The Many, Many Benefits of Digital Transformation

Hordes of consultants and software sales staff are excitedly promoting digital transformation. And with good reason: the list of potential benefits is both long and significant.

The value of these benefits varies widely from industry to industry and company to company, but they’re so widely distributed that every engineering organization can achieve significant results in some aspect of their business.

Stuck on where to start? This list of digital transformation benefits and example applications will trigger ideas that engineers can implement in their own organizations.

Enhance customer experience

Digital transformation enables the personalized, seamless, 24/7 customer service many organizations aspire to offer. The benefits include improved customer satisfaction and loyalty, leading to:

1. Reduced customer acquisition costs.
2. Lower customer churn.
3. Higher average revenue per sale and customer.
4. Increased brand value.

Some customer experience applications engineers can champion include:

1. Real-time access to customer purchase history and profile data for customer interactions such as sales meetings, service calls and phone calls.
2. A seamless customer experience regardless of platform, such as laptop, smartphone or tablet.
3. Personalized result sets for product searches by including customer profile information.
4. Integrated customer data for reduced customer service times at call centers and reduced operating costs.
5. Product visualizations using augmented reality (AR) for customers to better appreciate products in action.

Improve efficiency and productivity

Digital transformation means using application software to automate repetitive tasks common to all organizations to improve efficiency and productivity. The benefits include:

1. Increased staff productivity and efficiency, which reduces cost and supports staff morale.
2. Reduced processing errors, which decreases the cost of rework and increases customer satisfaction.
3. Streamlined workflows, which lowers the time to complete work.

Some efficiency applications engineers can pursue include:

1. Improved modelling and simulation to reduce product development times while enhancing quality.
2. Better defect and warranty tracking to improve product quality.
3. Enhanced vendor invoice processing for more accurate cost tracking and on-time payment.
4. Faster product return process for improved customer service and reduced restocking cost.

Increase business value from data

Digital transformation increases the consistent capture of operational data and improves access to external data sources. Typically, the benefit is that engineers can analyze data from multiple sources to gain additional insights into customer behavior and operational performance. Another benefit is that organizations achieve a single source of truth for critical data like sales, production units, operating costs, capital investment and employee count.

Some data value applications engineers can consider include:

1. Better data analysis of customer needs and preferences, leading to confidently tailoring products and services.
2. Modelling distribution networks to reduce shipping costs and minimize fulfillment times.
3. Better operational data integration for earlier recognition of poorly performing assets or production processes, leading to interventions that minimize losses.
4. Gathering competitor and industry performance data to understand threats and trends better.

Boost agility

Digital transformation can help engineers respond more quickly and effectively to changes in the business environment. Example changes include:

1. Customer needs and preferences.
2. Market conditions and trends.
3. Competitor actions.
4. Government and regulatory expectations.
5. Technology developments.

By leveraging digital technologies, businesses can quickly test and launch new products, services and marketing campaigns and make real-time adjustments based on consumer feedback.

Some agility applications engineers can try include:

1. Forecasting the impact of competitor actions on sales growth and net income.
2. Planning the introduction of new materials like advanced composites into the manufacturing process.
3. Modelling the impact of alternatives to respond to transportation disruptions.
4. Forecasting the impact of supply chain issues on product costs and delivery commitments.
5. Understanding greenhouse gas emissions, forecasting those emissions and modelling the impact of proposed measures to reduce emissions.

Stimulate innovation

Digital transformation can help engineers stimulate innovation by simplifying data accessibility, integration and visualization. Most innovations arise from one of the following:

1. Encouraging more multi-disciplinary collaboration.
2. Adapting technology or practices from other industries.
3. Financing or at least monitoring basic science and engineering research.
4. Ideas sparked by customer comments or complaints. These are often unrelated to the eventual concept.

The benefits of innovation include contributing to all the other benefits described in this article. The high-level benefits are:

1. Increased competitiveness to avoid losing market share to competitors.
2. Reduced employee turnover because the organization is an attractive place to work.
3. Higher profitability to improve shareholder returns and fund investments for future growth.

Some innovation applications engineers can attempt include:

1. Bringing engineers, marketing staff and suppliers together to brainstorm new product ideas and variations to existing products.
2. Monitoring innovation in other industries, even ones that are unrelated on the surface.
3. Indexing technical and academic journals for potentially relevant advances.
4. Indexing patent, trademark and copyright filings for potentially relevant innovations.

Implement cost savings

Digital transformation can help organizations reduce costs and increase profitability by:

1. Replacing manual processes with automated ones to avoid non-digital data and reduce dependence on paper.
2. Minimizing errors and related rework.
3. Streamlining operations by introducing Lean Six Sigma practices.
4. Reducing waste by increasing quality.

Some cost applications engineers can implement include:

1. Reviewing manual processes for replacement by automation.
2. Routinely presenting detailed cost data to quickly identify problem trends and opportunities to reduce those costs.
3. Introducing design for manufacturing (DfM) into the product development process to reduce manufacturing costs and the reject rate.
4. Replacing Excel as a high-cost, informal application integration and reporting tool with a formal application based on an extract, transform and load (ETL) software package.
5. Rationalizing the application portfolio to eliminate duplication.

Improve collaboration and communication

Digital transformation can introduce a digital collaboration platform to help engineering teams work together more effectively, regardless of geographic location or time zone differences. The benefits include:

1. Ensuring the work benefits from all the available expertise and experience.
2. Reducing elapsed time when work can continue around the clock.
3. Enabling multi-lingual participation.

Some collaboration applications with which engineers can experiment include:

1. Implementing an anonymous group decision support system (GDSS).
2. Involving more participants in product development without adding to cost and time.
3. Bringing engineers, maintenance staff and suppliers together with relevant data to brainstorm solutions to product variability and equipment reliability issues.
4. Analyzing and resolving production problems by sharing performance data easily.
5. Collaborating with supply chain vendors to shorten production times or simplify distribution arrangements.

Support data-driven decision making

Digital transformation can give engineers access to vast amounts of data and analytics tools to help them make informed decisions. The benefits include:

1. Improving decision making and reducing risk.
2. Avoiding shooting from the hip based on gut feel, seniority or the views of dominant personalities.
3. Overreliance on experience that may not be relevant to the decision.

Some data-driven applications engineers can contemplate include:

1. Analyzing curated data, not isolated observations or unusual events, to identify trends, spot opportunities and approve or reject investment proposals.
2. Converting data into actionable intelligence by leveraging modelling, data analytics and reporting tools to support decision-making.

Digital transformation can help organizations stay competitive, improve customer satisfaction, stay agile, drive growth and stimulate innovation. Find the right application and you’ll be on track to realize these benefits yourself.