Digitalisation means different things to different people

Digitalisation. Nearly every company says they are doing it. But what exactly is it? Despite significant investment in digitalisation and boundless discussion on the topic, it remains poorly understood. Companies already transforming their businesses will beg to differ, but there is no common understanding or definition of digitalisation. It is discussed at length but digitalisation means different things to different people.

There is ambiguity surrounding buzz words like digitisation, the process of changing from analogue to digital form, and digitalisation. Some (wrongly) assume that digitalisation is confined to automation, as opposed to the application of evolving technology.

Speaking during a panel discussion on digitalisation at the International Council on Combustion Engines (CIMAC) Congress in Vancouver, Canada, from 10-14 June 2019, Ted Steigert, head of digital transformation at INNIO, defined digitalisation as “enabling better outcomes for humans, powered by technology.” Steigert described a need for digitalisation to create value — whether to the customer, company or ecosystem.

INNIO was formed in November 2018 with the acquisition by Advent International of GE’s Distributed Power business. The transaction includes the Jenbacher and Waukesha product lines, the digital platform and related services offerings.

Many companies are already spending vast amounts of money on the digital transformation of their businesses while some are not spending enough. But for those wishing to avail of the future benefits of digitalisation, often the toughest challenge is getting started — understanding where the value is and how to bring it forward. The CIMAC digitalisation panel, which included several experts on digital technologies, agree a shift in the mindset is required to embrace digitalisation. In order to do this, people need to appreciate digitalisation a little more.

A survey of Singapore-based industry trade group Asian Lubricant Manufacturers Union (ALMU) members, completed in September 2018, acknowledged that changes in market dynamics due to disruptive technologies are a significant challenge for Asian lubricant businesses. Members highlighted a need for technical support on the digitalisation of their businesses. Some respondents lamented the lack of a common platform for discussions on the technical needs of the region.

When it comes to co-operation between different component systems, Stei-gert suggests the problem is in the orchestration. Often, there is a lack of understanding of which part you are playing. Either the segmentation is not clear, or everyone is trying to “get more” rather than sticking to their guns and creating a greater overall benefit, he says.

The number one priority in digitalisation is the metrics. “What gets measured gets done,” says Steigert. Focusing solely on finance and revenue is an ignorant measure. In many instances it takes too long for the effect to set in, he says. Certainly, companies are focused on producing more and more data; but increasing piles of data are of little benefit if we cannot figure out how to transfer data into knowledge that has value.

Management of data is paramount. Data sharing is often seen as a “showstopper,” but is our hesitance to enable data sharing preventing innovation? The CIMAC panellists propose we put aside this fear and improve data access so all parties can improve their own products. Data sharing is what has made the internet so successful — the openness, standardisation and connectivity. However, balancing ownership, access and intellectual property is a difficult equation. How do you wrap this into a business model that apportions benefits and revenues without a receiving entity deriving more value than the subject giving the data away?

The inaugural ALMU Annual Meeting & Global Leadership Summit was held in Singapore on 4-5 March 2019. The event attracted leading minds from the lubricants industry in Asia, and across the globe, to address key challenges facing the Asian lubricants community. One of the prominent themes of the event was how the lubricant industry is preparing for the impending digital transformation.

Richard Jory, vice president, lubricants supply chain, Shell International, provided a keynote address on “Digitalisation in the Lubricants Industry.” The Shell representative identified several areas where the world’s leading lubricant provider is extracting value from digital solutions. However, Jory advised that 80-90% of the benefits of Shell’s digital work is from “building a strong digital backbone” which includes strengthening data management, gaining deeper insight into customers, and improving how Shell delivers its products and services.

Wu Yuedi, president of Shanghai Lubricant Traders Association (SLTA) delivered a “View from China” on digital transformation Opportunities and challenges for the lubricant industry. Wu advised that digitalisation is a priority for China and is well supported by its government. However, despite rapid advancements in the digitalisation of the life services industry, and manufacturing products for individual customers; equipment/energy/parts/raw material/and manufacturing digitalisation in the business to business (B2B) space are occurring more slowly in the region, he says.

Valentina Serra-Holm is president of the Union of the European Lubricants Industry (UEIL) – an organisation that represents the interests of the lubricants industry in Europe. Serra-Holm told attendees that digitalisation is in the very early stages in Europe. While digitalisation can be implemented across the entire value chain and provides an opportunity to differentiate and fight commoditisation; at this stage there are only a few areas where it is more developed — sales and marketing, supply and logistics, and condition monitoring. Europe trails the United States in its progress on digitalisation, though, there is clear interest among several industry players, which may lead to an acceleration of the process, says Serra-Holm.

The UEIL representative cited multiple examples of well-established companies that have implemented digital initiatives. Inoviga GMBH, a wholly owned subsidiary of Fuchs Petrolub SE, was established in 2016 to provide the driving force behind digitalisation projects within the company. Inoviga will focus on creating the foundations for digital services, developing and testing alternative and complementary business models, and — equally importantly — instilling the importance of digitalisation in the mindset of Fuchs employees.

Evonik is another company Serra-Holm said is investing heavily in digitalisation. Evonik Digital is a dedicated division that provides a shelter for the incubation of digital projects and the testing of new platforms without integration into enterprise resource planning (ERP) systems.

Holly Alfano, CEO of the Independent Lubricant Manufacturers Association (ILMA) delivered a North American perspective on the impact of digital transformation on lubricant manufacturing. Alfano focused on five key components of digitalisation including e-commerce, the fourth industrial revolution, robotics, consumer evolution and cybersecurity.

Recognising the importance of digitalisation and the technology adoption journey, ALMU is providing support for its members’ digitalisation initiatives. The trade association recently started a dialogue with Enterprise Singapore (ESG) to explore how members can be supported in digitalization and automation projects — in terms of contacts, potential solution providers, as well as funding for eligible Singapore-based companies. In a letter to members, Ho Leng Woon, ALMU chairman, encouraged members to take advantage of this opportunity by indicating the digitalisation initiatives they would like ALMU and ESG to support.