UK manufacturing and digital transformation – The state of play

Business Strategy & Management, Comments

David Ogidi, of Contentstack, discusses how the manufacturing sector is coping with the digital transformation

One of the most frequently cited terms in business technology discussions of recent years has been ‘digital transformation’ – the ability of a business to adapt to a world in which the digital experience of customers, employees and partners is just as important as physical interaction.

This experience is founded on software and the UK enterprise software market is expected to reach $37.2 billion by 2023. Some of that investment will be going toward replacing older tools with modern solutions, with our recent research amongst enterprise leaders suggesting that a fifth of businesses are expecting to do this. So far, so good.

But the other part of that multi-billion-dollar investment will come from tools and technologies that enable new, digital types of business and experiences. And on average, 42 per cent of respondents believe that their digital ambitions require new technologies.

And it is against this backdrop that our recent research made for more sober reading. The main finding was only 27 per cent of respondents felt that their current technology investment would be able to support their digital transformation ambitions over the next 18 months. For respondents in the manufacturing industry, that number was 33 per cent. It is therefore small wonder that at a recent conference, Tim Figures, director of technology, sustainability and innovation at Make UK, the manufacturers’ organisation said that the UK is “lacking in digital manufacturing technology”.

This is not for the lack of commitment. Overall, a fifth of UK companies have an executive role dedicated specifically to digital or transformation. These roles were most likely to be found in manufacturing which reported being led by a CDO or CTO 33 per cent of the time.

It is undeniable that UK manufacturing is experiencing immense pressure for rapid change, which may be why they are so likely to have a specific C-level transformation role. This may be because UK manufacturing is juggling such an acute array of demands, from the impact of the global pandemic and Brexit, to the wave of innovation in processes with 3D printing, IoT, and AI.

So, if it is not leadership, then what is the problem?

Our research suggests that existing technology is currently not up to the job. Currently, UK enterprise leaders say that a quarter of technology investment is unable to meet digital ambitions and that average is expected to rise to nearly a third over the next 18 months. At the same time, the amount of companies who find 30 per cent or more of their technology inadequate jumps from a third to nearly half. Simply put, legacy investments are getting old quickly.

There is one further note of concern. At present, 81 per cent of companies use 60 per cent or less of their technology and on average, companies are only using half of their digital experience investment. This means not only do current technologies lack the capabilities to meet ambitions, but the capabilities these tools do offer are largely going to waste.

Lack of integration was the main reason for technology to be inadequate, with 58 per cent listing it as a top contributing factor. Most UK manufacturers (especially those that have attempted ERP projects or similar) would agree that enterprise technology rarely plays together as nicely as it claims.

But for manufacturers looking to exploit the promise of connected technologies and Industry 4.0, this is even more concerning. Technology ecosystems must evolve with business needs and if it’s difficult to integrate a tool now, it is going to be nigh-impossible to rewire those integrations every time a tool is added or removed from the technology stack. It is here that approaches such as MACH, where digital technology stacks are developed around Microservices, API’s, Cloud infrastructure and Headless architectures, come into their own.

Digital experience will be a key weapon in the armoury for UK manufacturers looking to respond to the ongoing demands of a post-COVID climate, navigate the uncertainty of Brexit and make the most of a market that is awash with innovation. Indeed, our research suggests that manufacturing is leading the charge and has serious digital ambitions. But there needs to be a drastic improvement in the approach to technology investment for any of this to become a reality.