K. Mitford: Digitalization is at the core of PTC’s strategy as our roots are in the digital world. We began by helping our customers create digital data with computer-aided design, 3D CAD models, and then expanded into PLM, Product Cycle Management, to manage the entire product lifecycle. But what is really happening now is the convergence of the digital and the physical worlds, with digital data from systems like CAD, PLM, and other enterprise systems, being combined with real world data from the physical product. IoT is the connection between the digital and the physical worlds. Digitalization is how our company started and it will always drive our strategy. For us, it is also about how you connect digital data to a physical product, and even to a human, using Augmented Reality. Augmented reality allows us as humans to easily digest, consume and experience the myriad of data available to us in a very easy way.
K. Mitford: Digital thread or digital threat? Yes and yes! Companies that do not adopt digitalization and IoT won’t be around in the long term as they won’t be able to survive in today’s economic climate. If you think of how companies are using the data coming from IoT, they are differentiating their products to increase sales, improving their business processes and becoming more efficient, while making their workforce and people more productive as well. This digital thread goes across the entire lifecycle, from how you design and manufacture the product, to how you operate and service it. If companies are not embracing technologies like IoT and Augmented Reality to really create this closed loop digital thread, this is going to impact their ability to compete in the future. The adoption of technology is happening at a fast pace and we are seeing this trend in our business as well. Companies are being much more prescriptive about the business problem IoT could help them solve. Therefore, if you haven’t embraced the concept of digital thread and IoT it puts your company at risk of not being able to compete long term in a very competitive business environment.
K. Mitford: When we look at IoT, and specifically at Industrial IoT, we see that factories are critical. According to a McKinsey report released in January 2019, one third of the total economic value of the Internet of Things comes from production and from factories. We are experiencing this in our business as well. A very large portion of customers are implementing the Internet of Things in their factories. Many other reports highlight the same fact, and if we consider a report published by The Guardian, in 2018 14% of factories implemented IoT at scale and this figure jumped to 24% in 2019. This demonstrates that the Internet of Things in factories is a reality.
Why? Because companies have different challenges within their factories today. They are trying to figure out how they can be more productive and increase OEE, quality and output. Productivity is a key driver for digitalization, but also agility, which means being able to respond quickly to changing demands. The third thing that we see happening is there is a challenge with the aging workforce. And the question is: How do you take the knowledge of the aging workforce and use that to upskill new workers and make them productive in a short time period. The Internet of Things and Augmented Reality are key enablers and a solution to these issues.
K. Mitford: Digital transformation and digitalization are big initiatives and if companies don’t start with a high-level business value and impact on their business, there is a high risk to end up in a ''pilot purgatory situation''. How do you limit this danger? First, using IoT to solve specific business problems. Then, you make sure that your strategy has executive level sponsorship in the company. And finally, you ensure that there is a close collaboration across the different functions in your organization.
The digital thread has an impact on all functions – engineering, manufacturing, customer operations, service. Making sure that there is an alignment across the different groups on how they are going to work together is key to enable the digital transformation.