FACCI White Paper: 2018 From Strategy to Development

FROM STRATEGY TO DEVELOPMENT How digital transformation is driving industry sustainability and innovation

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Introduction Page 3

A view from the top for sustainability and digitisation Page 4

TABLE OF CONTENTS

The road to enhanced performance with a digital transformation strategy Page 5

How big data is shaping the future of digital transformation Page 7

Executing on strategy: Digital factories are changing the industrial landscape Page 9

Towards the industries of tomorrow Page 10

About FACCI

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INTRODUCTION Industries around the globe are changing rapidly and digital technologies demonstrate how quickly a single process or entire business can be transformed.

To identify this pace of change, and assist business leaders with turning their digital transformation strategies into reality, the French-Australian Chamber of Commerce and Industry (FACCI), in partnership with Schneider Electric, held another successful industry event series.

For the fourth consecutive year, the 2018 Schneider Electric Innovation Hub Business Forum made its mark as a premier thought-leadership event attracting a high-profile audience, from C-suite executives and decision makers to industry experts, influencers and government representatives.

This year’s event brought together industry leaders from around the world across three cities – Brisbane, Adelaide and Sydney – during June, with more than 100 delegates in each city. The event debuted an innovative format with a participant-centric focus, including roundtable discussions and collaborative sessions which encouraged networking and business opportunities.

The new Experience Hub provided an opportunity for participants to interact with innovative technologies including prototype demonstrations, robotics, and virtual and augmented reality.

This report provides insights from leading commentators at the event into how digital transformation can be applied to deliver new value to business and open new and innovative markets.

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Industry sustainability and efficiency will depend on digital, so the success of digital transformation programs is now a business imperative.

In his opening address, Ambassador of France to Australia, H.E. Christophe Penot, expressed the importance of industry collaboration between the two countries.

“President Macron’s recent visit demonstrated the high degree of political commitment France has to trade with Australia,” he said. “We will continue to develop economic and trade links. Most of France’s top 40 companies operate here and French firms employ about 70,000 people in Australia.”

Penot said the bilateral relationship is exploring new avenues for business, including digital transformation.

“Digital transformation will deeply impact all industries and I strongly encourage companies to design proactive strategies to benefit from it,” he said. “A lot of digital transformation comes from large companies, but startups also play a key role in fostering this now high priority for governments the world over.”

Penot said the public sector does not need to take a leading role in digital transformation for private sector companies, but instead provide an ecosystem for businesses, big and small, to stimulate investment in innovative projects and develop new services.

“It is time for digital transformation strategies and opportunities to be seen through to tangible outcomes,” he said.

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A VIEW FROM THE TOP FOR SUSTAINABILITY AND DIGITISATION For digital transformation to drive tangible outcomes such as more sustainable industries it must be adopted by all levels of the organisation, not just one department, according to several of the event’s speakers.

Schneider Electric Zone President and Managing Director, Pacific, Gareth O’Reilly, said digitalisation will present companies with an inescapable choice: Do I disrupt my own business model or will it be disrupted by somebody else?

“You have to embrace digital or become it,” O’Reilly said. “What will become the most valuable assets are things which cannot become digital, such as the human aspects of a business.”

O’Reilly said digital transformation is not something that is “delegated”. It must be led by senior management to enact real change. Technologies such as visualisation and blockchain are combining to put consumers at the centre of markets and businesses must adapt to remain relevant.

A recurring theme of the forum was the role digital transformation will play in improving efficiency and sustainability. According to O’Reilly, today’s leadership positions should not maintain the status quo.

“We need to be advocates for change and a better future of our organisation.

Successful leaders will be both digital activists and sustainability activists.”

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“Sustainability is where visionary business leaders and organisations are making their mark as it makes good business sense. For example, organisations that actively manage and plan for climate change see an 80 per cent return on equity [ROE] compared with similar sized organisations that don’t. There is now a value risk for businesses of not being sustainable,” he said.

Transport for NSW Executive Director of Operational Systems, Pascal Labouze, spoke about the opportunities for digital to drive efficiencies in the state’s road and rail networks.

“We are implementing a system for roads that will provide analytics to improve and reduce congestion as the quicker you make the right decision, the less chance there is for congestion to build up,” he said.

With the rail network there is a program to move from conventional to digital signalling.

“We are struggling to reach 20 train services an hour, but new technology will deliver 24 trains an hour,” Labouze said.

The world is facing a once-in-a-century event with digital and visionary businesses will embrace this and make their mark.

“It took us 100 years to get here, but industry will be rebuilt during the next decade for the next 100 years,” O’Reilly said.

