Category: Digital Transformation

Introduction

The digitization trend is widespread and in demand in various areas. Coreynen, Matthyssens, and Van Bockhaven (2017, p. 44) define this concept and note that it implies “the increasing use of digital technologies for connecting people, systems, companies, products and services”. About the oil and gas industry, this course is relevant today, when many states sell these natural resources actively and, in many respects, form the domestic economy and budget due to them, improving the principles of extraction and production is an essential task. Shukla and Karki (2016) note that introducing innovations in this field is a demanded activity. Therefore, a focus on digitization and connectivity are the crucial aspects of the oil and gas industry.

Advantages of Digitization in the Oil and Gas Industry

The digitization of industrial facilities in the oil and gas industry is inextricably linked to the issues of ensuring product safety. Innovative IT solutions aimed at speeding up the automation process and optimizing many production processes in enterprises have found wide applications in the market. For instance, according to Longde et al. (2015), the impact of digital technologies is becoming wider, which allows improving not only production processes but also other significant aspects, for example, increasing the organizational efficiency and quality of employees’ operation. At the same time, innovations in production and processing, the digitization of workflow, and other activities are strategically important steps for any company on the path to its digital future.

Koplos, Tuccillo, and Ranalli (2014) evaluate the success of the Baker Hughes company and give the statistical results of introducing digital technologies in 2012. According to the results of the assessment, during that period, the corporation drilled “36,824 oil and gas wells”, which was a significant step towards leadership in the industry (Koplos, Tuccillo & Ranalli 2014, p. 45). Therefore, the provision of manufacturing with high-tech equipment contributes to productivity and the expansion of market influence.

It is essential to bear in mind that for the oil and gas industry, security is a key issue that digital technology can solve in many ways. As Siebel (2017) points out, using predictive analytics eliminating the technological failures of production assets or costly equipment downtime, as well as minimizing the human factor, contributes to the normal operation of all systems. The functions of modern digital devices that support the work of the oil and gas industry serve as the tolls reducing people’s participation in the monitoring process, thereby automating the monitoring of activities and allowing employees to focus on the ways of increasing production results (Siebel 2017; Longde et al. (2015). These advantages prove the relevance of implementing high-tech equipment in this area.

Another essential advantage of digitization is technological solutions that are used throughout the world to improve production efficiency and the current operational activities of employees. This is important since, for instance, at those enterprises where flammable chemicals are part of the environment, sparks caused by the operation of mobile phones or other portable devices may provoke emergencies. According to Longde et al. (2015), even the temperature of their surface can be dangerous for both employees and enterprises as a whole. The authors argue that, as companies are increasingly merging with digital technologies, their most important system functions shortly may directly depend on the availability of computer solutions (Longde et al. 2015).

The reliability and durability of such equipment are the key factors for successful work. Therefore, equipping employees with mobile devices that are suitable for work in high-risk enterprises will allow them to collect, use, and access information in places where it was previously impossible, and will also help companies save and optimize operational data and generate business ideas.

Digitization and Automation

Concerning the oil and gas industry, such terms have become common as oil production digitization, smart wells, processing automation, and other aspects of activities. The key role is traditionally given to minimizing a human role and making the processes of formation and transmission of information and data computerized. However, the considered examples of using information technologies in the oil and gas industry meet these goals.

In order not to confuse the two concepts, it is essential to consider their features. Carvajal, Maucec, and Cullick (2017) offer to draw attention to the digitization concept and compare this principle of work with automation as one of the varieties of advanced production. As the authors point out, both directions are related to increasing the role of information technologies; nevertheless, a qualitative difference is formed in the depth of their application (Carvajal, Maucec & Cullick 2017).

Automation, as a more traditional method, includes information technology into the production, thereby reducing the cost of the manufacturer. At the same time, a specific business model remains unchanged – making a profit by selling products. Digitization is the result of the enhanced implementation of information technology until the moment of a qualitative change in the business (Carvajal, Maucec, & Cullick 2017). As a result of increasing the level of the application of modern technical mechanisms, the transformation of the business model of an enterprise occurs, which causes modernization. Ventures change their operating modes from the sales of products to the provision of services with the use of technologies that include manufactured products.

About the oil and gas industry in the conditions of a new paradigm and, in particular, the Baker Hughes company, natural energy resources are not the final product. With the classical methods of work, suppliers’ responsibility ends at the moment of transferring the resource and receiving payment. In this case, automation facilitates the internal processes of a manufacturer, reduces its cost, which, in turn, may affect consumers by reducing prices. The notion of digitization goes further because, as Kapitonov et al. (2017) state, the use of information technologies creates values ​​for buyers, which means that the commercialization of modern equipment is performed.

In this case, a manufacturer is to expand the area of ​​responsibility and penetrate the needs of customers, thereby selling not raw materials but, alternatively, the final result of utilizing and processing them. The use of information technologies offers opportunities for such interpenetration. At the same time, smart devices installed in wells, security systems, and other areas do not affect buyers of the fuel and are tools of manufacturers’ internal costs (Kapitonov et al. 2017). This mechanism explains the relevance of digitization from the customers’ perspective.

In its classical definition, the oil and gas industry, in particular, the extraction, processing, transportation, warehousing, and sale of mineral resources, hardly suits the concept of digital innovations. Vorob’ev et al. (2017) argue that the transition to a new regime means forming a fundamentally new service sector, as well as non-standard value-added chains and pricing. Nevertheless, the issues of the automation of the economics of the raw materials are relevant and significant in the context of modern modernization practice. According to Kapitonov et al. (2017), implementing automation processes in the oil and gas industry proceeds gradually but steadily.

For instance, the rapid exchange of data except the human factor allows creating a transparent market for supply and demand and (Carvajal, Maucec & Cullick 2017). Some suppliers are in competitive advantage, in particular, those who can maximize flexibility to meet the needs of energy buyers, while optimizing production risks associated with uneven consumption (Carvajal, Maucec & Cullick 2017; Kapitonov et al. 2017). Therefore, the concept of digitization as the final stage of the modernization of the oil and gas industry has many conventions and certain nuances affecting contemporary innovations.

Existing Digital Technologies in the Oil and Gas Industry

Combining the main production structures in the oil and gas industry with the help of telecommunications into a single system allows monitoring all the technological processes of exploration and production of valuable energy resources. Digital innovative technologies developed to date include a wide range of devices and mechanisms that contribute to more productive mining. Since the Baker Hughes Corporation occupies one of the leading positions in this sector, the introduction of appropriate technologies helps the company to develop steadily and maintain market competition by involving the necessary tools and instruments.

