Configuration Lifecycle Management as a Platform for Cross-Functional Collaboration and Digital Transformation

With globalization, competition has increased. Ironically, the reliance on technology rather than human skills means that smart factories anywhere in the world can compete on a global scale. However, the fact that more customers expect the ability to customize and personalize products means that the ability to manage complexity and respond quickly to new customer demands is a more important competitive criterion.

An over-reliance on a silo-based organization can be counter-productive in such circumstances. If engineering, logistics, manufacturing, marketing, sales and service departments focus solely on making their own internal processes more efficient and less on how the end-to-end process performs, efficiency and scale can be achieved, but at the cost of agility, responsiveness and innovation.

Within each department, a tremendous team-spirit and group culture emerges that induces pride in being the best in their respective disciplines. However, this team loyalty also leads to competition between teams and a distrust of other departments. Strong department-level cultures also develop their own language and world-view, which can be exclusive and very different from those of other departments leading to a lack of understanding and basis for communication and collaboration.

In the fourth industrial revolution, the focus is no longer just on ensuring best-practice digital processes within each department silo, but also ensuring that the end-to-end product design, manufacturing, sales, delivery and service process, or product lifecycle, can be continuously improved and adapted to meet new customer demands and competitive challenges. This will require cross-functional collaboration on a scale unseen to date.

Several studies have shown that the main barrier to success with change initiatives and digital transformation efforts is the lack of cross-functional collaboration. Both BCG [1] and McKinsey [2] have indicated that the success rate of digital transformations is only 30%:

In both cases, BCG and McKinsey offer reasons for why digital transformations fail with a focus on the role of senior management in setting high aspirations, assembling the right team and putting the right monitoring infrastructure in place. In other words, transformation needs to be driven from the top. However, this point-of-view can often overlook the realities on the ground and consider the organization “change-resistant.”

In 2018, Gartner highlighted 6 barriers to digital transformation [3]:

1. A change-resisting culture: “People have to be able to work across boundaries and explore new ideas. In reality, most organizations are stuck in a culture of change-resistant silos and hierarchies”

2. Limited sharing and collaboration: “Issues of ownership and control of processes, information and systems make people reluctant to share their knowledge”

3. The business isn’t ready: “When the CIO or CDO wants to start the transformation process, it turns out that the business doesn’t have the skills or resources needed”

4. The talent gap: “Most organizations follow a traditional pattern — organized into functions such as IT, sales and supply chain and largely focused on operations. Change can be slow in this kind of environment”

5. The current practices don’t support the talent: “Highly structured and slow traditional processes don’t work for digital”

6. Change isn’t easy: “Over the long term, enterprises should build the organizational capabilities that make change simpler and faster. To do that, they should develop a platform-based strategy that supports continuous change and design principles and then innovate on top of that platform, allowing new services to draw from the platform and its core services”

Gartner highlights “change-resistant silos” with “slow traditional processes” where “people are reluctant to share their knowledge.” With such a defensive outlook, “change can be slow in this kind of environment,” as noted by Gartner. In such circumstances, finding the “skills and resources” that can help drive a top-down change initiative is difficult.

Gartner is clearly identifying the dangers of silo-based organizations to digital transformation initiatives and the importance of cross-functional collaboration. But, notice also the recommendation to develop a “platform-based strategy that supports continuous change.” Cross-functional collaboration needs to be enabled and supported by a platform-based strategy that can effectuate continuous change and innovation.

In their examination of why most transformations fail [4], McKinsey’s Harry Robinson stated that “business leaders looking to lock in COVID-19-era speed and adaptability would be wise to follow a simple process: reflect, decide, and deploy at scale.” According to McKinsey, many initiatives during COVID-19 were performed in haste. It is therefore prudent to reflect and decide on the most efficient path forward in addressing concerns. But, the key to success is to deploy at scale. This does not necessarily mean a “big-bang” approach. Ass McKinsey explained, “deploying at scale is typically unleashed by a deep transformation in one area (a frontrunner that is a good representation of what’s possible at scale), followed swiftly by company-wide transformation.”

This mirrors our own experience in Configit where big-bang approaches rarely achieve their objectives as there are too many unknowns or new ways of thinking that need to be confronted at once. Alternatively, a phased approach has proven to be the most successful and sustainable path to enduring success.

The majority of Configit customers begin with a limited scope focused on a specific challenge that needs to be addressed at a department level. This could be improving variant management in PLM systems or developing a more efficient CPQ sales system. Each phase is designed to deliver value by addressing a specific challenge or opportunity. When this is successfully accomplished, the next challenge or opportunity can be addressed.
However, Configuration Lifecycle Management, by its nature, is a cross-functional platform. Once the product configuration options information is available, it is accessible by all departments providing a reliable, up-to-date source of information. Integration is required to extract the information needed from supporting IT systems in various departments, but is not intrusive and doesn’t require each department to change its way of working.

By lending itself naturally to cross-functional collaboration initiatives, CLM provides a single-source-of-truth on product configuration information that can be interpreted by all.

When a single-source-of-truth is established, it not only improves efficiency by reducing the number of sources of data that need to be maintained and synchronized, but also automates and accelerates workflows due to the real-time availability of reliable data. By making this information available to all departments, it also facilitates a common language that enables collaboration on end-to-end challenges that improve the customer experience.

At the recent 2021 Configuration Lifecycle Management Virtual Summit, companies shared their experience with CLM implementations and the tangible benefits achieved. Accenture and Infosys provided data from their experience working with their clients, while Vestas provided detailed data on their CLM journey.

The benefits highlighted below were echoed by other companies presenting at the Summit, including faster time-to-market, significant effort and cost reduction, increased sales and margins all thanks to improved collaboration leveraged by CLM.

At Configit, we recommend a phased approach to CLM implementation with a focus on delivering value in each phase. This value is grounded in addressing specific challenges and opportunities. It is therefore prudent to start at a departmental level with those team members familiar with day-to-day issues that affect productivity and efficiency.

As CLM begins to deliver efficiency value at a departmental level, the platform is established to begin addressing more ambitious challenges related to the end-to-end process. As noted previously, it is at this level that the core competitive issues for the manufacturer can be addressed. CLM can thus be used to address challenges to cross-functional collaboration and sharing of knowledge in relation to product configuration information, opening new levels of digital transformation.

Firstly, the end-to-end product lifecycle and portfolio can be optimized by identifying challenges and opportunities at each step of the product lifecycle across departments. For example, challenges in sales and service can be related to design decisions that, once optimized, can increase sales and service efficiency. Information on the popularity and profitability of product variants and configuration options enables optimization of the product portfolio.

Finally, optimization can be taken to the next level by identifying opportunities to offer new product variants and options that address real, identified customer challenges and needs. It can also be used to investigate how the organization can adapt to new customer demands and requirements and how to roll-out new solutions faster and with fewer issues as potential challenges across the end-to-end product lifecycle are identified up-front and accommodated in the design from the beginning.

[1] BCG, P. Forth, T. Reichert, R. de Laubier, and S. Chakraborty, Flipping the Odds of Digital Transformation Success.
[2] McKinsey&Company, H. Robinson, Why do most transformations fail? A conversation with Harry Robinson.
[3] Gartner, Gartner Identifies Six Barriers to Becoming a Digital Business.
[4] McKinsey&Company, H. Robinson, Why do most transformations fail? A conversation with Harry Robinson.