From the Editor: Digitization and digital culture represent a world of opportunities in rail country

— by Pat Foran, editor

Pat Foran

As we’ve reported with regularity this year, the Internet of Things (IoT), Big Data, cognitive computing, et al. represent a world of opportunity in rail country.

To what extent are railroaders and other links in the transportation chain capitalizing on that opportunity? They’ve got some ground to cover, but more and more links are serious about getting there and are on their way, if results of a recently conducted survey are any indication.

In August, PwC released “Industry 4.0: Building the Digital Enterprise,” a survey of 186 transportation and logistics company executives from 26 countries — including North American freight- and passenger-rail execs — on how they’re building digital products and integrating technology into their offerings. Among the report’s findings:

• Execs expect to reduce operational costs 3.6 percent per year by implementing initiatives related to Industry 4.0, or the fourth industrial revolution — automation and data exchange in manufacturing technology, including IoT, cloud computing, etc.
• The proportion of transportation/logistics companies expecting to have reached an advanced level of digitization will increase from 28 percent today to 71 percent by 2020.
• Thirty-seven percent of the respondents said they’ve already reached advanced levels of digitization in customer access, sales channels and marketing.
• Respondents expect a 2.7 percent annual revenue boost from their digitization and integration initiatives.

When asked to cite their biggest challenges or inhibitors for building digital operations companies, 50 percent of the respondents said the lack of digital culture and training.

“For many companies, culture is linked closely with the need to have clear vision and leadership from top management about the direction of digital operations,” PwC report writers noted.

It’s also tied to dollars. More respondents (38 percent) are concerned about “the high financial investment requirements” of digital operations and data security than they are about the lack of a clear vision/leadership (33 percent).

That doesn’t mean transportation and logistics firms aren’t investing in digital ops or data security. We know railroads are, for example. And they know they have to — particularly in areas where “digitization carries transformative potential,” as the PwC report writers concluded.

“Companies which are slow to react may find it difficult to compete,” they wrote. “The next two to three years will be an important time for companies looking to catch up.”