RESEARCH NOTE. Workplace Service. Four Ways To Succeed In Manufacturing With Video-Enabled Collaborative Decision Environments

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1 Author: David Mario Smith Four Ways To Succeed In Manufacturing With Video-Enabled Collaborative Decision Environments Summary: Manufacturing enterprises are using video to create collaborative decision environments for competitive advantage. Here are four key benefits video can provide. Topic: Collaboration Issue: What collaboration technologies and architectures should enterprises leverage? Over 95 percent of companies we speak with say innovation via collaboration is important to their business. Our research indicates that a manufacturer can potentially increase its bottom line by up to 20% through innovations developed in collaborative decision environments. This research note discusses the value of video in these decision spaces for manufacturing firms (see Figure 1). Figure 1: Four Key Benefits of Using Video in Manufacturing Video In Collaboration For years, video has been a great medium for collaboration when distance or geography poses a barrier. However, while demand was high, its use did not increase to match the need. We believe one reason is that beyond travel cost reduction, which is very important, traditional video conferencing providers didn t always message the real business cases for video. Copyright 2014 Aragon Research Inc. and/or its affiliates. All rights reserved. Aragon Research and the Aragon Research Globe are trademarks of Aragon Research Inc. All other trademarks are the property of their respective owners. This publication may not be distributed in any form without Aragon Research s prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Nevertheless, Aragon Research provides this publication and the information contained in it "AS IS," without warranty of any kind. To the maximum extent allowed by law, Aragon Research expressly disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Aragon Research and Advisory Services organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Aragon Research may include a discussion of related legal issues, Aragon Research does not provide legal advice or services and its research should not be construed or used as such. Aragon Research is a private company and its clients may include firms or financial institutions that have financial interests in entities covered by Aragon Research. Further information about the objectivity of Aragon Research can be found at aragonresearch.com

2 Some of the lagging uptake has been due to technical and operational challenges that represented a barrier to entry for both purchasers and users. These include cost, connection quality and reliability, operational complexity, unfamiliarity or discomfort with the process, lack of experience in conducting business in real time on a global scale, and simple anxiety over new technologies and procedures. However, some professions have no doubt about the value of video, particularly those whose success depends on personal interactions. Education, law, healthcare, sales and marketing are enthusiastic about the medium. Among other cohorts that have started to embrace it for specific value propositions, we can include manufacturing. Note 1: US Manufacturing US manufacturers contributed $2.08 trillion to the economy in 2013, up from $2.03 trillion in This accounted for 12.5 percent of GDP. In further detail, for every $1.00 spent in manufacturing, another $1.32 is added to the economy, the highest multiplier effect of any economic sector. Source: Bureau Of Economic Analysis Video Collaboration In Manufacturing The overall manufacturing industry includes many sub-segments such as food, chemicals, automotive, aerospace and defense. However, the demands are similar across all segments. All are charged with growing the business, cutting costs, communicating and collaborating with partners, reducing time to market, competing effectively in the marketplace, streamlining production, and acquiring and retaining the talent to do this. Video helps in all of these areas. In manufacturing, video supports real-time collaboration in ways that do more than just cut travel, but also more importantly raise productivity, improve innovation and reduce time to market throughout the product development cycle. In looking at data from our clients, we find that manufacturing organizations can reduce time to market by 15% to 25% using video technology. For highly successful manufacturing firms, video collaboration directly affects their bottom line, while firms that cling to traditional collaboration models are at a disadvantage. The global manufacturing industry has grown, albeit modestly. In the US alone, according to the U.S. Bureau of Economic Analysis, manufacturers contributed $2.08 trillion to the economy in 2013, up from $2.03 trillion in 2012 (see Note 1). However, with globalization and growth, enhanced collaboration becomes ever more important, to keep pace and interact with partners, suppliers and customers in various geographies. Companies that find their supply chains growing with new suppliers need better management and foresight Aragon Research Inc. and or its affiliates. All rights reserved. Page 2

