Industrial Transformation Blog

In a recent blog post, our fearless leader, President and Principal Analyst Matthew Littlefield, noted that, “Although no one can argue with the technological innovation and productivity gains that lighthouse plants demonstrate, our data shows that including lighthouse plants as part of your Industrial Transformation (IX) program does not correlate to success.”  This post builds on that earlier post and drills into when lighthouse strategies can be effective and what is an alternative strategy more correlated to success.

Four recent M&A announcements have prompted us to catch up on our view of where the industry is heading and follow up on our earlier predictions for 2021. They are:

The way most industrial organizations manage risks in their operations is akin to driving a car forward while looking in the rearview mirror. This approach is useful for understanding what’s already happened but is of limited value in seeing what’s ahead and taking preventive action accordingly. The essential solution is to shift from a posture of risk hindsight to one of foresight and the ability to predict and prevent adverse events rather than respond after the fact.

We all know the reality of discrete and batch manufacturers. If you walk into virtually any manufacturing plant, you will find literally hundreds of manufacturing computing applications being utilized. A few of those applications, ERP most prominently, are generally supported by the corporate IT staff. A wider number of those applications, automation and MES, are typically supported by operations itself via the OT team or the “shadow IT” team (the manufacturing engineers, etc., that are providing day-to-day support to these systems). The vast majority of applications are custom – often built in Excel, Access, or Java – and are not well-supported and virtually impossible to deploy across sites. And, the picture gets worse: despite all these applications, operational personnel are still looking for more technology to help reduce manufacturing costs and improve quality.

In our December 2020 blog on AWS℠ Industrial, we noted that AWS and the other hyperscalers have always had the ambition to move up the value proposition and delivery stack. The hyperscaler’s objective is simple: to maximize the volume of dollars and services running through their platform. And, they incent their partners and their own salespeople to do so. They aim to win no matter which route one takes, directly through them or via their partners. We said that all roads lead to Rome.

Part of the fallout from the COVID-19 pandemic has been a resurgence of the Environment, Health and Safety (EHS) business function. Anyone paying attention has seen that the management (or mismanagement) of EHS-related operational risks can directly impact business continuity, for better or worse. Now more than ever, license to operate, let alone profitable operations, depend on effective management of safety, health, and environmental risks.   

LNS Research first introduced the term Industrial Transformation (IX) in our research on Industrial Transformation Readiness in 2018. We chose the moniker to specifically distinguish from the existing Digital Transformation term as we see IX as an important but distinct subset of the broader Digital Transformation umbrella. Our definition of Industrial Transformation states that IX is a proactive and coordinated approach in leveraging digital technologies to create step-change improvement in industrial operations.

LNS Research has long followed the open and interoperable systems movement, first in IT components and systems and now in automation systems through the initiatives of the International User Association of Automation Technology in Process Industries (NAMUR) and the Open Process Automation Forum (OPAF), of which LNS Research is an Open Group member. Both organizations have proposed standards that leverage existing standards to speed and ease adoption. The purpose of this blog is not to argue the pros and cons of the initiatives whose two groups, by the way, cooperate. Rather, we posit that:

Since the advent of Manufacturing Execution Systems (MES, or MOM for those who prefer) in the late 1980s, life sciences, and especially pharmaceuticals finishing and packing, led the way in useful MES solutions. Some would argue that MES for pharma has reached maturity and there are few gains to be made. At LNS Research, we believe that change is just beginning and it is time for the pharma software industry to wake up or get severely disrupted by new players.

Many pharmaceutical companies, ranging from boutique startups to the global giants, have active Industrial Transformation (IX) programs that foresee structural changes in the way they operate. Existing pharma MES systems provide the necessary functionality for most operations but are hard to maintain, inflexible, and do not provide a data platform for other parts of the enterprise. Such integration will, inevitably, be a part of IX programs. 

In our 2021 Industrial Transformation (IX) Readiness research, we asked more than 300 industrial companies where they were on their IX journey. Since our 2019 study, the share of companies fully committed to the journey soared from 16% to 28% - crossing the proverbial chasm. Conversely, the share of companies “stuck in pilot purgatory” fell from 13% to 7%.