Chemical enterprises prepare for digital transformation


Digital Transformation: Are chemical enterprises ready?

Deloitte identifies five enablers to augment digital initiatives

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Growth for most chemical enterprises is the result of operational and financial improvements, including optimizing asset utilization, improving yields, running efficient operations, enhancing workforce productivity, managing working capital, and ensuring optimal pricing. These performance levers are focused on strengthening the core of the enterprise, resulting in some growth to the bottom line. But, as many global industries and sectors embrace digitization in areas ranging from business processes to customer relationship management, digital transformation is becoming a smart business objective beyond just improving the core of the business. The global chemical industry can benefit from such transformation, which can act as a catalyst to unlock enterprise-wide business innovation.

However, with moderate past growth and estimated future growth (approximately 3 percent annually) of the global chemicals industry, the pace of digital adoption in the sector has been lackluster. According to Deloitte Global inaugural 2016 Global Digital Chemistry Survey, more than 50 percent of chemical enterprises lack a digital strategy and transformation roadmap. More surprisingly, two out of three chemical enterprises having revenues between US$5 and US$25 billion and those focusing on specialties (specialty chemicals, coatings, plastics, and composites) seem to be in the early phase of attaining digital maturity.

Moreover, the path towards digital transformation can be challenged by a range of issues that many chemical enterprises may find difficult to navigate and overcome. In particular, as follows:

  • According to 36% of chemical executives surveyed, the ability to accelerate and scale up digital initiatives at an enterprise level is a top organizational barrier to digital transformation;
  • Chemical enterprises, on a historical basis, have been slow to adopt and implement new solutions and innovations as they continue to focus on their core business rather than disruptive ones and do not turn these challenges into growth opportunities;
  • Leadership’s role in designing and executing a digital strategy is critically important because of the effects digital transformation can have on the entire organization.

This alarming statistic may be the result of the global chemical industry being asset-heavy and requiring high capital investments. It also presents substantial entry barriers to smaller enterprises that may be more eager to embrace the digital agenda. 

“Digital Transformations change business models, operating models, and customer experience at its core (functional, organisational and financial). These changes and exponential technologies indeed enable acceleration of businesses. However, the constant lag between innovation and implementation requires chemical companies to be very agile across all its internal processes. Something that is sometimes complicated by the existing talent deficit in the market”, says Yulia Orlova, Chemical industry leader, Deloitte CIS.

In meantime, chemical enterprises express digital ambitions, but the path remains laden with challenges inhibiting progress. Many ad-hoc approaches and experiments with digital and exponential technologies are underway in the global chemicals industry. Digital opportunities are expected the most in business operations, sales, and marketing in the short term.

Yet, many chemical enterprises are unsure about the advantages that can result from a digital revolution and are cautious towards an enterprise-wide digital makeover: сurrent digital responsibilities are misplaced, сhange management to ease workforce adoption of the digital agenda appear absent, the critical role of cyber security, talent management, and strategic alliances have not been fully recognized.

Based on the results of the Deloitte Global 2016 Global Digital Chemistry Survey and industry observations, Deloitte team has identifies five enablers to augment digital initiatives that can help chemical enterprises in augmenting their digital strategies.

  • Build a robust transformation process, starting with a clear digital enterprise strategy
  • Enable enterprise-wide scalability of digital by establishing a sustainable insight-driven strategy that builds and strengthens internal capabilities
  • Create a structured approach to identify risks in complex and dynamic ecosystems
  • Establish agile operating models that can engage newly prioritized resources to plan, execute, and manage digital activities
  • Embed continuous innovation into a culture that supports new ideas and encourages learning

For more details, please download the full report in English. 

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