Industrial modernization: Becoming future-ready in uncertain times

BrandPost By Sergio Rio, Executive Advisor, VMware Tanzu
Aug 17, 20235 mins
Digital Transformation

Today, business decision-makers face a balancing act: how to innovate and deliver critical business outcomes with bulky tech debt and proprietary legacy systems…if done well, modernization can extend the lifespan of an organization’s software and infrastructure while taking advantage of recent innovation.

Digital shapes
Credit: iStock/Nongkran_ch

The industrial sector has shown incredible resiliency and has been building back fast despite significant headwinds. The COVID-19 global pandemic exposed the fragility of manufacturing supply chains, causing substantial shortages of essential products such as medical supplies, critical minerals, and semiconductors.

Dynamics of current geopolitical forces are keeping supply chain risks in focus, resulting in increased public awareness, government interventions, and actions by individual companies. Industry and market trends will likely further accelerate organizational changes in 2023, particularly in this uncertain economic scenario with war and persistent inflation.

Making products closer to customers removes some uncertainty and risks in the supply chain and relocating production of high-value products back to the U.S. market is a challenging task and will only work with agility and innovation across the value chain. According to the 2022 State of Manufacturing Report, 93% of industrial companies are looking to technology solutions to increase operational efficiency for new product development.

These winds of change present an opportunity to create financial, strategic, and social value by moving from an economy where competitiveness is based solely on cost minimization to an economy based on value and innovation.

A balancing act

Digital transformations are notoriously difficult to scale up across networks of factories. The historical divide between siloed IT (information technology) and OT (operations technology) has aggravated two significant barriers to change: technology debt and vendor lock-in.

A significant portion of the industrial sector currently works with an aging legacy infrastructure and applications running on a complex mix of on/off-premises technologies. Most of these legacy technologies expose businesses to security and vendor lock-in risks since they are based on proprietary standards and demand substantial switching costs.

That’s the unseen technology debt, a complexity tax that every new project pays, inhibiting companies’ long-term velocity and productivity and harming budgets and returns on investment.

In this situation, business decision-makers face a balancing act: how to innovate and deliver critical business outcomes with such a significant tech debt and many proprietary legacy systems? In other words, how to lead the winds of change of current geopolitical dynamics and investment waves, become future-ready, and stay ahead of competitors?

Leading the winds of change

Future-ready companies have already embraced agile practices and distributed computing technologies like edge computing, containers, and microservices to optimize existing systems and drive innovation.

IT modernization is the practice of updating older software and infrastructure to newer computing approaches, including languages, frameworks, architectures, and infrastructure platforms. It does not require wholesale replacement> if done well, modernization can extend the lifespan of an organization’s software and infrastructure while taking advantage of recent innovation. While the term legacy may have a negative connotation in technology, these systems are often the bedrock of a company’s business operations.

Modern, cloud-native computing paradigms are distributed by nature. Modernization shifts the technology stack from a tightly coupled, hierarchical, siloed, and point-to-point structure to one that is application-driven, loosely coupled, software-defined, and integrated across all layers of the architecture.

Successful modernization programs have prioritized low-risk and high-yield initiatives in productivity and efficiency gains to realize benefits and quickly reallocate funding to deploy innovative edge native applications like:

  • Predictive maintenance significantly reduces maintenance costs and total machine downtime by proactively analyzing and diagnosing issues without the need for human intervention.
  • Smart quality inspection & control significantly increases product quality and yield by proactively detecting defects on production lines using multisensory data (e.g., cameras, ultrasound sensors, accelerometers, etc.).
  • Autonomous inventory management brings greater visibility, reduces inventory losses, and ensures critical items are in stock at the right time using autonomous off-the-shelf drones.
  • Advanced safety and human effectiveness increase workforce safety and compliance across the factory floor, detecting equipment anomalies in real-time, offering 3D work instructions, and overlaying them onto physical assets and environments using AR/VR glasses and technologies. It also accelerates the onboarding process of new or seasonal employees by bringing off-site classroom-style training directly into the factory for on-the-job and in-context training.
  • Computational generative design accelerates and improves new product development processes generating multiple simultaneous solutions based on real-world design goals, product performance requirements, and manufacturing constraints.
  • Advanced automation simplifies the product design process and enables mass production and customization at scale (e.g., additive manufacturing)

It’s not a surprise that research shows that 59% of organizations with application modernization plans in progress report that the activity has intensified over the past 12 months, with almost 20% saying it has “significantly accelerated.”

Forging ahead

In this age of disruption, industrial enterprises are forged ahead by powerful “winds of change.” Companies that are agile and innovative across the industrial value chain are well-positioned to be future-ready and ahead of competitors.

A modernization approach based on agile practices and distributed computing technologies extends the lifespan of an organization’s software and infrastructure while also taking advantage of technological innovations. It’s the balancing act that reaps benefits from prioritizing low-risk and high-yield initiatives that provide the funding for innovative use cases.

Those who lack the urgency to adapt and think differently, believing their margins are too thin to innovate or that the short run is always trumping the long, will be left behind.