Schneider is a European-based company leading the digital transformation in process automation and energy management in industry, data centers, buildings, and infrastructure. It is a member of the 500 fortune companies with operations in about one hundred countries. In an article by Catalyst (2019), Schneider Electric reported that “With global presence in over 100 countries, Schneider is the undisputable leader in Power Management – Medium Voltage, Low Voltage and Secure Power, and in Automation Systems.” (para. 4). This shows the extend to which the organization has advanced its operations in the electrical and digital systems industry.
Digital Mastery Table at Schneider Electric
In a video by Schneider Electric (2018), Schneider Electric’s Executive Vice President of IoT and Digital Offers Cyril Perducat indicate that the two requirements for a successful digital transformation are digital and leadership skills.
The digital skills portrayed by the Schneider Electric workforce include ICT competencies of the workforce, data-driven decision making, receptiveness to new technologies, and access to digital skills. The company recruits a highly competent workforce with requisite skills. It carries out mentorship programs for inexperienced workers to enhance knowledge and skills to land them to vacant roles available in the company circles (Karunakaran, Mooney, and Ross, 2015). Furthermore, the company is open to disruptive technologies that promise to solve customer and production needs.
For the digital transformation to be successful, the company leadership must possess these attributes:
- should be open to learning novel technology,
- should be visionary,
- Should be able to identify and seize new opportunities, and
- Should encourage cooperation and coordination for digital transformation.
Schneider Electric leadership is made of team builders, business developers, project managers, software leaders, production leaders, and marketing leaders.
Based on a specific framework in a report by Capgemini Research Institute (2018), Schneider can be categorized as in Table 1.
Table 1. Schneider Electric Digital Mastery Table.
| ||They exhibit low mastery of digital and leadership skills.|
| ||They possess leadership skills but lack digital skills|
| ||They exhibit mastery of digital skills but lack leadership skills.|
| ||They possess a high mastery of digital and leadership skills.|
From the table, beginners have the least digital and leadership skills, while conservatives possess high leadership skills than beginners and fashionistas. Fashionistas exhibit higher digital skills than beginners and conservatives. Overall, a digital master is the most superior in terms of digital and leadership skills.
Digital Transformation Maturity Matrix
Research by Teichert (2019), defines digital maturity as its state of being complete and set to fulfill customer needs. Although digital transformation and digital maturity are occasionally used interchangeably, digital maturity is a systematic way of achieving digitization (Kane et al, 2017). It shows the digital transformation in a business (Chanias and Hess, 2016; Kane et al, 2017). A data transformation maturity matrix for Schneider Electric is a checklist of parameters for assessing its digital systems’ perfectness (Berghaus and Back, 2016). A body of literature proves that Schneider Electric’s digital transformation is effective by focusing on the following parameters:
The company is open to change, which is one attribute to consider. Taking the initiative to embrace digital transformation in their operations shows that they are ready for change. Schneider Electric says: “The driver behind this digital reboot is the customer. No longer can any company build technology in a vacuum; instead, it must leverage technology advancements (e.g., IoT, AI, cloud, sensing, mobility) to advance customer-centric innovation and R&D” (Schneider, n.d, para. 8).
It is clear that the company is interested in using the digitalization it fulfilling customer needs and expectations. The company’s management has also sought to inspire an innovative spirit in their team by recruiting “innovative thinkers disruptors from both the existing workforce” (Schneider, n.d, para. 9). An innovative workforce is capable of presenting practical solutions to customer requirements.
Schneider has done a lot in transforming digitally by creating software solutions that minimize maintenance costs and machines’ downtime. Examples of digital products they developed include but are not limited to EcoStruxure Asset Advisor, Energy management, EcoStruxure Building Advisor, and Alarm Management. The company also offers troubleshooting services, predictive analysis, among other valuable services. In light of technology, therefore, Schneider Electric has passed that test.
Teichert (2019) describes digital strategy implementation of a strategy by utilizing digital technology to run the business better. The development of software solutions such as the EcoStruxure Asset Advisor and EcoStruxure Building Advisor to help users reduce maintenance costs and reduce downtime problems by predicting failure is a digital strategy. The launching of Open Talent Market to link employees to mentors and side projects was a strategy to retain the workforce while advancing their career and job satisfaction.
According to Techert (2019), innovation entails creating agile and flexible functionalities and disruptive models centered on customers. Schneider Electric has utilized its innovative capabilities in full capacity. First of all, the design and implementation of digital products such as Open Talent Market, EcoStruxure Asset Advisor, Energy management, EcoStruxure Building Advisor and Alarm Management are innovative ideas customer-centric (Weill and Woerner, 2018).
The disruptive systems that were created to provide business solutions resulted from creativity and innovation on the part of the company’s workforce (Schuelke-Leech, 2018). The company is always looking to maintain a skilled workforce by recruiting, sourcing, or mentoring novice employees for future vacant roles. These measures ensure a sufficient labor force, retention of skilled workforce, and proper succession planning (Shore, 2017; Zachary and Fischler, 2020). The result is that the company’s digital maturity in terms of innovation is well-structured.
Digital Disruption Technologies at Schneider Electric
According to Smith (2020), disruptive technology is an innovation that greatly changes the way businesses and industries function. The attributes of disruptive technology are superior enough to displace existing processes, ad behaviors. Although digital transformation is formulated from the human dimension, the process is based on technological requirements that should collaborate to change business rules (Garmulewicz et al., 2018). The technological requirements are collectively referred to as SMAC, an acronym that stands for Social, Mobile, Analytics, and Cloud.
