How Accenture is reinventing digital transformation through Industry X.0.
These are unprecedented and exciting times, an era in which the very fabric of human living is being reimagined and redefined every day by the ways in which humans now get to interact with the ‘things’ around them. The ‘things’ have been injected with life; life in the form of software-defined intelligence that can not only make the things ‘think’ and act smartly, but also connect and collaborate with other things and more importantly, with humans. Our social network is not just defined by our friends and relatives any more – there is a new class of friends, in the form of the ‘living things’ all around us. Connectedness has been redefined – it is not only confined to just the 7bn+ humans anymore but is extended to include the 8bn+ ‘smart and living things’ that exist today.
Coexistence with smart living things has evolved into embodied cognition – our smartphones and cars are extensions of our character and profile and they seamlessly transfer the extensions when moving away from one and entering into the space of the other. The rate at which things are getting smarter and connected is staggering. Gartner projects there will be in excess of 20bn smart and connected things by 2020. There has to be a structured and methodical approach to manage this exponential growth of our connected ecosystem such that the inclusion of the new class of ‘smart and living things’ into day-to-day life, is focused on increasing human productivity and efficiency, and ultimately improving our lifestyle. A framework is imperative to making this connected ecosystem work for us.
At Accenture, Industry X.0 is defined as such a framework that underpins the digital reinvention of the industries, through which organizations leverage advanced digital technologies to transform their core business operations in order to reimagine human-centered worker and end-user experiences, and ultimately to drive innovation and growth. New levels of operational efficiencies are harnessed – in the core business operations of research and development (R&D), engineering, product design and manufacturing, by leveraging advanced sensors and networks, and by embedding software-enabled intelligence into integrated products and services. Workers and customer experiences are reimagined and redesigned through immersive and AR/VR technologies. Innovation and growth is accelerated – new business models are formulated and revenue streams generated by unlocking and harnessing the value trapped inside the ecosystem that is developed through connectedness.
One of the fundamental philosophies of Industry X.0 is to transform the core business systems and processes. By introducing modern architecture patterns and principles, legacy systems can be modularized and modernized which then opens opportunities to introduce digital technologies into legacy systems. The digital technologies (e.g. microservices, analytics and immersive user experiences) introduce layers of utilities that unlock the trapped value from such systems and processes. The value realization and operational efficiency gains naturally lead to more viable cost economics. The savings obtained can be subsequently apportioned to invest in rotating the business strategy and innovation to the ‘new’ – an absolute imperative to sustain and thrive amidst the systematic digital transformation of everything. To consolidate, there are six foundational capabilities that should underpin the digital business strategy to systematically rotate to a new digital business:
- Transform the core – invest in digitization along with horizontal and vertical integration of enterprise systems in core business operations around R&D, product engineering & design, and manufacturing operations.
- Focus on experiences and outcomes – shift the business strategy, innovation focus, and core competency away from product centricity and into a needs-first true experiential platform.
- Rearchitect the ecosystem – to identify, assemble and liaise with the right ecosystem partners to drive innovation and differentiated capabilities.
- Innovate new business models – by offering consumer experiences, leveraging industrial consumerism patterns to disintermediate and reach the end consumers, while innovating new revenue streams and models.
- Build the workforce – in a commensurate capacity by new skilling, re-skilling, and upskilling the next generation talent.
- Manage the wise pivot – balance the investment, workforce, and funds allocation between transforming the core and rotating to the new.
The term X.0, in Industry X.0, is neither coined in error, nor it is a misrepresentation of 4.0 (as in Industry 4.0): it has a purpose and rationale. To begin with, the term X.0 is in recognition and acknowledgement of the fact that digital technologies are advancing at such a rapid pace that the technology staging posts can no longer be pinned down for more than a moment; what is 4.0 today is quickly going to progress to 5.0, to then 6.0, and counting. The framework for digital transformations hence needs to be constantly assessed, analyzed and refreshed to take advantage of the rapid advancements.
Secondly, it is important to acknowledge that the essence of Industry 4.0 is based primarily on harnessing operational efficiencies in manufacturing operations by leveraging technology to increase the Overall Equipment Effectiveness (OEE) which is typically defined as the product of Availability, Productivity and Quality metrics. However, digital transformation is truly much more than just the operational efficiency gains. Business value is increasingly favoring innovation around the generation of new revenue streams that is not only driven by innovative As-A-Service business models but also through hyper personalization of consumerism that is driving micro segmentation and hence an exponential expansion of the addressable consumer base. Industry X.0 addresses not only the cost economics driven by traditional operational efficiencies of Industry 4.0 but also the generation of new consumer centric business models and hence new revenue streams. X.0 signifies the exponential pace of progression in digitization.
