER

250
Blockbuster declined offers to
acquire Netflix in 2000 for 50
MUSD...

FUJIFILM

200
150
NETFLIX

100
50

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

... Telecom

1995

KODAK

... Music
REVENUE FROM RECORDED MUSIC ( bn)

2004-2005 Motorola
reaches its peak with
a 22% market share

Napster
(P2P)

2006 Q4 Sony
Ericsson reaches its
peak with a 9%
market share

iPod launched

IPRED law
Spotify launched

12

As all things get connected, business models likely to shift towards data, computations and
priority
Why Google et al are investing billions in networks and smart services
Connections

Things and things


500 Bn devices/sensors

Business model:
Data
Eye balls

Digitization of society & business

Business model:
Data
Computations
Priority

Things and people


50 Bn devices

People

Approx. 23 Bn devices

2014

2020

2050

Time

Digitization continues ... and data will only grow in importance


Combination of central and decentralized compute and data storage
Copyright 2014 Capgemini Consulting. All rights reserved.

13

For us, Digital Transformation is about utilizing new technologies to radically change,
improve and future-proof an organization and its business

DIGITAL MATURITY MATTERS

THE DIGITAL WAVE AFFECT ALL TYPES OF INDUSTRIES AND COMPANIES - NOT JUST
HIGH-TECH PLAYERS ALSO MORE TRADITIONAL INDUSTRIES

COMPANIES THAT SUCCESSFULLY MANAGE THE TRANSFORMATION ARE THE FUTURE


LEADERS IN THE MARKET

COMPANIES THAT WANT TO RIDE ON - AND NOT BE WASHED AWAY BY - THE DIGITAL
WAVE HAVE TO ACT NOW

14

To truly understand the new challenges and opportunities in a digital world, we entered
into a research partnership with the MIT some 4 years ago
Capgemini Consultings partnership with the MIT
Capgemini Consulting and MIT are partners in the
study of digital transformation

The objective is to understand how the digital winners

Prof. Eric Brynjolfsson


Director of MIT CDB
Digital productivity

are managing (or have managed) their digital


transformation, starting from brick and mortar and
moving to a digital company, and to identify some
guiding principles and best practices.

MIT CDB studies the challenges of leading global organisations in


their digital transformations and the importance of the new
digital economy, founded in 1999

Prof. Andy McAfee


Principal investigator
Enterprise 2.0/Management
implications of Digital

Prof. George Westerman


Project lead

Technology & Organisation

Capgemini Consultings 'Digital Transformation: A Road-Map for Billion-Dollar Organizations' developed


with the MIT was just ranked in the top 5 publications of thought leadership of the last decade
Copyright 2014 Capgemini Consulting. All rights reserved.

15

Question 1

Copyright 2014 Capgemini Consulting. All rights reserved.

16

Digital Transformation is on top of CXOs agendas

We want P&G to be the most digitallyenabled company in the world


Bob McDonald, P&G, CEO

Digital has been a catalyst for


everything in the company
Angela Ahrendts, Burberry, CEO

Digitalisation will become part of our DNA


Joe Gross, Allianz Group, Head of market
management

Europe is facing a digital transformation.


Data is the new oil for the digital age. So we
are planning to shake up how public
authorities share data.
Neelie Kroes, VP European Commission

Boeing believes the future of the aviation


industry lies in "the digital airline. Materials,
componentry, construction methods,
manufacturing methods, the whole digital
revolution We are embedding all that
thinking into the product.
Copyright 2014 Capgemini Consulting. All rights reserved.

17

We have defined digital maturity along two different dimensions: Digital Intensity and
Transformation Management Intensity

technology-enabled initiatives to change how


the company operates its customer
engagements, internal operations, and even
business models.
SMAC

Digital Intensity

Digital Intensity is investment in

Location-based marketing
Customer Service in Social Media

Transformation Management Intensity

Connected Products

Mobile sales
Digital Design

Transformation Management
Intensity consists in creating the leadership
capabilities necessary to drive digital
transformation in the organization.
Digital Vision