Suez Australia and New Zealand’s Director, Marketing, Communications and National Key Accounts, Justin Frank, said digital transformation can play a role in changing traditional industries to drive a new level of sustainability.

“If you look at the resource recovery and water industries digital transformation really puts more information in the hands of both our council and commercial customers,” he said.

With the right digital platforms, citizens can report problems which are then automatically submitted to customer service, increasing efficiency.

More sensors will facilitate options for network-based control systems and ultimately “smart cities” where public infrastructure, such as street lights, can be optimised for greater efficiency. In Dijon, France, smart LED lighting is reducing lighting costs by 65 per cent.

“We are struggling to reach 20 train services an hour, but new technology will deliver 24 trains an hour,” 6

THE ROAD TO ENHANCED PERFORMANCE WITH A DIGITAL TRANSFORMATION STRATEGY All organisations, no matter the industry they are involved in, are being transformed. The pace at which this occurs will vary depending on the potential impact of digital on each industry.

Digital transformation is seen as a driver across all business units and the essence of most strategies is to achieve enhanced performance for customers and the company as a whole.

Thales Australia Vice-President of Strategy, Gary Dawson, said the company has that twin focus of enhanced performance for customers and by the company. With more data Thales can glean new insights, including how transport carriage can be better filled and the feasibility of a move to availability-based contract models, better informed by sensor data from ships. “In highly-secure environments that is challenging as there is an expectation risk, both internal and external,� Dawson said.

Dawson said determine what needs to be added, acquired or developed to get to an end-to-end decision-making chain.

It is also important to keep focused and be realistic about goals, remembering the problem you are trying to solve. Try to avoid becoming over enthusiastic about digital and digital transformation as the technology is not the end-game.

There can be a tendency to chase new technology, but you need to constantly assess the business benefits.

The challenge with skills can be quite specific and it can be difficult to scale an idea without resource or industrial issues. Don’t underestimate the human factors relating to your digital transformation program as people are often the biggest factor when it comes to change.

Successful digital transformation will result in a change in culture, way of thinking and must be driven by the right people.

Start your strategy by looking at what you need to achieve and then design the process and add the technology to get the desired outcome.

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HOW BIG DATA IS SHAPING THE FUTURE OF DIGITAL TRANSFORMATION As more business processes go digital there will be new types of data generated in much higher volumes than we see today. Big data is a way to manage large data sets and extract real time business intelligence. Successful organisations will execute on data-driven transformation programs.

Digital transformation programs are establishing a platform for more intelligent, sustainable industries which rely less on guesswork and more on real-time operational data.

A key takeaway from the forum was business leaders should not think data is an “IT thing” as it requires proper change management, which can be a challenge. Data can be seen as a dry topic, but it needs to be understood company-wide to deliver the most benefit.

which is focusing on data. Make it top of mind so people understand how important it is. People using systems will be responsible for getting the correct data.”

There is a lot of data being collected, but it is not always put to the right use, or shared with the right people and organisations. If we can share large amounts of data securely then that will truly enable a digital economy.

For example, in financial services and insurance the data revolution is opening ways to deliver more personal products to customers instead of a one-size-fits-all offer.

Head of Euler Hermes Digital Agency, Asia-Pacific, Caroline Paulhan, said corporates won’t get anywhere with data science without giving people a perspective on what the next generation of the company will be.

“Many companies will say ‘safety first’, but we are becoming a bit like that with ‘data first’,” she said.

“There are internal innovation challenges, the first of

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GET STARTED WITH SOMETHING MEASURABLE The concept of big data can be daunting, but the advice is to start small and work on a measurable outcome. Be optimistic and ask “if I do invest, what will be the business return?” In most cases, IT and business leaders will find it is the access to data, rather than the technology, that is limiting for getting the most out of big data initiatives.

Paulhan said people assume digital is “immediate and free”, but there will always be delays so manage stakeholder expectations.

Start with problems you have and task people, not necessarily a data scientist, to unlock data and put it to work.

As always, don’t ignore the impact data will have on staff.

Data can change roles and people generally don’t know to what extent.

“If you have pain points, or can be more customer centric, you will find a way even if the journey is not linear, there will be bumps along the way,” Paulhan said.

It is important the “data culture” of an organisation is to experiment with everything and not shelter access to data.

Many companies have the right tools, but not the right processes and incentives for the best use of data.

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EXECUTING ON STRATEGY: DIGITAL FACTORIES ARE CHANGING THE INDUSTRIAL LANDSCAPE

Today’s industries are driven by market demands and reactive decisionmaking. Tomorrow’s companies will be driven by real-time data analytics and, as a result, more informed strategies.

