Bringing IT and OT together for success in a digital future
The Fourth Industrial Revolution is blurring the lines between the physical and the digital spheres of production. With the now-ubiquitous connectivity of people, machines, and real time data, the physical and digital spaces are converging to reshape the way by which organizations design, manufacture, and distribute products.
Unconstrained design with algorithmic optimization and customer co-creation, flexible production with fewer steps, batch size of one and shorter lead time, unchained distribution with multi-component consolidation, distributed production, and reshoring are accelerating value creation from production lifecycle.
Speed is the dominant factor of transformation required to remain competitive in this world of connectivity. If companies cannot develop at a pace that enables them to win, they will fall behind very quickly.
One of the critical components for enabling output speed is organizational alignment between the Information Technology (IT) and Operations Technology (OT) groups. With an increasing thrust toward the digitization of operations, there exists a need to align IT and OT teams to enhance end-to-end visibility of data and decisions and to permit scale at speed while ensuring increased security controls.
[Graphic # 1]
Digital / technology sphere is traditionally organized under two umbrellas - IT and OT
Aligning IT and OT teams, however, will be difficult. Traditionally, the teams have been driven by their different priorities and end-user expectations (See Graphic # 1). While the IT team traditionally focused on managing business applications, enabling information sharing, and enforcing standards throughout the organization, the OT team focused on driving operational efficiency at the sites, thereby ensuring continuity of operations with high availability of underlying technology resources. End-user expectations drove different behaviors: IT teams were expected to make core IT operations efficient and stable at reduced costs, while OT teams concentrated on supporting real-time actions and rapid response to site-specific technology needs.
These differing priorities and user expectations have manifested in organizational silos and in limited interactions, alignment, and coordination challenges across functions—eventually leading to different IT and OT budgets and goals.
The new Digital Age is closing the gap between these two traditional roles, forcing convergence of IT and OT into a common technology group. This convergence is leading to change across three critical areas (see Graphic #2):
- Technology Group Objectives. The objectives are moving from efficiency, stability, and support to agility and innovation.
- Scope of Service and Organization Capabilities. As architectures evolve from a heterogeneous technology landscape to a rapidly scalable, evolving platform paradigm, the underlying technology organization capability is shifting from a traditional transaction-based, people-driven mindset to a more insights-driven approach, supported by rapid and continuous automation.
- Steering and Governance. These procedures are moving from a rigid process-driven approach to flexible execution with greater autonomy and faster decision making.
[Graphic # 2]
Evolving Role of Technology Groups
Alignment across technology groups becomes more critical when the firm moves from experimenting with digital to scaling capabilities across the organization. One of the critical enablers for achieving this alignment is having greater unity and collaboration across the IT and OT groups.
So, how are the IT and OT teams brought together to support the ‘new’ digital future? The organization must make changes across its mindset, skillset, and toolset to drive the needed change within the three critical dimensions (See Graphic #3):
- Mindset Change—A new way of thinking and organizing to deliver effectively against business objectives
a. Organize technology teams effectively to deliver against business objectives and enable a seamless business and technology interface
b. Develop a strong and coordinated portfolio and program governance across technology teams geographically to drive continuous learning and improvement and to ensure alignment of critical priorities
- Skillset Change—Aligned skills and capabilities to support critical business priorities
a. Align critical capability requirements across technology teams and geographies to streamline the delivery model
b. Address capability gaps in near and longer term and develop a plan to close the gaps (internally and with partner support)
- Toolset Change—Supporting tools, standards and processes to enable faster delivery and support collaboration across technology and business groups
a. Invest in tools and automation to achieve faster delivery against business priorities, ease technology support for business operations, and enable information sharing across groups for faster and more accurate decision making
b. Refine supporting standards and processes to complement the toolset, simplify interactions, and enable greater collaboration
[Graphic # 3]
Target model requires a defined Mindset / Skillset / Toolset
Changing the organization’s mindset is the most critical and often the most challenging task in bringing the IT and OT teams together. Leadership must consider tradeoffs across centralized control for standardization and individual site autonomy for delivering against specific business priorities. There are two traditional organizational models heavily leveraged in asset heavy industries such as discrete manufacturing, energy, process, and mining.
1) One Regional Technology Group Reporting to Central Technology Leads. This model works best when the technology needs of the business operations are stable and the primary focus of the technology group is on support and enhancement. The central team drives the group’s agenda and priorities with the region’s input, enabling greater standardization and efficiency in support operations.
However, this model requires greater coordination of central and regional priorities and enhanced program governance to ensure that the technology teams focus on the right initiatives. Most firms in the discrete manufacturing and processing industries follow this model.
2) One Technology Group Reporting to Regional Operations Leads. This model works best when the technology group’s focus is on building new and rapid technology capability, with highly localized needs driven by individual regions or sites. The central team focuses on standards governance, while the region drives priority with greater autonomy of decisions.
However, this model requires robust architecture standards that are established centrally to enable localization of requirements without compromising enterprise level industrialization opportunities. Most firms in traditional process industries with heavy site autonomy follow this model.
An effective organization structure enables convergence of traditionally separate IT and OT organization visions and priorities and fosters greater interaction and collaboration across groups to support the firm’s business objectives. In turn, this enables scale at the speed required for digital transformation. Therefore, before an organization finalizes its investment plans in digital, it is critical to invest time in aligning the technology groups to ensure all teams join forces to advance toward a common set of strategic priorities.