New skills
Cultural change
Cross-silos coordination and governance

18

Digital leaders outperform their peers

Four levels of digital maturity based on a


combination of hard and soft factors

Digital leaders outperform their peers

Beginners

Fashionistas

Digital intensity

What is the
organization doing
with Digital
Technologies?
--- hard stuff ---

6%

Many advanced digital features


(e.g. social, mobile) ...
... but in silos
No overarching vision
Underdeveloped coordination
Digital culture may exist in silos

Beginners

65%

Management skeptical of the


business value of advanced
digital technologies
May be carrying out some
experiments
Immature digital culture

Digirati

Conservatives

Digirati

15%

Strong overarching digital vision


Good governance
Many digital initiatives
generating business value in
measurable ways
Strong digital culture

Conservatives

Fashionistas

9%
6%

Revenue

-4%
-10%

26%

14%

Overarching digital vision exists,


but may be underdeveloped
Few advanced digital capabilities
in place
Strong governance cross silos
Taking active steps to build
digital skills and culture

Transformation management intensity


How is the organization
managing this
transformation?
--- soft stuff ---

9%

Profitability

-11%
-24%

12%
7%

Market valuation

-7%
-12%

Source: Capgemini Consulting & MIT

Most companies now recognize that digital is critical ... But the pace is too slow
(unless youre the CEO)
When will it become critical to implement DT
across the organization?

27%

That time has passed it is already


a matter of survival

The pace of implementation of digital


transformation in the organization

15%

11%

32%

78%

18%

33%

13%
5%

10%

Fast or Very Fast

25%

22%

About Right

64%

67%

38%

This Year

Within the next


2 years

47%
3 years or more

11%

57%

Slow or Very Slow

Its never going to become


important across the entire
organisation

CEO

C-Level
Managers
executives

Staff

20

A lack of sense of urgency is the biggest barrier to Digital Transformation

Many managers feel no urgency as few


leaders offer a vision or road map for DT

Barriers to Digital Transformation

Other 7%
The vast majority of employees
support the digital vision when
senior leaders share it

Agree
20%
Strongly Agree
73%
Shared their
Digital Vision:
36%

No "burning platform" /

39%

Not enough funding

33%

Limitations of IT systems

30%

Roles and

... But few CXOs actually do


share their digital vision ...

28%

Lack of vision

28%

Unclear business case

27%

Business units

24%

Culture not amenable to

Did not share their


vision: 64%

19%

Lack of leadership skills

Percentage of respondents who think that leadership is


aligned on a road map

Fashionistas, Conservatives, Beginners

...or a clear /
<25% aligned road map

Digiratis

>40%

Regulatory concerns

16%
9%

21

Question 2

Copyright 2014 Capgemini Consulting. All rights reserved.

22

Most digital initiatives focus on improving the customer experience

Most digital initiatives focus on CX


Our digital initiatives are
helping us to: ...

1,880
Ensure xchannel
consistency

Enhance our
existing
products
services
Launch new
products and
services

Improve the
customer
experience

Customer Experience

1,260
Improve
internal
comms
Enhance the
productivity
of workers
Automate
operational
processes

1,090

Transition physical
products / services to
digital ones
Develop new
business models
Launch new
businesses

Expand our reach to


new customers and
markets

The customer is the first priority


Top-line focused programmes
Easier to get funding

... Or lipstick on the pig?

Operational Improvements Business model change

Copyright 2014 Capgemini Consulting. All rights reserved.

23

In our experience, companies have not followed optimal path to increase digital maturity

Fashionistas

Digirati

How to become a Digital Leader? What steps?

Optimal

Digital Intensity

Common

A combination of hard and soft factors required


Priorities and initiatives to address both Digital
Intensity and Transformation Mgmt dimensions

Beginners

Conservatives

What signifies the Digital Leaders we have


studied, do they exhibit common characteristics?
Transformation Management Intensity

Commonly chosen path in the Digital Journey


Start with customer facing / tangible activities
Early and costly failures due to silo structures, lacking strategy and no
transformation agenda
How to find the management courage to increase investments after initial failures
Holistic perspective required

24

Question 3

Copyright 2014 Capgemini Consulting. All rights reserved.

