The Pace of Digital Transformation is Accelerating

Digital transformation promises to make engineering companies better, faster and more profitable. But that transformation doesn’t come easily.

That’s because digital transformation is a lofty goal: it’s nothing less than the end-to-end digitization of your company’s data and processes, all of it seamlessly connected to enable optimization, automation and the generation of novel business insights. Hardly an overnight upgrade.

Many companies have taken a slow-and-steady approach to digital transformation, but the overall pace is changing. In a 2021 survey on digital strategy in the post-pandemic era, consulting firm McKinsey spelled it out plainly: “What was considered best-in-class speed for most business practices in 2018 is now slower than average.”

There are a few explanations for the acceleration of digital transformation. It’s not all because of COVID, although the pandemic played a role. A timely convergence of maturing technology and a changing workforce is creating increasing pressure to transform, and the average company must now think more deeply about its digital strategy—and act decisively—to keep up with the competition.

Technology is Ripe for Digital Transformation

Digital transformation requires a coalescence of many technologies: semiconductors, battery storage, telecommunication protocols, enterprise engineering software, artificial intelligence and many more. As each of these individual technologies has improved, it has brought the possibility of digital transformation a step closer.

A case in point is one of the oft-cited enablers of digital transformation: the Internet of Things (IoT), the global wireless network of every thing from a milling machine in a factory to a moisture sensor on a cabbage farm. Everything in the IoT needs a sensor, antenna, processor, protocol and power source, and operators need effective hardware, software and network infrastructure to manage a full fleet of things and process the data they generate.

And if all those technologies align, it’s well worth the effort: each IoT node becomes a source of real-time data that engineers can use to analyze and optimize systems from production lines to agricultural operations.

Data is the key to digital transformation, and we’re in the midst of a data explosion. There were 8.6 billion IoT devices in 2019, and there will be nearly 30 billion by 2030, according to market-data provider Statista.

Companies need a plan for all that data, which leads to another technology often uttered in the same breath as digital transformation: the cloud, that fluffy euphemism for the virtually unlimited data processing and storage capability that’s become ubiquitous in the modern era.

The cloud isn’t new, but it has reached new heights. In 2015, about a quarter of all the world’s data was stored in the cloud, according to research firm Cybersecurity Ventures. It predicts that by 2025 the cloud will hold half of all data in the world, hosting an incomprehensible total of 100 zettabytes (that’s 100 billion terabytes).

The cloud offers an affordable and scalable way to manage data, a fact that has not gone unnoticed by engineering technology providers. Autodesk recently announced that it will retool all its software to be cloud-native. It’s not alone amongst engineering software providers. Altair, Ansys, Dassault Systèmes, PTC, Siemens and many others have made major investments in cloud-based platforms for CAD, CAM, simulation, PLM, ERP and more.

“Today many software vendors are including advanced digital capabilities into their solutions, including AI and ML models, digital twins and collaborative product design and development, for example. These advancements are enabling digital transformations to take place at scale and more quickly than ever before,” says Bill Lenihan, Manufacturing, Distribution, Logistics and Retail Industry Lead for Hartman Executive Advisors, a technology advisory firm.

Technology races ever on, clearing ever more obstacles in the path of digital transformation. That’s one reason the average company is increasingly hawkish on digital transformation. However, it’s only half of the equation.

People Expect Digital Transformation

Engineers are people too, and the engineering workforce is changing. Some of those changes are obvious and mundane. The inexorable march of time replaces aging engineers with young upstarts, a natural passing of the torch. But did you know that there are many more young engineers entering the workforce than older engineers leaving it?

According to the U.S. Bureau of Labor Statistics, the median age of employees in architecture and engineering occupations is dropping, with an influx of young engineers flipping the demographics of the profession. In 2011, the most populous age bracket for engineers was 45 to 54 years old. In 2021, 25- to 34-year-old engineers outnumbered that group by over a quarter million.

The net result is that the engineering workforce is getting younger. Millions of today’s engineers have never known a world without computers, the Internet, cell phones, GPS or the myriad other digital technologies we take for granted today. These engineers naturally have different expectations of technology and how it’s used in the workplace. They might not even apply for a job if they can’t do it online.

It turns out that Millennial and Gen Z engineers have different expectations than their older peers. Younger workers want a good work-life balance more than anything else when choosing to work for a given employer, according to Deloitte’s Global 2022 Gen Z and millennial survey. A flexible working model (remote, hybrid or on-location) is another top consideration for younger workers.

Digital transformation may be the key to addressing these needs. A base level of digitalization is necessary to enable a flexible working model, and thanks to the pandemic, many organizations were forced to reach that level. This is one way to ensure work-life balance, but engineering companies can go even further. They could look for opportunities to automate, shifting tedious tasks from employees to algorithms. This would free their employees to do more meaningful work, checking off another top reason Gen Zs and millennials choose their employers.

The new workforce embraces digital transformation and the benefits it can provide them personally and professionally. With each passing of the torch, companies looking to attract and retain talented engineers are feeling more pressure to digitize. (Ensuring that the existing workforce is ready for digital transformation is a whole other can of worms.)

The COVID Catalyst

Let’s address the coronavirus in the room. It would be pointless to linger on the many dramatic changes caused by the COVID-19 pandemic; we’ve all experienced them firsthand. Suffice it to say that the pandemic served as a loud wake-up call for companies that had previously ignored or downplayed digitalization, and many scrambled to adapt to the new normal.

“The pace of technological change that took place across the industry was incredible—and it’s not over. Enterprises now have a deeper understanding of what progress looks like and how much time, resources and effort it takes to be successful. Digital transformation hasn’t gotten easier, but it has become the price of admission for doing business,” says Andrew McCloskey, CTO of engineering software provider Aveva.

It’s important to note that COVID was a catalyst for digital transformation, not a cause. The pandemic hit the gas on changes that were already underway—changes meant not to help weather a future pandemic but to build stronger businesses.