According to Harthy et al. (2018), in the field of exploration during development, passive good monitoring is applied, which is a successful technique for analyzing the volume of potential resources. Also, the authors note that for ecological protection, environmental monitoring in real-time is utilized (Harthy et al. 2018). This operation allows preventing harmful effects on the environment through the preliminary assessment of the impact of drilling and production regimes, thereby taking the necessary safety measures. All these digital technologies serve as valuable tools in promoting the development of the oil and gas industry.

Organizing the management of oil production from remote centers by using electronics means not only improving production or expanding the use of digital technology but also changing the direction of work. Hajizadeh (2019) notes that the integration of data collection and management systems concerning the state of wells and other components allows exploration and mining organizations to make effective decisions. This opens up the possibilities of analyzing the current situation, developing an optimal management strategy, and reducing inevitable costs.

Kamsu-Foguem (2016) also confirms the relevance of these mechanisms but note that despite the advancement of technologies, manual inspection is mandatory to avoid unforeseen situations and eliminate errors. This recommendation applies, in particular, to the field of extraction. In general, technologies for optimizing production and forecasting help prevent accidents. According to Hajizadeh (2019), such a direction as machine learning is in demand in modern realities. The author provides statistics on the progress of this field and argues that, by 2018, the number of studies in this area has increased significantly (Hajizadeh 2019). Therefore, both manufacturers and researchers are interested in studying innovations in the oil and gas industry.

Predictive Analytics as a Component of Digitization

Oil and gas companies carry out maintenance work regularly due to different reasons, for instance, the improvement of activity stages or a combination of technologies. However, the reliability of equipment may remain low, and the overabundance of maintenance personnel may entail undesirable costs. To solve these problems, Davis et al. (2017) offer to pay attention to the predictive analytics system.

Installing sensors and automating the monitoring process can reduce the number of repairs, minimize tools downtime, and determine the optimal number of employees required to perform the specified work. In addition, as the authors point out, with the help of modern technologies, it is possible to study a field at all stages of its development remotely (Davis et al. 2017). Therefore, such a predictive activity is relevant to the industry under consideration.

Specialized mobile applications allow controlling equipment modes remotely and obtaining deep analytics, including the analysis of products, regularity, and quantity that corporate and retail customers buy. According to Schäkel, Janssen, and Brecher (2019), when relying on these data, one can increase the efficiency of gasoline supplies to retail networks of gas stations or the fleets of industrial companies.

Oil and gas companies, in particular, Baker Hughes, actively introduce mobile applications for retail consumers (Koplos, Tuccillo & Ranalli 2014). Such tools can also be issued for corporate customers to check the availability of manufacturers’ products and redundancy. Stakeholders may consolidate the accumulated data on demand and distribution with data on production and processing. The efficiency of all the processes will increase under the conditions of complex rather than scattered digitalization and competent personnel management.

Many processes at oil and gas fields depend on qualified specialists, and their permanent presence there is not necessary. Nevertheless, in case of emergencies, companies are forced to constantly keep on the platforms a large number of employees. To bring them there if necessary is an unreasonable decision since their delivery, as a rule, to hard-to-reach deposits, is financially costly. The augmented reality technologies that Yu et al. (2015) describe allowing employees at oil and gas fields to interact with an expert remotely, consult on the ways of troubleshooting, and perform other significant tasks.

The authors note that wireless technologies have rather compact designs, which, at the same time, is an advantage in the conditions of limited space (Yu et al. 2015). Therefore, this method of remote access is an important phase of predictive control practice.

Key Advantages and Challenges

When summing up the findings of the presented academic sources, the results of the review may be grouped based on the criteria of merits and difficulties. Digitization in the oil and gas industry is a complex and multi-stage process that is characterized by many nuances. Despite the large number of benefits that both suppliers and buyers receive due to innovation in extraction and production modes, difficulties occur inevitably. Table 1 presents the types of main advantages and challenges that arise in the process of digitization in the oil and gas industry.

Table 1. Advantages and Challenges of Adopting Digitization.

Reference List

Carvajal, G, Maucec, M & Cullick, S 2017, Intelligent digital oil and gas fields: concepts, collaboration, and right-time decisions, Gulf Professional Publishing, Cambridge, MA.

Coreynen, W, Matthyssens, P & Van Bockhaven, W 2017, ‘Boosting servitization through digitization: pathways and dynamic resource configurations for manufacturers’, Industrial Marketing Management, vol. 60, pp. 42-53.

Davis, S, Brodersen, S, Böhmer, G & Siemens, AG 2017, ‘Digitalization sparks a quiet revolution’, World Pumps, vol. 2017, no. 5, pp. 28-31.

Hajizadeh, Y 2019, ‘Machine learning in oil and gas; a SWOT analysis approach’, Journal of Petroleum Science and Engineering, vol. 176, pp. 661-663.

Harthy, AMA, Oo, YH, Al-Saqri, SM & Karim, AM 2018, ‘The effect of technology and digitalization on the quality management system among Omani oil and gas drilling company’, International Journal of Applied Engineering Research, vol. 13, no. 5, pp. 2331-2337.

Kamsu-Foguem, B 2016, ‘Information structuring and risk-based inspection for the marine oil pipelines’, Applied Ocean Research, vol. 56, pp. 132-142.

Kapitonov, IA, Korolev, VG, Shadrin, AA & Shulus, AA 2017, ‘The role of small and medium-sized innovative enterprises in the solution of the import substitution task in oil and gas-sector segment of the Russian fuel and energy complex’, International Journal of Energy Economics and Policy, vol. 7, no. 3, pp. 137-145.

Koplos, J, Tuccillo, ME & Ranalli, B 2014, ‘Hydraulic fracturing overview: how, where, and its role in oil and gas’, American Water Works Association, vol. 106, no. 11, pp. 38-46.

Longde, S, Chaoliang, F, Feng, L, Rukai, Z, Zhang, Y, Xuanjun, Y, Jia, A, Gao, X & Ling, S 2015, ‘Innovations and challenges of sedimentology in oil and gas exploration and development’, Petroleum Exploration and Development, vol. 42, no. 2, pp. 143-151.

Schäkel, M, Janssen, H & Brecher, C 2019, ‘Increased reliability for the manufacturing of composite pressure vessels’, Lightweight Design Worldwide, vol. 12, no. 3, pp. 10-17.

Shukla, A & Karki, H 2016, ‘Application of robotics in onshore oil and gas industry – a review part i’, Robotics and Autonomous Systems, vol. 75, pp. 490-507.

Siebel, TM 2017, ‘Why digital transformation is now on the CEO’s shoulders’, McKinsey Quarterly, vol. 4, no. 3, pp. 1-7.

Vorob’ev, A, Shchesnyak, E, Dzhugendra, SR, Shchesnyak, K & Vorob’ev, K 2017, ‘Transition to advance technologies of subsoil use’, Metallurgical & Mining Industry, no. 2, pp. 72-80.