25

Companies are digitally transforming across three key dimensions


Digital Leaders have a common DNA 1(3)
Digirati distinguish themselves by excelling in one or more areas of digital intensity

26

Digirati are far better than other types of firms at changing their business models
Digital Leaders have a common DNA 2(3)

Digirati are able to link their implementation


capabilities and leadership capabilities to
fundamentally transform how the company
operates. Companies in other quadrants are
less able to do so.

The business model changes include:


Adding value to products and services
Reaching new customers
Linking operational and customer-facing
processes in new ways
Launching new businesses
Customizing products and services
Operating as a more unified enterprise

27

Though every companys journey is unique, certain combinations of


investments appear to be complementary
Digital Leaders put focus on Analytics and Data Integration fundamental to
radically improve both customer experience and operational excellence
Engage customers

Internal operations

Social Media
-

Investments in digital
technologies the SMAC stack

Monitor reputation
Promote & sell products &
services
Provide customer service
Build customer /ecosystem
communities

- Social
Process
Digitization

Analytics
-

Target marketing more


effectively
Personalize marketing
communications
Optimize pricing
Better qualify sales prospects

Customer
Experience
-

Cross-channels consistency
Personalize the customer
experience
Offer self-service

Mobile Channel
-

Automating processes
Monitoring operations in
real-time
Adaptability to external
changes

- Mobile

Internal
Collaboration
-

Active knowledge sharing


Use of internal social
networks and video conf.
Working anywhere, anytime,
any device

- Analytics
- Cloud

Data integration
- Usually with cloud as a
change agent

Data Integration
-

Customer Data
Other data (finance, supply-chain, operations)

- Fundamental to get leverage


on other capabilities

Analytics capabilities to
operationalize the data

Promote products & services


Sell products and services
Provide customer service

Digital leaders realize that data is a critical asset to harness

28

Digirati invest 100% in transformation management


Digital Leaders have a common DNA 3(3)
Four key transformation management practices enable companies to align their digital efforts under a
common vision and coordination structure, and engage the company in making that vision a reality
Digital Leaders have crafted a compelling digital vision that
incorporates the companys strategic assets

Vision

Effective investment rules and


coordination mechanisms improve
efficiency and ensure digital efforts
are moving in the right direction

Governance

Engagement

IT
Business

When employees are engaged in a


shared vision they help to make it a
reality, offer less resistance to
change and often identify new
opportunities

Digital leaders get Business & IT to work together


even if it means substituting people and processes
as well as the technology

Digital Transformation needs to be shaped, driven and sustained from the top of the organization
Focus on the How more than the What
29

AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing

Manufacturing case examples


Breakout discussions and present back
Summary and conclusions

Transform the power of digital


Copyright 2014 Capgemini Consulting. All rights reserved.

30

In our research we concluded that the typical manufacturing company remains a digital
beginner in the context of Digital Transformation
Digital maturity by industry
Some industries are more mature than others...

... but there are digital leaders in every industry


Share of Digirati per industry

Telecom

Digital intensity

Travel & hospitality


Strong in social and mobile
Need to focus on crosschannel consistency, worker
enablement and analytics

Pharmaceuticals

Fast to launch digital


initiatives
Need to integrate and
align initiatives across silos

High Tech
Retail

Banking

Insurance
Utilities

Manufacturing

38%

Banking
Bank &
Finans

35%

Insurance
Frskring

33%

TravelResor
& hospitality
& service

FMCG

See less opportunity / threat


in digital transformation
Need a transformative digital
vision and the leadership
drive

High
High Tech
Tech

31%

Telekom
Telecom

30%

Detaljhandel
Retail

26%

Konsumentvaror
FMCG
Strong digital
governance
capabilities, but
cautious to investing
Regulatory worries and
a risk-averse culture

Transformation management intensity

24%

Energi
Utilities

20%

Tillverkning
Manufacturing
Lkemedel
Pharmaceuticals

12%
7%

Only 12% of the manufacturing companies can be associated to the Digirati


Copyright 2014 Capgemini Consulting. All rights reserved.

31

Digital manufacturing leaders are outperforming their peers, especially on the How
dimension

Consistent with other industries, compared to their


industry peers, digital leaders stand out on the HOW
... The horizontal axis in our digital maturity matrix
Generally, Manufacturing is behind other industries in
business model and customer experience
- Move from product to service, but taking time
- In a B2B context, Dealer structures inhibiting
end-user / customer relationships

How are the digital manufacturing leaders different?


