School of Innovation, Design, and Engineering

Factors affecting digital

transformation in
manufacturing companies
Master thesis work
30 credits, Advanced level
Product and process development
Production and Logistics

Nnewuku Rosa Eluekezi, Hatice Tuncay

Commissioned by: Malardalen University

Tutor (University): Koteshwar Chirumalla
Examiner: Antti Salonen
ABSTRACT

The adoption of digital transformation can be seen as the companies´ opportunity for increased
competitiveness. The possibilities of digital transformation are many as it allows, among other
things, a connection between workers and machines or between machines. However, companies
are facing difficulties to implement digital transformation effectively. Implementing digital
transformation is a slow process for companies and most companies are in the early stages of it.
Also, the technologies that are associated with digital transformation are still unclear. Companies
still lack a systematic approach to implementing digital transformation. Understanding critical
factors that affect digital transformation in manufacturing companies could help to develop a
systematic approach for implementing digital transformation. Therefore, in this research the
authors have carefully reviewed and identified factors that affect digital transformation within
the manufacturing industry.

This thesis research aims to identify the factors that will lead to the success of digital
transformation in manufacturing companies and to also find out the factors that when being
ignored will lead to unsuccessfulness. The research has been guided by three research questions:
1) Which factors are stated in the literature that is affecting the implementation of digital
transformation in manufacturing companies, 2) How are these factors related to each other in the
literature, and 3) How can practitioners and academics use factors for the successful
implementation of digital transformation?

In this research, a systematic literature review (SLR) has been carried out which has led to
identifying 11 key factors. Based on the identified factors, a model has been developed to support
the implementation of digital transformation in manufacturing companies. The model consists of
four different categories of factors, namely, “Awareness related factors, Readiness related
factors, Technology, Selection, and Integration related factors (so-called ARTO-model.
Furthermore, a survey has been developed to get experts´ perspectives on the identified factors
and the model.

Based on the input from the survey, a final compiled ARTO model is proposed as a guiding tool
for the successful implementation of digital transformation. Further, a model to show the
relationship between the factors is created.

Keywords: Digital transformation, Digitalization, Industry 4.0, Enabling technologies, Key

factors, Critical factors, Manufacturing industry, Guiding framework
SAMMANFATTNING
Implementeringen av digital transformation kan ses som företags möjlighet till ökad
konkurrenskraft. Möjligheterna med digital transformation är många, då det bland annat tillåter
uppkoppling mellan arbetare och maskiner. Dock, står företagen inför svårigheter med
implementeringen av det. Implementeringen av digital transformation är en långsam process för
företagen och många företag befinner sig i tidigt skede. Även teknologier som associeras med
digital transformation är fortfarande oklara och det saknas kunskap gällande detta. Dessutom
finns det inte mycket handlingskraft när det kommer till faktorer som påverkar digital
transformation. Företag saknar fortfarande tillvägagångssätt för implementering av digital
transformation. Därför har författarna till den här undersökningen noga granskat och identifierat
faktorer som påverkar digital transformation inom tillverkande företag.

Syftet med den här undersökningen är att ta reda på faktorer som ska leda till framgång av digital
transformation i tillverkande företag, och vidare ta reda på faktorer som när de ignoreras kommer
leda till misslyckande.

Forskningsfråga 1: Vilka är faktorerna som nämns i litteraturen och som påverkar digital
transformation i tillverkande företag?
Forskningsfråga 2: Hur är dessa faktorer relaterade till varandra inom litteraturen?
Forskningsfråga 3: Hur kan praktiker och akademiker använda faktorer för ett framgångsrikt
genomförande av digital transformation?

I den här undersökningen har det gjorts en systematisk litteraturstudie som ledde till utvecklingen
av ett ramverk. Vidare skapades en enkät för att få experters perspektiv på den systematiska
litteraturstudien och ramverket.

Det skapades en modell som bygger på fyra olika kategorier ”Awareness related factors,
Readiness related factors, Technology, Selection and integration related factors (så kallad
ARTO-modell) utifrån den systematiska litteraturstudien och därefter gjordes en liknande modell
baserad på inputen från enkäten. Slutligen sammanställdes resultaten i en gemensam ARTO-
modell och en modell för att visa relationen mellan de olika modellerna skapades

Nyckelord: Digital Transformation, Digitalisering, Industri 4.0, Möjliggörande teknik, Nyckel

faktorer, Kritiska faktorer, Tillverkande företag, Vägledande ram
ACKNOWLEDGEMENTS

We acknowledge that this thesis would not have been possible without the input of several
individuals whose contribution, love, and support made it possible.

Our deepest gratitude goes to associate professor Koteshwar Chirumualla who is our supervisor.
Your love for excellence and attention to detail was of utmost benefit in this work. We are indeed
grateful.

Additionally, we are grateful to the librarians who spent hours assisting us with relevant data on
how to get the articles that are most suitable for the thesis.

Lastly, to friends and family, we say a big thank you. You are loved and greatly appreciated.

Rosa & Hatice

List of Content

1. INTRODUCTION .......................................................................................................................................... 9
1.1 BACKGROUND .................................................................................................................................................. 9
1.2 PROBLEM FORMULATION................................................................................................................................ 10
1.3 AIM AND RESEARCH QUESTION ...................................................................................................................... 12
1.4 RESEARCH LIMITATIONS................................................................................................................................. 12
2. RESEARCH METHOD ................................................................................................................................... 13
2.1 RESEARCH APPROACH .................................................................................................................................... 13
2.2 RESEARCH PROCESS ....................................................................................................................................... 13
2.3 SYSTEMATIC LITERATURE REVIEW ................................................................................................................. 14
2.4 SURVEY FORMULATION .................................................................................................................................. 16
2.5 DATA ANALYSIS .................................................................................................................................... 17
2.6 VALIDITY AND RELIABILITY .................................................................................................................. 18
3. KEY CONCEPTS AND DEFINITION ............................................................................................................ 19
3.1 DIGITALIZATION............................................................................................................................................. 19
3.2 DIGITAL TRANSFORMATION ........................................................................................................................... 19
3.3 INDUSTRY 4.0 ................................................................................................................................................. 19
3.4 SMART FACTORY ........................................................................................................................................... 20
3.5 SMART MANUFACTURING .............................................................................................................................. 20
4. RESULTS FROM SYSTEMATIC LITERATURE REVIEW ...................................................................... 22
4.1 IDENTIFIED FACTORS THAT ARE INFLUENCING DIGITAL TRANSFORMATION.................................................... 22
4.1.1 Factors related to Organizational Culture ............................................................................................ 22
4.1.2 Factors related to Organizational Structure ......................................................................................... 23
4.1.3 Factors related to People and organizational competence ................................................................... 23
4.1.4 Factors related to Characteristics, Selection & Integration of Digital Technologies ........................... 24
4.1.5 Factors related to Infrastructural Investment........................................................................................ 25
4.1.6 Factors related to External Support ...................................................................................................... 26
4.1.7 Factors related to Data Security ........................................................................................................... 26
4.1.8 Factors related to Design of Production System (DPS) ........................................................................ 26
4.1.9 Factors related to Organizational Strategies ........................................................................................ 27
4.1.10 Factors related to Organizational Leadership .................................................................................... 28
4.1.11 Factors related to Data Governance ................................................................................................... 28
4.2 RELATIONSHIP BETWEEN THE FACTORS INFLUENCING DIGITAL TRANSFORMATION ........................................ 35
5 RESULTS FROM SURVEY ....................................................................................................................... 37
5.1 OVERVIEW OF PARTICIPANTS AND COMPANIES .............................................................................................. 37
5.1.1 Educational Qualification ..................................................................................................................... 37
5.1.2 Job Profile ............................................................................................................................................. 38
5.1.3 Years of Experience ............................................................................................................................... 38
5.1.4 Company Size ........................................................................................................................................ 39
5.1.5 Type of Industry ..................................................................................................................................... 39
5.1.6 Type of Products Produced by the Company ......................................................................................... 40
5.2 KEY FACTORS AFFECTING DIGITAL TRANSFORMATION .......................................................................... 41
5.2.1 Average rating on factors ...................................................................................................................... 42
5.3 DETAILS ON EACH FACTOR ............................................................................................................................. 42
5.3.1 Organizational Structure ....................................................................................................................... 42
5.3.2 Organizational Culture.......................................................................................................................... 43
5.3.3 People and Organizational Competence ............................................................................................... 43
5.3.4 Characteristics, Selection, and Integration of Digital Technologies ..................................................... 44
5.3.5 Infrastructural Investments .............................................................................................................. 44
5.3.6 External Support .............................................................................................................................. 45
5.3.7 Organizational Strategies ................................................................................................................ 45
5.3.8 Data Security.................................................................................................................................... 46
 5.3.9 Design of Production System (DPS) ................................................................................................ 46
5.3.10 Organizational Leadership .......................................................................................................... 47
5.3.11 Data Governance ........................................................................................................................ 47
5.4 ARTO MODEL FROM SURVEY ................................................................................................................ 47
5.5 ADDITIONAL COMMENTS FROM THE SURVEY ................................................................................................. 48
5.5.1 General comment from the survey ......................................................................................................... 49
6 ANALYSIS AND DISCUSSION ....................................................................................................................... 51
6.1 Descriptive analysis of the SLR ................................................................................................................ 51
6.1.1 Factors from literature .......................................................................................................................... 51
6.1.2 Article Type ........................................................................................................................................... 52
6.1.3 Year of publication ................................................................................................................................ 52
6.1.4 Type of industry ..................................................................................................................................... 53
6.2 THE ARTO MODEL BASED ON SLR ............................................................................................................... 53
6.2.1 Awareness Related Factors ................................................................................................................... 54
6.2.2 Readiness Related Factors .................................................................................................................... 54
6.2.3 Technology Selection and Relevance ..................................................................................................... 55
6.2.4 Operations related Factors ................................................................................................................... 55
6.3 OVERALL RESULTS OF THE SURVEY .................................................................................................... 55
6.4 COMPARISON OF THE SLR AND THE SURVEY RESULTS................................................................................... 56
6.5 THEORETICAL IMPLICATIONS ......................................................................................................................... 57
6.6 PRACTICAL IMPLICATION ............................................................................................................................... 57
7. CONCLUSIONS AND RECOMMENDATIONS ........................................................................................... 59
7.1 CONCLUSION ............................................................................................................................................. 59
7.2 RECOMMENDATIONS FOR FUTURE RESEARCH ................................................................................ 60
7 REFERENCES ............................................................................................................................................. 61
8.1 APPENDIX 1- DIGITAL SURVEY RELATED TO DIGITAL TRANSFORMATION IN MANUFACTURING COMPANIES ... 65
9.2 APPENDIX 2- LIST OF ALL FACTORS FOUND AND SOURCES ............................................................................. 79
LIST OF FIGURES

Figure 1 Research process .......................................................................................................... 14

Figure 2 Systematic literature review......................................................................................... 16
Figure 3 Analysis process step ................................................................................................... 17
Figure 4 Educational qualification of the survey participants .................................................... 37
Figure 5 Type of industry where the survey participants are working....................................... 40
Figure 6 Key factors affecting digital transformation ................................................................ 41
Figure 7 Average rating on factors ............................................................................................. 42
Figure 8 Organizational structure ............................................................................................... 42
Figure 9 Organizational culture.................................................................................................. 43
Figure 10 People and organizational competence ...................................................................... 43
Figure 11 Characteristics, selection, and integration of Digital Technologies .......................... 44
Figure 12 Infrastructural Investments ........................................................................................ 44
Figure 13 External support ......................................................................................................... 45
Figure 14 Organizational strategies............................................................................................ 45
Figure 15 Data security .............................................................................................................. 46
Figure 16 Design of Production System (DPS) ......................................................................... 46
Figure 17 Organizational leadership .......................................................................................... 47
Figure 18 Data governance ........................................................................................................ 47
Figure 19 The ARTO- Model based on the results from the survey .......................................... 48
Figure 20 Successful and unsuccessful outcomes of the factors ................................................ 51
Figure 21 Article types from literature ....................................................................................... 52
Figure 22 Year of publication of articles ................................................................................... 52
Figure 23 Type of Industry......................................................................................................... 53
Figure 24 Factors affecting digital transformation model (ARTO model) ................................ 54
Figure 25 The ARTO- model after comparison of the SLR and the survey .............................. 56
Figure 26 The relationship between the factors ......................................................................... 58

LIST OF TABLES

Table 1 Keywords used .............................................................................................................. 15

Table 2 Search String ................................................................................................................. 16
Table 3 Factors and sub-factors of DT with sources .................................................................. 29
Table 4 Job profile of the survey participants ............................................................................ 38
Table 5 Years of experience of the survey participants ............................................................. 39
Table 6 Company size ................................................................................................................ 39
Table 7 Type of products produced by the company ................................................................. 40
ABBREVIATIONS DESCRIPTION
AI Artificial Intelligence

DT Digital Transformation

IoT Internet of Things

PSD Production System Development

SLR Systematic Literature Review

SM Smart Manufacturing

SME Small and Medium-sized Enterprises

SMS Systematic Mapping Studies

VR Virtual Reality
 1. INTRODUCTION

This section explains the background of the problem, followed by the aim and research question
of the thesis. The section ends with an explanation of the scope and the limitations.

1.1 Background
In recent times, manufacturing companies have experienced great shifts such as technological
advancements, increased competition, customer demand modifications, increased
apprehension (Choi, et. al 2017), which has resulted in the need for companies to be digitally
transformed. Digitalization has several innovative opportunities for the manufacturing sector
(Santos, et al. 2020) which makes it easy for companies to tackle issues such as customer
satisfaction, resource maximization, workforce utilization, cost reduction, quality control, etc.
In a bid to maximize these innovative opportunities provided by digitalization, companies now
must consciously make efforts to employ the technologies for the attainment of better results
(Lee, et. al. 2015). Digitalization combined with enabling digital technologies to contribute to
creating value with the systems of production and the kinds of products produced in
manufacturing companies. The enabling technologies have introduced flexibility and
adaptability into the market with minimized labor costs (Synnes, 2016). Cost reduction and
increased productivity are some benefits of digitalization (Schiffer, et al. 2019) whose major
purpose is to share data, access technical systems, and increase efficiency and effectiveness
(Perzylo, et al., 2021). With digitalization, production speed can be increased while reducing
all costs connected to stops from production speed and error (Fera, et al., 2021).

There are several terms employed in digitalization which include industry 4.0, smart factory,
smart manufacturing, digital transformation, etc. Over the years, the manufacturing industry
has experienced several industrial revolutions ranging from the 1st revolution to the 4th which
is the most recent. These revolutions have consistently brought changes to the production
systems, management systems, and modes of operation which has resulted in the introduction
of advanced methods and better ways of doing things (Santos, et. al. 2020). The fourth
industrial revolution which is often referred to as a term industry 4.0 is a significantly important
term in manufacturing and academia. The emergence of Industry 4.0 has led to the rise of
digital transformation and its application leads to better product quality, better system
monitoring, and the overall efficiency of the shop floor (Temel, et al 2019).