Yu, Y, Huang, S, Wang, J & Ou, J 2015, ‘Design of wireless logging instrument system for monitoring oil drilling platform’, IEEE Sensors Journal, vol. 15, no. 6, pp. 3453-3458.

New information technologies (NIT) have an enormous influence on an individual’s quality of life and the development of business. Currently, laptops, computers, tablets, and smartphones are relatively common attributes in the everyday routine of both consumers and industries. However, if a company wants to be ahead of competitors, it needs to invest in advanced digital technologies regularly. Even though it can be challenging to imagine ways of how NIT can develop more over time, this skill is particularly helpful for successful company owners. Nonetheless, individuals should analyze the possible reasons for the deployment of NIT to their unique business needs. Thus, company owners should examine various drivers, including appropriate electronic deliverability, customizability, search costs, and more. Primarily, NITs are used to build a more reliable connection between customers and businesses. Thus, institutions use NIT as a network because it helps to build stronger relationships and alliances. I think that companies, big or small, should be able to adapt to new technologies by always updating their knowledge on the topic, consulting with competent specialists, and being future-oriented.

There are numerous examples of successful businesses that could not keep growing and improving because of a lack of NIT introduction into their model. However, a small company can develop fast if it has a strong internet presence, can provide various services online, or assist customers with new technology products. In any caseenablesenable businesses, consumers, investors, partners, and suppliers to stay interconnected. Besides adaptability, individuals should learn how to choose what aspect of NIT to implement based on their unique purposes. This positive transformation of a business can be done by deciding on the most effective mediation strategy.

The operation system of electric utility companies may differ depending on the type and form of ownership, for example, a state or an investor-owned company. In addition, since typically, an electrical utility system consists of several electrical companies providing different services, and their integration can be vertical or horizontal, the ways of making a profit are also different (Willis & Philipson, 2018). However, in general, electric utility companies profit from contracting with governments for the supply of electrical power by selling energy or power supply services to corporations, as well as to other countries.

Electric utility companies have faced the problem of decentralization in the past due to the underdevelopment of the service market in this area and the centralization of the system. Decentralization of electrical systems began to occur relatively recently since in the past, the practice of companies that are responsible “for everything” was more developed (Frei et al., 2018). Consequently, digitalization for large companies was complex because of their scale. At the same time, as noted by Scognamiglio, companies tried to sell services, but the culture was too different; thus, digitalization was not profitable for services (Chesbrough, 2020). Hence, digitalization was challenging and not profitable for companies in the past, despite the fact that technologies were less developed.

Francesco Starace has seen the opportunities for the development of the sphere by assessing the needs and demands of the audience. In the era of digitalization of all areas, electric utility companies also needed this transition, although most of them feared the costs and failure due to multiple challenges. In addition, environmental trends and technological developments have caused the rise in popularity of electric vehicles, which are a promising development trend. For example, the market share for electric cars in Europe grew from 1.2% to 10% from 2015 to 2020 (“Trends and developments,” 2021). Consequently, Starace has seen a potential niche with low competition and chose a way for the corporation to improve the performance of its low-profit companies.

In the process of creating new projects, the company faced many challenges, which lagged its development. Among such problems were deficiencies at the hardware level, the need to change the service system to a more customer-centric one, as well as shift the cultural and knowledge emphasis and provide continuous education of staff (Chesbrough, 2020). In addition, the corporation had too many diversified projects that caused overwork and stress among employees. However, the timely identification of problems, prioritization, and reduction of projects allowed all Enel X companies to complete the changes on time and generate significant profits.

Francesco Venturini’s priorities should focus on company development and digitalization in areas that have significant potential. As determined by Venturini, such areas can be eMobility, financial services, and optical fiber while maintaining work with governments, businesses, and individual customers (Chesbrough, 2020). As Siebel (2019) points out, only companies that implement wholesome digital reinvention but not just transform their business processes can be successful. Therefore, the path of further digitalization should be Venturini’s choice.

Thus, the case study demonstrates that trend analysis, proper resource selection, and profound cultural and organizational change are the path to the successful digitalization of an enterprise. Most companies will soon have to go this way and take into account that superficial or partial digitalization is often insufficient. For this reason, all companies must make organizational and cultural changes within the company but not just introduce new equipment or technologies to succeed.

References

Chesbrough, H. (2020). Enel X: Driving digital transformation in the energy sector. Haas School of Business, University of California Berkeley.

Frei, F., Sinsel, S. R., Hanafy, A., & Hoppmann, J. (2018). Leaders or laggards? The evolution of electric utilities’ business portfolios during the energy transition. Energy Policy, 120, 655–665. Web.

Siebel, T.M. (2019). Digital transformation: Survive and thrive in an era of mass extinction. RosettaBooks.

Trends and developments in electric vehicle markets. (2021). Web.

Willis, H.L. & Philipson, L. (2018). Understanding electric utilities and de-regulation. CRC Press.

Technological advancement demands that companies adopt modern digital transformation strategies to succeed in the market. Indeed, these strategies and tools enable social, economic, and environmental sustainability for organizations (Gil-Gomez et al., 2020). According to Ebert and Duarte (2018), digital transformation is the process of acquiring disruptive technologies by a company to accelerate its growth, increase productivity, and elevate value. It includes a wide range of novel electronic devices, software, quantum computers, and various methods of cloud storage and data analytics (Ebert & Duarte, 2018). Furthermore, this field offers businesses the opportunity of integrating artificial intelligence, augmented reality, and simulation in their management, planning, and execution processes (Ebert & Duarte, 2018). For example, the Spanish company Vivo constructed a robot that helps clients formulate their requests, while many leading hospitals introduced electronic health records to make clinicians’ work more efficient (Ebert & Duarte, 2018). Nevertheless, despite such a wide variance of tools, there are several success factors and points that the company should consider. For disruptive technologies to benefit organizations, it is essential to consider digitation and customer-oriented strategy.

The first success factor in digital transformation is the company’s preparedness to make bold moves in the digital realm to explore and anticipate customers’ expectations. Organizations that make only slight innovations and alterations to their technological part will always lag behind those who adopt disruptive tools and strategies aggressively (Blackburn et al., 2020). It became particularly critical during the times of coronavirus crisis when firms no longer had an opportunity to test some software they had never utilized. Instead, they had to learn fast and implement them to maintain their businesses’ viability in the market. Moreover, organizations deploying digital solutions should be able to create flexibility for their employees and adaptability of their projects using modern technology and software. Digitalization helps companies remain competitive, simplifies the process of security checking, estimating threats, finding opportunities, and even building project plans and budgets (Li et al., 2021). For example, Schindler developed intelligent algorithms and introduced advanced sensors to increase customer satisfaction (Sebastian et al., 2020). It shows how important it is to use a digitized solutions strategy to predict what may improve the product and make it more attractive for clients.

