Digital transformation is a long journey for most firms: Hicham Abdessamad
New Delhi: As digital transformation continues to be the overarching theme for companies, there is a growing need for them—especially in traditional sectors such as manufacturing compared to more tech-savvy ones like banking and telecom—to focus on “investments and change management”, according to a technology expert.
“Digital transformation is now an overused term: but what does it really mean and can you be realistic about it? For an old, traditional company to become digital, it will require a lot of investment and change management,” said Hicham Abdessamad, president and CEO of Hitachi Consulting Corp., in a recent interview.
Hitachi Consulting competes with a slew of global technology consulting and solution providers such as Accenture Plc, International Business Machines Corp. (IBM) and Tata Consultancy Services Ltd (TCS) for the growing digital transformation pie which, according to research firm International Data Corp., will see a 42% increase from 2017 to touch $1.7 trillion worldwide in 2019.
Hitachi Consulting is part of the diversified Japanese company, Hitachi Ltd, whose first major business in India was household fans—exported into the country as far back as 1933. But cut to the present and the conglomerate now provides anything from solar inverters and automotive components to air conditioners, medical and construction equipment, and tech hardware, software and services.
One of the recent wins in the domain of technology for Hitachi, according to Abdessamad, is the “real-time governance centre” in Andhra Pradesh—which was inaugurated by chief minister N. Chandrababu Naidu in November last year. The idea of this centre, which is linked to other district data centres in the state, is to be able to get an integrated view of real-time data pertaining to agriculture, civil supplies, traffic movement and other services for faster response times and better governance.
While Abdessamad cites this as one example of how his company is working on Indian central and state governments’ smart cities initiatives, he insists that typically most smart city projects are “led by consortia of different companies”.
Hitachi’s viewpoint and approach to working on such projects—not much different from its engagement with large organizations on digital—is “modular” and, often, incremental.
“The way we approach it is to help companies build a roadmap to digital, where they can have small (digital) wins along the way,” he said. Typically, he added, organizations can look at the whole value chain of digital—be it the optimizing the supply chain or operations or a factory.
“In reality, digital is a four-to-six or even 10-year journey. What we look for is the number one business use case that can help a company get started on this journey,” he said.
For instance, in a factory, one of the biggest challenges, according to him, is “anomaly detection”, so it could be a use case for digital. After completing it, the organization can then move on to the next project. “In this way, it can undertake digital transformation in different steps,” he added. As a group, Hitachi itself has been transforming into a solutions organization with focus on four themes: digital operations, digital customer experience, digital enterprise and smart infrastructure. Explaining the rationale behind this thinking, Abdessamad said, “Hitachi has been in business for over 100 years and we have 166 subsidiaries, ranging from nuclear power generation and mining to automotive and technology. Over the past couple of years, we started to focus a lot on digital transformation. We are an industrial company that also has an IT business and we try to bridge the operational technology (OT) and information technology (IT), especially as the Internet of Things (IoT) concept began to emerge.”
So the company thought of leveraging its expertise in OT as well as IT and began focusing on companies that are “primed or ready for” digital transformation. “We did this under the theme of ‘Social Innovation’ which, to us, is about using technology and innovation to improve society. And we do that with a co-creation approach with a number of our customers and partners,” he emphasized.
On the question of how Hitachi is different from other digital transformation solution providers, Abdessamad said, “Differentiation is a big deal for us, which is why we stick to industries where we have some capability—manufacturing, for instance, since we run hundreds of factories around the world and know how to optimize them digitally.”
That, however, is easier said than done for CXOs in traditional companies who continue to face the challenges of bridging OT and IT.
“The biggest challenge for them is that OT and IT are completely different worlds. The operations folks in manufacturing usually do not care about IT, and the IT people do not have domain knowledge of manufacturing from a process perspective,” he said.
One of the mistakes many companies make, according to Abdessamad, is to take a technology approach to solving the problem. “They may come in with a big data analytics or an IoT platform but if they do not understand the business processes, they are going to fall short. We take a different approach and tell them we are also in this business and we have people who understand manufacturing processes and challenges as well as technology folks and data scientists. Plus, in consulting, we have people who understand the business. So the combination of these three is very powerful,” he said.
In his experience, what works with customers is that one has to be “open with them and they should be able to use their own tools and solutions they have invested in or built over the years”. And that is the reason why Hitachi is okay with its customers using open source software or other companies’ products that can generally be integrated with its own.
“For example, our Lumada IoT platform is completely open and customers can use it in parts, as a whole or not at all. But that is fine as long as they are able to achieve the desired business outcome,” concluded Abdessamad.