Digital transformation can be viewed as the adoption of modern technologies in the affairs of
a company to have a competitive edge in the industry (Mergel, et. al., 2019) with its usefulness
cutting across various sectors of the economy, all levels of government, relationships with
suppliers, and even customers (Illa, 2018). However, researchers have different opinions on
what digital transformation means. For example, Schumacher, et al. (2019) states that digital
transformation is the same as Industry 4.0 while Temel, et al, (2019) argues that digital
transformation became more relevant with the introduction of Industry 4.0. Digital
transformation usually includes the use of technologies such as big data, virtual reality (Illa,

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2018), Cyber-Physical Systems (CPS), cloud computing, augmented reality, computer
simulation, and the Internet of Things (IoT) (Perzylo, et al., 2021) and has the potential to
connect workers, and machines within an industry (Merhar, 2019). Illa (2018) claims that
technologies such as Big data, and the Internet of Things (IoT) are the technologies with the
largest transforming effects.

Despite the advantages of digital transformation, companies are facing difficulties with the
implementation of various technologies (Perzylo, et al., 2021). The implementation in
manufacturing companies seems to be a slow process and most companies are in the earliest
stages of implementing current technologies (Johansson, et. al. 2018). Firstly, most
manufacturing companies are in the basic stage of IT usage which is due to the long and gradual
process that is required including all criteria that must be met. Secondly, the different
technologies which are associated with digital transformation are still unclear and many
companies do not understand their functionalities (Buer, et al., 2019). De. Carolis, et al., (2017)
states that an important aspect to consider in digital transformation is to define the
transformation roadmap of the manufacturing company, which helps the company to clarify
the degree of maturity for its implementation. The clarity on the degree of maturity would help
to explore the company´s environment while examining the potential possibilities that might
exist for the company.

1.2 Problem formulation

Transforming the manufacturing sector digitally comes with lots of benefits and opportunities.
However, the concept of digital transformation means different things to different people which
has to a significant extent affected its level of acceptance and implementation (Santos, et al.
2020). The concept of digital transformation is complex, with different requirements for
different companies, lacks defined ways of implementation and its results differ from each
other (Kane, 2019).

Manavalan, et al. (2019) states that very few companies have attempted the implementation
process while the rest of the companies are not yet ready for the transformation. Inadequate
planning, inappropriate strategy, and many other factors are responsible for the unsuccessful
implementation of digital transformation in certain companies (Schuh, et al., 2017). Yildrim &
Demirbag (2020) however, adds that the absence of research indicating current happenings
with regards to digital transformation could be seen as a major factor that has contributed to
the unreadiness of companies in its implementation. Manavalan, et al. (2019) claims that digital
transformation is gradually becoming a reality despite these challenges.

Despite these setbacks, the need to have a digitally transformed company remains a major
prerequisite for companies (Yildrim & Demirbag, 2020) that will be able to handle the rise in
competition, changes in customer demand, need for better quality, etc. Products must be
manufactured within the shortest possible time (lead time reduction), delivery time reduced
while ensuring that costs are minimized, and quality is not compromised. It has therefore
become paramount that all companies intending to remain relevant in the market in the nearest
future go with the trend by ensuring that they are part of the transformation (Zheng, 2020).
Failure to move with the trend of digital transformation will cause the company to lose its
relevance in the market in the nearest future (Zapata, et al. 2020; Bechtold et al. 2014).

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A major reason for moving with the current trend of digital transformation is that most
companies lack sufficient knowledge regarding these technologies, their modus operandi,
capital required for investment, and technical skills (Schuh, et al 2014). Sanders, et al (2016)
added that the cost of investing in digital technologies is also a factor that has limited the level
at which companies have implemented it. Schuh, et al (2014) however argues that investment
in technology is not enough but there must be an effort to understand how it works which has
led to failure in implementation and frustration with some companies wondering if it is worth
it.

To increase capacity and for easy monitoring, companies have begun adopting current
technologies (Temel, 2019). However, moving to the next phase of digital transformation has
been quite challenging (Illa, et al 2018). The advancement and acceptance of digital
transformation are dependent on the level of understanding of the factors influencing the
procedures involved in its implementation. Several studies have been conducted to identify the
critical success factors and success factors but have been developed on a general basis i.e., the
studies were performed while generalizing digital transformation for all sectors of the economy
(Deepu, et. al. 2021; Sahu, 2019; Sahu, et al., 2018). Another aspect that researchers have dived
into is the drivers and barriers to digital transformation (Schniederjans, et. al. 2020; Jones, et.
al., 2021; Kane, et. al., 2015). Despite this, enabling technologies still have an exceptionally
low implementation rate (Perzylo, et al., 2021) because companies have insufficient insight on
the methodologies required to implement the transition (Schniederjans, et. al. 2020). Schiffer,
et al. (2019) suggests that it is important that organizational procedures are boosted before the
transformation is introduced.

The study of the success factors has been described as indicators used to assess the
advancement of digital transformation while critical success factors are being treated as those
insignificant details required for success to be guaranteed (Vogelsang, et al. 2018). The study
of these factors is essential to establish the relationship that exists between them which will
make adoption and implementation faster and quicker (Deepu et. al. 2021). It is believed that
focusing on the drivers and barriers of digital transformation in general terms will make it easy
to develop strategies that will be durable (Sharma et. al. 2020). However, it is obvious that this
is not enough as the transition to digital technology is still very problematic to companies. The
failure to conduct most of the research within a particular sector also poses serious problems
to companies whose intention is to transit as the solutions are not tailor-made and so may not
be well suited to meet the exact need that they have (Jones, et al., 2021).

Efforts have been made to develop readiness frameworks, maturity models to aid the successful
implementation of digital transformation in manufacturing companies (De Carolis, et al., 2017;
Santos and Martinho, 2020). However, when it comes to the aspect of factors that affect digital
transformation in manufacturing companies, not much has been done. Digital transformation
still lacks defined ways of implementation and practitioners are yet to experience huge progress
in their journey. It lacks rules and definite methods of handling the transition to producing
results (Kane, 2019). In this research, the authors will carefully distinguish and evaluate the
numerous factors that affect digital transformation within the manufacturing industry for easy
identification of all factors available in the literature and establish the connection between them
which will benefit researchers, practitioners, -related stakeholders, and management within the
manufacturing industry (Smith et. al. 2008).

11
1.3 Aim and Research question
To address the above gaps, this study aims to identify factors that are crucial to the success of
digital transformation in manufacturing companies. The authors are interested in finding the
factors that will lead to the success of digital transformation and even those that when ignored
will lead to it being unsuccessful. It will also include factors that can be referred to as “must-
haves” if digital transformation implementation in manufacturing companies will be
successful.

Our research is guided by the following questions:

RQ 1: Which factors are stated in the literature as affecting the success of digital transformation
in manufacturing companies?

RQ2: How are these factors related to each other in the literature?

RQ3: How can practitioners and academics use these factors for the successful implementation
of digital transformation?

1.4 Research limitations

The research was limited to success factors, critical factors, prerequisites affecting digital
transformation in manufacturing companies. This means that results obtained from this study
may not apply to other industries especially those which are more service-oriented. The authors
also excluded barriers and challenges to digital transformation, thus the authors are more
interested in what leads to the implementation of successful digital transformation rather than
listing barriers and challenges for implementing it, which may have limited the findings in
some way.

12
2. RESEARCH METHOD

__________________________________________________________________________
In this section, the methodology for the research is described in detail. For each method that
has been implemented, there is an explanation and argumentation as to why that method was
appropriate. The section begins with an explanation of the research approach, furthermore the
search strategy and continues with an explanation of the screening and selection phase for the
collected data. Finally, the survey and the survey data are presented.

2.1 Research approach

Inductive, deductive, and abductive research approaches are according to Bryman & Bell
(2015) the three main approaches. The difference between these approaches is that inductive
research is focusing on the aim, the empirical data, and the research questions. It can be based
on new theories that are developed from the analysed data and empirical data (Bryman & Bell,
2015). While the deductive approach aims to test the theory that begins with a hypothesis and
data is then collected (Bryman & Bell, 2015). It can be considered that the abductive research
approach is a combination of the two approaches mentioned before. It is based on identifying
and defining the connections and establishing a changed theory (Bryman & Bell, 2015).

In this research, there were clear research questions and a clear aim. Empirical data were
collected, analysed, and based on that data new theories were created. Therefore, this research
can be considered inductive research. This thesis is intended to identify the factors that will
lead to the success of digital transformation in manufacturing companies and to also find out
the factors that when being ignored will lead to unsuccessfulness.

2.2 Research process

In this research, a systematic literature review was first carried out to examine in detail the
factors affecting digital transformation in manufacturing companies. Thereafter the collected
data from the SLR were analysed and based on the analysed data, a framework and a survey
were created. The survey was distributed to researchers who were allowed to answer the
questions anonymously and add their perspectives from an internal industrial perspective. The
next step was the analysis of the results from the survey. Finally, results from the systematic
literature review and the survey were compiled to create a generic model. A model was also
created to show how the several factors are interdependent.

13
The research process involves six steps as shown in figure 1.

Figure 1 Research process

2.3 Systematic literature review

A systematic literature review (SLR) was performed to answer research question 1 (RQ1 and
RQ2). The literature study also helped to gain an understanding of previous studies that have
been done and what is missing in this area. The SLR approach contributes to creating a basis
for knowledge to be passed on and facilitates the theory development of a specific topic
(Masrom, et al., 2021). The systematic review can be carried out in several ways. It mainly
involves three stages: planning the review, conducting the review, and reporting the results.
The first step is to plan and collect information related to the existing knowledge about the
topic. The second step is to perform a detailed analysis of the existing focus areas within the
topic e.g. related theories, methods, and factors. The third step is to summarise the results in
the form of a model related to the focus area (Masrom, et al., 2021).

Stage 1: Planning
Before starting an SLR it is crucial to emphasize the goal that is in view, and then a review
protocol is created, as the protocol facilitates defining the criteria when collecting the literature
(Masrom, et al., 2021). The review protocol specifies the research method, and it also reduces
research bias (Masrom, et al., 2021).

14
The first step is the creation of a timetable by the authors which included all processes and time
limits. The next phase was to book an appointment with the librarian in order to obtain
assistance within a scheduled meeting created a timetable for execution. Afterward, the
booking of appointments with the library for a better understanding of how to search for
articles. The processes included in the timetable for the SLR include the actual search for
literature using the logic operators, application of the inclusion and exclusion criteria after the
reading of the abstracts and titles, using excel sheet for article categorization, choice of relevant
papers, snowballing, and final choice of papers to be included in the SLR.

Stage 2: Conducting the review

This stage includes the search, analysis, and selection of relevant literature (Masrom, et al.,
2021). A further detailed explanation of this step follows below:

Literature collection

Within this study, a systematic literature review was conducted to find out factors affecting
digital transformation in manufacturing companies. Academic databases were used, including
Scopus and Web of Science. These databases are consistent with previous databases (Masrom,
et al., 2021). The selection of the articles was based on keywords, title, and abstract. The
authors searched for articles ranging from 2005 to 2021 which resulted in 379 articles. Different
keywords (Table 1) and other advanced criteria such as limiting it to the subject area of
engineering were used to find as appropriate papers as possible. The papers would be related
to manufacturing, digital transformation/smart factory/industry 4.0, success factors/
enablers/capabilities/ prerequisites/ critical success factor/ criteria/ determinants. To increase
the number of articles the Boolean logic operators were used (i.e., AND, and OR and NOT).
Of these 379 papers, in the first round, only abstracts were read on each paper to eliminate
irrelevant ones. After reading the abstracts and examination of the topics of the article, 176
papers were selected. These papers were fully read and analyzed to ensure that they were
relevant to the study. Below (Table 2) are the criteria used in selecting the sources. For the
inclusion criteria, only the manufacturing industry and sector were included and narrowed
down to the engineering field. Success factors, capabilities, critical success factors,
digitalization, digital transformation were included. All countries both developed and
underdeveloped were considered. The authors excluded every paper that talked about digital
technologies implementation without including factors, papers that were not specific with
digital transformation, articles that focused on software. Barriers and challenges of digital
transformation in manufacturing companies were also excluded. The collected papers were
downloaded into Endnote for further evaluation. The downloaded papers were fully read, and
essential information was highlighted. At the same time the relevant articles were exported to
an excel- sheet to categorize the papers into different categorize (e.g., name, publication year,
factors that they address, etc.), to facilitate the understanding of the articles.
Table 1 Keywords used
Keywords
Digital transformation
Digitalization
Industry 4.0
Enabling technologies

15
Table 2 Search String

Database Matches Scanned Selected

“(digital*transformation OR digitali* Web of 96 50 22

OR smart* factory OR industry 4.0) Science
AND (manufacturing* companies)
AND (factor* OR success factors OR
enablers OR capabilities OR Scopus 283 126 45
prerequisites OR critical success factor
OR criteria OR determinants) AND
NOT (challenges OR barriers)”
Total 379 176 67

Figure 2 Systematic literature review

2.4 Survey formulation

To get a first-hand perspective on the topic and a more holistic view of the implementation of
digitalization from different companies, a web survey using SurveyMonkey was created. The
target group for the survey was people from different manufacturing companies and the

16
estimated time for the survey was 15-20 minutes. The given deadline for the companies to carry
out the survey was two weeks with the possibility of extension. Section one of the survey
covered ordinary questions related to the company and the individual. Questions related to the
company were for instance: questions about the type of company, number of employees, types
of products that they are producing. Questions related to the individual were: educational
qualification, job profile, experience in this role. Furthermore, section two addressed questions
related to the key factors for digital transformation. In this section, the participants would be
allowed to score each factor according to the Likert Scale from the eleven factors achieved via
the SLR, on a scale from 1-7, where 1= non-significant, 2= less significant, 3= somewhat less
significant, 4= neither significant nor less significant, 5= somewhat significant, 6= significant
and 7= highly significant. Section three deals with some identified subfactors determined based
on the SLR. In this section, the participants were asked to choose the subfactor(s) that is/are
relevant for each key factor from their company´s perspective. The fourth and last section deals
with a generic model created based on several factors and their subfactors. The generic model
consists of four phases such as awareness in the organization for the digital transformation,
organizational readiness for the digital transformation, selection of technologies, and its
relevance for digital transformation. Finally, the participants´ answers were collected and
compiled.