The second success factor is the ability to engage customers in the implementation of digital solutions. The customer engagement strategy helps to understand various needs and demands that clients may have. For instance, Amazon created a user-friendly platform that allows consumers to search for necessary products, place orders, and make payments quickly and efficiently (Sebastian et al., 2020). Another example is Kaiser Permanente, a non-profit healthcare organization that created patient-centric online platforms that expanded individuals’ chances to receive help from different medical experts (Sebastian et al., 2020). These two cases demonstrate how embedding technological solutions improve customer satisfaction and organizational success.

Although the two abovementioned strategies were demonstrated to lead to successful business outcomes, firms should consider one essential point when utilizing digital tools. Specifically, they should understand the applicability of particular software or device for their company. It may be reasonable for car manufacturers to purchase advanced robotic systems and 3D printers, but they may be useless for a law firm (Ebert & Duarte, 2018). Instead, the latter may consider using cloud computing for data storage.

In summary, the two main digital transformation strategies are digitized solutions and customer engagement. The former is used in cases when the company wants to explore and predict customer needs using technology, while the latter helps to interact with clients and receive their feedback. However, when utilizing these methods and implementing disruptive technologies, businesses should always consider the usability of a particular device or program to their organizations to ensure that digital solutions bring maximum benefit.

References

Blackburn, S., LaBerge, L., O’Toole, C., & Schneider, J. (2020). Digital strategy in a time of crisis. McKinsey Digital, 1 – 10.

Ebert, C., & Duarte, C. H. C. (2018). Digital transformation. IEEE Software, 35(4), 16-21.

Gil-Gomez, H., Guerola-Navarro, V., Oltra-Badenes, R., & Lozano-Quilis, J. A. (2020). Customer relationship management: Digital transformation and sustainable business model innovation.Economic Research, 33(1), 2733 – 2750.

Li, H., Wu, Y., Cao, D., & Wang, Y. (2021). Organizational mindfulness towards digital transformation as a prerequisite of information processing capability to achieve market agility.Journal of Business Research, 122, 700 – 712.

Sebastian, I. M., Ross, J. W., Beath, C., Mocker, M., Moloney, K. G., & Fonstad, N. O. (2020). How big old companies navigate digital transformation. In R. D. Galliers, D. E. Leidner, & B. Simeonova, Strategic information management (pp. 133–150). Routledge.

Introduction

The digital transformation and the transition to the online environment used to be seen as the prerogative of the organizations that provided solely the services that could be easily translated into the online context due to the absence of direct physical interactions between the end user and the end product or service. Specifically, organizations offering educational opportunities, computer software, and similar products appeared to be the primary audiences for which targeting the digital setting. However, with the rapid development of the online market platform and the digital services having become ubiquitous in every industry, most companies must consider entering the digital realm, which usually poses a range of challenges due to the lack of preparedness. Although SADARA operates in the chemical industry, which is not related to the digital market directly, the organization needs to build a well-functioning supply chain within the digital realm and transition to the digital context seamlessly due to the opportunities for enhanced interaction with customers and business partners, as well as streamlining its organizational processes and managing quality more effectively.

Digital Transformation

When considering the specific changes that SADARA will have to undergo in order to enter the KSA digital economy realm, one should consider applying E2E digital transformation framework as the most effective strategy with the greatest potential. The concept of E2E is fairly simple since it presupposes eliminating any intermediary between a chemical company and its end customer, thus streamlining the process of service or product delivery (Ivanov et al., 2020).

Therefore, the digital transformation in question will have to be viewed as a threefold process, which will include the enhancement of the company’s communication, increase in quality management, and the improvement of the organization’s supply chain with its further expansion. In fact, the three processes in question are closely interrelated. Specifically, the improvement of the supply chain will require increased quality of communication, similarly to the manufacturing process, so that the number of errors and defects could be minimized. Lastly, innovative communication tools will have to be used to encourage the dialogue between the company and its customers, thus managing possible complains and improving the quality of service consistently.

Therefore, apart from other transformations, the creation of a digital application that will allow SADARA to receive feedback from its customers will be strongly required. The application will help to respond to complaints and suggestions for quality improvement in real time, thus building the company’s reputation in customers’ eyes and increasing SADARA’s presence both in the KSA and global chemical markets. Specifically, the application in question should provide an opportunity for gathering feedback from customers as the source of further insights fr improving the quality of service and the products delivered to end customers.

However, the transitioning to the agile framework and the incorporation of both incremental and disruptive innovations into the set of tools that the organization uses to manage its operational, processes, sales, communication, and other critical parts of its supply chain management (SCR) and customer relations (CR) should be regarded as the priority for SADARA presently. Thus, the firm will be able to morph into an improved version of itself and address the requests of its buyers more effectively.

Key Factors for Digital Transformation

On the surface, the idea of digitalizing the products and services offered by the companies representing the chemical industry does not make a lot of sense due to the rigidly practical application of the specified services and products. Namely, the chemical compounds produced by the identified type of organizations are used for specific purposes, of which basic chemicals constitute the largest portion, followed by the products for life sciences, then, to a lesser extent, by specialty chemicals, and, finally, a small percentage of consume products (“Who we are?,” 2021). However, even though the product itself cannot be digitalized, chemical companies, such as SADARA, can introduce digital tools into their supply chains and participate in the online economic setting actively to enhance their supply chain and communication efficacy, as well as improve quality control. Therefore, SADARA will benefit significantly from the integration of the model for digitalizing commercial operations.

The rise in the opportunities for communication and marketing that the use of digital tools and the e-market, in general, provides must be seen as the primary factor in opting for digitalization for SADARA. By incorporating innovative tools for digital communication and collaboration, the company will be able to expand, embrace the opportunities of cross-disciplinary and cross-cultural communication, and, eventually, promote the culture of shared knowledge in its setting. As a result, SADARA’s information management quality will rise, leading to better product quality management and enhanced customer communication, with the ultimate rise in the firm’s global performance. Overall, the proposed change will allow SADARA to reduce costs substantially since the process of transferring critical data will be simplified, and the threat of crucial information being omitted, with the resulting disruption in the deadlines, will be avoided successfully. Consequently, the speed of the product delivery will improve, which will help the organization to build an even stronger reputation in the target market.

Best Approach to Transformation and Digitalization

One of the main challenges that SADARA is going to face when implementing the digitalization process and transferring of the online environment will be to ensure that every aspect of its performance is altered accordingly and coordinated with the innovations that will be implemented in its SCM and marketing domains. Therefore, a comprehensive model that will allow embracing every aspect of the corporate processes, from manufacturing to HRM to customer relations, must be aligned with the newly designed framework and represent a coherent structure. Studies show that the specified task remains one of the main impediments for organizations aiming at digitalization of their products and services (Caputo et al., 2021). Therefore, the digitalization process should be taken to the level of corporate governance and implemented at the specified scale so that the organization could embrace every advantage of the digitalization process without experiencing challenges while adjusting every aspect of its performance to the new approach.

