Seven Common Digital Innovation Challenges (And How to Overcome Them)

What does digital innovation look like in the manufacturing space? Despite the fact that 3 out of 4 CEOs believe the Industrial Internet of Things (IIoT) will revolutionize the industry, only 20% have a strategy for adoption.

That’s no surprise. No matter the type of technology, survey after survey shows that a vast majority of business leaders want to innovate digitally, but only a fraction (often 20-25%) have a plan to bring that innovation to life.

Digital innovation can be complicated. It’s not always about leaping straight into a new technology project. For many companies, the first step is updating legacy systems and implementing an integrated data framework. Once those things are in place, then you can step up your initiatives to include some of the more progressive innovations like artificial intelligence, machine learning, and IIoT capabilities.

The problem is that upgrading technology often requires significant financial investment. That’s a major concern for at least half of the companies looking at digital transformation.

And there are other roadblocks, too, like security and staff shortages.

So how do you successfully build innovation into your digital strategy without scrapping your budget or careening into a change management disaster?

Start by knowing what the roadblocks are and learning to overcome them. Here are seven of the roadblocks we see most often, and what you need to do to hurdle them.

1. Security

According to Tech Republic, 55% of companies consider security to be their most pressing challenge when it comes to digital innovation. Each connected device or piece of equipment represents a potential access point, and the potential for hackers to break through your security increases every time you add a new device to your network. Because innovation often includes new mobile capabilities, smart machines, and equipment sensors, the security risk multiplies as you begin to implement new technology.

The good news is that security preparedness can prevent data loss, compliance violations, and other security breaches. A strong security structure should withstand hacking attempts and keep your data safe by implementing:

* A security architecture that integrates systems and unifies security measures
* Threat identification and intelligence
* Safeguards that protect all parts of the network
* Automated security protocols
* Employee training

2. Budget Constraints

No organization has unlimited resources to invest in digital innovation. Still, insufficient investment can snowball into other problems like outdated technology and inadequate data gathering. It’s a cycle that can only be broken by intentional, strategic implementation of the right technologies at the right time.

Start with a strong business case that demonstrates ROI not only for the technology, but also for your workforce. For example, the technology could reduce inefficiencies in the supply line, freeing your employees to invest their efforts elsewhere for higher productivity. Next, create a strategic plan to reach your innovation goals. Tackle those goals in phases if that’s what your budget requires. Consider what steps you will need to take (data and analytics infrastructure, connectivity, security measures, equipment, etc.), and work them into your budget over time.

3. IT Staff Shortages

Most industries, including manufacturing, suffer from a skills gap in innovative technologies like AI, IoT, and robotics. In a study conducted by PricewaterhouseCoopers, 26% of industrial manufacturers said that lack of skilled teams was their biggest hindrance to implementing digital innovation projects. The hiring crunch is linked closely to budget concerns, since skilled IT workers usually have their pick of jobs and may be swayed by higher salaries.

There are a couple of ways to approach this issue. First, recognize that investment in your IT team is an investment in the future of your company. Building a team of dedicated digital innovation experts will position you to take advantage of new technologies that give you a competitive edge. Second, consider outsourcing parts of the innovation process such as software development and implementation as a cost-saving measure. The gig economy is strong in innovation areas, which means outsourcing can provide top-shelf talent just when your business needs it.

4. Outdated Technology

Legacy systems hold many companies back from achieving innovation goals, because they can’t integrate with new technologies and they can’t handle the avalanche of data that is generated. Successful innovation often requires modernizing these outdated systems so they can give you the insights and functionality you need.

Building a functional technology stack doesn’t necessarily mean that you have to scrap everything and start over. Legacy systems can sometimes be upgraded to meet your needs.  You may also be able to develop targeted solutions to support or supplement your primary system (for example, a new data warehousing solution). The key is to make sure your technology can accommodate both current and future innovations. Start with a technology roadmap that lays out your vision and then start building the framework that will take you there.

5. Lack of Urgency

Digital inertia—allowing things to continue as they are as long as they are working—plagues manufacturing companies. If you are making a profit and the company is doing well, why change? Unfortunately, this is usually a shortsighted and costly mistake. It fails to consider the potential ROI for digital innovation as well as the loss of competitive advantage if you fall behind the curve. Automation and smart machines can significantly increase both production output and employee productivity, making technology a critical investment even if you’re currently enjoying success.

A digital champion (such as a chief digital officer) can help bring all stakeholders on board with a cohesive technology strategy by serving as a go-between among departments and teams.

6. Lack of Expertise

If your leadership doesn’t feel urgency to innovate, then you probably also have a problem with lack of expertise in the relevant technologies. Employees may be very skilled in their roles, but they will need to learn new skills if you plan to introduce smart machines, robots, or AI sensors to your manufacturing floor.

Technology developers and providers can help you bridge the knowledge gap with new solutions, and they can also help you through the implementation and initial training process. Ultimately, though, you will need to tweak your hiring plan to attract employees with the right skills and provide sufficient training so your current employees can work efficiently with the new tech.

7. Resistance to Change

Mckinsey reports that 70% of change management programs fail, and one of the biggest reasons is that employees resist the change. Learning to do things a new way is hard, especially when there are also communication problems and not enough training.

Effective change management is a science, but it starts with building a sense of shared purpose, providing the right information at the right time so employees aren’t blindsided, and offering enough support so that individuals feel empowered to learn the new solution.

Conclusion

Imagine the money you could save if you could predict maintenance needs before a piece of equipment went down. Imagine how your output could increase with better supply chain management and fewer human errors. And consider the opportunity cost of falling behind your closest competitors because you didn’t have the data or analysis or traceability or whatever to make vital strategic business decisions at crucial times.

It’s never simple to transition from old processes to new ones, especially while sustaining profit margins at the same time. But the truth is that profit increases, better supply chain management, productivity gains, and other benefits will make it well worth the effort in the long term.

Digital revolution is coming to the manufacturing industry. Yes, there will be roadblocks. But the investment you make in digital innovation now will pay off huge dividends later as you streamline processes and build a strong foundation for the future.

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