2.5 Data Analysis

In step 1, data obtained from literature is read and analysed using the excel sheet to answer the
research questions. The analysis sheet is classified based on categories such as paper type,
purpose/focus of the paper, focus/technology type, factors/capabilities/prerequisites/critical
factors of DT, implementation model/maturity model, successful/unsuccessful factors of DT,
type of empirical studies/type of industry, year of publication, and various definition of DT. In
addition, an ARTO model was generated based on the findings from the SLR.

The second step is to read through the literature review and based on that create a survey that
would validate findings from the SLR. Participants would either validate findings from the
SLR or include new ideas and suggestions.
In step 3, the survey is read, and results are presented in different diagrams. An ARTO- model
with the highest-ranked factors according to the survey participants is created. Furthermore, in
step 4, the results from the literature study and the survey were compiled in the form of new
diagrams. A comparison of the literature study and the survey was made. Based on the most
dominant factors considering both the literature study and the survey, a definite ARTO- model
was created. A final model which reveals the relationship between the various factors affecting
DT is also generated based on the findings from the literature and the survey.

Figure 3 Analysis process step

17
2.6 Validity and Reliability
A research study requires validity and reliability to be considered (Bryman, 2008). These are
two factors that must be considered when analyzing the quality of research (Golafshani, 2003).
Reliability refers to determining whether research can be repeated, and the same result is
achieved (Golafshani, 2003). In this research, scientific papers have been studied carefully, to
get as many credible papers as possible, only previewed papers were read. The papers would
not be older than the year 2005 since the papers would not be too old.

Validity in a quantitative research process deals with data that has been collected and how it
has been collected. Validity provides answers to whether what is intended to be answered is
answered (Golafshani, 2003).

To measure or test the validity and reliability of qualitative research, it is common to use
triangulation, a method that includes combining various scientific research methods
(Golafshani, 2003). In this research, two different methods, SLR and a web-based survey were
combined.

18
3. KEY CONCEPTS AND DEFINITION

__________________________________________________________________________________________
In this section, the key concepts of the research are described in detail. These key concepts
are smart manufacturing, smart factory, industry 4.0, and digitalization.
___________________________________________________________________________

3.1 Digitalization
Digital transformation is a crucial factor in the industry and its importance is growing. Various
digital technologies such as cloud- computing, cyber-physical systems, big data, and additive
manufacturing enable new processes in the entire value chain and the production process, from
manufacturing to sales and services where the product is used (Bogner, et al., 2016).

Digitalization contributes to the reconfiguration and integration of products with other systems
(Santos & Martinho, 2020). In addition, Buer, et al., (2020) and Ruiz Zuniga, et al., (2017)
claim that as digitalization contributes to real-time data the planning and the control of the
operations will also be in real-time. At the same time, digitalization contributes to flexibility
capability in making productivity changes in the desire to increase the productivity level
(Yildirim & Demirbağ, 2020). Digitization also enables a clearer picture for customers of how
much value the company contributes to the customer (Yildirim & Demirbağ, 2020).

3.2 Digital Transformation

Digital transformation cuts across all sectors of the economy. It simplifies innovation and leads
to an overall improvement of the entire system. Despite the benefits of digital transformation,
practitioners are confronted with a difficult challenge regarding incorporating it into the entire
system (Illa and Padhi, 2018). This is because of the lack of definite procedures for the
implementation and monitoring of DT. For DT to be successful, it must have well-defined
strategies (Kane, et. al, 2015)

DT requires a long-term plan if the desired goal is to be achieved with a certain level of
investment (Illa and Padhi, 2018). Leadership is mentioned as a vital key to its survival (Kane,
2019).

3.3 Industry 4.0

The fourth industrial revolution also named Industry 4.0, is known to be the beginning of the
introduction of the Internet of Things in the field of production (Bogner, et al., 2016). Interest
in industry 4.0 increased in 2011 in Germany when the federal government decided to work
together with universities and private companies. They started with a strategic program where
the aim was to increase the productivity and efficiency of the national industry (Frank, et al.,
2019). Today, this topic has become one of the most popular terms among professionals and
academia.

Industry 4.0 is based on the collection of real-time data, its analysis, and the usage of digital
technologies to provide useful information for manufacturing (Frank, et al., 2019). Industry 4.0
contributes to the integration of physical objects, production lines, intelligent machines, etc.
The new agile and networked value chain allows companies to be more productive, obtain

19
reduced costs, and improve product quality thus becoming more competitive in the market
(Genest and Gemache, 2020). As a result of industry 4.0’s complex technology architecture,
the implementation remains complicated. There are proposed maturity models for
implementing industry 4.0 technologies and numerous studies have also shown how these
technologies affect industrial performance (Frank, et al., 2019; Yildirim and Demirbag, 2020;
Wang, et al., 2016, Wagire, et al., 2020; Sjobakk, 2018).

3.4 Smart Factory

A shop floor is a place where unprocessed materials and partly finished goods are converted to
end products. With the smart factory, communication, and material flow freely across the
subsystems thus integrating end-to-end engineering into the conventional factory which helps
create better product models. The introduction of vertical integration into the conventional shop
floor with the aid of the smart factory will further result in a more effective and flexible system
(Wang, et. al. 2016). The conversion of traditional factories to smart factories will increase the
current level of competition in production (Resman, et al., 2021). The usage of industry 4.0
technologies will make the attainment of the smart factory a reality. It must, however, be
designed to cope with the problems that will arise because of this transformation (Wang, et al.,
2016).

For a smart factory to be created, it is highly essential to create an imitation of the system that
is desired which can be done using simulation or digital twin (Resman, et al., 2021). Wang, et
al., (2016) suggests a system architecture for the smart factory that consists of four layers. The
1st layer is where the physical tools are kept. These tools are smart tools that can communicate
with each other on the shop floor. The 2nd layer deals with the “industrial network” which
connects the first and the third layer. The 3rd layer is the layer where data is stored, and it also
offers the advantage of being used for calculations. This layer (3rd layer) is designed to make
it easy for the smart factory to meet production demand. The fourth layer is the final layer and
is used to control and supervise the work done on the shop floor.

3.5 Smart Manufacturing

The term smart manufacturing was created by certain governmental agencies in the United
States in a bid to make industry 4.0 a reality (Thoben, et al 2017). Though sometimes referred
to as industry 4.0, SM aims at improving the ergonomics of the workplace, creation of better
product quality, and a rise in the overall performance of the company (Catarci, et al., 2019). It
involves the usage of a group of technologies that are data-based in every aspect of the
manufacturing process and is further extended to the supply chain (Davis, et al. 2012). It has
the cyber-physical systems (CPS) as well as the Internet of Things (IoT) as its bedrock (Catarci,
et al., 2019). The smart factory creates a picture that merges the intellects of key players within
the supply chain for improved performance on the shop floor which leads to less environmental
pollution, better coordination, higher productivity, and healthy competition (Davis, et al.,
2012). Customer satisfaction despite demand variations and the merging of industrialization
with human innovativeness are the results expected from the smart factory (Thoben, et al.,
2017).

It recognizes the place of human creativity and does not attempt to eliminate man from the
entire manufacturing process (Thoben, et al., 2017). Thus, enabling the manufacturing
company to better handle the challenges encountered on the shop floor, within the production

20
process, and across the supply chain network. It is aimed at obtaining better results hence it
must be designed to tackle all forms of uncertainties that arise within the system. This is indeed
an exceedingly challenging task to achieve since the manufacturing industry is currently faced
with sophisticated and complex issues with the introduction of Industry 4.0 (Feeney & Weiss,
2014).

21
4. Results from Systematic Literature Review

__________________________________________________________________________________________
In this section, results derived from the SLR will be discussed. The factors that influence
digital transformation in manufacturing companies were derived from various articles and
later categorized into eleven (11) major factors.
__________________________________________________________________________________________

4.1 Identified factors that are influencing digital transformation

Below is a list of all identified factors.
• Organizational Culture: examining the organization’s overall attitude with regards to
digital transformation.
• Organizational Structure: this is a factor that is focused on ensuring a structure that is
functional and encourages the attainment of digital transformation.
• People and Organizational competence: consider the competence level of the workforce
within the organization considering digital transformation.
• Characteristics, selection & Integration of Digital Technologies: this factor deals with
the process employed by the organization in selecting and integrating digital
technologies into its transformation process.
• Infrastructural Investment: considers infrastructures that must be invested in by the
organization if its digital transformation goals will be attained.
• External Support: these are the external influences of the organization. Ranging from
the customers which the organization must satisfy to the suppliers that must assist in
delivering the required technology.
• Data Security: the process of transforming the organization digitally implies that several
data will be gathered. This data must be understood and properly stored for the digital
transformation process to be successful. This factor deals with the safety of all data
obtained from the process.
• Design of Production System (DPS): this factor considers how the production system
is designed
• Organizational Strategies: deals with strategies employed if digital transformation goals
will be attained.
• Organizational Leadership: deals with the management and leadership of the
organization that desires to attain a digitally transformed organization. This factor
considers their approach, strategies, and leadership style.
• Data Governance (DG): this refers to the ability of the individuals within the
organization to fully understand and interpret all data gathered.

4.1.1 Factors related to Organizational Culture

In this context, organizational culture refers to the analysis of the behavioral characteristics of
employees. For instance, it seeks to examine how the leadership of the company works, the
mode of communication between teams, adaptation to modern technologies, the company’s
willingness to collaborate, and overall attitude towards innovation (Manavalan & Javakrishna,
2019; Merhar, et al., 2019; Mittal, et al., 2019; Paschou, et al., 2018; Santos & Martinho;

22
Schumacher, et al., 2019; Synnes & Welo, 2016; Temel & Ayaz, 2019). It further examines
the preparedness of the company towards the implementation of digital equipment (sensors,
digital monitoring, optimization, automation, and IoT connection, etc.) (Wagire, et al., 2020),
and its level of readiness towards digitalization (Schumacher, et al., 2019).

4.1.2 Factors related to Organizational Structure

Organizational structure is related to the organization’s behavioral patterns and management-

related issues, which aims at evaluating the approaches employed by the management of the
organization in directing the work while ensuring a structure that is functional and agile (Santos
& Martinho, 2020). Furthermore, the company´s organizational structure focuses strongly on
task orientation, motivation, employee autonomy, flexibility, team skills, customer orientation,
and collaboration throughout the value chain (Santos & Martinho, 2020). Security issues,
reconfigurable layouts, management of innovation, and the degree of openness to innovation
are important aspects to consider in the context of organizational structure (Santos & Martinho,
2020).

4.1.3 Factors related to People and organizational competence

The term people and organizational competence refer to the workforce within the organization
and their level of competence. “Workforce” is the term used in dividing the employees into
two subcomponents, the existing abilities, and the acquisition of new skills (Santos &
Martinho, 2020; Schumacher, et al., 2019), which is done through the qualification of new
employees (Santos & Martinho, 2020).

The awareness of Industry 4.0 plays a significant role in companies as technology tends to
simplify work for the employees. For instance, with the use of Virtual Reality (VR) technology,
employees can be suitably trained (Wagire, et al., 2020). With the transition to digitalization
and the use of new innovative technologies, it is significant to consider the qualification of
employees and constantly update the skills of the management and workforce.

The team’s willingness to implement innovative technologies, awareness of change and

flexibility is crucial (Paschou, et al., 2018; Santos & Martinho, 2020; Schumacher, et al., 2019)
to the overall growth of the organization. Simultaneously, the company must have employees
with expertise in data collection (Paschou, et al., 2018) as the lack of this capability often leads
to the inability to define starting points and could hinder prompt response in data-related
activities (Nausch, et al., 2020). IoT devices bring tremendous benefits to employees. They can
for instance send a warning to the workers before an unforeseen situation occurs, which saves
lives, time, and cost (Manavalan & Javakrishna, 2019). Another benefit of IoT devices for the
employees is that it enables supervisors to track the location of components with the help of
remote locations which in turn enables live instructions to be sent to workers on how they
should handle sensitive materials and special equipment (Manavalan & Javakrishna, 2019).
Furthermore, technological readiness is a crucial factor for the company as lack of it negatively
affects economic success.

According to Merhar, et al., (2019) to implement digitalization, information, participation, and

training are crucial factors for the participants. Also, confirmation from the management is a

23
significant factor for the participants' acceptance. Equal distribution of the devices, social
influence, support from the management, influences from colleagues, and external effects
being an innovative company (Merhar, et al., 2019). Choi, et al., (2017) means that workers,
environmental effects, and material handling systems are more complicated than data
acquisition for non-equipment factors since they are not standardized. Choi, et al., (2017)
means that workers, environmental effects, and material handling systems are more
complicated than data acquisition for non-equipment factors since they are not standardized.
Enabling factors for implementing digitalization are innovative education and training together
with laws and regulations. It is also important to knowledge workers about it (Mittal, et al.,
2019).

4.1.4 Factors related to Characteristics, Selection & Integration of Digital Technologies

This refers to the methods employed in choosing and integrating digital technologies into the
company's digital transformation process. When implementing digital technologies, it is
important to be able to ensure the traceability of data from start to finish within the structure,
to reduce waste, increase productivity, and facilitate maintenance (Temel & Ayaz, 2019). The
Smart factory has also been implemented for Small and Medium-sized Enterprises (SMEs)
through, for example, the use of Artificial Intelligence (AI) and Big Data. Cloud computing
has also been used by SMEs to support smart manufacturing (Jung, et al., 2020; Ruiz Zuniga,
et al., 2017).
Some important aspects to consider with digitalization are reliability, great functionality,
timeliness of the software and the devices, fast data transformation, and exceptional
performance (Merhar, et al., 2019). Furthermore, the ease of use and the perceived usefulness
are affecting the users' willingness to use the technology (Merhar, et al., 2019; Synnes & Welo,
2016). Digital technologies enable companies to increase their competitiveness and increase
productivity. Thus, this requires innovative thinking combined with a holistic view. It is
important to deliver cost-optimized products to the customers based on their demands. To meet
this, the company should not only consider production, service, and function, the organizational
aspects (quality control, logistics, control of material flow, and quality control) are at least as
important. Enabling factors to support this could be a company´s ability to absorb modern
technologies and increase flexibility, where the work environment production system is
included to maximize the utilization of the capacity. Another factor is product and process
development by facilitating teamwork. It is also important to include the supporting tools, for
instance, guidelines to share knowledge between different departments such as production and
product engineering (Jung, et al., 2020; Ruiz Zuniga, et al., 2017) Furthermore, a holistic view
is important within a company as it supports technical capabilities that are related to services,
products, and processes that are which in turn is related to the organizational strategy (Santos
& Martinho, 2020). Cloud computing also contributes to opportunities such as storage
capabilities and on-demand computing (Bevilacqua, et al., 2017).
In recent times, additive manufacturing has become increasingly popular in companies as
automation is preferred increasingly in the modern industry which has given rise to increased
flexibility and customization within production systems (Qin, et al., 2017)
To enable big data in a company an important prerequisite is to treat the big data at the strategic
level and how to solve problems related to big data (Paschou, et al., 2018).
Merhar, et al., (2019) opined that users desire that digital devices are simple and the usability
is easy. The ease of use of the devices is affecting the attitude towards the willingness to use

24
the technologies. The general attitude towards technology is characterized by openness and
optimism. The digital system design should be designed easily, they should be functional and
reliable and close to the date and the data transformation should be fast. Furthermore, digital
tools are popular to varying degrees. For instance, in the private sector tablets are most popular
and it is assumed to have the best display options. In second place comes smartphones because
of mobility. Portable devices are most popular as they are considered flexible (Merhar, et al.,
2019).

