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Digital business disruption roils the manufacturing sector

David Foote, whose research advisory firm, Foote Partners LLC, specializes in tracking compensation for IT skills, knew digital business disruption was real when he started getting calls from companies like Fender Musical Instruments Corp.

“Fender makes metal and wood products — musical instruments, amps. And they call me and say, ‘We’re putting together this digital group and we have no idea what to pay these people and how to reward them,'” Foote said. “‘Wait a minute,’ I said, ‘You’re a manufacturing company, what does this mean?'”

The storied guitar maker told Foote it wasn’t exactly sure, but it was looking for ways to grow its business. Guitar is a hard instrument to master. It had a couple of ideas for digital products that would make it easier for people to learn how to play — and help sell more guitars.

All corners of the manufacturing sector are seeking digital skills compensation data, Foote said, citing Lowe’s Companies Inc. and Honeywell International as two more examples. “Lowe’s is the store you walk into when you want to build a deck on the back of your house. We’re working with them and find out they’re doing stuff with NASA on all this crazy robotics stuff and 3D imaging,” he said. Honeywell, making a big push into the connected home market, now has “nine, very well-staffed digital innovation groups around the United States and Canada,” according to Foote.

“It’s not that people are doing digitization that’s so amazing. It’s that the companies calling us and asking for help now are hard-core manufacturing companies. They’re all getting into digital software, and things are getting serious,” he said.

GE picks up and moves to a digital hotspot

A marquee example of a hard core manufacturing company in the midst of business digital disruption is General Electric. Foote, who lives about five miles from what will soon be G.E.’s former headquarters in Fairfield, Conn., said the manufacturer’s move to Boston isn’t just about tax breaks. “They are going digital in a very big way and they want to put their headquarters closer to the action,” Foote said, referring to Boston’s thriving high-tech ecosystem.  Indeed, CEO Jeffrey Immelt recently asserted that the industrial powerhouse would be a “top 10 software company” by 2020.

(Of course, convincing the world that G.E. is going digital in a very big way won’t be easy, a reality wryly acknowledged in the company’s ad campaign, “What’s the Matter with Owen.”)

Digital skills held back by culture

As the manufacturing and other sectors come to terms with doing business in the digital era, the questions for companies and CIOs, as well as for Foote Partners, is what IT skills and roles are required to deal with digital business disruption, and what do companies need to pay these people to be competitive. But hiring the right people doesn’t necessarily put companies closer to digital transformation.

One example, said Foote, is the role of DevOps engineer. DevOps — the blending of tasks performed by a company’s application development and systems operations teams — has been around for a long time, but only recently has there been enough compensation data to follow the role of DevOps engineer.

Foote had long wondered why more companies hadn’t gone after a skill that would help them integrate their IT, operations and business strategy — and conceivably give them a competitive edge.

“Then I realized after talking to companies is that DevOps is really not a technical skill; it’s a whole mindset. And a lot of companies were really turned off by that, because they don’t adapt very well when they have to change. Change is tough.”

For more on which skills are hot, and which not, in digital business transformation, check out part two of this post, IT job skills, digital mind-set in short supply.”

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