Schneider Electric National Segment Manager for Water and Wastewater, Simon Zander, spoke about how tomorrow’s digital factories will be fully “instrumentalised” and data driven.

“Our Hawkei vehicle production line started more digitisation. For example, the timesheet system was analogue and now it is digital,” Polette said.

“Digital factories have been around a long time, but there can still be a significant disconnect between control systems and business systems,” he said. “The design phase is now digital with ‘twins’ created to see the factory operate before it is built.”

In another example, an organisation might develop software that can be used on a website by thousands, or millions, of people. The digital factory might produce some software for a very specific customer problem, or a problem internal to the organisation, such as safety-critical software that might go into an aircraft or a train.

According to Director Strategic Initiatives at Thales, Josh Polette, a “digital factory” can either use digital technologies to change industrial

There are all sorts of different applications which can create, or use, a digital factory. The emerging Internet of Things (IoT) space will have

operations or produce digital products, including software.

far reaching applications for digital factories now and into the future.

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NEW OPPORTUNITIES FOR DIGITAL FACTORIES A successful digital transformation project will result in real business transformation and if business leaders don’t take the opportunity to change the way people are working, then they may end up simply reinforcing existing practices.

With the rise of digital factories, it is important to involve staff from beginning. Allow people to contribute to the digital transformation story by collaborating on how digital can change the organisation and what opportunities are there for developing digital products.

SUEZ’s Justin Frank said the way industries communicate with customers is becoming a mainstream process and

“With IoT and trucks of the future, it becomes a platform you can build on, for example, adding quality controls and 3D modelling onto a truck,” Frank said.

People at the forefront of operations and new opportunities should be engaged through every stage of a transformation. Some roles will be replaced with automation and new roles will appear to take advantage of digital.

Dassault Systèmes Senior Sales Manager, Business Transformation, Craig Bradley, said there are huge opportunities for 3D visualisation technology to be part

there are big opportunities to interface operations with CRM to better understand customers’ needs, then linking those back into the factory.

of a digital transformation program and shape the digital factories of the future.

“Visualisation is not just about exposing information. By modelling things in the 3D world you are continuously making better decisions about digital transformation,” he said.

“This helps optimise resource utilisation and extend asset lifecycles.”

For digital transformation to deliver optimal performance, the context of the data needs to be considered when making decisions across a range of applications, from manufacturing plants to smart cities.

“Once everything is connected you can see a maintenance schedule connected to a workload schedule,” Bradley said.

The technology can also improve safety and reduce errors.

Maintenance, repair and overhaul (MRO) work can be simulated in 3D to help ensure the procedure is done safely and the work instructions are communicated.

Organisations with fixed assets can create a digital “twin” which not only replicates the dimensions of the physical system, but can provide real time operations data that can be acted upon.

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TOWARDS THE INDUSTRIES OF TOMORROW Industries of tomorrow will thrive in digital. In order to remain relevant and competitive business leaders must embrace change.

Not only will operations be more data-driven, but successful organisations will exploit the full potential of their own digital factory.

When working a digital transformation program it is possible to have “tunnel vision” and lose sight of the bigger picture. A key theme of the event was to work on measurable outcomes and involve people from the beginning as they are the real catalysts for change.

French-Australian Chamber of Commerce & Industry Federal President, François Romanet, said businesses needed to focus on everybody in the organisation for successful digital transformation

to occur. It was not about meeting the needs of generation y, or other interests.

Business networks such as the French-Australian Chamber of Commerce & Industry are important for promoting digital transformation discussions. They promote cross-pollination of ideas across different industries and allow business leaders to gain unique insights into successful methods used in other industries that may be transferable to their own.

Other benefits include the facilitation of focused networking around key ideas, like digital transformation, and shared areas of business interest.

A national network with local expertise will take into account differences in industry beyond state borders and include the value of local knowledge and contacts.

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ABOUT FACCI The French-Australian Chamber of Commerce & Industry (FACCI) is an independent, not-for-profit organisation governed by a Board of 19 Directors and comprising more than 600 members, with offices across Australia.

The Chamber is affiliated to CCI France International, a worldwide network of 112 French Chambers operating in 82 countries.

The Chamber’s main mission is to promote FACCI members and support French companies succeed in Australia through information, networking and business support services.

The French-Australian Chamber of Commerce and Industry’s 2018 Schneider Electric Innovation Hub Business Forum was held in Brisbane on June 1, Adelaide on June 15 and Sydney on June 18.

Find out more information about upcoming industry events and how to get involved with the French-Australian Chamber of Commerce & Industry at: www.facci.com.au