With technology and innovation rapidly changing the manufacturing business model, Kathy Hopinkah Hannan, Global Lead Partner at KPMG in the US, talked with Brad Halverson, Group President and CFO of Caterpillar Inc. to learn more about how the 90-year-old manufacturer is using technology to drive new growth opportunities.
Kathy: How is technology and innovation changing the way Caterpillar serves its customers?
Brad: Caterpillar is reimagining the way our customers work through digital technology and innovation – combining diesel and data to disrupt ourselves before others can disrupt us. We intentionally allocate resources to products and services that make our customers more money than they could make with our competitors, and deliver the most economic value to our shareholders through our operating and execution model. That allows us to reinvest our earnings back into the business and continually increase the value we bring to customers.
Kathy: To what extent does Caterpillar partner with technology firms and non-traditional players to drive its growth agenda?
Brad: We’re using several different approaches to discover, test and launch new technologies alongside external experts and third parties. One of our most successful approaches has been the establishment of Caterpillar Ventures, a team that focuses on identifying emerging technologies that could help us solve customers’ problems. We have already made several investments, and there’s a strong pipeline. Ultimately, we recognize that when we combine our 90-year history of innovation with external viewpoints from startups, we can really add a lot of value.
Kathy: How has technology and innovation changed the way Caterpillar has approached its markets?
Brad: If you consider that 5 years ago hardly any heavy equipment was connected with telematics, but today Caterpillar has about 400,000 connected machines, engines and locomotives worldwide … we see great opportunity for growth in technology-driven information, data analytics and services that surround the iron we manufacture.
Kathy: What role will data, analytics and digital technology play in Caterpillar’s growth strategy?
Brad: We believe that digital tools and data analytics are an important part of our value proposition as we use the data from our products to create even more value for our customers. This value creation can come in many forms… like designing better productivity into our machines or working with customers to improve their machine operators’ efficiency through data coming back from our products.