Copyright 2014 Capgemini Consulting. All rights reserved.

32

For manufacturing companies DT is blue skies ... but still have a limited view of what
they should do and how to do it

Positive about DT opportunities ...


Disagree

Neutral

Agree

Digital transformation is a
competitive opportunity for our 12%14%
company

Our competitive position will suffer


if we do not engage in digital
transformation
Digital transformation is a threat to
our company's status in the industry

... But no aligned plan in place


Disagree

There is a high-level roadmap for


digital transformation

74%

21% 12%

74%

67%

12%14%

Neutral

Agree

43%

23%

Senior executives and middle


managers share a common vision of
digital transformation

55%

17%

Senior executives have a digital


transformation vision that involves
radical changes

51%

26%

34%

28%

23%

83 % of the manufacturing Digirati have a comprehensive


vision and a roadmap towards digital

We fear that most manufacturers are not yet realizing the potentially disruptive shift about to come
Copyright 2014 Capgemini Consulting. All rights reserved.

33

Question 4

Copyright 2014 Capgemini Consulting. All rights reserved.

34

Many manufacturing companies need to scale up capabilities on both the customer side
and the operations side and above all, become more data driven

Customer engagement
Disagree

We use analytics to target


marketing more effectively
We use digital technologies to
enable self-service

We improve our knowledge of


markets and customers through
devices embedded in products

Neutral

53%

60%

70%

Internal operations

Agree

Disagree

18%

29%

17% 23%

15% 15%

Neutral

Our core processes are automated

We monitor our operations in real


time

Our operational processes can adapt


quickly to external changes

19%

Agree

30%

42%

51%

51%

20%

23%

38%

26%

67% of the digital leaders use analytics to

83% of the Digital Leaders in manufacturing monitor

target markets and customers

their operations in real-time, and 100% have


automated their core processes

Digital Leaders are much more data driven than their peers
Copyright 2014 Capgemini Consulting. All rights reserved.

35

Softwareization of vehicles and machines, prompt current players to develop their


positioning and business models
Vehicles and machines to become softwaredefined opportunity and potentially disruptive

Parallel: the telco industry software defined


networks and virtualization of functions

New players
New business
models

Virtualized networks create an opportunity for Ericsson to leverage its unique assets to offer cloud serv

New business
processes

Telecom and IT merges


Business applications and cloud services

New entrants

Revenue
growth
Software

New
battlefield

and clashes

APIs

Apps

Office

Platform

Windows

HD, processor,
Infrastructure
network

CIO

Telco / other
Opportunity for
new

Centralized logic with software and services to


control the network infrastructure

Telco / other
entrants to disrupt
the
Software & data
centers
Network / infrastructure layer

Opportunity for telcos to


CTO

$
Hardware /
equipment

Hardware

telecom spaceTelco

Network virtualization
creates a potential
conflict of interest and
mandate bw. CIO & CTO

re-use capabilities for new


revenue growth

Current leaders

Profit
squeeze

Competition and collaboration on system and


platform level

IT leaders to make inroads into the telecom


industry, telcos aim to enter the IT market
Copyright 2014 Capgemini Consulting. All rights reserved.

36

Manufacturing leaders focus on cloud enabled common platforms for their operations

75 % have a common platform

48 %

for different business units

43 %

67 % state they have an


integrated view of product
& service performance

38 %

67% believe to have an

We are only at the beginning of the


digitization of the manufacturing industry
The digital leaders are taking steps to
enable a shift in business model from
physical hardware to digital software

integrated view on

customer data
56%

100 %

state they have an integrated

view on supply chain status


Manufacturing
average

Top-performers
(Digirati)

Copyright 2014 Capgemini Consulting. All rights reserved.