4.1.5 Factors related to Infrastructural Investment

This refers to the infrastructures that the company must invest in while transiting to digital
transformation. Companies that are active in the goods sector have a great awareness
regarding industry 4.0. The company size plays an important role when considering the
challenges and the benefits related to the transition to industry 4.0. Where the key barrier for
SMEs is the lack of financial resources, the most critical factor for large enterprises is the
transition to industry 4.0. (Yildirim & Demirbağ, 2020). Buer et al., (2020), agree that
smaller companies are less prepared for industry 4.0 from a financial perspective and they
are also less prepared from a technological aspect. The operational break-even point will
increase together with the investments for industry 4.0 implementation. Other challenges
when implementing digitization are low production volumes, it requires standardization,
worries regarding data security, and less access to trained employees. Thus, many SMEs can
assume that the transition to digitization is not sufficiently profitable. How to implement
digitization in companies can thus differ between large and small companies. This is
something that needs to be studied further.

However, Buer, et al., (2020) argues that the transition to industry 4.0 is not limited to large
enterprises because industry 4.0 includes the entire supply chain and can create great benefits
for SMEs such as creating new products, creating new services, and innovative business
models. Other great benefits that digitalization can contribute to are increased efficiency and
reduced costs which are independent of the company size. Furthermore, Buer, et al., (2020)
claims that the smaller companies have less knowledge in IT, unlike the larger companies. In
the work to expand IT competence, the manager´s actions play a crucial role. Managers should
develop activities that can expand the IT skills of their employees, it can be through a research
project and by participating the employees in knowledge-sharing networks (Buer, et al., 2020).
Countries that are in a stage of development are lacking capital accumulation (Yildirim &
Demirbağ, 2020; Ruiz Zuniga, et al., 2017) and need customized approaches and useful models
on how to make the technology transfer as effective as possible, and how to build a capacity
that needs to be developed from deep case studies (Yildirim & Demirbağ, 2020). Companies
do not believe that the excessive costs, lack of knowledge, and lack of sufficient benefits are
worth investing in comparison to the return.
Many companies however agree that the excessive costs, the lack of competence, and the
insufficient benefits make it not worth investing in digitization (Schiffer, et al., 2019)
Paschou, et al., (2018) agree that a significant prerequisite for enabling digitization in a
company is that the company should have the infrastructure for digital systems.

25
4.1.6 Factors related to External Support

External factors in this research refer to all factors from without the organization that influences
its transition to digital transformation. The need for customer satisfaction is a major influencer
of the current dramatic shift that the world is experiencing. It must be carefully considered in
the design of the production system (Choi, et al., 2017). These factors which include
competition, competitors, globalization, suppliers, laws, and regulations all play massive roles
in the transition to digital transformation (Ruiz Zuniga, et al., 2017). The suppliers affect the
supply and delivery of raw materials, pieces of equipment, machines to the organization. The
accuracy of their delivery and timeliness of the delivery plays a crucial role in the success of
the transition (Bevilacqua, et al., 2017).

The need to remain relevant in the competitive manufacturing industry has been a major
inspiration behind the transition for many organizations. Customer satisfaction and constant
threats from competitors have left companies with little or no choice but to move along with
the trend (Yildirim & Demirbağ, 2020). External factors such as rules and regulations guiding
the organizations can be viewed as a motivator to digitally transform the company (Mittal, et
al., 2019). The enabling technologies play a significant role in the distribution of products from
the organization to the customers thus ensuring that the goods arrive at the appropriate time,
with an accurate price, and in good condition (Manavalan & Javakrishna, 2019).

4.1.7 Factors related to Data Security

Data Security in this research deals with everything that has to do with ensuring the safety of
all data obtained, stored, analyzed, and transmitted within the system. The system must be
designed in a manner that keeps intruders perpetually out of reach of all the organization’s data.
Digital transformation results in the handling of an exceptionally large, bulky, and complicated
amount of data that must be well protected. The safety and security of data and information
within the organization is a vital aspect that must be well handled to ensure the continuity of
the organization. The management must design strategies that guarantee maximum security of
the organization’s information and all data captured (Merhar, et al., 2019; Ruiz Zuniga, et al.,
2017).
The ability of the organization to provide adequate security for its data is viewed as an
intelligent operation. The data of the organization is vital and thus must be guarded diligently.
The security of data goes past data transmission to how it is computed in the cloud (Santos &
Martinho, 2020).

4.1.8 Factors related to Design of Production System (DPS)

Design of Production system (DPS) refers to how the production system is designed as the
organization transitions from the conventional to the digitalized production system. It takes
into consideration planning, available resources, the processes, and the level of productivity.
At the workstations, data is required for proper monitoring, accurate functioning of the entire
system. The goal of the design is to create an optimal system; hence production planning is a
critical aspect that requires the investment of an adequate amount of time (Bevilacqua, et al.,
2017).

Productivity level has the potential to be transformed from the current state to a higher one.
For example, the DPS can be implemented with the use of lean production. This will make the

26
system unable to create much waste. The combination of lean and enabling technologies will
result in the design of an optimal system (Yildirim & Demirbağ, 2020).

With digital transformation, the production system can be traced from one end to the other
which makes for easy monitoring, and better product quality. The ability to trace the system is
a very crucial step that must properly be implemented into the designed production system
(Temel & Ayaz, 2019). The following must also be considered in PSD, the methods employed
in moving materials within the system, how the physical factory is constructed (Choi, et al.,
2017) while ensuring that the integration of digital technologies will result in processes that
can be used in observing actual happenings within the system (Choi, et al., 2017; Schumacher,
et al., 2019).
At the initial stage of the DPS are the customers whose needs the organization wants to satisfy.
It is therefore important that the system is designed with customer satisfaction as the main goal.
Then the processes, productivity level, and productivity of the factory. Thereafter, all other
essential factors such as material flow, methods that would be employed in disbursing the
products from one workstation to another must also be given consideration (Choi, et al., 2017).

4.1.9 Factors related to Organizational Strategies

Organizational strategies refer to how strategies are employed within the company before
transiting to digital transformation. The company’s strategies play a vital role in transiting from
the conventional method of doing things to a digitalized method. Digital transformation must
be embarked upon with strategies that can produce results over a long time. It is therefore
important for the company to have a digital vision that will influence its strategy (Sjobakk,
2018).

The features that an organization’s strategy possesses can affect the transition to digital
transformation. The organization must critically examine its business strategy to determine if
it will suit the transition or there will be a need to create an entirely different strategy for the
transition. In most cases, it is always the best option to adjust the digital transformation strategy
with the business strategy to attain a more effective transition (Sjobakk, 2018).

Based on current research, it is difficult to determine the exact connection between the normal
strategy of the organization and the strategy employed as the organization embarks on digital
transformation. Sjobakk, (2018) claims that since the strategies employed during the transition
affect the entire process, then it will not be out of place to say that the strategy created during
this transition is influenced by “digital technologies” (Sjobakk, 2018).

The appropriate strategy helps in evaluating and assessing the progress of the transition.
Without this, the transition will lead to more complications which will eventually lead to
frustration. Vision is important in the transition process (Sjobakk, 2018).

It assists in role assigning, resource management, in achieving the desired goal. Benchmarking,
Roadmap, and lean are some of the strategies that can be employed in the transition (Yildirim
& Demirbağ, 2020).

It is not unusual to find companies that employ ad-hoc methods to achieve desired results.
However, it is in the best interest of the organization to systematically map out its strategies to
achieve results that will be long-term and sustainable (Yildirim & Demirbağ, 2020). Strategies

27
should be specially made to meet the need of the organization and assist her in achieving the
desired objective (Yildirim & Demirbağ, 2020).

4.1.10 Factors related to Organizational Leadership

Organizational leadership in this research deals with the roles played by the leaders in attaining
a digitally transformed organization.
The usage of enabling technologies positively affects the ability and results obtained by the
leadership of the organization (Bevilacqua, et al., 2017). It is believed that the capabilities of
the management and leadership of the organization have the potential of bringing great rewards
to the organization. The leaders determine how the organization is structured which in turn
influences the workforce and results obtained. The management must make the structure
workable for all parties involved (Santos & Martinho, 2020) while setting benchmarks with
which the organization’s performance can be measured.

The organization in its transition must invest in certain infrastructures for there to exist a
successful transition. It is the management that has the sole responsibility to decide the
infrastructure to invest in which is however dependent on the amount that the management has
set aside in its budget for infrastructure (Yildirim & Demirbağ, 2020). Hence it will be right to
say that the size of the organization plays a large role in the amount invested in infrastructure
which will, in turn, affect the transition of the organization into digital transformation.
Leadership can also utilize available resources for greater productivity with the aid of enabling
technologies (Manavalan & Javakrishna, 2019).

4.1.11 Factors related to Data Governance

Data Governance (DG) refers to the ways of ensuring that data gathered within the system is
interpreted, securely stored, and safely transmitted when necessary. Data governance begins
from the point where data is retrieved from the various actors within the system. It is then
analyzed for proper understanding before it is stored (Bevilacqua, et al., 2017). Data capture is
currently a major limitation in the journey of organizations to digital transformation. When
properly extracted data becomes a useful tool that assists the leaders in decision making (Choi,
et al., 2017). It is the smooth and consistent flow of data that ensures proper communication
and makes tracking easy for the operators within the system (Temel & Ayaz, 2019). When
appropriate data is collected, correct speculation is made which leads to better results. Proper
and useful information is obtained where the right data is accessible. Efforts must be made for
data collected and stored in the cloud to be analyzed and further integrated into the system
(Qin, et al., 2017). For a successful transition, the organization must be able to analyze available
data while ensuring that it is shared appropriately within the system to those that need it (Mittal,
et al., 2019). Previously, using the conventional method, data management was easy with few
data aggregates. Today, however, with digital transformation, data collection is from several
sources which have resulted in lots of complications. This is because of the issues that arise as
the users within the system try to analyze and interpret it for accurate understanding. This
information can be obtained from both internal sources (production department, the
administrators, etc.) and external sources (suppliers, customers demand, etc.). Data
management plays a vital role in the choices made by management within the organization
which includes policies and techniques to ensure that the system is effective and efficient
(Bevilacqua, et al., 2017).

28
Enabling technologies to make data connectivity, collection, and transmission possible which
enhances decision making. Technologies such as “Cloud and Big data” could be viewed as
sources of energy in digital transformation while the mastermind can be seen as “IoT”
(Manavalan & Javakrishna, 2019).
With data management, the system can be observed and actual happenings within the system
can be recorded. This makes it possible to better comprehend and investigate occurrences
within the system which enables the actors to make relevant changes (Ruiz Zuniga, et al.,
2017).

Below is a table showing the complete list of all factors discovered from the literature. These
factors were grouped based on their level of similarities and later categorized into eleven (11)
key factors.

Table 3 Factors and sub-factors of DT with sources

Factors Sub-factors Sources

Organizational culture • Maintained Temel and Ayaz (2019)

Communication
• Readiness of cultural, Schumacher, et. al (2019)
strategic,
organizational, and
technical aspects
• Organizational culture Santos and Martinho (2020)
• Communication Santos and Martinho (2020)
network for a large
amount of data traffic
Pacchini, et. al (2019)
• Standardization of
Communication
• Communication Ruiz, et. al. (2017)

• Preparedness to Merhar, et. al. (2019)

understand analytics,
sensors, etc
• Usefulness and Mittal, et. al (2019)
sensitivity of industry
4.0 transformation

• Innovation Wagire, et. al (2020

Santos and Martinho (2020)

• Working environment
• Environment
• Standards
Choi, et. al (2017) /Merhar,
et.al (2019)
Syn and Welo (2016) /
Manavalan
and Jayakrishna (2019)
/Mittal, et. al (2019)

29
Organizational structure • Organizational
structure
• Company size
• Planning
• Value creation
• Flexibility capability
• Coordination
• Creativity and labor
enrichment
• openness and change
responsivity.
• Reconfigurable layouts
• Integration of products
with other systems
• Capacity of agile
• reconfiguration of
products
People and Organizational
Competence • Workers
• People and culture
• People/employees
• Workforce
qualification
• Personnel empowered
to organize and collect
data
• Participation
• Social Influence
• Workers
• Employees
• Skills acquisition
30
Santos and Martinho (2020)
Santos and Martinho
(2020) / Buer et al., (2020)
Ruiz, et. al. (2017)
/ Yildirim & Demirbağ,
(2020)
Synnes and Welo (2016) /
Yildirim & Demirbağ,
(2020)
Yildirim & Demirbağ
(2020)
Ruiz, et. al (2017)
Santos & Martinho, (2020)
Santos & Martinho, (2020)
Santos & Martinho, (2020)
Santos & Martinho, (2020)
Santos & Martinho, (2020)
Santos & Martinho, (2020)
Choi, et. al (2017)
Wagire, et. al (2020)
Santos & Martinho, (2020)
Santos & Martinho, (2020)
Pacchini, et. al (2019)
Merhar, et. al (2019)
Merhar, et. al (2019)/
Manavalan
and Jayakrishna (2019)
Choi, et. al (2017)
Schumacher, et al., (2019)
Santos & Martinho, (2020)
 • Innovative education
and training
• Knowledge/lack of Mittal, et. al (2019)
knowledge
Qin, et. al (2017)/Nausch,
et. al (2020)

• Organizational IT
competence
• Adequate knowledge Buer, et. al (2020)

• Awareness/Awareness Merhar, et al (2019)/

of change
• Intelligence/Intelligent
control
• Consciousness
• Knowledge of the
problems to be solved
• Appropriate knowledge
• Innovative education
and training
• Awareness of change
• Lack of know-how
• Skepticism
• Support and knowledge
in skills development
Wagire, et. al (2020)
Mittal, et. al (2019)/Qin, et.
al (2017)
Qin, et. al (2017)/Mittal, et.
al (2019)
Qin, et. al (2017)
Schuh, et. al (2017)
Pacchini, et. al (2019)
Mittal, et. al (2019)
Merhar, et. al (2019)
Schiffer, et. al (2019)
Ruiz, et. al (2017)
Ruiz, et. al (2017)

