Digital Transformation has never been more important for progressive manufacturing businesses. Whether the driver is to increase shareholder value, create competitive advantage or stimulate growth through new products and markets, digital transformation is today a fact of life. One of the impacts of Covid-19 has been the acceleration of digital strategies to manage new customer demands and develop new ways of working. Many manufacturing companies have condensed their digital transformation from years to months, due to the pandemic, but even prior to this, the drive to use data as a competitive weapon has never been more important.
The current economic conditions have naturally created uncertainty, with the resultant impact varying greatly. The economic fall-out of Covid-19 varies. For example, while some retailers closed their stores, on-line businesses went from strength to strength. Food manufacturers struggled to keep pace with demand whilst car manufacturers and their suppliers experienced a significant downturn. What is evident is that no one size fits all; no magic bullet that transforms the fortunes of a marketplace or an individual business. Therefore every company needs to embrace digital transformation, but at a pace their market demands.
While today, digital transformation is a fact of life for some companies, this must be managed within the constraints of diminishing sales, restricted cashflow, and supply chain disruption. The old adage of "cash is king" has never been more pertinent, but standing still is not an option.
So, what does this mean for manufacturing customers and what are the knock-on effects within the IT industry?
For some of our customers, lockdown meant a complete cessation of trading. For others, sales were negatively impacted, even when they had full order books. For the lucky ones, they benefitted from sharp increases in turnover and profitability.
Senior Business leaders are undoubtedly more cautious. But what has really changed is the timeframe in which any manufacturing IT project must deliver value. Today, IT investment must produce tangible short-term results. The trend is towards smaller projects, with multiple business releases and explicit deliverables per phase. Companies that had not embraced digital transformation prior to Covid-19 have had a wake up call. Our latest survey indicates that not only did they find themselves struggling during Covid-19, but also the absence of past experience, lagging underlying IT technology projects and cash constraints are making it difficult to catch up. A recent McKinsey study states that 56% of respondents found their companies constrained to respond satisfactorily to Covid-19 in the absence of digital technologies. It's time for manufacturers to catch up.
Nowhere is that more obvious than with manufacturing customers running older versions of the Microsoft Dynamics AX Platform. Companies on AX4, AX2009 and AX2012 can commence or continue their digital transformation by moving their ERP system into the Azure cloud without a full-on migration to Microsoft's next generation of CRM and ERP applications, Microsoft Dynamics 365. But why do this?
Many of the underlying technologies supporting these older platforms are obsolete and unsupported as, understandably, Microsoft has moved on. The result is a direct threat in terms of continuity of business. However, by moving these older platforms into Azure, in one move you can:
- Deliver shareholder value through a defined cloud journey
- Provide business continuity
- Elongate the life of the current platform thus reducing capital expenditure
- Cement your commitment to digital transformation
At HSO, we support this approach. Many of our customers use older AX platforms and we are actively supporting them while in parallel advising them on their digital transformation, but at a pace that meets their business and marketplace. In many cases it does necessitate a move to Microsoft Dynamics 365, but not always.
HSO is offering a FREE Manufacturing Workshop, Transforming Dynamics AX to Dynamics 365, on