Specifically, the proposed framework includes four major sections, namely, the introduction of the agile SCM framework as the means of collaborating with business partners, the enhancement of customer experience by means of improving communication and promoting customer innovation, introducing automation for suppliers, and integrating new digital models for improving key performance aspects. The latter element of digitalization will focus specifically on the promotion of incremental improvements and innovation across the organization so that SADARA could response to innovative solutions immediately and incorporate them into its performance correspondingly.

Digital Business Model

Since digitalization lies at the core of the described process, it will be logical to start the transformation with the development of a new business strategy that will be rooted in the digital approach. For SADARA, the specified change will require the application of the end-to-end (E2E) digital transformation. By definition, the proposed approach will allow limiting the extent of expenses due to the Ivanov et al. (2020), while also improving customer experience by enhancing the communication between the customer and the organization. The E2E model implies the digitalization of the B2B framework, which SADARA is currently employing (Ivanov et al., 2020). Specifically, the E2E approach will allow the organization to create a seamless management process for all key tasks due to the inclusion of a digital framework that will incorporate control tools for the respective areas, such as manufacturing (quality assurance and defects identification), customer communication (feedback analysis and customer support), and communication across the supply chain (deadline management, task allocation, logistics processes, and the related concerns). Indeed, according to Ivanov et al. (2020, p. 6), E2E primarily suggests “automation and integration of production and managerial process in a single information system. “Consequently, with the implementation of the E2E framework as the vehicle for the digitalization of the company and transfer to the new mode of functioning, SADARA will be able to attract the attention of key stakeholders and win their trust by offering improved service quality.

Added Value

To ensure that SADARA will still have a noticeable competitive advantage within the digital market of the chemical industry, it will need a combination of IoT- and AI-based business strategies for maintaining product and service quality while keeping an eye on the essential trends and be able to forecast changes in customers’ demand.

Specifically, the application of the IoT will allow SADARA to enhance its asset utilization by purchasing updated technology, including smart machines that will provide complete automation of the production processes, therefore, minimizing the probability of an error occurring at the manufacturing phase. Moreover, in case of an unexpected issue emerging in the process, the integrated IoT framework will allow adjusting the rest of the processes accordingly so that the change in question could not affect the overall quality of the end product (Abou-Foul et al., 2020). Namely, measuring the precise quantity of the ingredients, ensuring that the product has the necessary chemical and physical properties, and that the manufacturing process aligns with the preset standards of quality will become significantly easier once the IoT framework is included into SADARA’s functioning (Abou-Foul et al., 2020). Similarly, the inclusion of AI into SADARA’s operations will help to forecast the key market trends and changes in customers’ demands quite accurately. The described changes are believed to create the added value needed for the organization to compete in the global market successfully.

Finally, it will be vital for SADARA to incorporate an amalgamation of an innovation management strategy based on both incremental and non-incremental approaches. Specifically, while SADARA will need a strategy that will allow it identifying innovative trends and disruptive innovations in technology and communication, simultaneously developing a framework for incorporating the emergent tools into its processes to offer improved products and increased quality of services. The specified framework will need to become the main competitive advantage and the key selling point of SADARA’s products in the chemical industry market.

Showing the Added Value to the Company

Over the past decade, appreciation for the idea of continuous incremental improvement as the basis for running a company has grown substantially among entrepreneurs. Specifically, a range of companies have acknowledged the importance of digitalization, shifting to the e-market setting as a more lucrative option for attracting new customers and selling their products (Abou-Foul et al., 2020). Therefore, the opportunity for SADARA to take a noticeable spot in the digital setting and cement it by developing a massive competitive advantage are the points that SADARA’s leaders are likely to appreciate in the specified pitch. Thus, by outlining the opportunities that the digitalization process will have on SADARA and its relationships with its customers, the ability to capture new audiences, and the chance to streamline its manufacturing and SCM-related processes are likely to be recognized for their importance. For this reason, emphasizing the described outcomes as the main effects that digitalization of SADARA’s services and products will entail will allow the company leaders to recognize the value of the described change.

Specifically, the added value can be described from several perspectives. First and most obvious, the opportunity to improve the quality of performance by introducing better control tools and enhancing the SCM processes will be addressed. Specifically, the options for introducing the principles of agile SCM into SADARA’s performance will be demonstrated. According to Sjödin et al. (2020, p. 480), the use of the IoT tools and the AI frameworks allows connecting organizational, manufacturing, and communication-related processes into a single framework in order to build the “capacity to co-create new digital service innovations in collaboration with customers and the broader ecosystem.” Moreover, the author emphasizes that the suggested change will entail the servitization of the internal corporate process, which means that the company’s brand will be represented both as a product and a service, thus attracting a broader range of customers and representing the company more accurately in the global market. Specifically, the servitization of SADARA’s products will show the fullest range of services that the company offers, including not only specific products, but also the improvement that they cause for the end user. Therefore, for SADARA, which is actively seeking to expand and improve its quality management along with the coordination of the key tasks within its supply chain, the inclusion of the agile strategies into the framework will be vital.

Afterward, the importance of communication in the present-day global SCM setting and the high probability of misunderstandings in it will have to be detailed, focusing on the opportunities that the proposed integration of IoT, as well as other IT and ICT tools, will have on the accuracy of data management. Thus, SADARA leaders will have a clear perspective on the opportunities that they will be able to embrace when deploying the proposed framework. The importance of the agile SCM framework as the option that will be unlocked for the organization as soon as it embraces digitalization will also have to be outlined as the mans of enhancing quality and, therefore, attracting new customers while also keeping the old ones loyal to the brand. Overall, the tremendous potential for increasing SADARA’s competitive advantage not only in th KSA, but also on the global scale should become the key selling point for the described approach toward shaping the company’s business strategy.

Implementing the Approach for the Client (SADARA)

Applying the proposed approach to SADARA will require the use of the financial projections that will illustrate the efficacy of the proposed approach. Namely, it will be crucial to show projected ROI changes after the integration of the digitalization techniques and the increased focus on the transformation of the company toward the IoT- and AI-driven change within its organizational, manufacturing, and management-related processes. Specifically, it will be necessary to perform the analysis of the chemistry market to illustrate the necessity for transitioning to the digital platform. Specifically, SADARA will have to realize that selling chemicals digitally is possible by employing the E2E framework (Ivanov et al., 2020). More importantly, the benefits of the specified approach, namely, the drop in costs and the chance to embrace much broader range of customers, including overseas partners, will have to be demonstrated.