Characteristics, Selection & • Usability Merhar, et. al (2019)

Integration of Digital Technologies
• Simplification Merhar, et. al (2019)
• Integration of MES and Temel and Ayaz (2019)
ERP
• Ease of use of Merhar, et. al (2019)
technology
• General attitude Merhar, et. al (2019)
towards Digital
Assistance
• Flexibility/ absorb new Synnes and Welo (2016)
technologies
• Flexibility of
Ruiz, et. al (2017)
technology
Santos and Martinho (2020)/
• Technical/Technical
Bevilacqua, et. al (2017)
capabilities related to
products and services
Qin, et. al (2017)
• Automation Mittal, et. al (2019)

31

Infrastructural investments
External Support
• IT-based production
management systems
• Intelligent control
• Technology should be
treated at the strategic
level
• Simple
• Building blocks
• Technology design
• Differences between
the devices
• Essential technologies
• Company size/
company size affecting
investment
• Capital accumulation
• Capital investment
• Fear high
implementation costs
• Infrastructure for
digital systems
• Suppliers
• Competition
/competitors
• Globalization
• Laws and regulations
• Competitiveness
• Provision of
manufacturing services
• Services management
• Supplier management
• Supplier collaboration
• Customer response
adoption
32
Mittal, et. al(2019)
Pacchini, et. al (2019)
Jung, et. al (2021)
Mittal, et. al (2019)
Merhar, et. al (2019)
Merhar, et. al (2019)
Jung, et. al (2021)
Yildirim & Demirbağ
(2020)/ Buer, et al., (2020)
Yildirim & Demirbağ
(2020)
Ruiz, et. al. (2017) /#127
Schuh
Schiffer, et. al (2019)
Pacchini, et. al (2019)
Bevilacqua, et. al (2017)
Yildirim & Demirbağ
(2020)
Mittal, et. al (2019)/
Yildirim & Demirbağ
(2020).
Mittal, et. al (2019)
Synnes & Welo (2016)
De Carolis, et. al (2017)
Manavalan
and Jayakrishna (2019)
Manavalan
and Jayakrishna (2019)
Manavalan
and Jayakrishna (2019)
Manavalan
and Jayakrishna (2019)
Data Security
Design of Production System
(DPS)
Organizational Strategies
• Protection of data
• Work & data safety
• Security
• Privacy issues
• Security of assets and
data protection
• Production planning
• Production sites
• Factories and processes
• Lean production &
maturity
• Productivity level
• Customization
• Material handling
system
• Traceability
• Productivity
• Manufacturing line
• Processes
• Factory construction
part
• Smart Mittal, et. al (2019)
products/parts/materials
• Iterative product and
process development
• Add content to
Strategies
• Identification of
company’s position in
the strategic landscape
• Models and goals
• Strategies
• Roadmap
• Leanness strategy
• Measurements using
benchmarks
• The right strategy for
lean & maturity index
33
Merhar, et. al (2019)
Merhar, et. al (2019)
Ruiz, et. al (2017)/Choi, et.
al (2017)
Ruiz, et. al (2017)
Santos & Martinho, 2020
Bevilacqua et. al (2017)
Bevilacqua et. al (2017)
Santos & Martinho (2020)
Yildrim
and Demirbag (2020)
Yildrim
and Demirbag (2020)
Temel & Ayaz (2019)
Merhar, et. al (2019)
Temel & Ayaz (2019)
Temel & Ayaz, 2019
Choi, et. al (2017)
Choi, et. al (2017)
/ Schumacher, et. al (2019)
Choi, et. al (2017)
Synnes and Welo (2016)
Sjobakk (2018)
Sjobakk (2018)
Sjobakk (2018)
Yildrim
and Demirbag (2020)
/ Santos and Martinho
(2020)/ #98 Wag
Yildrim
and Demirbag (2020)
Yildrim
and Demirbag (2020)
Yildrim
and Demirbag (2020)
Yildrim
and Demirbag (2020)
Mittal, et. al (2019)
 • Lean production &
maturity Sjobakk (2018)
• Alignment with
business strategy Sjobakk (2018)
• digital vision Synnes and Welo (2016)
• Processes that facilitate
teamwork
Nausch, et. al (202)
Manavalan
• Readiness model and Jayakrishna (2019)
• Sustainable
Development Synnes and Welo (2018)
Perspective
• Sustainable growth/
right unit cost
Schumacher, et. al (2019)
• Analyzing products
Qin, et. al (2017)
• Integration and analysis
Manavalan
• Strategic sourcing and Jayakrishna (2019)
Manavalan
• Cost management and Jayakrishna (2019)

Organizational Leadership • Improving management Bevilacqua et al. (2017)

capacity and efficiency
• Leadership Santos & Martinho, 2020).
• Managerial capabilities Santos & Martinho, 2020).
related to
organizational strategy
and culture
Yildirim & Demirbağ, 2020
• Management
Manavalan
• Management Strategy and Jayakrishna (2019)
and Organization
Perspective Ruiz, et. al (2017)/Choi, et.
• Good/Adequate al (2017)
management

• Uncertainty of Ruiz, et. al (2017)

management and
stakeholders
• Lack of transparency Schumacher, et. al (2019)
makes benchmarking
difficult
• Operational Manavalan
management and Jayakrishna (2019)

Data Governance (DG) • Data collection Qin, et. al (2017)

• Data sharing systems Mittal, et. al (2019)

34
 • Data analytics Mittal, et. al (2019)
• Data/information Pacchini, et. al (2019)
organized and
maintained in secure
digital systems
• Data aggregation
Bevilacqua, et.al (2017)
• Collection and
Nausch, et. al (2020)
utilization of internal
and external data
• Continuous data flow
Temel and Ayaz (2019)
• Level of information Merhar, et. al (2019)
• Information collection Bevilacqua, et.al (2017)
• Early and consistent Merhar, et. al (2019)
information
• Flow of information Merhar, et. al (2019)
• Agile information share Merhar, et. al (2019)
across the organization

4.2 Relationship between the factors influencing digital transformation

Based on this research, it is obvious that some of the factors are interrelated. Data governance
for example, which deals with how data is acquired, analyzed, and transmitted, is essential in
decision making for the management (Bevilacqua, et al., 2017). It helps in the planning,
managing, and designing of the production system (Bevilacqua et al., 2017). The organization’s
strategy must include the safety and security of all data obtained (Merhar, et al., 2019). Apart
from the usage of data in designing the right production system, the right strategy is needed.
Without the right strategy, the system design may not yield its required result (Yildirim &
Demirbağ, 2020). That is why it is important to have the right management with a good
strategy. The management’s strategy will to a significant extent determine the level of result
that will be obtained and how profitable it will be (Yildirim & Demirbağ, 2020). The strategy
of the management will be the determinant factor in the types of technology that the
organization will invest in and the processes that will be employed. Here, the management may
take into consideration the size of the organization which to a large extent determines its
budget. The organization cannot invest in infrastructures beyond its budget (Yildirim &
Demirbağ, 2020).

Apart from the data governance and the management of the organization, the customers must
be considered in the design of the production system. Their satisfaction is uppermost, and
everything must be done to ensure that (Choi, et al., 2017). The management & leadership must
decide how the customers will be satisfied and how value would be created for them while also
considering the strategy that will be employed to derive that (Yildirim & Demirbağ, 2020).

Organizational culture is linked with how the workers within the organization behave. It affects
the communication level of communication and affects the choice of technology made (Santos
& Martinho, 2020). The organizational structure affects the customers, the workers, and how
they behave. It influences the competence of the workers (Santos & Martinho, 2020).
Organizational leaders have the responsibility of deciding the qualifications and competence
35
of workers that will assist the organization to achieve its goals. They are also embedded with
the responsibility of training them to attain the level of competence that is required (Yildirim
& Demirbağ, 2020).

36
 5 Results from Survey

Here the authors will present the results derived from the survey. We will consider the factors
and validation of the ARTO model.

5.1 Overview of participants and companies

The survey had a total number of 29 respondents. However, certain questions were skipped by
some respondents. In this section, we will examine the educational qualification of the
respondents, their job profile, years of experience, company size, the company’s type of
industry, and the type of products produced within the respondents’ company (Kim, et. al.,
2018).

5.1.1 Educational Qualification

This exposes the level of competence that the participants possess as well as the field of studies.
A total of 28 respondents revealed their educational qualifications participants possess different
educational backgrounds (as seen in fig 8) ranging from physics to management, engineering,
economics, etc. For easy classification, the authors have classified the respondents into four
categories: upper secondary school, Bachelor's, Master's, and Ph.D.
64% of respondents were holders of a master’s degree while 21% possessed a Bachelor’s
degree. However, some respondents failed to indicate their specific fields hence the inclusion
of words such as M.Sc., and engineer.

Educational Qualification

Masters (M.Sc)

Bachelors (B.Sc)

Upper Secondary school

PhD

0 2 4 6 8 10 12 14 16 18

M.Sc Engineer Physics Aeronautical

Industrial & Mgt Production systems Mechanical Industrial Economics
Technical Automation Innovation Technical Material Science

Figure 4 Educational qualification of the survey participants

37
5.1.2 Job Profile

In this section (Table 4), 27 respondents indicated their job profiles. Job profiles reveal the skill
level of respondents, tasks, and duties performed within their various organizations. Their job
profiles cut across all aspects of the manufacturing industry. It includes strategists, technicians,
production planners, research leaders, co-ordinators, managers just to mention a few. It also
includes students with less experience and global leaders with lots of experience.

Table 4 Job profile of the survey participants

S/N JOB PROFILE TOTAL
1. Production planner 1
2. Energy Strategics 1
3. Ph.D. student 2
4. Project Management & Production Development 1
5. Supply Chain 1
6. Sales manager & global account manager 1
7 Sales & Operations Manager 1
8. Leader in data & analytics 1
9. Research Leader/ Senior R&D engineer 2
10. Manager Operations Development 1
11. Global manager 1
12. Managing director 1
13. Digital leader 1
14. Program manager 1
15. Technical field sales 1
16. Chief Operating Officer (COO) 1
17. Development engineer 1
18. Innovation Leader 1
20. Logistics & production developer 2
21. Engineer 1
22. Director manufacturing engineering 1
23. Senior Advisor 1
24. IP Management 1
25. Maintenance technician 1

5.1.3 Years of Experience

Years of experience, reveal the total number of years invested in what the respondents do. It
further shows the capabilities, and expertise of respondents in digital transformation. A total of
27 respondents included their years of experience in the survey. This was later categorized into
five main categories (Table 5) which are: 1 – 5 years with a total number of 17 respondents, 6
– 10 years with 6 respondents, 11 – 15 years with 3 respondents and the respondent with over
20 years of experience was only one. While most of the participants have less than 6 years of
experience the inclusion of those in the other categories helps create a balance that produces a
rich response from the participants. It is important to also state that these respondents with less
than 6 years of experience had an average of 2.9 years which is approximately 3 years.

38
Table 5 Years of experience of the survey participants
S/N Years of experience Number of respondents
1. 1–5 17
2. 6 – 10 6
3. 11 – 15 3
4. 16 – 20 0
5. 20 years and above 1

5.1.4 Company Size

The company size had a total of 27 respondents. The size of the company will assist the authors
in making a definite judgment. This is because the practice of digital transformation is more
evident in enterprises and large companies. The authors grouped all responses into four
categories. This includes Small, Medium, Large, and Enterprise. 65% of participants are from
companies with over 1000 employees which provides a broader perspective on digital
transformation.
Table 6 Company size
Company size Number of employees Number of responses
Small 0 – 250 4
Medium 251 – 500 0
Large 501 – 1000 5
Enterprise 1001 and above 18

5.1.5 Type of Industry

This is essential for the authors to have a result that applies to all sections of the manufacturing
sector. In this section, 28 respondents responded. Their responses (fig 9) included construction,
energy, mining, pharmaceutical, telecommunications, automation, mobility, just to mention a
few. The automotive industry which is the largest had a total of 18 respondents while 4 others
followed closely with a total of 11%. This presents an interesting aspect of this survey. The
closeness that exists between the various industries provides answers from various industries
summed up as one.

39
 Type of Industry

4% 4% 7%
7% 4%

4%
4% 18%

11%

4% 11%

11%
11%

Heavy duty Energy company Automative Pharmaceutical

Electronics Car/Mobility Telecommunications General Manufacturing
ST Harness manufacturing mining Casting foundry
construction

Figure 5 Type of industry where the survey participants are working

5.1.6 Type of Products Produced by the Company

The type of product determines the level of digital transformation that may be required by the
organization. This is true as certain products produced under the conventional system could be
burdensome to the employees who may have to constantly lift heavy objects.

A total of 27 respondents included this information in the survey. Apart from 3 respondents
(Table 7) whose companies produced heavy-duty trucks, and 2 respondents producing
medicine and pharmaceuticals, all companies had different products. This is seen as an aspect
that will positively impact the result of the report. This is because the approach used by
companies to attain a digitalized process will differ when the products are not the same.

Table 7 Type of products produced by the company

S/N Product types Total respondents
1 Heavy-duty trucks 3
2 Heat, electricity, water treatment, water cleaning, 1
heating, and cooling
3 Axles and transmissions 1
4 Automation and drives products including motors 1
5 Automation, digitalization, and electrification 1
6 Cars 1
7 Communication equipment 1
8 Products for Energy, Marine and Food & Industry 1
9 Automation equipment 1
10 Mechanical assembly and harness 1
11 Electrical equipment 1
12 Metal 1
13 Product distributors 1

40
 14 Mechanical components such as gears, shafts, etc. 1
15 Raw materials 1
16 Components for automotive, process and energy 1
systems
17 Construction Equipment 1
18 Converters for trains 1
19 Customer specific. Low volume and High mix products 1
20 Molecular diagnostics 1
21 Commercial vehicles 1
22 A great number of pharmaceuticals/medicines 2
23 Paper and packaging 1
24 Gearboxes, marine propulsion systems 1

5.2 Key factors affecting digital transformation

Key factors affecting digital transformation

25 12,50%
3 12%
17%
25%
17%
13% 13%
33% 29% 4 4
37,50% 5 6 3 3
7 26% 22%
20 9 8
37,50% 37.5%
21% 6 5
9 6 42%
29% 37.5% 5 0%, 0
10
15 33%
37.5%
9
7 9 22% 27%, 4
8 29% 26%, 6 5
37,50% 33%
17%
10 0%, 0
20%
46% 4
9 7 8%, 2
35% 5
12.5% 5 26%
25% 11 29% 6 8 33%
3
5 8%, 2 6
17%
4 25%, 6
8%, 2 17%, 4 7 5
8%, 2 4%, 1 12.5%, 1 4%, 2
4%, 1 4%, 1 12.5%, 3 4%, 1 4%, 1 4%, 1 9%, 1
0

1= Non significant 2= Less significant

3= Somewhat significant 4= Neither significant nor less significant
5= Somewhat significant 6= Significant
7= Highly significant

Figure 6 Key factors affecting digital transformation

To be able to distinguish the factors affecting DT, the participants were asked to rank the key
factors based on their level of significance. They had to rank from 1-7, where 1= Non-
significant, 2= Less significant, 3= Somewhat significant, 4= Neither significant nor less
significant, 5= Somewhat significant, 6= Significant, 7= Highly significant.

