Digital Transformation and the silo effect

Let’s check what the impact is of siloed control systems and digital transformation. A good start is to have a read of the book “the silo effect” by Gillian Tett. In her book she makes the argument that silos, or specialised divisions within the organisations, with their valuable expertise and efficiency can also lead to significant problems. These could lead to inflexibility, poor communication, and tunnel vision of the division. The interesting observation is to avoid these issues is by identifying risks, innovation and be able to adapt to changes and business transformation. The author Gillian Tett argues “that while silos have their uses, they can be detrimental when they become too rigid and disconnected from parts of the organisation.”

The article Digital Transformation: Your Key to Success introduces the concept of “Developing a comprehensive Digital Transformation strategy” in its first section. Below, we will discuss the opportunity to understand the challenges posed by siloed teams as outlined by Gillian Tett and how this understanding can inform the digital transformation of “Siloed” control systems on the factory floor.

The advantages of breaking down silo’s in your architecture

In the industrial sector, digital transformation is a critical strategy aimed at enhancing efficiency and competitiveness. However, the journey towards digital transformation could be hindered by the existence of “siloed” control systems within factories, and other industrial establishments. These systems, when isolated, can significantly hinder the integration and optimization of processes across various departments and functions. Recognizing the existence of silos is one thing; we will also introduce operational platforms to foster agility and collaboration between individuals.

So, let’s first understand the benefits when companies are working in a collaborative environment by breaking down silos:

1. Cross-functional teams: encourage collaboration by forming cross-functional teams.
2. Shared goals and metrics: aligning goals and metrics across departments helps create a unified purpose.
3. Integrated systems and technology: invest in integrated software systems that connect different functions within the organization.
4. Open communication channels: encourage an environment of open communication.
5. Training and awareness programs: conduct training sessions to educate employees about the importance of breaking down silos.
6. Incentives for collaboration: recognize and reward collaborative efforts.

Change is a gradual process; thus, it’s important to recognize that breaking down silos is a continuous effort necessitating dedication from leaders and engagement from all people. Through the adoption of these strategies, organizations can forge a more unified and effective structural framework.

Now, let’s look into the challenges present at the control level of an industrial company.

Siloed control systems are challenging Digital Transformation

In the ever-evolving landscape of business and technology, organizations strive for efficiency, agility, and seamless operations. Siloed control systems, while offering certain benefits, can hinder progress toward these goals. Let’s explore the challenges posed by siloed systems and the imperative need for a centralized operational platform.

1. Lack of interconnectivity

Siloed systems operating in isolation are like separate islands in a vast ocean. Unfortunately, these islands lack bridges or communication channels. As a result, data flow between departments becomes fragmented, leading to inefficiencies. Imagine a manufacturing unit with separate operational systems for loading, processing, inventory and supply chain. Without seamless “digital” interconnectivity, delays occur, faults are made, decisions are suboptimal, and overall productivity suffers.

2. Inconsistent data and standards

Each siloed control system speaks its own language—different data formats, varying standards, implemented by different system integrators and could have incompatible protocols. Picture a scenario where sales data is stored differently from production data, supply chain, and finance uses a separate set of metrics altogether. Aggregating and analyzing this disparate information becomes a challenging task. Inconsistent data leads to errors, misaligned strategies, and subpar decision-making. A unified platform would harmonize these languages, enabling better insights and informed choices.

We frequently observe that customers are ok to operate with sub-optimal processes. They produce today, what is the problem? The crux of the issue is that operations have become accustomed to functioning in isolation, creating a perceived need to transition to a fully integrated digital system. An outside view can be useful in this case.

3. Hamper innovation

Innovation thrives on collaboration with diversity of ideas. Siloed control systems, however, build “walls” between systems, impacting people who make the decisions. The marketing team might have groundbreaking insights, but if they can’t share them seamlessly with operation, who want to perform simulations by combining several data sources from different control systems to understand fully the operational challenges and opportunity. This is an example that in today’s world this could take weeks, months based on assumptions, experiences and not facts and therefore hampers innovation. the same for a tech company where software development, hardware design, and user experience teams work in isolation. The result? Delayed product launches, missed opportunities, and frustrated customers. A centralized data platform fosters collaboration, allowing ideas to flow freely and innovation to flourish.

4. Increased operational costs

Maintaining multiple independent control systems exacts a toll on resources, but this is the case in most of the cases when companies expand over time or acquire new operational units. Direct operational costs—such as licensing fees, maintenance, and support—are just the tip of the iceberg. The real drain lies in inefficiencies. Imagine redundant data entry across systems by passing paper from one station to the other, duplicated efforts in troubleshooting, and the time wasted reconciling discrepancies. These hidden costs accumulate, affecting the bottom line. A centralized platform streamlines processes, reduces duplication, and optimizes resource allocation, ultimately saving both time and money.