3 Video Goes Beyond Collaboration A key value of video in manufacturing is to bring people face-toface in collaborative decision environments, but in the emerging Internet of Things, video also involves objects as well as people (see Note 2). Not only the usual security cameras but also other specialized sensors and monitors need to be able to deliver visual information to collaborators in real time. Video-Enabled Business Applications In this era of pervasive video, video-enabled business applications (VEBAs) are emerging to enhance business processes (see Figure 2 and Note 3). VEBAs can increase operational efficiency and innovation at a time when manufacturing processes are being streamlined to improve agility in other ways as well. Note 2: The Internet of Things (IoT) IoT is based on the idea that every object, from appliances to applications, will be network-connected and able to send and receive data. Ultimately, everything that can be connected will be connected. Things, of course, includes cameras. Many surveillance cameras are smart and most are network-connected. In manufacturing, inspection cameras can be smart enough to recognize a bad part or a process error and trigger an exception or take other action. Note 3: Video-Enabled Business Applications VEBAs are purpose-built implementations of video that can be used repeatedly in specific business scenarios. They can capture information (communication, marketing, sports, security) and help collaborators make better, faster decisions. Using VEBAs, developers can integrate video organically into a broad spectrum of business processes and workflows, making it seamless and intuitive. A well-built VEBA makes using video as natural as reading and writing. The manufacturers cited in this report are increasing the use of six key VEBAs: Collaborative Decision Environments Video Inspection Video Surveillance and Security Video Content Management Video-Enabled Learning Remote Support and Troubleshooting Figure 2: VEBAs For Manufacturing Video Content Management Video collaboration has high value in real time, but this value is multiplied when the session content persists and can be reused. Video content management (VCM) provides this ability (see Note 4). In manufacturing, for example, the ability to search and review prior troubleshooting sessions tagged with specific failure modes can point to a more comprehensive solution than a one-off response to an ad hoc situation. Putting It All Together Note 4: Video Content Management (VCM) Video is a large-scale data type that requires fast, high-volume storage and special search tools. Traditional ECM systems offer these capabilities, but much of the demand is being met by new, often cloud-based video content management (VCM) services that are smarter about video and easier to use, impose less overhead on long-range infrastructures, and are streamlined and optimized for this work. Many collaboration providers offer solutions that include or integrate with VCM tools. On the following pages, we outline the four benefits of video in manufacturing, with a real-world example that illustrates each one. A comprehensive video strategy will deliver all four Aragon Research Inc. and or its affiliates. All rights reserved. Page 3

4 Benefit #1: Real-Time Decisions Real-time Decisions Bring Competitive Advantage To truly be competitive in this ever-connected global marketplace, manufacturers of all kinds need technologies that can give them virtual real-time presence in any location, with any combination of devices. These investments will provide solid business outcomes and help companies make better decisions, increase operational agility, overcome roadblocks to innovation, accelerate time to market, and access a diverse and ever-widening talent pool. Throughout its continuum from room systems to desktop and mobile devices, video supports collaborative interactions that go beyond the corporate office. In manufacturing this collaboration is needed for real-time decision-making. Video provides a reliable, repeatable decision-making environment where collaborators can arrive at consistent business outcomes regardless of distance or geographical boundaries. Example 1: Real-Time Decisions One global manufacturer used video conferencing to see work in progress at remote facilities around the world on a daily basis. This provided transparency and real-time data to management that projects were progressing. The company established an archive of relevant content (regulations, manuals, data sheets, specifications, etc.) that participants in a collaborative session could search and share to ensure that they made the right decisions. It also assembled a social network of experts in relevant domains, both inside and outside the firm, who could be brought into a session as advisors to help deal with questions quickly. The company installed special cameras at remote facilities so participants could watch the line at work, see highspeed processes in slow motion, and inspect microscopic flaws and features in parts and tools. By putting so many eyes on the actual process and its results, diagnostic ability soared, and many issues could be resolved before the meeting was over. As planning improved, the need for last-minute changes diminished and the number of troubleshooting meetings decreased. Proactivity replaced reactivity; productivity soared Aragon Research Inc. and or its affiliates. All rights reserved. Page 4

5 Benefit #2: Innovation Hubs Innovation Hubs Keep Things Moving One of the most interesting trends in manufacturing is the idea of next-shoring. The concept brings manufacturing closer to hubs of innovation and demand, near the point of consumption. In these hubs, video collaboration helps partners and customers clarify their requirements to reduce the manufacturer s risk of misunderstanding their needs. Face-to-face interactions strengthen the parties relationships and promote trust and confidence. In manufacturing, rapid customization is the Holy Grail. Bringing experts together quickly in real time to see issues and solve problems is invaluable from an operational perspective. Collaborative video environments have been so effective that custom-designed products can be done in half the time. Example 2: Innovation Hubs To better manage its production processes, a manufacturer of specialty tape needed to exchange information in real time across multiple sites. It started with teleconferencing, but quickly noted audio s limited ability to engage people directly. In the fast-paced world of manufacturing, face-toface interaction is crucial to making quick, reliable decisions. The company felt that only video could meet all its needs. The Asia-based SMB configured a video collaboration system that was easy to manage and could communicate with all the locations where it did business. Once it became operational, the system allowed the company to establish a real-time virtual presence anywhere in the world. It quickly became popular among users, and over the following year, the rapid uptake of video collaboration affected many of the firm s metrics. It cut travel costs, increased operational efficiency, reduced its time to market and improved its partner and customer relationships. Over time, the wheel on this hub began to turn faster for the company and its partners. The immediacy of real-time video let the company increase both the number and the effectiveness of its interactions with the many stakeholders in the busy hub environment. Moreover, the synergies among the newly engaged participants triggered greater creativity and innovation, resulting in more new deals and unanticipated opportunities for further collaboration Aragon Research Inc. and or its affiliates. All rights reserved. Page 5