37

Over time, the vehicle and manufacturing industry to move into more advanced services
requiring more capable infrastructures and platforms
Vehicle and manufacturing leaders to develop
capabilities required for future digitization
Maturity &
complexity

5 yrs -

Autonomous
machines & V2V
communications

2 yrs Now

Fleet mgmt and


predictive asset
maintenance
Capability examples:
Connected machines
data collection
Over the air PAM
Remote diagnostics can
ensure proper
functioning, minimum
down time and lower
fuel consumption

Dynamic machine &


vehicle customization
Capability examples:
More capable platforms
with the ability to push
updates and new
services simultaneously
across entire fleets
Security, e.g.
authentication services
Enable collaboration
across ecosystem

Capability examples:
Infrastructure with
elastic networking,
supporting vehicle to
vehicle and close to the
edge compute &
communication
Advanced security e.g.
signature services, to
manage end to end
SLAs
Compliance to
regulations / policies
Standardization and
interoperability

Vehicle and manufacturing players will need to develop their


software offering and operation
Increasing need for a common platform
Move from data collection to remote management (updates &
upgrades) of the software
Risks, examples
- There may be a push for separation of hardware and
software, which is likely detrimental for current business
- Risk that current leaders get disrupted by new entrants with
less vested interest

Opportunities, examples
- New revenue possibilities primarily on the software side
- Need to leverage e.g. installed base
- Need to build an ecosystem

Microsoft model or Apple model


Time

- Open or closed
- Software-led or hardware-led

Digital Leaders are years ahead of their peers


Copyright 2014 Capgemini Consulting. All rights reserved.

38

Question 5

Fashionista

Digital intensity

Many advanced digital features


(e.g. social, mobile) ...
... but in silos
No overarching vision
Underdeveloped coordination
Digital culture may exist in silos

Beginner
Management skeptical of the
business value of advanced
digital technologies
May be carrying out some
experiments
Immature digital culture

Digirati
Strong overarching digital
vision
Good governance
Many digital initiatives
generating business value in
measurable ways
Strong digital culture

Conservative
Overarching digital vision
exists, but may be
underdeveloped
Few advanced digital
capabilities in place
Strong governance cross silos
Taking active steps to build
digital skills and culture

Transformation management intensity

Copyright 2014 Capgemini Consulting. All rights reserved.

39

AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing

Manufacturing case examples


Breakout discussions and present back
Summary and conclusions

Transform the power of digital


Copyright 2014 Capgemini Consulting. All rights reserved.

40

(Modular, Flexible, Boundless)

What do we see manufacturers focusing on?


Lets look at some cases

Copyright 2014 Capgemini Consulting. All rights reserved.

41

A trailer manufacturer delivers networked and integrated transport solutions


Smart Products | Use Case

A smart two-way communication


with the refrigeration unit can protect
against damage when transporting
temperature-controlled freight

Background
Real-time sharing of operational data
to customer and manufacturer is not
sufficiently provided
Operated trucks, especially with the
refrigeration unit, are not centrally
integrated from the customers point
of view

Solution
Telematic tools deployed in the trucks
track maintenance-status, weightload, cargo-temperature and the
location
Two-way communication between the
truck and both customer and
manufacturer as a continuous data
link

Benefits
Better integration of connected
support services such as efficient
truck maintenance based on proactive servicing
Enhanced item demand forecasting
to further improve supply chain
efficiency
Improved product development
based on detailed insights on truck
performance and actual usage
patterns
Copyright 2014 Capgemini Consulting. All rights reserved.

42

A leading building automation company designed a digital service management platform


to enable the delivery of innovative remote service offerings
Smart Services | Use Case

Service digitization increases the


efficiency of service delivery and
ensures the delivery of high-quality
services at low costs

Background
Intention to offer innovative remote
services
Renew and expand the IT platform to
offer / extend value added services
Create a better customer experience

Solution
Definition of function, role and
process requirements for operating
the remote service portfolio
Design of a target IT architecture for
digital service management
Implementation of an advanced digital
service management platform

Benefits
Business structure and IT perfectly
respond to business needs
Deliver innovative service offerings
through highly automated and
efficient processes

Copyright 2014 Capgemini Consulting. All rights reserved.

43

Easy-to use tools are available through cloud-based platforms, from solutions for idea
generation and crowdsourcing up to complex engineering activities
Extended Innovation | Use Case

If collective intelligence is such a


powerful way for organizations to
get things done [...] why dont more
businesses use it? The answer, we think, is

they dont know how.


