Businesses are complex entities with multiple ecosystems. For the C-suite, having a view over what is happening in a business is critical to its success. Unfortunately, the view many have is limited and/or often incomplete. The relationships and processes between different parts of a business are intertwined and often obscured. It means that senior management are wholly reliant on reporting from their teams, and consequently their decisions are based on discrete facts, not a holistic view of the business.
So how do you change that? It is all too easy to say you need better insight because that’s a given. The challenge is, how do you get that insight?
The answer is an approach that has become increasingly common in other parts of the business – digital twins.
What is a Digital Twin?
In a nutshell, a digital twin is a digital copy of something that can be used to model and predict behaviour. Think of a smart building. It is full of components and technology from the mundane air conditioning and heating systems to computers and other types of equipment.
A digital twin of that building would consist of hundreds, thousands and even tens of thousands of subsystems. These will be maintained by the hundreds of suppliers responsible for manufacturing and supplying that equipment. Many of them will also have maintenance contracts to keep it running.
Modelling those systems will show how efficient and effective or ineffective they are. Anything you can monitor and get data from, you can model. Over time, that data will make it possible to predict behaviour and tune for the best outcomes. These could include widening the gap between maintenance windows or lowering the temperature in underused parts of a building to save on energy costs.
That data can also be shared with suppliers who can compare it with other customers and provide more data back to tune things like maintenance schedules further.
What does this mean for the business?
Instead of creating a digital twin of a piece of machinery, a process or, as in the above example, part of the business, the goal is to make a digital twin of the entire business. In reality, it is more a meta-model of multiple digital twins that model every business unit and, importantly, every business process.
The latter is critical. Modelling a piece of machinery is very different from modelling how a department operates and integrates with the business and with customers. It also requires that you model all the processes that occur, including processes that affect the entire organisation, such as risk and compliance.
That digital twin of an organisation allows senior managers to see how their business functions more clearly. It gives them insights into business capabilities and how changes in one department in one business unit can affect the entire company. It means that an organisation can model change across the entire business and see the potential costs and impacts.
Why modelling the business, department by department is essential
It is not uncommon for organisations to reorganise parts of their business. In most cases, the planning and preparation focus on the most obvious items such as staff, impact on the business and impact on customers. What is often not well understood is the impact across the business at an inter-departmental level. The impact on business processes is just as unknown, especially where IT has to make significant changes.
Modelling a department will shine a light on those interdependencies. For example, if the change affects the payment terms to suppliers, it would not only impact purchasing teams but also departments who had limited purchasing autonomy. Also affected would be legal. That is because there may be terms and conditions from suppliers before ownership of goods is transferred. It could also affect production because any reliance on just-in-time goods delivery could be disrupted by change.
This will also affect the ability of the sales team to sell and deliver products to customers. This impacts the company’s revenue and has a direct impact on the bottom line.
By modelling the department and all its interconnection across the company, it is possible to see, in advance, just who is affected by the change to payment of suppliers. The company can then model a range of solutions to see what has the least impact on the business while achieving the required outcome. It can also develop new processes and systems and train staff before any changes occur.
Conclusion
Digital transformation is a means to achieve meaningful, predictable and consistent business transformation. It is specifically not about a single set of changes to the business. Instead, it is about effectively supporting continuous change as organisations adapt to the world around them and look for new business opportunities. Continuous change creates problems because there is no time following changes to sit back, assess, tune and then move forward.
Applying the principles of digital twins to business transformation means that organisations can model any change. They can quickly identify challenges and put remediations in place. Without it, organisations risk phase after phase of change, creating significant technical debt around business processes. This is not a sustainable approach for any successful business.
IFS develops and delivers cloud enterprise software for companies around the world who manufacture and distribute goods, build and maintain assets, and manage service-focused operations. Within our single platform, our industry specific products are innately connected to a single data model and use embedded digital innovation so that our customers can be their best when it really matters to their customers—at the Moment of Service™. The industry expertise of our people and of our growing ecosystem, together with a commitment to deliver value at every single step, has made IFS a recognized leader and the most recommended supplier in our sector. Our team of 4,500 employees every day live our values of agility, trustworthiness and collaboration in how we support our 10,000+ customers. Learn more about how our enterprise software solutions can help your business today at ifs.com.