Digital transformations are technology enabled but business led. Bold innovations are only possible when they are not just episodic in nature, but strongly encouraged by their inculcation into the fabric of the enterprise. At Accenture, Industry X.0 is one of the firm’s strategic growth areas and has aligned focus, investment, capabilities and expertise to be commensurate with the industry direction and demands. Accenture continuously refreshes, refines and leverages the Industry X.0 framework to not only help its clients build a strategic business case and roadmap for digital transformation but also help them initiate, prototype, demonstrate value, and then industrialize and sustain their digital journey.
Innovation in Industry X.0 broadly touches the disciplines of Connected Products, Connected Operations, Connected Worker and the Connected Enterprise. Across all the disciplines there is a resonating shift in business strategy from building products to delivering outcomes through digital services and human-centered experiences around the physical product or an ecosystem of products – there is a palpable shift in strategic innovation away from product centricity to building true experiential platforms. Connected Products has a pathway that typically follows the progression from Products, to Products & Services, to Products & Differentiated Services, and ultimately to Products As A Service. The benefits and value realization follow a similar, but potentially more exponential, uptake path. While the first wave of maturity of connected products enhances products and the spare parts sales, the second wave of Products & Services introduces value through offering customized after-sales plans and hence increased customer touchpoints and engagements. Products & Differentiated Services opens channels for upselling more premium services fostered by increased maturity and sophistication of the product and its overall performance. Products As A Service opens entirely new opportunities for different economic models like risk-and-reward based revenue sharing, ‘pay for what you consume’, as well as other innovative consumption-based payment models. The value progression not only increases the number of touchpoints along the consumer’s interaction with the product but also increases the addressable customer base. It is the layers of utility that are innovatively engineered into the connected product that fosters the exponential uptake; a few of which go on to disrupt the market.
From a technology standpoint, a set of digital technologies are settling down to form the foundation of digital transformations resulting in:
- Autonomous robots – which are enabling smart, connected and intelligent machines to collaborate alongside humans in transforming business processes.
- Horizontal and vertical integration – of the enterprise and business ecosystems (think of partners and suppliers) to develop real-time integrated views of data and networks across the value chain.
- AR/VR – that is reimaging assisted diagnostics, support and maintenance.
- Additive manufacturing – where technologies like 3D (and most recently 4D) printing are used for production of small batches of highly customized and programmable products.
- Cloud – that has helped in commoditizing the compute, storage and network consumption among other well-known advantages of scale and the sharing economy.
- Simulation – providing the ability to digitally simulate entire production assembly lines for rapid prototyping and innovation before even the physical construction has started. Think digital twins!
- Big Data & Analytics – that is truly enabling massive scale data processing and insight generation targeted at timely decision making across the key business processes.
- IIoT – i.e. the Industrial Internet of Things that is enabling the infusion of intelligence into products, processes, and services that communicate with each other and humans over a global network.
- Cybersecurity – ensuring that the enterprise assets, both physical and IT infrastructure, are truly secured from the cyber threat vectors that are continuously on the rise as more systems gets interconnected.
The Industry X.0 framework fosters the convergence of both strategy-led as well as technology-led initiatives with the methodical and systematic focus of helping organizations formulate an innovation driven strategy and pathway for digital transformation that is underpinned by both quantitative and qualitative business value.
An example of a qualitative lever is a business strategy around industrial consumerism. For example, the essential philosophies of industrial consumerism are based on the tenets that:
- The loci of power have shifted out of the organizations and into the hands of the consumer. The ubiquity of choices is leading consumers down the path of intolerance to anything that is mediocre; they have multiple choices to shift to other brands.
- Since the choice and control are now in the hands of the consumers, it is important to develop products with a mindset that is not product first but instead is driven by value-driven end-user experiences. This will be imperative for some organizations, e.g. industrial manufacturers and retailers, so as to leverage the increased number of consumer touch points (with the connected products) and convert them favorably into a consumer behavior that is more collaborative, and ultimately more co-creative, than the current consumption driven mindset.
Innovations that are driven by such mindsets are proven to open up new opportunities and hence revenue streams.