Data security received the highest percentage for highly significant (37,5%), followed by data
governance (33%) and then organizational leadership (29%). The organizational culture got
42% on significant and followed by three of the factors (people and organizational competence,

41
organizational structure and characteristics, selection, and integration of digital technologies)
that got 37,5% on significant.

5.2.1 Average rating on factors

AVERAGE RATING ON FACTORS

Data security 5.8
Data governance 5.7
Organizational leadership 5.7
Organizational strategies 5.7
People and organizational competence 5.6
Organizational structure 5.5
Organizational culture 5.4
Infrastructural investment 5.3
Characteristics, selection & integration of… 5.2
Design of production system 5
External support 5

4.6 4.8 5 5.2 5.4 5.6 5.8 6

Figure 7 Average rating on factors

The average rating gives an overview of all key factors and their scores (fig. 11). It goes further
to reveal the most significant key factor in digital transformation. Data security emerges with
the highest average rating of 5.8 out of 7. Data governance, organizational leadership, and
organizational strategies all followed with an average of 5.7 out of 7.

5.3 Details on each factor

This section of the survey was designed to identify the sub-factors that correspond with the
main factor based on responses from the participants.

5.3.1 Organizational Structure

ORGANIZATIONAL STRUCTURE

VALUE CREATION FOR CUSTOMERS 79.17%

OPENNESS AND CHANGE RESPONSIVITY 66.67%

FLEXIBILITY CAPACITY OF THE COMPANY 58.33%

CREATIVITY AND LABOR ENRICHMENT 37.50%

INTEGRATION OF PRODUCTS WITH OTHER 25%

SYSTEMS

Figure 8 Organizational structure

42
Based on responses from the participants (fig. 12), value creation for the customers is seen as
a very important aspect of the organization’s structure. It is also important to be open and
respond positively to change while ensuring that flexibility is maintained as the company
transitions to DT. Integration of products and creativity will be considered as non-subfactors
of organizational structure because of the low percentage score.

5.3.2 Organizational Culture

ORGANIZATIONAL CULTURE

READINESS OF CULTURAL, STRATEGIC, 83.33%

ORGANIZATIONAL, AND TECHNICAL…

PREPAREDNESS TO UNDERSTAND 62.50%

ANALYTICS, SENSORS, ETC.

INNOVATIVE ABILITIES 50%

WORKING ENVIRONMENT 50%

USEFULNESS AND SENSITIVITY OF 41.67%

INDUSTRY 4.0 TRANSFORMATION

Figure 9 Organizational culture

Organizational culture is mainly affected by its readiness level (fig. 13). The readiness of the
organization must be seen in all that is done both by the management and the workforce. It
encompasses the strategies of the organization, including the digital technologies to be
employed in analytics. The organization’s level of preparedness and readiness will in turn
impact the working environment and encourage innovative abilities.

5.3.3 People and Organizational Competence

PEOPLE & ORGANIZATIONAL

COMPETENCE

AWARENESS OF CHANGE WITHIN THE … 66.67%

WORKFORCE QUALIFICATION 62.50%

ORGANIZATIONAL IT COMPETENCE 62.50%

ADEQUATE KNOWLEDGE OF THE WORKFORCE 62.50%

INNOVATIVE EDUCATION AND TRAINING 58.33%

INTELLIGENCE/INTELLIGENT CONTROL… 41.67%

Figure 10 People and organizational competence

43
The sub-factors from the literature (fig. 14) correspond largely with the participants' points of
view. The participants believe that the creation of awareness among the workforce is more
important than their educational qualifications and every other sub-factor. This we believe is
because awareness helps create preparedness for the expected change which in turn makes it
easy to acquire all necessary skills for the attainment of the set goal.

5.3.4 Characteristics, Selection, and Integration of Digital Technologies

CHARACTERISTICS, SELECTION &

INTEGRATION OF DIGITAL TECHNOLOGIES

TIME SAVING OF PROCESSING AND… 79.17%

RELIABILITY AND PERFORMANCE OF THE… 75%

EASE OF USE OF TECHNOLOGY 58.33%

SUPPORTING TOOLS SUCH GUIDELINES FOR… 54.17%

IT-BASED PRODUCTION MANAGEMENT SYSTEMS 54.17%

INTEROPERABILITY WITHIN THE SYSTEM 45.83%

AUTOMATION OF THE ENTIRE PROCESS 45.83%

TECHNOLOGY DESIGN 37.50%

Figure 11 Characteristics, selection, and integration of Digital Technologies

In selecting and integrating digital technologies, time-saving is the utmost sub-factor (fig. 15).
Afterward, the reliability of the technology must be considered. This is because the major
benefits that DT provides are time reduction and better quality (Temel, et al 2019). Based on
this response, we can conclude that the design of the technology is not important in this section.

5.3.5 Infrastructural Investments

INFRASTRUCTURAL INVESTMENTS

INFRATRUCTURE OF DIGITAL SYSTEMS

78.26%

CAPITAL INVESTMENT OF THE COMPANY

52.17%

THE SIZE OF THE COMPANY

47.83%

Figure 12 Infrastructural Investments

44
As seen in fig. 16, the size of the company is of less significance as regards infrastructural
investment. This is contrary, however, to the belief that the size of the company plays a major
role in its journey to DT (Manavalan & Javakrishna, 2019). Infrastructures for digital systems
are of great necessity and must be invested in.

5.3.6 External Support

EXTERNAL SUPPORT

SUPPLIERS OF THE TECHNOLOGIES 66.67%

CUSTOMER RESPONCE ADOPTION 58.33%

MARKET COMPETITION INFLUENCING CUSTOMER 50%

CHOICE

LAWS AND REGULATIONS IN THE COUNTRY WHERE 41.67%

THE COMPANY IS BASED

GLOBALIZATION WITHIN THE WORLD ECONOMY 37.50%

Figure 13 External support

The participants believe that the suppliers are the most important sub-factor (fig. 17) with
regards to the external support. The organization must also adopt methods that will aid in
responding promptly to the customers' requests as the market competition constantly influences
the choices of the customers. Globalization can be ignored as a sub-factor under external
support.

5.3.7 Organizational Strategies

ORGANIZATIONAL STRATEGIES

ROADMAP EMPLOYED BY THE 73.91%

ORGANIZATION

MODELS AND GOALS OF THE COMPANY 69.57%

PROCESSES THAT FACILITATES TEAMWORK 65.22%

INTEGRATION AND ANALYSIS OF 56.52%

COMPANY´S PROCESSES

Figure 14 Organizational strategies

45
The roadmap employed by the organization has the highest percentage (fig. 18). Participants
appreciate a well-planned organization. Models and goals of the company end up in second
place. The organization’s strategies must encourage teamwork while ensuring that the goals
are integrated into the company’s processes.

5.3.8 Data Security

DATA SECURITY

SECURITY OF ASSETS AND DATA PROTECTION 86.96%

WORK ANDA DATA SAFETY 78.26%

PRIVACY ISSUES WITHIN AND WITHOUT THE 60.87%

COMPANY

Figure 15 Data security

Security of assets and data protection together with work and data safety has a high percentage
(between 78.26% and 86.96%) while privacy issues within and without the company ends up
relatively high (60.87%). All assets must be protected which ensures that all data acquired are
securely kept.

5.3.9 Design of Production System (DPS)

DESIGN OF PRODUCTION SYSTEM (DPS)

FACTORIES AND PROCESSES 73.91%

PRODUCTIVITY LEVEL OF THE COMPANY 65.22%

MATERIAL HANDLING SYSTEM 56.52%

PRODUCT CUSTOMIZATION 47.83%

Figure 16 Design of Production System (DPS)

46
In the field of “Design of Production System,” factories and processes are considered to be
most significant. Closely followed by the productivity level of the company (Yildirim and
Demirbag, 2020). The productivity level of the company affects the design of the company’s
production system.

5.3.10 Organizational Leadership

ORGANIZATIONAL LEADERSHIP

MANAGERIAL CAPABILITIES RELATED TO 86.96%

ORGANIZATIONAL STRATEGY AND CULTURE
IMPROVE MANAGEMENT CAPACITY AND 60.87%
EFFICIENCY
UNCERTAITY OF MANAGEMENT AND 43.48%
STAKEHOLDERS
Figure 17 Organizational leadership

According to the survey participants, managerial capabilities related to organizational strategy

and culture (fig. 21) plays the biggest role by as much as 86.96%. This reveals that the
capability of the management will greatly influence the transition to DT. Uncertainty of
management and stakeholders will be considered insignificant to this key factor. Improvement
of management capacity and efficiency is essential as the capabilities of the leadership can be
improved upon.

5.3.11 Data Governance

DATA GOVERNANCE

DATA ANALYTICS TECHNIQUES 78.26%

COLLECTION AND UTILIZATION OF INTERNAL 69.57%

AND EXTERNAL DATA
DATA/ INFORMATION ORGANIZED AND 60.87%
MAINTAINED IN SECURE DIGITAL SYSTEMS

DATA SHARING SYSTEMS 60.87%

Figure 18 Data governance

Data analytics techniques end up at the top and are considered very significant. After the
collection of data, it must be well analyzed if it is to be well understood. Data analysis is
incomplete where it is not safely and properly transmitted to the users.

5.4 ARTO model from Survey

The ARTO- model below reveals the various key factors and their percentages based on
responses from participants. Factors with less than 50% were ignored.

47
Figure 19 The ARTO- Model based on the results from the survey

5.5 Additional comments from the survey

The survey participants were allowed to include thoughts that could affect each key factor. The
participants believe that a holistic perspective that focuses on how digitalization affects other
processes such as production, sales support, etc. is crucial and should be below the factor
“organizational structure”. This is often ignored or forgotten during risk assessment. They also
mentioned that coordination between different sites and balance between organizational
resources is crucial. A continuous evaluation by management and team is required for a
successful transition.
Furthermore, the participants claim that “organizational culture” is crucial and thus should be
led by example from the management who must involve people at all levels in decision making
as this will lead to the short-term and long-term success of digitalization strategies. They also
claim that openness and transparency on analytics and reporting inadequate shortcomings are
vital.
With regards to the factor “people and organizational competence”, the participants stated that
competence is not only knowledge and skills, but that it also means values and attitudes towards
change from management. Development on all levels and a change-driven competence are
required.

48
For the factor “Characteristics, Selection, and Integration of Digital Technologies” the
participants add that it is up to each responsible unit to connect to a larger store where they use
a digital tool to get there, instead of sticking to their business and letting digitalization be a side
player outside their primary business. Furthermore, they mean that value-added, and ease of
use must be evaluated for all concerned. Here it is important to carefully consider human-
machine interaction during emergencies. They also added that “infrastructural investment”
should consider how fast hardware and software change, maintenance issues, and license. It
also has to do with the interoperability between old and modern technologies/applications.
With regards to “External support”, the participants think that customers are crucial but not the
suppliers and competitors when it comes to implementation of digitalization as it is already
visible what the competitors and the suppliers have available. They suggest that it would be
better to change the name of the key factor to “external communication”. They also added that
for a company that has in some way started the digitalization process, the ranking should be as
follows: Customers- 7, Suppliers- 6, and Competitors-4. When considering these key factors it
is crucial to find out the exact level of the company’s digitalization, geographical location of
the company, whether it is situated in a developing country or an industrialized country.
Furthermore, they mean that companies must purchase guidelines for engaging the right
partners if the company does not have internal competencies. The participants further stated
that contracts that are signed with less competent partners lead to organizational and individual-
based digital stress. In the field of “organizational strategies”, participants suggest that there is
a need for strategies, resources, scope experiments, and back- up plans to solve organizational
challenges. In considering “data security” participants believe that most often this is ignored.
They claim that unprofessional partners can damage the company´s brand hence the need to
think logically about who has access to the data and not wait for EU- rules. Some other
participants however argue that it is important to consider laws and regulations before taking a
step toward digitalization. Adding that there is a need for backup plans that must be rehearsed
by role-plays. Furthermore, when it comes to “Design of production system” they mean that it
is how you see your product or service that determines it. This is an extremely critical point as
new systems and old traditional production methodologies will only add complexities and
unknown root causes, this will lead to blaming human factors instead of analyzing human-
machine interactions. Production flow changes and new technologies must be considered. In
the field of “Organizational leadership” the participants believe that management turnover must
be analyzed. This is because many organizations fail when people who are responsible for each
part of the project leave and are replaced by others. Thereby, they mean that management
accountability is crucial. The participants also added that companies must include cyber
security in the field of “data governance” when they are outsourcing IT- development and
support services to external partners.

5.5.1 General comment from the survey

Participants were also allowed to add any general comments. They claimed that it is crucial to
have the needs of the company and to clarify the problems that the company must be able to
solve with the help of digitalization. They added that firstly it is important to determine whether
the budget is realistic or unrealistic. Then a project plan must be created, and managers must
involve people from all functions from start. In addition, managers and people involved in the
implementation of digitalization must get adequate training. Furthermore, a good balance is
required in the team. People should listen to each other and react professionally to feedback
and critical questions. It is required well-documented risk assessments and risk reduction
measures before the start and after completion of projects. In addition, it requires good

49
communication with all concerned and flexibility to test new technologies. Respect and
accountability of people between people at all levels is a major factor.

50
6 ANALYSIS AND DISCUSSION

The authors will start this section by presenting the overall results of the survey and continue
with a comparison of the SLR and the survey results while considering the theoretical and
practical implications.

6.1 Descriptive analysis of the SLR

In this section, the authors will be examining topics such as factors from literature, article type,
year of publication, and types of industry to further analyze and understand the level of effort
made by researchers about digital transformation. With descriptive analysis, the authors can
easily analyze and evaluate these areas based on all literature studied (Kim, et. al., 2018).

6.1.1 Factors from literature

All literature examined in this study was in two categories. While some authors discussed the
factors that are required for the adoption and implementation of digital technologies to be
successful, others were careful to mention some basic criteria that will result in digital
transformation not being successful.