Afterward, the improvement in product and service quality, as well as the development of a unique competitive advantage based on close communication with customers and servitization of the product, will need to be considered as the essential characteristics that make the specified framework especially attractive to an organization (Kohtamäki et al., 2020). Since the process of digitalization is inevitable for any company, it is cucial for SADARA to get a head start on the specified task so that it could develop a sustainable framework beforehand. Thus, the company will not need to rush when the specified task gains particular urgency. Instead, SADARA can currently take its time to restructure its supply chain and consider how innovative technology can be integrated into its framework most effectively. In fact, the specified process needs to be shaped toward the creation of a cost-effective approach based on cutting cost for the processes that used to be performed manually rather than with the help of digital tools.

Additionally, the transformation of the organizational setting within SADARA will also have to be represented as a major opportunity for the company. First and most obvious, the specified change will allow defining whether staff members at SADARA are motivated and loyal enough to support the change in question. Moreover, with the transformation of the workplace environment and the improvement of the organizational processes, the reconsideration of the corporate values and the emphasis on the professional development of staff members as the primary motivation device will become possible. Thus, employees will develop the loyalty needed to support the described transformation and the shift toward digitalization, while acquiring the skills needed to promote the change further.

Conclusion

Since SADARA has evolved to the point where it requires an intricate and elaborate supply chain for collaboration with its suppliers, retailers, and partners, as well as the increased importance of enhanced communication with the target audiences and the enhanced quality management, SADARA will need to transfer to the digital platform gradually. The specified process will have to be carried out in the manner that will allow streamlining quality management and key supply chain tasks, thus improving the performance of the organization. As a result, the transformation will have a significantly positive effect on SADARA and its performance in the chemical industry. Moreover, with the inclusion of the described strategies and tools, SADARA will have the potential to become a leading organization in the digital market, gaining additional value and becoming immediately recognizable. Therefore, the proposed approach toward building an online presence in the KSA chemical market, as well as the global one.

References

Abou-Foul, M., Ruiz-Alba, J. L., & Soares, A. (2020). The impact of digitalization and servitization on the financial performance of a firm: An empirical analysis. Production Planning & Control, 1-15. Web.

Caputo, A., Pizzi, S., Pellegrini, M. M., & Dabić, M. (2021). Digitalization and business models: Where are we going? A science map of the field. Journal of Business Research, 123, 489-501. Web.

Ivanov, I., Lukyanova, T., & Orlova, L. (2020). Digitalization as a driver of innovation for industrial enterprises. IOP Conference Series, Materials Science and Engineering, 753(8), 1-14.

Kohtamäki, M., Parida, V., Patel, P. C., & Gebauer, H. (2020). The relationship between digitalization and servitization: The role of servitization in capturing the financial potential of digitalization. Technological Forecasting and Social Change, 151. Web.

Sjödin, D., Parida, V., Kohtamäki, M., & Wincent, J. (2020). An agile co-creation process for digital servitization: A micro-service innovation approach. Journal of Business Research, 112, 478-491. Web.

Who we are? (2021). Web.

Needs and Key Benefits of Supply Chain Digital Transformation

• Due to transparency ⇒ Better decision-making ;
• Because of just-in-time procurements ⇒ A reduction of inventory levels;
• Due to the integrated system in the value chain:
  • More visibility of the inventory levels;
  • Increases sales;
  • Increase profit margins;
  • Increase bonding with clients.
• Because of minimizing risk and cost pertinent to the supply chain:
  • Improves supply chain flexibility;
  • üMore competitive advantage over rivals.
• Due to the reduced number of stages within the selling chains and decentralized warehouses ⇒ Reduced delivery time;
• Because of options are available during decision-making ⇒ Better decision-making on the supply chain management.

Analytics

Why is this significant?

According to Veridian (2019), there is a need for digital transformation in the supply chain to streamline operations, reduce costs, and improve the employees’ working environment. Data analytic must be able to be turned into actionable insights (Saravanan, 2020). However, if supply chain analytics is not well planned, it can result in opportunity losses and data losses.

In a study carried by Shamout (2019), it was established that supply chain analytics are effective in augmenting the supply chain ingenuity and robustness. Supply chain analytics have been proven to be of great significance in helping managers access relevant data at the right time. The abovementioned data is then used to form the basis for innovation.

Robust analytics capacity is paramount to any organization that earnestly envisions to remain competitive in the digital economy (Dubey, Gunasekaran, & Childe, 2019; Pappas, Mikalef, Giannakos, Krogstie, & Lekakos, 2018). Digital data analytics regarding the supply chain help managers make decisions based only on insight and not instinct. Analytics in digital supply chains aids the development and offering of better products and services within the target market.

Simulation

Why is this significant?

Simulations are effective in the analysis of the supply chain. A simulation is an effective tool in assessing, investigating, evaluating, and observing the real-life logistics of supply chains and eventually aid in management. Simulations are admissible where traditional methods are deemed incapable of handling the intricacy and interactions of phenomena.

According to Wang and Li (2021), simulations aid in the realization of precise and resourceful matching between colossal information and the clients to help improve services being delivered throughout the supply chain. According to Tordecilla, Juan, Montoya-Torres, Quintero-Araujo, and Panadero (2021), simulation allows managers to plan for uncertainties, time efficiency, and appropriate strategies.

Simulations are essential tools in investigating the behavior of a supply chain instead of only assessing the optimal results (Özceylan, Çetinkaya, Demirel & Sabırlıoğlu, 2018). Simulations are effective in helping managers have better identification and planning on real-life challenges that can arise in a supply chain.

Optimization

Why is this significant?

According to IBM (n.d.), supply chain optimization entails applying information technology such as AI, IoT, and block chain in improving performance and efficiency in a supply chain. When a supply chain is well optimized, there is increased business efficiency and responsiveness. Eventually, clients will quickly get whatever they want at their convenient time and location profitably to the business. Optimization makes the supply chains more sustainable.

According to IBM (n.d.), the following are some of the uses of supply chain optimization:

• Silos;
• Client Needs;
• Competitive Advantage;
• Sustainability;
• Agility.

Roadmap for Embedding Technologies

Supply Chain Optimization:

• Design;
• Planning;
• Execution.

Supply Chain Analytics:

• Business Problem identification;
• Find data;
• Choosing right team;
• Selection of suitable tools;
• Implementtion of analytics;
• Measurement of success.

Supply Chain Simulation:

• Products;
• Facilities;
• Vehicles;
• Routes.

Why us?

• Experience: For more than 15 years, DigiX* company has successfully offered consultation services on supply chain digital transformation to more than 200 companies globally.
• Professional Employees: The company has 35 IT professionals that constantly offer consultation to clients regardless of location.
• High-quality consultations: The DigiX* company has consultancy professionals proficient in the majority of the famous supply chain management systems. For instance, we have 12 members conversant with the Enterprise Resource Planning (ERP) system, among others.