Examples of quantitative value levers are often use-case driven. In boosting operational efficiencies, untapped or unrealized value is more often than not related to availability, productivity and quality of not only the operational processes but also of the final product that is built. Some of the use cases seen as very common across a wide diversity of industries are around:
- Optimized asset utilization.
- Asset downtime prediction and reduction.
- Production throughput and yield optimization.
- Reduction of total maintenance cost – proactive reduction of repair and fix cycles.
- Early detection and mitigation of operator related productivity losses.
- End to end supply chain visibility.
- Quality early warning on both process and product quality parameters.
Another dimension of quantitative value lever is delivered through executing on laser focused initiatives targeted at cost take outs across the various operating business units. Applying the proven framework of Zero-Based Budgeting (ZBB) into manufacturing processes and operations has proven dividends on significant cost take outs. Accenture uses the framework called ZBx where it applies its uniquely tailored techniques of Zero-Based budgeting to spend (ZBs), to supply chain (ZBSC), among other pertinent dimensions. Applying Zero-Based Spend (ZBs) and Zero-Based Supply Chain (ZBSC) techniques and methods to the Cost of Goods Sold (COGS) brings a unique dimension to optimizing operational efficiencies in manufacturing and is leveraged as a part of the Industry X.0 framework.
In order to make Industry X.0 real for our clients, it is important to have an implementation and execution engine – one of Accenture’s flagship differentiators in Industry X.0, as it pertains to the implementation of digital transformations, is called the Digital Services Factory (DSF). DSF is an execution framework that packages a continuously refreshed set of processes, tools, skills, advanced digital technologies and operating models that are carefully designed and packaged to accelerate the clients’ digital transformation journeys.
The primary challenge it addresses is time to market – not only does it takes an enormous effort to bring innovation to market but also some laser focused discipline to pivot on a shifted business strategy, thinking, and core competency that is away from a products-first and into a needs-first, outcome-driven innovation model. DSF works by offering an end-to-end innovation service: from ideation to prototyping, industrializing, scaling, and finally operating the digital business – a combination that is hard to aggregate and harmonize. The framework is customized to suit every client’s unique requirements as well as their current maturity vis-à-vis their desired state in their digital transformation journey. One of the core principles of using the DSF is that it is executed as a joint venture with the client, bringing in not only the best capabilities of Accenture, but also that of the ecosystem’s partners and alliances, to collaborate and co-create along with the client’s best minds. The customized outcomes are then quite easily fabricated into the client’s unique ecosystem. Clients are encouraged to first try using the execution engine before they buy fully into it. Once used and implemented, and once the value realization benefits are obtained through DSF, the clients gain an innovation engine and a well-established factory for building, hardening, and offering digital services to their end customers. There are way too many organizations who have already dipped their feet into innovation through a series of prototypes and proof-of-concepts. However, and as is often seen, it is not until the time comes to industrialize a service or a product or an offering that the true value of DSF comes to the advantage – in terms of scaling an innovation fast and accelerating an offering to market, DSF is the answer.
Nothing succeeds like success, and leveraging the Industry X.0 framework for differentiated advantages – of innovation, agility and time to value – is no different. Although there is a significantly growing number of case studies that exemplifies the true value of leveraging the Industry X.0 framework, two which best illustrate this are Schneider Electric and Biesse Group.
Schneider Electric is a French multinational corporation that specializes in energy management and automation solutions spanning hardware, software and services. Schneider wanted an asset monitoring solution to monitor the heat and humidity of its electrical distribution assets. They wanted to use small wireless thermal sensor technology for sensing, coupled with the LORA wireless protocol for communication. Monitoring the heat signature of its critical assets is extremely important to Schneider not only to extend their lifetime but also from a safety standpoint. This was a very important program for Schneider – important enough that it could not wait for their typical three-year timelines to take an innovation from ideation to the field. Schneider teamed up with Accenture and together they developed and piloted their digital transformation program leveraging the DSF. By collecting data and applying AI and deep learning algorithms, Accenture helped to not only develop and industrialize the service offering but also an operating model to operate it at scale. The service offering helped to not only prevent critical asset failure but also prevent power grid downtime. The true value came when Schneider Electric realized its time horizons from ideation to field enablement were cut from its typical three-year timelines down to a whopping eight-month cycle. The true power of Industry X.0 and DSF was realized.