Founders of the MIT Center for Collective Intelligence

Background
When benefits are difficult to
quantify, decision-makers are
reluctant to invest into new
platforms or tools
But integrating the surrounding
network of customers, suppliers or
partners into the idea generation
and product development process
requires structured tools

Solution
Cloud-based, enterprise-grade
innovation and collaboration
platforms are now easily available
They provide functions such as
SharePoint integration, CAD
capabilities, social media analytics,
content sharing
Examples: Local Motors, AutoDesk
360, SpigitEngage, IdeaScale

Benefits
Enables Extended Innovation in
variable intensity, as needed
Integrates a multitude of possible
channels
No heavy up-front investments
required

Copyright 2014 Capgemini Consulting. All rights reserved.

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A collaboration platform enabled a world-class aircraft and rocket engine manufacturer to


engineering collaboration across the extended-enterprise
Agile Collaboration Network | Use Case

Through Agile Collaboration


Networks, manufacturing companies can
truly leverage the opportunities arising
from the globalized marketplace for
know-how.

Background
Need to globally collaborate all along
product life cycle with more
suppliers and partners
Real time collaboration of internal
and external users around digital
mock up must be improved
Communication must be facilitated
Partners and suppliers dont have a
direct access to product
configuration

Solution
Implementation of collaborative
solutions based on TeamCenter
Unified Architecture (TCUA) to share
configurations and digital mock up
with external partners and suppliers
Definition of product data model
Reengineering of modification
processes in order to find the right
balance about the rhythm of
evolution into digital mock up and
PLM corresponding configurations

Benefits
Global transparency about demand
and resource availability through
consolidation across all levels of the
network
Validation of plans by checking sales
plans against network planning
quantities
Reservation of agreed quantities to
ensure delivery reliability
Triggering the investment process at
an early stage
Copyright 2014 Capgemini Consulting. All rights reserved.

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Situational adaption of product lines enables just-in-time production, minimized batch


sizes and optimal capacity utilization
Decentralized Production Control | Use Case
Development
Services
(Product/
Production
System)

Product
definition

Self-adjusting elements and production


stations enable dynamic transformation
of production lines in regard to order,

Production
Systems

Production
Services

function and amount of used modules

Purchasing
Services
Assembly
Services
Quality
Mgmt.
Services

Delivery
Services

Maintenance
Services
Erection &
Installation
Services

Background
Hitherto, production planning and
control processes are rigid,
centralized and decoupled even from
the intra-company ERP system
The layout of production facilities is
equally obtained through rigid,
hierarchically structured planning
processes

Solution
Formulation of systematic production
processes to be run on modularized
production lines
Automated reconfiguration of
production modules in response to
market demand
Production lines are connected in a
cross-company network

Benefits
Plug & Produce capability of
production modules allows for
dynamic integration in production
cycle
Under-utilization and resulting
excess capacity may be transferred
to business partners

Copyright 2014 Capgemini Consulting. All rights reserved.

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Chip manufacturer Intel designed and implemented a data-driven chip testing process
resulting in significant operational cost savings
Data-driven Operational Excellence | Case Study
Techniques of big data analysis
applied on core value processes can
lead to annual savings of several

million USD

Background
Highly automated production
facilities generate about 5 TB of data
every hour
In the past, the potential arising from
this data was not leveraged to drive
its core competency of high volume,
precision manufacturing

Solution
Intel initially launched several pilot
projects to discover the potential
arising from data
By this, a business analytics solution
was designed that optimizes test
procedures of a specific production
line
Previously, all produced chips were
run through an extensive series of
tests

Added value
The model results were leveraged to
significantly cut down the number
of conducted tests
This led to cost savings of
USD 3 million within the first year
By rolling out this solution to all
production lines, annual savings of
USD 30 million are expected

Copyright 2014 Capgemini Consulting. All rights reserved.

47

Question 6

Copyright 2014 Capgemini Consulting. All rights reserved.