DigiX* company is conversant with the delicacy of the framework embodying the YorkMart supply chain and guarantees a total high degree of professionalism. Since YorkMart organization uses an ERP system, our company is more than willing to offer the consultation service of this system. The consultation will also entail services on supply chain optimization, simulations, and analytics. Our prices are affordable, and we are professional. If granted this opportunity to offer the above mentioned services, we assure you that you will see a significant improvement.

References

Agrawal, P., & Narain, R. (2018). Digital supply chain management: An overview. IOP Conference Series: Materials Science and Engineering, 455(1), 1-6. Web.

Dubey, R., Gunasekaran, A., & Childe, S.J. (2019). Big data analytics capability in supply chain agility: The moderating effect of organizational flexibility. Management Decision, 57(8), 2092-2112. Web.

IBM. (n.d.). What is supply chain optimization? Web.

Markoff, R. (2020). Digesting the shocks: How supply chains are adapting to the COVID-19 lockdowns. Web.

Morley, M. (2017). Supply chain analytics. Chichester, CH: John Wiley & Sons, Ltd.

Özceylan, E., Çetinkaya, C., Demirel, N., & Sabırlıoğlu, O. (2018). Impacts of additive manufacturing on supply chain flow: A simulation approach in healthcare industry. Logistics, 2(1), 1-20. Web.

Pappas, I. O., Mikalef, P., Giannakos, M. N., Krogstie, J., & Lekakos, G. (2018). Big data and business analytics ecosystems: paving the way towards digital transformation and sustainable societies. Information Systems and e-Business Management, 16, 479-491. Web.

Quayson, M., Bai, C., & Osei, V. (2020). Digital inclusion for resilient post-COVID-19 supply chains: Smallholder farmer perspectives. IEEE Engineering Management Review, 48(3), 104-110. Web.

Saravanan, S. (2020). Digital supply chain transformation: Preparing for future growth. Web.

SCM Globe. (2015). Supply chain simulation in 6 easy steps. Web.

Shamout, M. D. (2019). Does supply chain analytics enhance supply chain innovation and robustness capability? Organizacija, 52(2), 95-106. Web.

Key Needs and Benefits of the Supply Chain Digitalization

Needs

Readiness and Outcomes Assessment:

• Maturity Levels;
• Description of the Current Technologies;
• Identification of Strengths and Weaknesses;
• Identifiction of Objectives and Potential Outcomes;
• Implementation of the Digitalization Roadmap.

Benefits

• Transparency;
• Shorter Delivery Chains;
• Reduced Delivery Time;
• Adjustment to Customer’s Needs;
• Improvement of the Internal Performance;
• Cost Effectiveness;
• Quick Response;
• Decentralized Warehousing;
• Higher Sales and Profit.

Is YorkMart Ready?

There are several factors that need to be considered in the digital transformation of the company.

Why Companies Fail:

• Lack of Time to Implement Digital Solutions;
• Lack of Internal Competencies;
• Lack of Coherent Digital Strategy;
• Lack of Clear Objectives.

Maturity Level of the Company:

• Assess the maturity level of the company – clearly identify the readiness of the company for digital transformation.

Identification of Objectives and Potential Outcomes:

• Clearly identify the objectives – what should be changed in the supply chain management?

Availability of Digital Technologies:

• Assess the availability of digital technologies – is the company ready for implementation of Cloud Computing, Big Data Analysis, Artificial Intelligence, etc.

Enterprise Resource Planning (ERP) and Digitalization Extension

The Advantages of the Existing Enterprise Resource Planning System:

• Integration of all business functions in one system;
• Automation of critical processes;
• Real-time response due to the unification of the databases.

How To Improve the Framework:

• Invest in the sustainability of the ERP system;
• Have a detailed plan on the improvement of the system;
• Further extend the framework through digital transformation.

Extending the ERP System Through Digitalization:

• To improve the present system, it is essential to utilize analytics, simulation, and optimization approach as a digitalization extension means.

Extending Digitalization

• Analytics.
• Optimization.
• Simulation.
• Planning.

Analytics

Traditional Analytics: Analyses what happened before and offers guidelines for the future.

Predictive Analytics: Analyses what might happen in the future – great potential to improve the performance of the company and is the primary focus of the digital transformation.

Prescriptive Analytics: Chooses the most appropriate solution based on predictive analytics.

The Predictive Analytics Framework

Predictive Analytics

• Sales and Demand Forecast: Big Data Analysis and Visual Representation.
• Behavior Strategy Forecast: Data Mining and Cloud Computing.
• Optimization of Logistics: Artificial Intelligence and Big Data Analysis.
• Analysis of the Customer’s Needs: Big Data Analysis and Data Mining.
• Optimization of Warehouse Production: Cloud Computing and Visual Representation.
• Equipment and Technologies Maintenance: Visual Representation and Cloud Computing.

Simulation

• Performance Impact.
• Prevention of Risks.
• The Usage of GIS Maps for Logistics Management.
• Network Design Improvement.

Simulation as a Method to Reduce Risks

Utilizes mathematical programming models and big data analysis to reduce the number of potential risks in the supply chain management.

Optimization

Optimization of the Processes

• Mathematical Algorithms;
• Big Data Analysis;
• Price Optimization;
• Anticipatory Shipping Optimization (Generic Algorithm Model);
• Transportation Optimization;
• Optimization of the Management – Identification of Risks in the System;
• Customer Response Optimization;
• Cloud Computing;
• Visual Representation.

Digitalization Roadmap

Supply Chain Digitalization is Inevitable

In the contemporary market, digital transformation provides a high number of advantages for the company, and the traditional supply chain management cannot handle the competition.

Advantages

A high number of advantages, such as cost and delivery time reduction due to predictive analytics, optimization of logistics, and prevention of risks due to simulation models.

Implications

Compared to the traditional form of supply chain management, digitalization allows for a better position in the market.

Results

The development of all functions included in the SC management and the revenue growth.

References

Agrawal, P., & Narain, R. (2018). Digital supply chain management: An Overview. IOP Conference Series: Materials Science and Engineering, 455 (pp. 1-6). Bristol, England: IOP Publishing.

Brinch, M. and Stentoft, J. (2017), “Digital supply chains: Still more ‘wannabe’ than practice”, DILF Orientering, Vol. 54 No. 2, pp. 22-28.

Chofreh, A. G., Goni, F. A., & Klemeš, J. J. (2018) Sustainable enterprise resource planning systems implementation: A framework development. Journal of Cleaner Production, 198, 1345–1354.

