Industrial technology corporations face a critical juncture to pivot business models further towards digital solutions which can better drive customer value and capture a greater share of wallet, either as companions to mechanical product portfolios or as stand-alone revenue streams.
First version published: August 2020
Last updated: November 2021
Industrial technology corporations can increasingly capture value through digitally-enabled solutions
- Operators are investing in digital capabilities to address fast-changing customer and regulatory landscapes, optimize processes and make smarter decisions
- This evolving landscape creates opportunities for disruption across industrial markets through new digitally-enabled technology solutions and business models
- Diversified industrial technology corporations are increasingly transitioning to digi-mechanical portfolios to create more compelling, differentiated value propositions
- Digi-mechanical or digitized product portfolios tend to translate to stronger financial performance
The adoption of digital technologies
The impact of Covid-19 on digital adoption in industrials
Whilst Covid-19 impacted budgets, the investment case for digital adoption has been strengthened. Many industrial operators are implementing digital solutions to address changing consumer needs and market landscapes, and improve operating processes.
There are several ways diversified industrial corporations have evolved their business models to be more digital. These include:
- digitizing existing mechanical products,
- adding complementary digital products to a mainly mechanical portfolio through Mergers and Acquisitions (M&A), and
- creating a complete digital solution organically and /or through M&A.
Industrial technology corporations must establish the appropriate customer-led digital strategy
Before implementing digital strategies, corporations should consider go-to market factors and understand customer needs. Considerations include:
- Is the digital strategy aligned with end-to-end customer needs and behavior?
- What is the size of the opportunity, market penetration, rate of adoption and external and internal barriers to adoption?
- How defensible is the technology – can it be replicated, will it be disrupted and what is the most attractive part of the value chain?
- Should the digital strategy be complementary to the existing portfolio or stand-alone model and revenue stream?
- Can the opportunity can be accessed organically?
- Are there decision making and channel synergies with the existing business?
- What core competences and capabilities are required?
Want to know more about how we help clients in the industrial technology sector?
Plural’s industrial tech team works closely with a number of global multi-platform industrial technology companies and private equity investors focusing on emerging opportunities presented by digitally-enabled and best-in-class mechanical technology in specific end markets.
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