Every manufacturing business has to be a software business
Twenty-five years ago, Watts S. Humphrey, father of software quality, stated, “every business is a software business.” A decade later, Microsoft CEO Satya Nadella picked up on the formula by inviting each business to think about how they can leverage software to transform themselves. ”Every business will become a software business, build applications, use advanced analytics and provide SaaS services.”
So the idea is familiar, but the manufacturing sector has long felt spared from the competition of new players and their disruptive business models.
Manufacturing businesses have yet to consider digital transformation a priority - industry 4.0 is no longer new - but even today, this digitization is often seen as a tool for operational improvement, a vague paradigm, or worse, a buzzword.
Beyond the smart factory, new business models
Technological support and software indeed allow for operational excellence to be achieved, a natural evolution for manufacturers. However, the potential offered by software in the manufacturing sector is even more significant when it will enable existing business models to be questioned. That’s when we shift from evolution to revolution.
External revolution: reinventing the product experience
Fundamental trend, the disruptive approach might be harder to conceive for leaders familiar with manufacturing possibilities but less to what software can bring to the table. We need to start looking to create a break with sectoral habits by radically renewing its functioning.
These new business models are made through a reinvented offering by adding a digital experience to the physical product.
“This is a revolution”
Apple, Google, Tesla, Netflix, Amazon, Uber, AirBnB and Netflix are all well-known eloquent examples of innovative or disruptive companies that have overturned the established order, radically remodelling well-established industries.
Behind these great successes, many of which touch the manufacturing sector, what is the common point? All define themselves first and foremost as software companies.
Disruptive assemblies: the LEGO blocks of revolution
Manufacturers have a wide range of tools to revolutionize their industries. Many technologies and concepts are now accessible to all, including:
- The Internet of Things (IoT)
- Nanotechnology
- Robotics and automation
- 3D Printing
- Cloud computing
- Artificial intelligence and machine learning (AI / ML)
- Digital twins
- Data monetization
- The blockchain
- Mass customization
- Drones
- Augmented / virtual reality (AR / VR)
Massively adopted to improve efficiency, these technological LEGO blocks are even more formidable when used as a catalyst for new offerings, and new digital products.
A few examples
Caterpillar uses augmented reality to enhance the user experience for operating and maintaining its equipment.
Vention has developed a concept of virtual twins for its equipment to design, simulate an equipment configuration and measure its efficiency.
GE Aerospace uses a clever combination of the Internet of Things, data valorization and algorithms to offer “aircraft engines as a service” with its TrueChoice offering. Instead of selling engines as products, they sell an “outcome”: engine flight hours, just like AWS offers virtual machines by the minute.
All these examples show us the central role of software in these innovations, which, when they do not completely upset a field, at least offer a head start on the competition.
Software, new manufacturing product
The primary ambition of the manufacturing industry is the production of physical products. Still, technological advances must now be an integral part of the customer offering, bringing an enhanced, improved or even personalized user experience.
Inevitable disruption
The question is no longer whether my specific manufacturing sector will be “disrupted” but when and how. No market, even niche, will be spared. Rethinking its business model by integrating these new variables is no longer a choice but a necessity. How to bring about these changes? How to stay ahead of the game and stay in the race?