Conclusion: paving the way to centralisation

The challenges of siloed control systems are clear, but the path forward is equally evident. Organizations must break down these barriers and transition toward integrated, centralized platforms. Such platforms offer scalability, ease of management, and adaptability—a solid foundation for digital transformation. By fostering new business models, interconnectivity, standardising data, encouraging innovation, and minimizing operational costs, businesses can thrive in today’s competitive landscape. So, let’s dismantle the silos and build bridges toward a digital transformation journey which goes beyond more efficient and a collaborative future.

In summary, the journey from silos to centralization is not just about technology; it’s a strategic shift that unlocks new possibilities.

Opportunities with centralised operational platforms

Let’s delve into the advantages of dismantling silos at the control level. With multiple control systems at the plant level, the challenge lies in integrating them into a single platform. Integrating each control system between each could lead to a complex web of connections that may become unmanageable over time, hindering innovation and transformation. Introducing a total new control system is also not recommended, this would be risky and very costly with limited ROI. Instead, one approach is to establish an operational layer or platform to which all control systems and new technologies like Internet of Things (IOT) can be connected.

Operational platforms and the concept of platform thinking are transformative in the industrial sectors, emphasizing the integration and optimization of processes across different organizational functions. These strategies are crucial for driving digital transformation, improving operational efficiency, and encouraging innovation.

The power of centralised operational platforms

In today’s dynamic business landscape, organizations are constantly seeking ways to transform and optimise their operations and gain a competitive edge. One strategic move that has gained prominence is transitioning from siloed control systems to a centralised operational platform. Let’s delve into the key benefits this transformation can bring:

1. Cost reduction: streamlining resources

Centralisation allows companies to consolidate their processes, systems, and how people made decisions and execute actions. By doing so, future proofing is the foundation, leading to significant operational agility and cost savings. Imagine a scenario where multiple control systems are now connected to the same platform. This implies that various personas, such as operators, managers, engineers, etc., have access to the same information but wish to analyze the data in a different way. In essence, this creates a single, reliable data source for all, enabling optimal decision-making that leads to opportunities and cost savings.

Maybe not in the beginning but other savings could be achieved by managing software licenses, hardware, and infrastructure more efficiently. A centralized platform streamlines these resources, eliminating unnecessary expenses. Moreover, efficient resource allocation becomes possible, resulting in a leaner and more cost-effective operation.

2. Improved productivity: collaboration and efficiency

Collaboration across departments is essential for productivity. A platform fosters seamless communication and collaboration. Teams can access shared data, collaborate on projects, and make informed decisions. For instance, a marketing team can easily coordinate with the production team to align product launches with market demand since the operational team has the right information at their fingertip. Digital transformation is not only about technology but about people therefore a one platform approach will accelerate the digital transformation journey for the organisation. Additionally, standardized processes reduce manual work, allowing employees to focus on value-added tasks. The result? Transformation opportunities, enhanced productivity and streamlined workflows.

3. Faster time-to-market: digital transformation agility in action

In today’s fast-paced business environment, agility is paramount. Centralised data and the connection of the control systems to a platform enable quicker decision-making. When a new market opportunity arises, companies can respond swiftly. Whether it’s launching a new product, adapting to changing customer preferences, or capitalizing on emerging trends, a centralized platform accelerates time-to-market. This agility ensures that businesses stay ahead of the curve and capitalize on growth opportunities.

4. Better exceptional customer experience: reliability and quality

Customers demand reliability, quality day in and day out. An operational platform contributes to a better customer experience in several ways. First, transforming and streamlining processes lead to higher product quality. When manufacturing, logistics, and customer service work in harmony, defects decrease, and delivery times improve. Second, reliable operations ensure that products are consistently available, meeting customer expectations. Ultimately, satisfied customers become loyal brand advocates.

5. Increased sustainability: a greener future

Sustainability is no longer a buzzword; it’s a business imperative. Centralized control systems play a crucial role in sustainability efforts. Currently, customers frequently focus on scope 1 and scope 2 initiatives, most likely CAPEX projects. An operational platform can assist by introducing the OPEX projects of emissions reduction. By having the information available in a platform, it becomes easier to have the information available to look into energy consumption. By monitoring energy use, waste production, and resource consumption, companies can implement eco-friendly practices. For instance, a platform can help to optimise energy usage in manufacturing plants or track supply chain emissions. Even better, have all the process information and energy information available in the same platform (today often disconnected) so the organisation is ready to optimise production and energy at the same time. These small steps collectively contribute to a greener, more sustainable future.

Conclusion: the path forward

Transitioning to an operational platform isn’t just about technology; it’s a strategic decision that impacts the entire organization. As businesses navigate the complexities of the modern world, embracing centralization offers a roadmap to success. From transformation to cost savings to enhanced customer satisfaction, the benefits are clear. So, take the leap, centralise your operations data, and unlock the full potential of your business.

Conclusion The transition from siloed control systems to an operational platform represents a significant shift towards achieving digital transformation in industrial companies. This shift not only addresses the immediate inefficiencies caused by isolated systems but also sets the stage for sustained growth and competitiveness in a digital-first world.