IT as an enabler for enterprise value networks.
In his opening remarks at ARC Advisory Group’s 15th Annual World Industry Forum in Orlando, Florida, Andy Chatha, ARC’s founder and president, introduced ARC’s new Collaborative Value Networks concept, commenting that while the business drivers have not changed significantly for manufacturers since last year, the intensity continues to increase.
According to Chatha, recent events in the Middle East have increased the level of uncertainty. Security – both physical and cyber – is becoming a bigger challenge for all companies. The BRIC countries are becoming stronger and more competitive every year. More ‘Facebook-generation’ younger people are joining the workforce, bringing many new ideas and working styles. Government regulations increase by the day. We have started to upgrade the electric grid, with the Smart Grid having the potential to become as powerful and intelligent as the Internet. And the IT revolution continues, bringing with it, what Chatha calls ‘easy IT’ solutions. “With all these changes going on, we need to become highly flexible and agile,” said Chatha.
“More investments are being made today in IT than in any other area. We have a tidal wave of new technology coming in social networks, mobility, smart grid, electric vehicles, and other areas. Corporate and venture capital investment in IT is at an all-time high. Facebook was recently valued at $50 billion, and this continues to go up every year. We will see many more Internet companies go public over the next couple of years.” According to Chatha, industry has many opportunities to take advantage of this easy IT to help it meet current and future challenges. “The newer IT solutions are easy to use, because they focus primarily on the consumer. Social networks and smartphones have become popular because they are so easy to use. Smart grid is starting a revolution and ultimately, will connect all home devices and appliances. Cloud computing is making IT a utility, hiding all complexity from the user.” Continuing a theme from last year’s forum, Chatha stated, “We need to start adopting more of these easy IT solutions at our companies, since they can help us reduce both cost and complexity.”
Next, Chatha cited two relevant statements from Bob McDonald, CEO of Procter & Gamble. Both appear in the company’s annual report. The first statement refers to digitisation: “With digitisation, our goal is to standardise, automate, and integrate systems and data so we can create a real-time operating and decision-making environment. We want P&G to be the most technology-enabled company in the world.” In the second, related statement, McDonald indicates that the company is looking for a sevenfold increase in real-time data to help it meet its targeted 20-25% reduction in selected spending areas.
Chatha added that any company that wants to reduce costs by 20-30% to compete effectively must – like P&G and others – innovate and look for new ways to do things using new solutions that enable new business models. This provided an excellent segue to his next topic for discussion: Collaborative Value Networks.
To put this in context, Chatha first discussed ARC’s collaborative manufacturing management (CMM) model, which ARC introduced back in 2000. While the CMM concept provides a meaningful way to visualise and analyse the plant as a node in a supply chain network, it does not go far enough. “Today’s companies realise that they must become more design or innovation-centric and supply chain networks do not incorporate design and engineering, which are managed separately by a different department,” Chatha commented. “To become more innovation-centric, companies need to integrate their design to make and deliver processes from end to end. Collaborative Value Networks extend CMM to the enterprise.
“To enable a Collaborative Value Network, you need an easy-to-use, Facebook-type platform and you have to digitise your company, moving your boxes of paperwork to the cloud,” Chatha said. “A few years ago, building this type of platform would have been prohibitively expensive, but today, the information technology is in place to build this platform at a reasonable cost.” However, building such a platform requires both executive leadership and common standards and processes at all levels. These enable everyone to work together efficiently.
In closing, Chatha implored Forum attendees to take advantage of the Collaborative Value Network concept to be proactive, effective, and responsible. “Stay engaged and share ideas with your colleagues.” To this end, Andy announced that ARC is building social media tools into its new website to encourage collaboration and innovation.
For more information on contact Larry O’Brien, ARC Advisory Group, +1 781 471 1126, lobrien@arcweb.com, www.arcweb.com
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