Today, chemical manufacturers are on the verge of being disrupted by digital and Industrial Internet of Things (IIoT) technologies. Incumbents are quickly realizing that in order to address the next wave of opportunity, they will have to shift from a historic “operations-driven” focus to more agile service-driven businesses. But how much traction are we really achieving? 

In recent discussions with chemical company executives, we’ve been trying to better understand their views on the pitfalls and successes of utilizing digital and IIoT technologies. One thing has been very clear–almost everyone believes digital and IIoT will drive the next wave of growth and innovation in the chemicals sector. But our conversations have also highlighted a wide range of challenges that leadership teams are struggling with to drive new growth strategies centered around digital and IIoT.  

Challenges include:

  • Where a company should begin on its digital transformation journey and who in the organization should own and lead the initiative?
  • Lack of education and often disagreement amongst leadership as to what digital and IIoT really mean as a growth opportunity.
  • Too many siloed digital projects happening all at once, without real organizing principles or schema to create and capture the value of the work.  
  • Leadership needs better and more compelling examples of proven return on investment (ROI) or tangible measures for success, which all too often impedes a company’s ability to “get out of the starting gate” quickly. 
  • Companies are taking a technology first mentality, meaning they focus on leveraging the latest technologies such as artificial intelligence (AI) or blockchain and just assume they will achieve value in the long-term.
  • Peers and suppliers aren’t geared or organized to support digital and IIoT in an ecosystem, or do not understand how to design or navigate dynamic partnerships in the context of an ecosystem.

It is still early on, but the mounting pressure and potential disruption to companies that manufacture chemicals could be quite large. In order to achieve success, companies need to start with customer problems and work with them to co-create solutions.

Read part two of this blog post for additional success factors for digital innovation in the chemicals industry. 

Smart Systems, Asset Performance Management and Digital Innovation in the Chemical Industry

IIoT Software for the Chemical Industry | GE Digital

Study by Harbor Research

To stay competitive, chemical manufacturers will need to sustain global economic momentum while developing new digital and Industrial Internet of Things (IIoT) capabilities and operating models. What growth themes and technology trends will the chemical industry seize to drive differentiation?


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About the author

Glen Allmendinger

Founder and President, Harbor Research

Glen Allmendinger is the founder and President of Harbor Research, a strategy consulting and technology research firm based in Boulder, Colorado and Zurich, Switzerland. Glen has been responsible for managing Harbor and all of its consulting and research activities since its inception, has co-authored several pioneering articles on smart systems and services and has spoken at over 100 industry events focused on machine-to-machine (M2M), Smart Systems, and the Internet of Things.


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