6 Benefit #3: Mobility Mobility Expands the Reach of Video Collaboration Mobile video collaboration extends real-time video capability to work teams in remote environments such as a manufacturing plant floor to share knowledge and speed up decision-making. For virtual teams, visual cues are crucial to making the right decisions that will ensure operational efficiency, cost control and customer responsiveness. With mobile video, remote workers can virtually come together to see and work on CAD drawings and detailed workflows, or create and edit content on tablets and phones. Organizations will need to evaluate comprehensive solutions that span the full range from room systems to mobile devices in order to make strategic procurement decisions. With the advanced capabilities available on devices such as tablets, there is often no need for large video room systems even when more intensive collaboration is needed. However, integration with those systems is critical. Enterprise planners should establish requirements based on specific video use cases. Example 3: Mobility A high-end kitchen appliance maker needed to streamline its sales operations, improve its customer experience and bring mobile showrooms to customers wherever they were. The sales team was on the road all day, but needed to have regular face-to-face meetings, also wherever they were. Planners realized they needed mobile video in their collaboration solution. The company gave each member of the sales team a tablet that included mobile video as part of its overall collaboration platform. They can attend meetings anytime from anywhere, show their customers the latest appliances in real time from a cloud-based archive of interactive video demos, or even make a video call to a product showroom for a live demonstration. Surveys report a high level of interest among customers and prospects, due in part to the high quality and entertainment value of the presentations. The company s service team also improved customer service by connecting product experts with customers and field workers via video for real-time troubleshooting, diagnostics and repair advice. Cloud-based interactive video installation and maintenance guides are available after every new product launch to improve customer service and reduce training requirements. Field calls are shorter, repeats are now rare, and service management costs are down Aragon Research Inc. and or its affiliates. All rights reserved. Page 6

7 Benefit #4: Operational Agility Video Collaboration Improves Enterprise Response Time Video is also used to monitor the manufacturing process itself and improve quality control and customer responsiveness. From an operations perspective, agility is vital in manufacturing. Producers need to respond quickly to fluctuating supply and demand and to changing customer requirements. This process flexibility requires real-time collaboration in conjunction with industry-specific tools to ensure success that will reach the bottom line. Video collaboration reduces downtime and speeds up processes. Companies can record best practices and reuse those sessions for training. Problems can be addressed in real time without the need for costly travel. Manufacturers report huge reductions in travel expenses due to the use of video collaboration. Example 4: Operational Agility A large beverage manufacturer needed to establish better communications between its head office, other offices and its manufacturing sites. Previous video conferencing efforts had been unreliable due to legacy infrastructure, resulting in low usage levels. To ensure better adoption, the firm wanted a solution that was highly reliable and easy to set up and use, and one that encompassed a broad range of channels and devices to accommodate virtually any connection scenario. The investment resulted in a bottom-up viral use of the video solution across the enterprise globally. The company reported a $425,000 savings in travel expenses in the first year of use. However, the biggest benefit was the impact on productivity and the increase in real-time collaborative decision-making, which improved agility throughout the organization. Previously, decisions were discussed in meetings but the actual decision-making was often deferred until additional information could be gathered or non-participants consulted. The new video collaboration infrastructure, with access to both mobile users and content stores, forecloses these reasons for delay. Presence and calendar information allow urgent meetings to be scheduled on short notice. Senior decision-makers can attend from wherever they are, and even if they are late, recorded prior discussions can be replayed, and nearly any document consulted onscreen. As a result, the company can respond to developments rapidly, often making decisions before the meeting is over. Far less time and money is wasted, and the company is developing a reputation for high efficiency and tight management Aragon Research Inc. and or its affiliates. All rights reserved. Page 7

8 Aragon Advisory Identify the use cases where video can be brought to bear on specific business processes where collaboration is needed. Choose solutions and technology providers that can deliver a strategic end-to end video solution that spans the full range from rooms to mobile devices. Ensure that solutions have recording capabilities to capture best practices for training purposes. Bottom Line There is no longer any question that video collaboration is helpful to manufacturing. Hard numbers and experience have made it a proven conclusion that a team s ability to meet face-to-face, wherever its members are around the world, brings a level of connectivity and collaborative potential that can bring speed and efficiency to business processes. The challenge for enterprises is to establish video collaboration requirements, identify use cases and choose the right solution provider: one with comprehensive end-to-end video strategies and capabilities Aragon Research Inc. and or its affiliates. All rights reserved. Page 8