Open Talent Market
An article by Lawrence (2020) reports that by 2020, Schneider had lost about forty-seven percent of its workforce, claiming no opportunity to enhance their careers at the company. Seeing that the traditional criteria of talent identification and nurturing and career advancement were failing, the company launched the Open Talent Market. The Open Talent Market is an Artificial Intelligence (AI) application designed to help the Human Resource department of Schneider Electric assign the internal skills to the most-deserving business roles (Lawrence, 2020).
This application’s main functions are to match workers with unassigned duties, assist them in getting a mentor, and link them to auxiliary projects. Employees are at liberty of sharing with the system whichever appropriate private information. For these functionalities, the employees feel that they are more in control of their professions.
Initially, the Human Resource department would physically match mentors and protégés, which did not work as intended (Lawrence, 2020). The arrival of the AI application reformed the whole process, and by December 2020, about thirty-eight thousand employees out of seventy-five thousand have registered in the system.
One positive impact of the application that is already noticeable is that there has been a decreasing need to source vacant duties because of maximum utilization of internal expertise (Haislip et al., 2020). Josh Bersin, a renowned industrial analyst in human resources, says that: “What’s more, applying technology-driven solutions like this is particularly crucial in organizations that are undergoing a digital transformation” (Lawrence, 2020, para. 8).
The analyst argues that digital transformation has made the company project-based, which creates the need for software tools, and the Open Talent Market is a perfect realization.
Berto Coffee Roaster
Berto is an Indonesian coffee-processing company that recently have resorted to automate and digitize its operations. The company has leveraged Schneider Electric’s EcoStruxure Machine SCADA Expert in monitoring real-time production processes and Ecostruxure Machine Advisor, which allows the management to control the machines remotely through a cloud-based control panel.
The managers use another software called Ecostruxure Augmented Operator Advisor to monitor the machines’ status in real-time, reduce maintenance costs by fifty percent, and detect interference Schneider Electric (2019). The company’s general manager is convinced that this digital transformation will boost coffee production in the country.
Schneider Electric’s Digital Transformation Journey
The four major segments of Schneider Electric’s economy are data center, buildings, infrastructure, and industry have undergone a tremendous transition over time, according to the 2019 Global Digital Transformation Report Buildings. The business value of buildings presents itself in terms of lower energy consumption, increased resident’s comfort and simplified processes.
Energy consumption and carbon emission from buildings has amounted to about thirty-six percent and thirty-nine percent respectively. Light and temperature regulation has been enable eased by the IoT connectivity of apps that monitor the two aspects. The result has since been resident comfort devoid of complaints. The building’s management system has simplified process and maintenance concerns into a single control panel with real-time notifications and troubleshooting functionalities.
The invention and use of sophisticated IT equipment in cooling and power backups in data centers have fuelled the operation costs. The report indicates that cooling can account for about forty percent of total costs. Research by Song et al. (2015) indicates that the energy consumption from the ICT industry alone would rise to 20.9 percent by 2025, thereby accounting for about 5.5 percent of global carbon emissions.
The report by Schneider indicates that new data centers with the cloud provider or edge sites have emerged and can perform twenty percent faster with modular architecture. China’s Unicom cloud data centers have achieved almost a hundred percent uptime while reducing total costs by over thirty percent (García-Herrero et al., 2017). The report observed that reduced operational costs were attributed to incorporating software for monitoring, analytics, and real-time expert help.
Operational costs have also been cut in the industrial sector of Schneider Electric. Industrial IoT links stock to smart sensors in the distribution chain, making it cheaper, faster and easier to move product to the market (Mazzei et al., 2020). Furthermore, digitalized machines with their unified record-keeping and real-time supervision help in resolving environmental and regulation issues. The report identified that companies that effect strategic digital transformation have witnessed the outcomes.
For example the US-based New Belgium Brewery have tremendously boosted its production by integrating intelligent sensors with a novel automation infrastructure. Since then, machine efficiency has risen from forty-five in 2017 to sixty-percent in 2019 while machine downtime have reduced by over fifty percent (Iacovone, Maloney, and Mckenzie, 2019). This story shows that digital transformation increases productivity by automating complex production processes.
The report states that the impact of digitizing infrastructure will be realized in the coming years. This infrastructure will be employed in ferrying people, goods and electricity worldwide while responding to concerns of carbon emissions. Electric power industry through the smart grid technology has embraced digitization. The components of the smart grid have all been consolidated under a central digital infrastructure (Siebel, 2017).
Once the smart grid connect is complete, it will reliably respond to dynamic environmental and workload issues (Yilmaz, Aksoz, and Saygin, 2018). Furthermore, the grid will produce data for efficiency optimization, enhance two-way current flow and expedite the change towards renewable energy transformation. With these developments, the smart grid will be better equipped to handle population growth and reduction of carbon emissions.
This case study focused on the digital transformation at Schneider Electric, a Europe-based transnational company which specializes in energy provision and automation of digital solutions in data centers, industries, infrastructure and buildings. This study began by providing an overview of the business and technological aspects of Schneider Electric then proceeded to categorize the company in a digital mastery table based on beginners, conservatives, fashionistas and digital masters.
The study also discussed the company’s digital transformation maturity matrix where it highlighted factors such as technology, digital culture, innovation and digital strategy as some of the determining factors of a well-developed digital transformation technology.
This research explored Schneider Electric’s disruption technologies and expounded on two technologies, Open Talent Market and Berto Coffee Roaster, which the company had implemented to solve customer and production needs. Finally, this case study examined the company’s digital transformation journey and presented certain advancements the company and its partners have gain through digital transformation.
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