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June 24, 2016
Digital Industry 4.0 - Part IV
By: Aidan Quilligan

In part III we looked at six critical capabilities on which manufacturers are focusing in order to improve operations. Here, as part of the digital industry 4.0 series, we drill down into a further major shift—As-a-Service.

Innovations such as the cloud, analytics, artificial intelligence and automation continue to develop apace, and the race is on for executives to leverage these technologies in the delivery of business operations. Often, moving towards delivery “As-a-Service” represents the best way to do so.

The marketplace is moving: applications, infrastructure and business processes are being brought together and delivered “As-a-Service.” This integration of functions provides companies with plug-in, scalable, consumption-based services, underpinned by the new technologies mentioned above.

Despite the advantages, research from Accenture and HfS Research discovers that 70 percent of large enterprises (with over $10 billion in revenues) are not anticipating delivering core operations As-a-Service for at least the next five years. Contrast that with the 42 percent of SMEs who regard As-a-Service as critical and it appears that large incumbents may be at risk if they fail to innovate.

To move forward briskly, executives must consider a number of factors. Leaders will encounter resistance and should manage change accordingly. The research highlights a disconnect between leadership ambition and execution: Fifty-three percent of operations leaders view As-a-Service as critical, compared to 29 percent of middle managers and delivery staff. As well as galvanising their delivery teams, leaders must learn to buy As-a-Service, with CFOs moving out of their comfort zones to purchase in a piece-by-piece manner.

Equally, as the delivery environment is disrupted by As-a-Service, companies must seek the right talent—people skilled in analytics and automation who are capable advisers. Another factor to consider is that 7 in 10 companies are planning investments into analytics, while only 4 in 10 are developing robotic process automation. Leaders must be wary of that prioritising, as analytics is only effective after processes are streamlined, standardized and automated.

Piloting As-a-Service with non-business critical functions is a good way of gaining leadership support before moving into other areas. Finally, relationships with providers should be about driving innovation. A provider gains in-depth knowledge over time about the buyer’s business, and should bring that knowledge and its industry expertise to bear every day.

Organisations are being challenged to find new ways of creating value—to move from FTE-based business models for operations and outsourcing towards a business model that is more collaborative, entrepreneurial, innovative and value driven. Getting there requires strong leadership, and a willingness from service-providers to undergo transformational change. Despite the challenges though, with a cloud infrastructure, continuous analytics and end-to-end capabilities for business processes, buyers and service providers can help usher in the revolutionary capabilities of As-a-Service.

Find out more about Digital Industry 4.0.

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