European manufacturing readiness and resiliency is being tested by COVID-19 and the economic slowdown that began in March 2020. When building a flexible and resilient company, digital technology becomes essential, while digital transformation pillars such as artificial intelligence (AI), analytics, cloud-based services, and the convergence of IT and operational technology (OT) become game changers.
But today, it is not all about technology. Companies need strong leadership more than ever, in order to guide the company through the troubled waters of the current crisis. This is made even more challenging because various disruptions are overlapping.
After the first COVID-19 wave, many executives believed that the “new normal” would not be that different from their past experience. However, it has become apparent that the disruptions caused by the COVID-19 pandemic are truly unprecedented, and that changes in the way companies operate is going to be significant. This exceptional situation has put the C-suite into the spotlight — and the chief operating officer (COO), in particular.
The role and responsibilities of the COO have expanded beyond their traditional realm of overseeing day-to-day administrative functions and business operations. The new role of the COO is now focused on change management and digital transformation. This includes a general rethinking of operations, technology arbitration and integration support, improvement of customer experience (CX), and risk management.
Digital Transformation and COVID-19 Shaping the Role of the COO
At IDC, we’ve identified several key trends that have driven the changing COO role during the last six months. These include:
- Mandate for companies to change the business and operational strategy in response to COVID-19, with a view to potential future disruptions resulting in even more resilient and flexible operations
- Focus on the improvement of operational efficiency resulting in cost savings (both OPEX and CAPEX)
- Establishing a work environment that is uncompromisingly compliant with health and safety policies
- The need for upskilling and reskilling of the workforce in response to the rapid deployment of digital solutions and limited access to digitally experienced workforce
- New ways of working, such as work-from-anywhere and remote operational task fulfillment
- Deployment of AI-driven solutions that support and even automate decision-making algorithms
- The rising importance of business collaboration ecosystems
- Process automation technology enhanced with AI that enables a “lights-out” operational environment
- Advanced solutions providing (near) real-time data from IT and operational technology (OT) systems
- Efforts aimed at sustainability impacting internal operations as well as supply chain base
Who Will Lead Technology Change in the COO’s Team?
We’ve also recognised that, in some organisations, the COO’s responsibilities cover end-to-end operations areas, including production, engineering, logistics, quality management, and asset management, as well as supply chain management and procurement.
To close the IT and OT loop, the cross-technology and cross-line of business (LOB) capabilities have to be established. And this is where a digital engineering function, reporting to the COO, has some specific responsibilities that differentiate it from pure IT and OT functions:
- Analytical and AI modeling support, development, and life-cycle management, including digital twins
- Data stream and ingestion management for operational performance management system
- Arbitration of operational semantics, tags, and frameworks
- Digital project management and ecosystem management
- Production edge architecture development and IoT support
Just as the COO team cooperates with other C-level departments, the IT and OT teams are now increasingly collaborating, particularly on projects related to DX. Some organisations even have dedicated IT resources for operations, consisting of some central digital groups.
Nevertheless, transformation in operations must be driven by the COO, not the CIO. This is because the need for speed/agility becomes more difficult when collaborating across silos. Full knowledge of business processes is necessary before the proper technology can be applied to yield value.
Collaboration with the CIO commonly takes place in deployment projects and upgrades of enterprise IT systems. This includes the deployment of cybersecurity tools and procedures and IT support of daily operations. In this structure, the CIO also provides operations with data for analysis and decision making, while the COO provides technology parameters to the CTO. This network of collaboration naturally differs according the company’s business strategy, operational goals and KPIs, and overall culture.
What Is Required for the COO to Succeed in an Uncertain Future?
The future face of manufacturing will be very different from what we have seen until now. The convergence of IT and OT systems will lead to a hyperconnected environment. Operational and back-office processes become even more integrated and automated. And cognitive AI-based technology will take over decision-making processes.
The COO’s team has always been tasked to ensure that the company’s capabilities keep pace with technology trends. In a successful operation, the ability to react to changing external and internal environments are incorporated into the team’s DNA.
With the new levels of resiliency required during the crisis and beyond, the COO team must transform; old roles and responsibilities must be reconsidered and new roles will need to be created. The emerging importance of digital engineers is a perfect example of how a COO team reflects the current trend of IT and OT convergence. However, to succeed in reaching the expected benefits, operations-related IT and OT integration projects should be delivered by a broader team, which in particular includes CIO and CTO. That is considered a digital dream team.
The initial step should be creating a strategy for digital skills development. An evaluation of current resources should span (at least) domain expertise, IT skills, and digital skills. Depending on the evaluation, the COO may recommend upskilling or reskilling of the workforce, or make a case for new hires.
Once operational goals are defined and the requisite technology is deployed to accomplish those goals, the strategy to reconfigure the COO’s workforce can be enacted. This integration of operational processes, people, and technology is a winning approach for both the COO team and the company as a whole.
If you want to know more about Future of Operations and the IT/OT convergence world, you can reach IDC’s European leaders here.
Published November 4, 2020