48

The future manufacturing business model will focus on customized, smart products,
supplemented by highly targeted services, delivered in open ecosystems
The Future Manufacturing Business Model

The Future Manufacturing Business Model will be based on customized, connected


products, data-driven services and increasingly service-based operating models
The virtual product model will be a major output or resource

Value creation organized through open ecosystems:


We will see a specialization even of big players in very specific fields , in which
they will provide leading, modularized products & services
Those will be used in plug & play style for the interconnected value propositions
In the future, manufacturers should therefore focus their business model on:
The best possible integration into the relevant ecosystems
Providing specific services with high value-add

Copyright 2014 Capgemini Consulting. All rights reserved.

49

AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing

Manufacturing case examples


Breakout discussions and present back
Summary and conclusions

Transform the power of digital


Copyright 2014 Capgemini Consulting. All rights reserved.

50

Breakout: instructions

Purpose
To have a joint discussion and understanding of the importance of DT to Volvo and its implications
2 perspectives: external and internal

What

Split into 4 breakout groups (3 groups locally, 1 virtual/phone)


2 groups to discuss external perspectives of DT and relevance for Volvo Group
2 groups to discuss internal perspectives of DT and relevance for Volvo Group
Each group has an assigned leader, who will also present back to the large group on behalf of the
breakout group

Time
30 min parallel discussions within each breakout group
4 x 5 min present back from each breakout group
2 x 5 min joint reflections and discussion (per perspective)

Copyright 2014 Capgemini Consulting. All rights reserved.

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Breakout group 1 and 2

Ambitions
(strategy)

External
change
(CuEx)

To what extent is DT important to Volvo Group?


What is Volvos current digital maturity
What are the key objectives?

What should Volvo do within the next 3 yrs in terms of:


Customers
Markets
Competition
Products & services
Channels

Copyright 2014 Capgemini Consulting. All rights reserved.

52

Digital flipchart Group 1

Ambitions
(strategy)

External change
(CuEx)

To what extent is DT important to Volvo Group?


It is important (considering the digital
transformation all around the world)
What is Volvos current digital maturity
Incosistant, case by case, not clearly imbedded.
What are the key objectives?
Defining the unified brand
experience/Platform.
Define the ownership of the data. (Product,
Customer, Market)
Combine this data with customer needs for
sustainable business models.
Time to market/ Agile development
Platforms for involving customer collaboration
in product development and also in
operations/services.

What should Volvo do within the next 3 yrs in terms of:


Customers
Offering new solution .
Develop the knowledge about total offfer.
Markets
Getting insights for new markets.
Extending the established digital platforms to
new markets/use existing information for new
Competition
Collaborating with information
Benchmarking
Products & services
Digital services, solutions.
Channels

Copyright 2014 Capgemini Consulting. All rights reserved.

53

Digital flipchart Group 2


Ambitions
(strategy)

External change
(CuEx)

The presentation only manufacturing, not the whole


company (development, AM etc).
E.g. AM has a suggestion, but is getting a no even though
there is a business case. Because product cost goes up.
Society goes towards a DT so Volvo cannot stand outside.
Will new competitors show up quickly? EX: An AM company
that only sells services for automation.
Other competitors are not too good either, so not critical to
work on this -> low prio.
Digital maturity historically quite high at Volvo, but today
we are not unified e.g teamplace, we are not really using the
potential. Why? no training. Technical mature but not so
good to capitalize on it. Ex: CareTrack no service connected to
this.
Key objectives? well there are no decisions, but what we
consider? Cost saving goal 2%, quite contra-productive. There
are different IT cost that should be steered differently, e.g.
admin systems, product IT, services etc.
Key objectives: to standardize and harmonize all applications.
All legacy systems. With fewer applications, fewer sources ->
easier to get info.
Negotiate globally regarding applications. Ex: VCE you buy
an own system if you cannot find exactly what you want we
need a stronger corporate. New org can give this?

To make customer value, capitalize


Take the services and soft products to the market, to sell in.
Must give customer value. Something that the customer will
save money on.
Our customers are not in the frontline of DT. To sell in
digitilization to these customers is a challenge. Cool features
are not the thing.
We must have a better dialogue with the customer to get
there needs.
Requires also training, ex: how to drive to save fuel, to create
effectivness in the customers processes.
Should we broaden our views for customers and services? ->
goal 50% to be soft products not reached.
New ideas, the ideas that are today are quite futuristic.
Ex: fleet management, we do not earn much, more a
competitive thing.
We must look on the maturity and need for different
markets, NA or Africa does not have the same.
VCE: AM, engine is sold to the wrong market, cannot be
supported locally.