Biesse Group is a global leader in technologies for processing wood, glass, stone, plastic and metal. It designs, manufactures and distributes machines, integrated systems and software for manufacturers of furniture, door/window frames and components for the construction, shipbuilding and aerospace industries. Based on customer research and the company’s strategy to develop true experiential platforms with new digital capabilities, Biesse Group wanted to improve operational efficiencies, reduce costs and open up new revenue streams such as machine usage analysis and production process optimization, much beyond just machinery production. As part of the roadmap, Biesse Group customers would be able to choose from different subscription levels that offer an extensive range of features from remote diagnostics, warnings and alerts to more sophisticated production process optimization capabilities that help improve overall business productivity and customer satisfaction. They collaborated with Accenture to build the business case, an operating model, and a cloud-based pilot and roadmap, for a connected asset management solution using the Accenture Connected Platforms as a Service (CPaaS) IoT platform deployed on Microsoft Azure.
The platform’s flexible architecture and preconfigured IoT services enabled the team to reduce the overall program complexity and duration using pre-built and pre-configured architectures, technologies and APIs. This enabled Biesse Group to start piloting a solution to clients in only five months. The solution was piloted across eight machines at a subset of customers with services like preventive maintenance alerts, machine management and manufacturing events analysis. The pilot helped Biesse improve customer service and loyalty, reduce warranty and maintenance costs and obtain real-time customer data and alerts. The insights from the field helped Biesse to improve product development, adding features that would be beneficial to the customer. These insights also enabled the company to develop closer customer relationships by providing suggestions on how to get the most productivity and efficiencies from its machines. For customers, the flexible menu of services helps to improve machine productivity and customer satisfaction by minimizing machine outages through predictive maintenance and in-depth analytics. Based on the pilot’s success, the Beisse Group planned to roll out services encompassing 20,000 machines; the progression from pilot to industrialization and accelerated scale out is where the value of leveraging the DSF execution framework became paramount.
To reiterate, it is important to acknowledge that true innovation cannot be sustained through episodic attempts. Innovation should be a continuum, embracing an embedded fabric of continuous exploration, looking for new breakthrough thinking and adopting a culture that fosters an innovation engine. In order to keep up, the rate of innovation must also be exponential. Organizations need to be bold enough to encourage continuous exploration of innovative ideas to stay relevant in the digitally disruptive market. Business leaders must not only embrace but also foster a business culture that encourages bold innovations. At Accenture it is seen as important for even the smartest of business and technology leaders to get away from their daily business routine; quite frequently the best ideas are triggered when leaders and executives are taken out of their daily grind and immersed into an environment that not only fosters high impact disruptive thinking but also provides an opportunity to experience the art of the possible that may be applicable to their business.
Accenture believes in bringing its clients into its global innovation centers that are true showcases of digital transformations in the field of Industry X.0. These innovation centers are set up in true manufacturing like facilities that showcase a diverse display of advanced digital technologies with industry relevance. While some demonstrations focus on operational efficiency gains some others demonstrate the art of the possible in hyper personalization, industrial consumerism and generating new revenue streams. Client leaders brought into such centers are allowed to explore the true art of the possible in technology-led digital disruptions. This induces their creative ideas as they get to touch, feel, and play around with the solutions on display. More often than not, there is at least one solution idea that sparks their interest; clients are encouraged to explore further. In the subsequent session client leaders are taken through a very focused design thinking workshop, organized at the Innovation Center, that is facilitated by a highly trained and specialized team, and in which the areas of interest are aligned to their own business processes. The outcome of such a few hours of high-octane workshops results in the ideation of the most innovative ideas that our client leaders get to take away and make their own. Seeding innovation through such client visits at Accenture’s Innovation Centers have shown startling results for clients and continues to be one of the key innovation entry points for Industry X.0. One of the most recent additions is the Detroit IIoT Innovation Center that was opened earlier this year. Clients are highly encouraged to come visit one of the centers and experience how Accenture can truly help them in their digital transformation journey.
Industry X.0 is truly transformative and is one of the strategic areas of priority as Accenture aligns itself to client needs, demands and expectations. In the current era of digital industrialization, it is Accenture’s structured, systematic, and outcome-driven way of encouraging its clients to approach us with a problem or an idea, and take away with them an innovation that helps them accelerate to market and get into a position of competitive differentiation.
There is an ‘X factor’ in Accenture’s Industry X.0. Come and experience it to drive differentiation for your business.