Outcome of the factors on DT

Successful 17

Unsuccessful 2

0 2 4 6 8 10 12 14 16 18

Figure 20 Successful and unsuccessful outcomes of the factors

From figure 3 above, it is obvious that researchers have spent more time researching factors
that will make digital transformation effective and successful than those that will make it
unsuccessful. In the figure above, it is evident that over 80% of the articles focused on the
successful outcome of digital transformation. In as much as this is good, the authors believe
that there is a gap in this area which is because there is a need for practitioners of digital
transformation to have balanced information on factors that make for successful and
unsuccessful transition. This balance will help avoid certain pitfalls which are particularly
important as we differentiate between companies that have started the transition and those that
are yet to start.

51
6.1.2 Article Type

In this category, the authors have examined the concluded articles which were categorized into
empirical studies, surveys, empirical and SLR, LR, conceptual papers, surveys, workshops,
systematic mapping studies (SMS), and process models. The article type is important for the
authors to evaluate work currently carried out by various authors in research regarding digital
transformation. These articles help reduce errors and make it easy to avoid bias in the final
analysis. In figure 3, the authors observed that researchers have spent more time conducting
empirical studies which the authors think is positive as information obtained has been gotten
from real practitioners on the field. However, the authors believe that there is a need to engage
other article types more to proffer solutions to the already existing problems that manufacturing
companies are currently facing in their quest to implement digital transformation.

Article type
Empirical 8
Empirical + SLR 5
Conceptual 3
Case study 1
Survey 1
SMS 1
LR 1
Workshop 1
Process model 1

0 1 2 3 4 5 6 7 8 9

Figure 21 Article types from literature

6.1.3 Year of publication

The authors have also examined the year of publication of the various articles ranging from the
year 2005 to 2021. It was noted that the year 2017 had a rise in the number of articles published
on factors affecting DT in manufacturing companies compared to previous years. However, in
2018 there was a huge decline in the number of articles. 2019 was at its peak while 2020
experienced a decline. It is currently difficult for the authors to state the factors responsible for
the rise and decline that is currently being experienced.

Year of publication
2019
2020
2017
2021
2018
2016
2014
0 1 2 3 4 5 6 7 8 9

Figure 22 Year of publication of articles

52
6.1.4 Type of industry

The authors have critically examined the types of industry for which the empirical studies were
conducted. This is essential for the authors to clearly understand how extensive the various
research has been. The authors observed that empirical studies have been conducted mainly
with discrete goods ranging from automobiles to mobile phones, tires, and so on. The authors
believe that there is a need for more extensive research that will cover all aspects of the
manufacturing industry. This will enable all practitioners within the manufacturing industry to
have access to relevant information that applies to them.

S. No Titel Source
1 Turkish white goods Yildirim and Demirbag
manufacturing companies (2020)
2 Auto-component Wagire, et. al (2020)
manufacturing company
3 Tire manufacturing Temel and Ayaz (2019)
4 Autoflex project Synnes and Welo (2016)
5 Integrative Production Schuh, et. al (2017)
Technology for High- Wage
Countries
6 Austrian Manufacturing Schumacher, et. al (2019)
company of discrete goods
7 Mobile & wearable devices Merhar, et. al (2019)
8 International Manufacturing Ruiz, et. al (2017)
Company (Siemens and
BMW)
9 Manufacturer of automotive Santos and Martinho (2020)
tires
10 Case study in an Italian Bilge and Severengiz (2019)
Manufacturing Company
11 Italian medium Enterprise Bevilacqua, et.al (2017)
12 Quality inspection Jung, et al (2021)
equipment
Figure 23 Type of Industry

6.2 The ARTO Model based on SLR

Factors affecting digital transformation identified from the literature were categorized into
eleven (11) main factors. The key factors were categorized into four sections for easy
identification and application. The ARTO model which gives a visual representation of the
relationship that exists between these key factors reveal four stages that practitioners of DT can
engage to attain success in their transition. The sections are awareness, readiness, technology
selection and relevance, and operations-related factors.

53
 •External Support •Organizational Structure
•People & Competence •Organizational Culture
•Organizational Culture •Organizational Leadership
•Organizational Structure •Organizational Strategies
•Organizational Strategies •People & Organizational
Competence
•Infrastructure Investment
Awareness Readiness
Related Related
Factors Factors

Technology
Operations Selection
Related &Relevance
Factors Factors

•Data Security •
•Data Governance (DG)
•Design of Production •Characteristics, Selection &
System (DPS) Integration of Digital
Technologies
•Infrastructure Investment

Figure 24 Factors affecting digital transformation model (ARTO model)

6.2.1 Awareness Related Factors

This is the first quadrant to the left-hand corner of the circle. It takes care of all the factors that
influence the management and stakeholders to make the decision to transit and digitally
transform the company. External factors such as competitors, customers, and so on are the
major pointers to the need for a transition. The customer’s demand, better quality from
competitors, and increase in competition in the market are some of the factors that influence
the decision of the organization to do things better and use technologies that will deliver faster
and more efficient results.
Another aspect of this is the fact that the company is usually not sure of the strategy to employ
at the awareness stage. The people and their level of technological competence at this stage are
also brought to question while the structure and culture of the organization determine to a
significant extent how the company will go about the transformation.

6.2.2 Readiness Related Factors

After the awareness for digital transformation has been created and the related factors have
been considered, the next step is the readiness phase. This is the second quadrant of the model.
At this phase, the company begins to assess itself to ascertain if it is ready for digital
transformation or not. It is important to state that this is the step where adjustments are made
to determine the company’s level of readiness for the transformation (Schumacher, et al.,
2019). For instance, the management and leaders may decide to empower the workers
intellectually by training and educating them to be able to handle the transformation (Mittal, et

54
al., 2019), invest in necessary infrastructures (Paschou, et al., 2018), develop the right strategy
for the transformation and where necessary, create a digital vision (Synnes & Welo, 2016) if
they do not have one and may need to create a digital roadmap (Synnes & Welo, 2016). This
will involve planning (Buer et al., 2020) and proper coordination (Ruiz Zuniga, et al., 2017). It
is expected that the company is flexible enough to accommodate all necessary changes that
must be made to accommodate the transformation. Another vital aspect of this step is
communication. It must be consistent, continuous, and well understood (Mittal, et al., 2019;
Temel & Ayaz, 2019). There must be adequate preparation to guarantee that the company will
not adopt ad hoc strategies in its digital transformation journey (Wagire, et al., 2020).

6.2.3 Technology Selection and Relevance

This is the third quadrant on the right-hand side. It is the step where the right technology that
is relevant to the company is selected. The right technology must be chosen for effectiveness
and to avoid time and effort wastage which could lead to frustration. The technology should be
simple, easy to use (Merhar, et al., 2019), quite affordable (Temel & Ayaz, 2019), and time
effective (Merhar, et al., 2019). Afterward, the right and most appropriate technology (Merhar,
et al., 2019) is adopted for the transition.

6.2.4 Operations related Factors

This is the last quadrant in the ARTO model. At this stage, the technologies have been selected
and are already in use. The use of various technologies usually results in the acquisition of a
huge amount of data. The data acquired must be well analyzed, safely communicated, and
stored without interruptions. The safety and security of data are of high importance to the
company, and they must ensure that preference is given to it. Information should flow freely
and consistently within the company for smooth operations within the system (Merhar, et al.,
2019).
With the use of the selected technologies, material handling becomes easy, product
customization becomes a part of the process (Temel & Ayaz, 2019). The entire production
process can be traced from beginning to the end and the level of productivity will rise (Choi,
et al., 2017; Merhar, et al., 2019).

6.3 Overall results of the survey

With the participant's percentage rankings on the various factors and their additional
comments, we can see that they lack well planning and structure from the management side.
Furthermore, it turns out that great emphasis should be placed on the involvement and
participation of all parties within the company for the transition to digitalization. However, a
budget review is required to find out what is required for digital transformation. In addition,
training should be if leads people to create curiosity and learn about the benefits of
digitalization. It also requires cooperation with everyone involved within the company and
finally, a risk assessment must be done.

55
6.4 Comparison of the SLR and the Survey results

The model below is developed after the comparison of the SLR and the survey. Factors that
were considered appropriate from both the SLR and the survey were selected. Furthermore,
factors that received a vote from a range between 65%- 100% from the survey were also
selected, such as “organizational leadership” and “organizational culture” within the field of
operations-related factors.

Figure 25 The ARTO- model after comparison of the SLR and the survey

Furthermore, when considering these factors, it is important to keep in mind if the company
has already begun a digitalization process or it is currently far from this step as these factors
are dependent on the company having in some way started a digitalization process. The
category, readiness (in the ARTO model) is for example not relevant for companies that are far
from digitalization. In addition, location plays a significant role as developed countries have
come a long way in the development of digitalization while developing countries are still
struggling (additional comments- survey).

The survey participants strongly confirm that “organizational culture” is an important aspect
in the implementation of digital transformation. We can also see that this factor is covering
three of four categories in the ARTO- model and thus conclude that this is something that is
significantly lacking and requires extra work. In addition, when examining the participants
´comments regarding “organizational culture” we can see that many of them attach significant
importance to the fact that it is crucial to involve everyone within the company with the work
56
for digital transformation. Knowledge and learning about how digital transformation works is
required at an early stage (additional comments- survey).

6.5 Theoretical implications

Here, the authors will compare the outcome of the study with the existing theory. This research
was not designed to identify just success factors, divers, and barriers of DT in manufacturing
companies. Rather, the goal of the authors is to identify all factors that affect DT in
manufacturing companies and show the relationship that exists between them. From previous
research, success factors and critical success factors affecting digital transformation, in general,
have been examined without due consideration to any particular sector of the economy
(Vogelsang, et al. 2018). The studies failed to provide a detailed framework on all factors
affecting DT in manufacturing companies. Based on findings from literature and
brainstorming, the authors identified 11 key factors and sub-factors that affect digital
transformation in manufacturing companies providing a holistic viewpoint (Smith et. al. 2008).
These key factors and sub-factors were further validated using the survey.

The literature further reveals the creation of readiness frameworks and maturity models
providing companies with frameworks that assists in the evaluation of the company’s position
with regards to DT (Smith et. al. 2008). Despite these models and frameworks, practitioners
still face huge difficulties with implementation (Schuh, et al 2014). Hence the creation of the
ARTO model.

The ARTO model helped categorize and simplify the factors for easy identification and
utilization based on the SLR. It was further validated using the survey which provides
practitioners and academia with a model that can be employed in their transition to DT. It is a
model that is also very useful for companies already practicing DT but is currently stuck. All
that is required, is to identify the company’s current position within the ARTO model using the
subfactors, key factors, and the quadrants in the model and continue the process.

6.6 Practical Implication

Based on our findings, 11 key factors affect digital transformation in manufacturing companies.
These factors are both confirmed from the literature and survey. The factors are explicit and
cover all aspects of the manufacturing industry with regards to transiting to digital
transformation. For instance, the leaders within the organization need to possess capabilities
that will encourage digital transformation (Santos and Martinho, 2020). The organization
requires a structure that creates value for customers while ensuring their preparedness and
readiness to transit (Synnes and Welo, 2016; Yildirim and Demirbag, 2020). They need to
create strategies with roadmaps, goals, and models that simplify the journey (Yildirim and
Demirbag, 2020). The success of the management to DT may be limited where the right
supplier and right tools are not engaged. The choice of the right tool solves most of the
problems. However, the attitude of the workforce, their willingness to change, readiness to
upgrade where necessary (Schumacher, et. al, 2019), and improving their ways of doing things
will assist the leaders of the organization to achieve the desired result. People and
organizational competence are highly vital as a wrong attitude or approach can frustrate all
efforts made. All individuals and departments within the organization must unite as one. This
remains a major reason why the management must carry the employees along in its quest for a
change. The characteristics and selection of digital technologies will determine the kind of
infrastructural investments that will be required which will influence the design of the

57
production system. The utilization of the tools and digital technologies in the integration
process will result in the generation of data. Data generated requires proper analysis,
interpretation, adequate storage, and safe transmission without any form of interference
(Merhar, et. al., 2019) for utmost benefit.

This leads to the final model (relationship model) created below to show the relationship
between the key factors affecting manufacturing companies.

Figure 26 The relationship between the factors

58
7. CONCLUSIONS AND RECOMMENDATIONS

This chapter presents a conclusion of this thesis by answering the research question and
providing recommendations for future research.

7.1 CONCLUSION
By identifying and analyzing the factors affecting digital transformation in manufacturing
companies based on the SLR, several factors were not only identified but the relationship that
exists between them was also noted. These factors may vary from company to company but at
the time of this research, the authors cannot say. Another aspect of this thesis worth considering
is the ranking of the factors. It is vital to consider if there are factors that are more dominant
than others. For instance, “organizational culture” will be used in three of the categories in the
ARTO- model. With this, it can be concluded that this factor has a significant impact on the
implementation of Digital Transformation. Furthermore, are there factors that can be ignored
by the company in its quest to attain digital transformation?

However, with the emergence of the survey results, it became obvious that at the heart of the
digital transformation is people. People are seen in ‘organizational leadership’, ‘people and
organizational competence’ and play major roles in almost all other key factors’
implementation success. For instance, data collection, analysis, transfer, usage, and safety is a
major aspect of digital transformation. This affects the leadership, customers, suppliers, and
even the company’s strategies. Despite this, the people within the organization determine how
data is generated, analyzed, stored, and managed.

The strategies, infrastructures to be invested in, technologies to be selected, structure and

culture of the company, people employed to work in the organization is a decision that is made
by the leadership. It is however difficult to fully comprehend the extent to which this varies
between large companies and SMEs. The external factors especially the customers cannot be
ignored in all of this. This is because the reason for the transformation is to create products and
have processes that satisfy the customers.

After the identification of the factors, a model was created, the so-called ARTO model, which
includes four categories (awareness related factors, readiness related factors, technology
selection, and relevance factors and operations related factors), covering a total of eleven main
categories related to factors influencing the digital transformation in manufacturing companies.
The ARTO model is aimed at creating a model that will assist the companies in their
implementation process. It goes beyond the consideration of the factor(s) that are most
important and tries to combine all the main factors to create a model that simplifies the stages
required for a successful digital transformation. It further shows that the refusal to follow these
stages systematically could lead to the failure of the entire process. For instance, the decision
to move from the awareness-related factors to the selection and relevance may result in
frustration. This is because the readiness-related factor is essential to transit to choosing the
right technology that will lead to the desired result.

This model is particularly interesting because it places no importance on a particular factor but
seeks to combine several factors in every category which further reveals the interrelationship

59
that exists between the factors and the various categories. However, certain companies have
started the transition process already but are not sure how to move forward in their journey.
The question now is, do they have to start from the initial stage or begin from the stage they
consider important? At this stage, discretion may be required to avoid wastage of resources and
unnecessary repetition of what has already been done.