Copyright 2014 Capgemini Consulting. All rights reserved.

54

Breakout group 3 and 4

Ambitions
(strategy)

Internal
change
(OpEx)

To what extent is DT important to Volvo Group?


What is Volvos current digital maturity
What are the key objectives?

What should Volvo do within the next 3 yrs in terms of:


Organization
Governance
Skills
Technology

Copyright 2014 Capgemini Consulting. All rights reserved.

55

Digital flipchart Group 3 & 4

Ambitions
(strategy)
Yes to a certain extent.
Great opportunity for developing services for
our sales operations.
Within manufacturing we are quite mature.
Key objectives:
Grow business from digital driven service
solutions
Stepwise improvement of our operations by
implementation of improved techinal
solutions (Lync etc)
Big data management for improvement

Internal change
(OpEx)
Technology:
Reduce the number of systems
Fit the systems to the service oriented
company
Skills:
Improve knowledge from data to learn about
our customers business/industry
Governance
Improve measurement cross organization (big
data)
Adherence to our process
Organization

Copyright 2014 Capgemini Consulting. All rights reserved.

56

AGENDA
About Capgemini Consulting
Digital Transformation
Digital Transformation in manufacturing

Manufacturing case examples


Breakout discussions and present back
Summary and conclusions

Transform the power of digital


Copyright 2014 Capgemini Consulting. All rights reserved.

57

The 7 myths of Digital Transformation


MYTH

REALITY

THERE ARE DIGITAL LEADERS OUTPERFORMING THEIR PEERS IN

DIGITAL IS FOR MEDIA, TECHNOLOGY AND B2C COMPANIES

DIGITAL TRANSFORMATION IS A BOTTOM-UP PHENOMENON

DIGITAL TRANSFORMATION MUST BE LED TOP-DOWN

ONLY THE CUSTOMER EXPERIENCE MATTERS IN DIGITAL

DIGITAL LEADERS CREATE PROFOUND CHANGES IN BUSINESS

TRANSFORMATION

MODELS AND OPERATIONS AS WELL

THERE IS NO RECIPE FOR DIGITAL TRANSFORMATION

DIGITAL LEADERS EXHIBIT COMMON CHARACTERISTICS

DIGITAL TRANSFORMATION CAN HAPPEN DESPITE IT

I HAVE PLENTY OF TIME

IM SAFE, MY DIGITAL TRANSFORMATION IS COMPLETE

EVERY INDUSTRY

ALL DIGITAL LEADERS HAVE BUILT SOLID IT-BUSINESS


RELATIONSHIPS AND TECHNOLOGY CAPABILITIES

DIGITAL TRANSFORMATION TAKES TIME AND SOME OF YOUR


COMPETITORS ARE ALREADY LEADING THE RACE

TECHNOLOGIES NEVER STOP CHANGING AND NEW BUSINESS


MODELS ARRIVE EVERY DAY

58

Concluding discussion

Feedback
How was the seminar overall?
Good
Room for improvement
Did we meet your expectations?
YES
To some extent
NO
Discussion & qualitative feedback (no poll)
Benefits? What was good / interesting?
Concerns? What should we have done
differently?

Copyright 2014 Capgemini Consulting. All rights reserved.

59

Concluding discussion

Feedback
How was the seminar overall?
Good
Room for improvement
Did we meet your expectations?
YES
To some extent
NO
Discussion & qualitative feedback (no poll)
Benefits? What was good / interesting?
Concerns? What should we have done
differently?

Thank you very much for the opportunity to be here, and the interesting discussions!
Copyright 2014 Capgemini Consulting. All rights reserved.

60

Want to learn more about Digital Transformation?

Go to capgemini-consulting.com ...

... for our main research & publications

Copyright 2014 Capgemini Consulting. All rights reserved.

61

Ulf Jansson

Karl Bjurstrm

Manufacturing & Automotive

Digital Strategy & Transformation

+46 703 78 14 76
ulf.jansson@capgemini.com

+46 706 80 46 23
karl.bjurstrom@capgemini.com

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