ABB Showcases Digital Transformation Using AppDirect Technology
Ask a dozen experts for their definition of “digital transformation” and you’ll likely get a dozen different answers in response.
(If you have the time, you can follow the intellectual debate over whether digital transformation, digitization and digitalization are different in any meaningful way.)
Gartner’s definition of digital transformation cuts to the chase: “Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.”
Definitions aside, the best way to understand digital transformation is to see it firsthand through the eyes of a world-class innovator. Take ABB.
If you’re not familiar, ABB is a world leader in industrial electrification. The Switzerland-based company makes power grids, electrification products, robots and more. Founded more than a century ago, ABB serves customers in utilities, transportation and infrastructure worldwide.
As you can imagine, most of what ABB sells is gear — big stuff made with atoms. Think transformers, wind turbines and pumps that cost well into the six figures and beyond. Of late, the company has eyed digital transformation with great interest. There are several reasons why. As a progressive European energy company, ABB wants to power the world without consuming the earth. As a publicly traded entity, it also wants to create new revenue streams and enter adjacent markets as “frictionlessly” as possible.
Digital innovation offers hope on both those fronts.
In late September, ABB unveiled its Ability Marketplace, which is a collection of more than 200 digital solutions for utilities, industry, and transport and infrastructure. Some of the solutions available in the marketplace, including the ABB Asset Health app for electrical systems, ABB develops directly. (The Asset Health app enables ABB service engineers and operations teams to monitor remote assets and performance metrics to determine the optimum time to service.) But other apps are expected to come from third parties, including business partners and customers.
This is what makes ABB’s digital transformation so interesting, says Alain Schaefer, digital growth lead at ABB. Speaking at the recent App Direct Engage conference in San Francisco, Schaefer said ABB is not only creating new revenue streams for itself with the marketplace, it is also providing new opportunities for business partners and customers alike.
This is quite a change from before when other entities powered innovation. Back in the 1980s, for example, big governments developed global initiatives, Schaefer observes. Think DARPA and the internet. Then in the 1990s, big enterprise companies such as Microsoft provided an economic and technological spark. This includes Windows 95, Explorer and other products. But today, small, disruptive startups leveraging multiple digital innovations at once are transforming business, commerce and society. While many of these have originated in the consumer space – Uber, Airbnb and so on – a growing number have set their sites on the B2B sector.
“Digital transformation is enabling our business units to evolve to new business models,” says Schaefer. This includes selling hardware as a service, energy as a service and even performance as a service. In the near future, ABB expects third parties to come up with innovative apps for the Ability Marketplace that will extend the capabilities of a variety of products including its best-selling manufacturing robot, YuMi. Today, YuMi is world-class at painting cars and assembling consumer electronics. In the near future, it could be programmed to cook food, pack products or perform other tasks. The potential for digital transformation is limitless, Schaefer says.
Take the request that the company received from one Chinese car manufacturer. It came to ABB asking for help with getting spare parts into Mexico, where it assembles vehicles destined for the Western Hemisphere. After looking at various supply-chain options, ABB proposed the idea of creating a network of 3-D printing partners. The solution is not yet operational, but its potential could be transformative for the car industry.
None of this could be possible, Schaefer says, without the ready-made platform that AppDirect has created. With AppDirect’ multidimensional commerce platform, which was showcased at the 2018 Engage show, any company can sell any product from any vendor across multiple channels via any computational device. It’s nothing short of a revolution in business transformation, AppDirect says.
“The agricultural revolution brought us the farmers market, the industrial revelation led to the supermarket and the information revolution gave us e-commerce,” says Nicolas Desmarais, chairman and co-CEO at AppDirect. Furthering that, he says, is the digital revolution, which is transforming economies from the one-time sale of atom-based goods to the recurring sale of digital-based services.
The primary thing that AppDirect’s platform does is to help simplify this process.
“When you see complexity in a physical supply chain, it’s apparent,” he says. “But not so with a digital supply chain. But leakage [in efficiency] is there just the same.”
By reducing barriers in its business and opening its ecosystem to partners and customers alike, ABB hopes to transform a lot more than its business. Given that it’s a world leader in energy, that’s something that could benefit everyone.