The systematic literature review was carried out using the Web of Science and Scopus which
may have affected the overall result as some documents not found in the two databases may
have been omitted. Another thing worth considering is that because the literature used for this
work was limited to the field of engineering, it presents the possibility of ignoring certain
articles useful to manufacturing companies but not within the field of engineering. Despite
these limitations, this thesis presents all identified factors that are crucial to the survival and
progress of manufacturing companies.

7.2 RECOMMENDATIONS FOR FUTURE RESEARCH

Based on the conclusions, the stakeholders need to consider if the size of the company, the type
of the company, or any other specific aspects that play any role in determining the principal
factors, as the factors may vary from company to company. For example, which of these
identified factors affect SMEs? Are there factors that are more dominant in SMEs than in larger
companies?

Another recommendation from this thesis is that there would be the need to fully understand
how the constantly evolving technologies should adapt themselves to these factors found in the
literature.

For future studies, we would like to include that this study is continued and the survey is
revisited to involve more participants which will give a broader perspective and a more
accurate result.

60
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Additional comments- Survey

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8 APPENDICES
8.1 Appendix 1- Digital survey related to digital transformation in
manufacturing companies

Key factors affecting digital transformation in manufacturing companies

1. Company background
We are students of Mälardalens University currently doing our
Master’s thesis in Product and Production Development. Our
research is focused on identifying key factors that are affecting
digital transformation in manufacturing companies. Based our
extensive literature review, we identified and mapped out several
key factors. Now, we would like to validate these results with an
extensive survey among different manufacturing companies. The
research when concluded, would aid manufacturing companies in
implementing digital transformation. This survey is expected to
take approximately 15-20 minutes of your time.
Responses are anonymous.
Thank you for your anticipated cooperation.

1. Which type of industry does your company belong to e.g.,

electronics, aerospace, railway, heavy- duty vehicle, steel
manufacturing etc.

2. What is your educational qualification?

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3. What is your job profile?

4. How many years of experience do you have in this role?

5. What type of products does your company produce?

6. How many employees are there in your company? Is your company

an SME or a large manufacturing company?

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 Key factors affecting digital transformation in manufacturing companies

2. Key Factors for Digital Transformation

Based on an extensive review, we have found 11 categories of
factors that are affecting digital transformation in manufacturing
companies.

These factors are:

Organizational structure

Organizational culture

People and organizational competence

Characteristics, Selection & Integration of digital technologies

Infrastructural Investments

External support

Data security

Design of production system (DPS)

Organizational strategies

Organizational leadership

Data governance (DG)

The description of each factor is provided below.

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Now, we want you to rank the above 11 factors in a preferential
order from scale 1-7 from your company's perspective. The scale is
represented with stars and each star represents a number, where
1= Non significant, 2 = less significant, 3 = somewhat less
significant, 4 = neither significant nor less significant, 5 = somewhat
significant, 6 = significant, 7= highly significant.

7. Organizational Structure: focuses strongly on task

orientation, motivation, employee autonomy, flexibility, and team
skills, customer orientation, and collaboration through the value
chain.

8. Organizational Culture: analyzes the behavioral

characteristics of employees and management.

9. People and Organizational Competence: refers to the

workforce and their level of competence

10. Characteristics, Selection and Integration of Digital

Technologies: refers to the methods employed in choosing and

68
integrating digital technologies into the company's digital
transformation process.

11. Infrastructural Investments: refers to the infrastructures

that the company must invest in while transiting to digital
transformation.

12. External Support: deals with factors such as customers,

suppliers, competitors.

13. Organizational Strategies: refers with how strategies are

employed within the company before transiting to digital
transformation.

14. Data Security: deals with everything that has to do with

ensuring the safety of all data obtained, stored, analyzed, and
transmitted within the system.

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15. Design of Production System (DPS): refers basically to how
the production system is designed as the organization transitions
from the conventional to the digitalized production system.

16. Organizational Leadership: deals basically with the roles

played by the leaders in attaining a digitally transformed
organization.

17. Data Governance: refers to the ways of ensuring that data

gathered within the system is adequately interpreted, securely stored
and, safely transmitted when necessary.

18. Kindly add any additional factor(s) that are affecting digital
transformation in your company which are missing in the theory or in
our review.

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 Key factors affecting digital transformation in manufacturing companies

3. Details of sub-factors for each key factor

From our literature review, we obtained several sub-factors for
each key factor. Below we listed them for 11 key factors. Now,
we would like you to chose the sub-factor(s) that is/are relevant
for each key factor from your company's perspective.

19. Organizational structure: focuses strongly on task

orientation, motivation, employee autonomy, flexibility, and team
skills, customer orientation, and collaboration through the value
chain.

Flexibility capacity of the company

Value creation for customers

Creativity and labor enrichment

Openness and change responsivity

Integration of products with other systems

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

20. Organizational culture: analyzes the behavioral

characteristics of employees and management.
Readiness of cultural, strategic, organizational, and technical aspects

Preparedness to understand analytics, sensors, etc.

Usefulness and sensitivity of Industry 4.0 transformation

Working environment

Innovative abilities

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

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21. People and Organizational Competence: refers to the
workforce and their level of competence
Innovative education and training

Workforce qualification

Organizational IT competence

Adequate knowledge of the workforce

Awareness of change within the company

Intelligence/Intelligent control employed by the workforce

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

22. Characteristics, Selection & Integration of Digital

Technologies: refers to the methods employed in choosing and
integrating digital technologies into the company's digital
transformation process.
Reliability and performance of the technology

Time saving of processing and production time

Supporting tools such guidelines for sharing knowledge

Interoperability within the system

Automation of the entire process

IT-based production management systems

Technology design

Ease of use of technology

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

23. Infrastructural Investments: refers to the infrastructures

that the company must invest in while transiting to digital
transformation.

72
 Capital investment of the

company The size of the

company

Infrastructure of digital systems

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

24. External Support: deals with factors such as customers,

suppliers, competitors.
Suppliers of the technologies

Laws and regulations in the country where the company is based

Globalization within the world economy

Customer response adoption

Market competition influencing customer choice

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

25. Data Security: deals with everything that has to do with

ensuring the safety of all data obtained, stored, analyzed, and
transmitted within the system.
Privacy issues within and without the company

Security of assets and data protection

Work & data safety

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

26. Design of Production System (DPS): refers basically to how

the production system is designed as the organization transitions
from the conventional to the digitalized production system.
Productivity level of the company

Material handling

system Product

customization

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 Factories and processes

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

27. Organizational Strategies: refers with how strategies are

employed within the company before transiting to digital
transformation
Models and goals of the company

Processes that facilitates teamwork

Integration and analysis of company's processes

Roadmap employed by the organization

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

28. Organizational Leadership: deals basically with the roles

played by the leaders in attaining a digitally transformed organization
Managerial capabilities related to organizational strategy and culture

Uncertainty of management and stakeholders

Improve management capacity and efficiency

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

29. Data Governance (DG): refers to the ways of ensuring that

data gathered within the system is adequately interpreted, securely
stored and, safely transmitted when necessary.
Collection and utilization of internal and external data

Data sharing systems

Data/information organized and maintained in secure digital systems

Data analytics techniques

(If you have any comments or if you see/experience any sub-factor that is missing or can be included in the above list, please specify
it.)

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 Key factors affecting digital transformation in manufacturing companies

4. Proposal of a model for factors affecting your company's digital transformation

From our review, we developed a generic model for digital
transformation based on the consideration of 11 identified factors.
The generic model will support companies in understanding key
factors that are affecting digital transformation in a structured way,
making a proper action plan for the successful digital
transformation.
The generic model consists of four phases such as:
1) Awareness in the organization for the digital transformation
2) Organizational Readiness for the digital transformation
3) Selection of technologies and its relevance for digital
transformation
4) Method of operations (or mode of operations) for digital
transformation

Awareness represents the first phase, which basically refers to the

point where the organization realizes the need for digital
transformation.

The second phase is organizational readiness, which refers to the

phase where the company examines itself to determine how ready
they are for the transformation.

The third phase is the selection of technologies and its relevance

for digital transformation. In this phase, the organization decides
the technology that is most suitable for its activities after
considering all available alternatives.

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The last and final phase, is the mode of operations. In this phase,
the company examines their modes of operations and the safety of
their data.

Based on the above explanation, we would like you to critically

examine the 11 identified key factors and give your honest opinion
on their inclusion in the respective phases of the generic model.

In the questions below, kindly select the key factors that

could be included in each phase of the generic model.

30. Phase 1: The Company's Awareness of the Digital

Transformation
Organizational structure

Organizational culture

People and organizational competence

Characteristics, Selection & Integration of digital technologies

Infrastructural Investments

External Support

Data Security

Design of Production System (DPS)

Organizational Strategies

Organizational Leadership

Data Governance (DG)

(If you have any other comments or if you see/experience any sub-factor that is missing or can be included in the above list, please
specify it.)

31. Phase 2: The Company´s Readiness for Digital Transformation.

Organizational structure

Organizational culture

People and Organizational Competence

Characteristics, Selection & Integration of Digital Technologies

Infrastructural Investment

External Support

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 Data Security

Design of Production system design (DPS)

Organizational Strategies

Organizational leadership

Data Governance (DG)

(If you have any other comments or if you see/experience any sub-factor that is missing or can be included in the above list, please
specify it.)

32. Phase 3: The Company's Selection of Technologies and its

Relevance for Digital Transformation.
Organizational Structure

Organizational Culture

People & organizational competence

Characteristics, Selection & Integration of Digital Technology

Infrastructural Investment

External Support

Data security

Design of Production system (DPS)

Organizational Strategies

Organizational Leadership

Data Governance (DG)

(If you have any other comments or if you see/experience any sub-factor that is missing or can be included in the above list, please
specify it.)

33. Phase 4: The Company´s Method of Operations after Digital

Transformation.
Organizational Structure

Organizational Culture

People and Organizational Competence

Characteristics, Selection & Integration of Digital Technologies

Infrastructural Investments

External Support

Data Security

Design Production System Design (DPS)

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 Organizational Strategies

Organizational Leadership

Data Governance (DG)

(If you have any other comments or if you see/experience any sub-factor that is missing or can be included in the above list, please
specify it.)

34. What do you think about this generic model as a reference

to communicating the key factors affecting digital transformation in
manufacturing companies?

35. If you have any general comments on the survey, its

structure and content, please comment it below.

Thank you so much for your time. We will come back to you with our
results after our analysis and final compilation.

Hatice and Rosa

78
9.2 Appendix 2- List of all factors found and sources

Categories of Sources List of factors

factors
General factors/ Temel and • Maintained communication
Success factors Ayaz (2019) • Traceability
• Continuous data flow
• Integration of MES and ERP
• Productivity
• Maintenance

• Readiness of cultural, strategic, organizational,

Schumacher, and technical aspects
et. al (2019)
• Analyzing products
• Processes
• Employees
• Lack of transparency makes benchmarking
difficult.

• Capital Investment
Ruiz, et al. • Uncertainty (management and stakeholders)
(2017) • Skepticism
• Compatibility
• Privacy issues
• Flexibility of technology
• Planning
• Coordination
• Standardization of Communication
• Security
• Support and knowledge in skills development
• Good/Adequate management

Schiffer and
• Fear of high implementation cost
Wiendahl
(2019) • Lack of know-how

• Adequate management
• Security
Choi, et. al • Process
(2017) • Manufacturing line
• Factory construction part

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 • Workers
• Material handling system
• Working environment

Jung, et. al
(2021) • Essential technologies
• Affordable
• Simple
• Interoperable

Schuh, et. al
(2017)
• Capital investment
• Appropriate knowledge

Santos and • Skills acquisition

Martinho • Creativity and labor enrichment
(2020)
• Innovation
• openness and change responsivity.
• Reconfigurable layouts
• Security of assets and data protection
• Agile information share across the organization
• Capacity of agile
• reconfiguration of products
• Integration of products with other systems

Enabling/ Synnes and • Value creation

Influencing factors Welo (2016) • Competitiveness
• Sustainable growth/ right unit cost
• Flexibility/ absorb new technologies.
• Processes that facilitate teamwork
• Iterative product and process development
• Supporting tools such as guidelines for sharing
knowledge

• Communication
Merhar, et.
al. (2019) • Flow of information
• Time-saving
• Awareness of change
• Level of information
• The general attitude towards Digital Assistance
• Ease of use of technology
• Differences between the devices
• Perceived usefulness
• Technology design
• Working environment
• Social Influence

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 • Usability
• Simplification
• Protection of data
• Work & data safety
• Reliability and performance
• Customization
• Early and consistent information
• Participation

Mittal, et. al • Laws and regulations

(2019) • Innovative education and training
• Data sharing systems
• Standards

• Customer response adoption

• Cost management
Manavalan • Supplier collaboration
and • Social
Jayakrishna • Environment
(2019) • Supplier management
• Services management
• Operational management
• Strategic sourcing
Prerequisite Yildrim and • Capital accumulation
factors Demirbag • Productivity level
(2020) • Flexibility capability
• Lean production & maturity
• Measurements using benchmarks
• The right strategy for lean & maturity index
• Planning
• Value creation
• Competitors
• Globalization
• Management
• Company size affecting investments
• Leanness strategy
• Roadmap

• Infrastructure for digital systems

• Data/information organized and maintained in
Pacchini, et. secure digital systems
al (2019) • Communication network for a large amount of
data traffic
• Personnel empowered to organize and collect
data

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 • Technology should be treated at the strategic
level
• Knowledge of the problems to be solved

• Intelligent control
Mittal, et. al • Smart products/parts/materials
(2019) • Data analytics
• IT-based production management systems
• Interoperability
• Building blocks
• Preparedness to understand analytics, sensors,
etc.

• digital vision
• Alignment with business strategy
Sjobakk • Models and Goals
(2018) • Identification of the company’s position in the
strategic landscape
• Add content to strategy

Capability related Qin, et. al • Intelligence

factors (2017) • Consciousness
• Automation
• Interoperability
• Data collection
• Integration and analysis
• Knowledge
• Automation

• Technical capabilities related to products and

Santos and services
Martinho • Factories and processes
(2020) • Managerial capabilities related to
organizational strategy and culture
• Workforce qualification
• Organizational structure
• Organizational culture
• Strategy
• Leadership,
• People/employees

Bevilacqua, • Data aggregation

et. al (2017) • Improving management capacity and efficiency

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 De Carolis, • Provision of manufacturing Services
et. al (2017)

Critical Wagire, et. • Strategies

factors/important al (2020) • People and culture
factors/key factors • Awareness
• Usefulness and sensitivity of industry 4.0
transformation

• Lack of knowledge
• Readiness model
Nausch, et.
• Collection and utilization of internal and
al (2020)
external data

• Information collection
Bevilacqua,
et. al (2017) • Production sites
• Suppliers
• Production planning
• Technical

• Company size
Buer, et. al • Organizational IT competence
(2020)

83