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Digital transformation change management, internet of things (IoT)

Digitalisation will completely transform these 3 industries in 2022

How customers will benefit from digital transformation in automotive, manufacturing and retail sectors

06 January 2022

If there’s one upside to the last two years’ pandemic-induced disruption, we’ve seen digitalisation accelerate in pace and scope throughout the business world within that time. 

For many enterprises, digital transformation is on a roll with no slowdown in sight: IDC predicts that “the digital economy will accelerate, with over 65% of Asia-Pacific (APAC) gross domestic product (GDP) expected to be digitalised and spending to hit USD 1.2 trillion between 2020 and 2023.”

These changes can be seen in capitals all across the Pacific rim. Factories, shops and offices in the region have outpaced their counterparts elsewhere in digitalisation – as IDC’s Group Vice President for ICT Research Sandra Ng put it, “APAC is already leading the race.”

Let’s look at how three industries in particular have embraced digitalisation – and what resulting changes their stakeholders should come to expect in the coming year.

Digitalisation in the automotive industry

virtual car hovers above a tablet

Automotive engineers used to be primarily concerned with horsepower and torque. With IT-related complexity on the rise in the automotive industry, those days are long gone: as digitalisation takes hold in the automotive industry, engineers must contend with a wider set of issues, not just structural and performance factors. 

IT-related complexity will continue to increase in the next few years: not just with navigational devices, but also with technology related to vehicle safety, infotainment, diagnostics, and increasingly, battery charging. This trend has become more acute with the rise of electric vehicles (EVs), noted by the Wall Street Journal as “more about software than hardware”.

The Chinese automotive industry has been on the forefront of these changes, and more: 

  • The China Software Industry Association (CSIA) predicts that the country’s automotive software market will be worth worth USD 4.09 billion by 2022, up 23.4% from USD 3.31 billion in 2020; 
  • The Chinese EV market has long overtaken the rest of the world, with 44% of the world's total stock of 10.2 million EVs compared the U.S.'s 17%; and
  • Artificial intelligence (AI) for autonomous vehicles is a growth market in China, with Chinese internet giant Baidu announcing its “Kunlun” AI chip for self-driving cars and its very first “robocar” in August.
Engineer Wearing Augmented Reality Headset Working on New Electric Car Chassis Platform

How China digitalises its cars shows the way for the rest of the world. The country has started passing legislation covering the processing of automobile data, mirroring two new UN Regulations on Cybersecurity (R155) and Software Updates (R156) that establish performance and audit requirements for car manufacturers. 

Regulators are aware that connected vehicles have opened up a new front in the never-ending battle against cybercrime: these new rules ensure that engineers take direct action to manage cyber security systems, avoiding incursions that might endanger their vehicles’ operations and their passengers. 

This is all familiar territory to companies like T-Systems that have long been on the leading edge of digitalisation in the APAC automotive industry. T-Systems’ participation in intelligent connected mobility research has led to innovations like the Argus cybersecurity for connected cars and mobile predictive maintenance courtesy of their "Machine Service in a Pocket".

Digitalisation in manufacturing

Industrial Engineer controlling robotics with monitoring system software

In the next few years, the manufacturing industry in APAC is bound to capitalise on the ability of today’s technology to seamlessly marry both physical and virtual realms. 

This trend is crystallised in “Industry 4.0”: a new field of digitally-enabled production processes that blends “manufacturing techniques with the Internet of Things to create manufacturing systems that are not only interconnected, but communicate, analyze, and use the information to drive further intelligent action back in the physical world.”

Industry 4.0 covers a lot of ground—from 5G-enabled machine-to-machine (M2M) communications, to AI-enabled “digital twins” that model factory situations in a virtual setting, to cloud-enabled predictive maintenance. In theory, Industry 4.0 can help manufacturing businesses enhance productivity, improve operational efficiency (by increasing traceability and transparency in operations), and reduce total cost of ownership (TCO). 

In practice, this means upgrading analog production processes to create data-driven, AI-powered, networked “smart factories”. This also means upgrading employee skills to better handle the new technology at their fingertips. 

The promise of Industry 4.0 resonates particularly well in Southeast Asia, where optimism for Industry 4.0 is at fever pitch. Over 70% of respondents in Vietnam, Indonesia, and Thailand had an improved view of Industry 4.0, a McKinsey report found; but due to gaps in expertise and capital, only 13% said their companies had begun an Industry 4.0 transformation. 

External partners like T-Systems can address both production and personnel issues for manufacturers who feel like Industry 4.0 is beyond their capabilities. Their integrated approach to Industry 4.0 covers engineering, production, logistics, all the way to sales & after sales, using digital end-to-end solutions that have helped complete over 4,000 digitalisation projects worldwide. 

Digitalisation in retail

Woman try to use hologram display with virtual augmented reality in the shop 

Low footfalls triggered by the pandemic and the ensuing Circuit Breaker have been a heavy burden on Singapore retailers, who experienced a 70% decrease in sales in 2020.

Luckily, local retailers had a trump card up their sleeve: a 90% Internet penetration rate in Singapore, beating the APAC average internet penetration rate of 58%. Through the first year of the pandemic, online sales in Singapore rose 151.2% year-on-year as of June 2020—an ascent that shows no sign of stopping anytime soon. 

The writing’s on the wall for pure brick-and-mortar retail operations: digital channels now rule APAC retail, and success belongs to those who can use digital sales channels and multi-channel strategies to encourage continuous buyer activity. 

Shops can deploy AI-based tools to better understand consumer demand, predictive analytics to ferret out new trends, and intuitive UX/UI to drop basket abandonment rates to a minimum. More retail stores are deploying an omnichannel approach to coordinate the customer buying journey—unifying multiple channels (the Web, mobile apps, email, private messaging, etc.) via a consolidated and streamlined digital system. 

That said, retail operations must constantly improve themselves to live up to high (and ever-evolving) consumer expectations. Security is a major issue: customers must feel comfortable sharing their personal and financial data (like credit cards) with retailers sight unseen, taking secure transactions and data protection for granted. 

Shops that survived the COVID crunch are in for an exciting time: "Asia-Pacific is propelling the retail industry, [generating] about three-quarters of global growth,” as a Bain study predicts. 

Continued success depends on maximising all the tools available through digitalisation, from data centres that can easily scale to meet unpredictable customer activity; to architectural environments such as SAP S4/HANA that serve as the backbone for the entire online retail operation; to cyber security solutions that safeguard customer information and increase confidence in the shopping experience - whether the information is stored on-site or in the cloud.

Conclusion: managing the human side of digitalisation

Big data cloud computing internet of things IOT AI network technology

Today’s technology has driven a rapid increase in digitalisation – competition between providers and wider adoption by companies has driven the cost of digitalisation down, even as the technology’s capabilities have increased.

It’s safe to say that digitalisation will only hasten its pace in the year to come. More industries will replace inefficient analog processes with new digital technologies and capabilities. And organisations will revise entire business models, enabled by cloud-based platforms that can network people, machines and “smart” objects in both physical and virtual realms. 

Widespread digital transformation aside, digitalisation can’t be hurried or simply plugged in willy nilly. Companies should invest in a long-term investment and change process, if digital transformation is on their agenda: this commitment can spell the difference between a failed digitalisation project and one that beats even 2022’s wildest expectations.

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