Canada’s industrial markets companies—and their counterparts in mining, oil and gas, power utilities, transportation and other capital asset-intensive sectors—have made pivotal contributions to our country’s economic prosperity. They will continue to do so in the future—even as data and digital technologies rapidly disrupt and drive change through their industry. KPMG’s recent research into the Canadian industrial markets sector’s digital readiness found that companies are making important progress and have many opportunities to get ahead of the competition.
Canadian industrial companies understand the pivotal role digital transformation will play in their future: 98 percent of respondents said that it was critical to their long-term competitiveness. This understanding is translating into action, too: our survey found that many industrial markets companies have been investing in new technologies:
The companies we surveyed are also planning for tomorrow’s digital transformations: future investment priorities include cloud (61 percent of respondents), demand-driven supply chain (60 percent), robotics (48 percent), IoT (38 percent) and intelligent automation (34 percent).
Unfortunately, many industrial markets companies may not be investing in digital transformation at the level needed to achieve the change required: 66 percent of respondents say their company spends less that 5 percent of revenue on digital transformation. While sustained investment at that level can help achieve incremental improvements to existing technologies, it’s unlikely to be sufficient to drive the transformation needed to stay competitive long-term.
It’s encouraging to see that manufacturers understand the importance of digital transformation—and that they’re making investments in digital technologies. To remain competitive, however, companies need to make bigger investments that accelerate their progress.
Surprisingly, given their attitude towards digital transformation and their investments to date, industrial markets companies are split on their engagement of big data. While 20 percent of respondents said their company actively leverages big data, 30 percent say they don’t leverage big data at all. Looking forward to the next few years, however, over half (57 percent) indicate plans to use—or explore the use of—big data.
This “mixed message” around big data may reflect a growing awareness of data’s full potential. Industrial markets companies generate lots of data; the challenge is figuring out what to do with it all. That requires companies to shift from using data to analyze the business historically, to figure out what happened, and instead harness data to look forward—and predict what’s likely to happen. This can involve anything from determining optimum preventive maintenance schedules to anticipating sales trends or supply chain issues. In making this shift, companies should consider how the value and cost savings of making decisions based on big data-driven predictions compares to their old, backward-looking approach. The differences can be stark—and very tangible.
To stay ahead of the competition, industrial companies need to be faster and more nimble. They need to build what customers want with less downtime—and lower costs. They need to become their customers’ supplier of choice. Digital transformation will enable them to do this.
Companies within the industrial markets sector often find themselves the target of cyber-attacks, despite their relatively lower profile compared to major consumer brands. 70 percent of respondents say they’re making significant investments in cyber security—and 68 percent say their IT world is secure. New technologies such as IoT will bring new cyber vulnerabilities, so companies will need to stay vigilant and continue to invest in this vital area. Cyber preparedness includes much more than a good firewall in your IT system and education of staff. It’s interesting that some of our more heavy industrial companies are actually very well set up to manage a critical breach in that they have solid disaster recovery protocols that are regularly practiced and know who should be ‘in the room’ quickly to respond to a significant cyber threat.
Industrial markets companies face a continuous risk of cyberattack. Constant vigilance is critical, especially as companies undertake their digital transformation journey. IoT devices, for example, can be powerful exponential technologies—but they can also open many new doors for cyber criminals.
Digital transformation is a long-term journey, and Canada’s industrial markets companies are making important progress. We urge companies to pick up the pace of their digital investments—because the time to get ahead of the competition is now.
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