De Carolis, A., Macchi, M., Negri, E., & Terzi, S. (2017). Guiding manufacturing companies towards digitalization a methodology for supporting manufacturing companies in defining their digitalization roadmap. In 2017 International Conference on Engineering, Technology and Innovation (pp. 487-495). Milan, Italy: Politecnico di Milano.

Evtodieva, T. E., Chernova, D. V., Ivanova, N. V., & Protsenko, O. D. (2019). Business analytics of supply chains in the digital economy. In S. Ashmarina et al. (Eds.), Digital transformation of the economy: Challenges, trends and new opportunities (pp. 329-336). Switzerland: Springer Nature Switzerland AG 2020.

Fornasiero, R., Marchiori, I., Pessot, E., Zangiacomi, A., Sardesai, S., Barros, A. C., Thanous, E., Weerdmeester, R., & Muerza, V. (2017). Paths to innovation in supply chains: The landscape of future research. In R. Fornasiero, S. Sardesai, A. C. Barros & A. Matopoulos (Eds.), Next generation supply chains: A roadmap for research and innovation (pp. 169-234). Switzerland: Springer Nature Switzerland AG.

Gustafsson, E., Jonsson, P., & Holmström, J. (2019). Digital product fitting in retail supply chains: Maturity levels and potential outcomes. Supply Chain Management: An International Journal.

Haddud, A., & Khare, A. (2020). Digitalizing supply chains potential benefits and impact on lean operations. International Journal of Lean Six Sigma, 11(4), 731–765.

Ivanov, D., Dolgui, A., Das, A., & Sokolov, B. (2019). Digital Supply Chain Twins: Managing the Ripple Effect, Resilience, and Disruption Risks by Data-Driven Optimization, Simulation, and Visibility. Advances in Manufacturing Technology, 309–332.

Jagoda, K., & Samaranayake, P. (2017). An integrated framework for ERP system implementation. International Journal of Accounting & Information Management, 25(1), 91–109.

Kittipanya-ngam, P., & Tan, K. H. (2019). A framework for food supply chain digitalization: lessons from Thailand. Production Planning & Control, 1–15.

Lee, C. K. H. (2016). A GA-based optimisation model for big data analytics supporting anticipatory shipping in Retail 4.0. International Journal of Production Research, 55(2), 593–605. Kittipanya-ngam, P., & Tan, K. H. (2019). A framework for food supply chain digitalization: lessons from Thailand. Production Planning & Control, 1–15.

Moufaddal, M., Benghabrit, A., & Bouhaddou, I. (2019). Industry 4.0: A roadmap to digital Supply Chains. In 2019 1st International Conference on Smart Systems and Data Science (ICSSD). Durham, England: University of Durham.

Schlüter, F. F., Hetterscheid, E., & Henke, M. (2017). A Simulation-Based Evaluation Approachfor Digitalization Scenarios in Smart SupplyChain Risk Management. Journal of Industrial Engineering and Management Science, 1, 179–206.

Seyedghorban, Z., Tahernejad, H., Meriton, R., & Graham, G. (2019). Supply chain digitalization: past, present and future. Production Planning & Control, 1–19.

Simchi-Levi, D., & Wu, M. X. (2017). Powering retailers’ digitization through analytics and automation. International Journal of Production Research, 56(1-2), 809–816.

Introduction

General Electric (GE) remains one of the leading competitors in the global technology industry. In 2011, the company embarked on a new journey aimed at improving its digital capabilities. This transformation focused on several goals such as embedding sensors in most of its products, introducing a superior software platform, and promoting a new business model. This paper gives a detailed analysis of the strategy and offers recommendations to improve GE’s performance.

GE’s Change in Strategy

The article “Why So Many High-Profile Digital Transformations Fail” by Thomas H. Davenport and George Westerman explains how GE changed its business strategy by introducing digital models and products. According to many experts, this new strategy would improve the corporation’s performance and productivity. However, GE’s digital transformation led to declined stock prices. Its decision to lure programmers and software engineers from companies such as Amazon, Google, and Apple did not deliver meaningful results (Lohr). These outcomes explain why GE should have stayed as a manufacturer instead of changing its strategy.

Such an approach would not have affected its business model (Herbert 37). Instead, the company should have utilized its assets and financial resources to manufacture and market superior products to its global customers.

Competing in the Digital Arena

The presented case indicates that GE’s strategy was ineffective and incapable of delivering positive results. However, the company can consider various initiatives to compete against corporations such as IBM, Cisco, Yahoo, and Google. The organization can begin by examining the nature of emerging technologies and merge them with its customers’ needs (Funke 2). Appropriate decisions should also be made regarding the short-term and long-term objectives of the intended digital transformation. The corporation should consider “steady progress toward the right end state without making costly mistakes” (Davenport and Westerman 5).

Its leaders can go further to focus on superior technologies that can be fitted in its products to meet the needs of different clients. The introduction of digital products is something that should be supported by the current business model (Westerman et al. 87). This means that GE’s digital transformation does not require a new or improved model. Such a strategy will ensure that the organization competes successfully with rivals in the digital arena such as IBM.

GE’s Move

General Electric’s digital transformation of its services and products was a move that expanded its business environment or segment. This decision led to the production of new software. Its internal business processes and supplier relationships also changed significantly. Such an initiative required a superior business model to make the company competitive and successful. However, the strategic change was less productive since GE’s stock price plummeted within a few years (Parviainen et al. 68).

Consequently, the corporation had to incur numerous expenses before starting to compete with its rivals such as United Technologies and Siemens. It is agreeable that the business models of such competitors remained uninterrupted or unaltered. The departure of GE’s CEO and other key persons made it less competitive and incapable of achieving most of its objectives.

Conclusion

The above discussion has revealed that many giant companies that decide to pursue high-profile digital transformations tend to record negative outcomes. The example of GE should, therefore, be studied carefully by firms that want to reap the benefits of emerging technologies. Steady progress supported by efficient decisions can address this problem and eventually deliver desirable results.

Works Cited

Davenport, Thomas H., and George Westerman. “Why So Many High-Profile Digital Transformations Fail.” Harvard Business Review. 2018, pp. 2-5.

Funke, Peter. “The Digital Transformation.” German Research, vol. 36, no. 1, 2014, pp. 2-3.

Herbert, Lindsay. Digital Transformation: Build Your Organization’s Future for the Innovation Age. Bloomsbury Publishing, 2017.

Lohr, Steve. “G.E., the 124-Year-Old Software Start-Up.” The New York Times, 2016. Web.

Parviainen, Päivi, et al. “Tackling the Digitalization Challenge: How to Benefit from Digitalization in Practice.” International Journal of Information Systems and Project Management, vol. 5, no. 1, 2017, pp. 63-77.

Westerman, George, et al. Leading Digital: Turning Technology into Business Transformation. Harvard Business Review Press, 2014.