Nicht kategorisiert Archive – ManagerWissen

Introduction of a technical compliance system – an interplay of compliance, R&D, and quality

Regina Gödde — Tue, 25 Feb 2025 10:44:06 +0000

A technical compliance management system can help to reduce the risk of product-related binding technical obligations. When introducing such a system, there are various points to consider that can be an essential lever to success. This includes, among other things, a clear understanding of the interfaces to compliance, legal, quality and R&D and the risk-based approach to defining the focus of the tCMS. The following article will go into these points in more detail.

Technical compliance is becoming increasingly important

Technical compliance or product compliance “means the adherence to the obligations binding on the company.” [1] This topic has received increasing attention in recent years, especially in the automotive industry, partly because regulatory requirements and product complexity are constantly increasing. As a result, more companies are introducing a technical compliance management system [2] and recognizing its importance. The question arises as to how this can be implemented sensibly and in accordance with current standards. It helps that many com panies already have compliance management systems. At the same time, the VDA (Verband der Automobilindustrie ) also publishes recommendations specifically for the implementation of product compliance systems. [1] Further more, the publications of the US Department of Justice provide orientation.

Technical compliance is part of an overarching compliance management system

The Schaeffler Group has compliance management systems for business integrity, exportcontrol, taxes, human rights, and technical compliance, among other things. It makes for these systems to be uniform and aligned with industry and assurance standards. At the Schaeffler Group, responsibility for this lies with the Group Chief Compliance Officer. It should also be noted that integrity is a fundamental component of the Schaeffler Group’s business practices. It is an essential element in all compliance systems and is enforced by uniform compliance management.

The Technical Compliance Management System (TCMS) at Schaeffler is established on the basis of the IDW PS 980 [3] auditing standard – analogous to the other compliance systems. It is an essential component of compliance management. This ensures a systematic approach of the overarching compliance management that utilizes the compliance competencies already available in the company. TCMS is also anchored within the Board of Management Department for Research and Development. This enables a good understanding of existing and new products and technologies. The organizational anchoring of a TCMS is company-specific and depends, among other things, on the respective responsibilities and organizational forms. It can be seen that technical compliance is often located in quality or compliance in addition to R&D [2].

When introducing a TCMS, which is a second-line responsibility, the connection to quality assurance should also be carefully considered. There are requirements to establish the product integrity of a product placed on the market [4].

A risk-based approach to a technical compliance system

Risk management is an essential part of any compliance management system. In order to develop an appropriate and effective TCMS, it is advisable to proceed in a risk-based manner, i.e. to systematically derive which topics the respective TCMS must focus on [1]. This is company-specific and depends on the respective products and markets. It should be noted that compliance with the binding obligations applies across the entire product lifecycle. From a process point of view, more than the respective product development process should be considered.

The assessment of technical compliance risks should be carried out regularly and system atically, so the main focus of a TCMS can adapt accordingly over time. This is an essential tool in the continuous development of a TCMS. For companies with a broad portfolio of different products, the TCMS risks of the product groups will vary. Accordingly, risk-based focal points must be identified in the TCMS.

The new version of the auditing standard IDW PS 980 explicitly addresses the fact that it is advisable to introduce a risk control matrix in order to identify and document the corresponding compliance risks [3]. With the help of the risk-based approach, i.e. identification of the relevant key topics, a risk-control matrix can be created in a structured manner. This is a helpful way to see if the identified risks are matched by sufficient measures and controls to reduce the risk. The effectiveness of the risk reduction must then still be tested in the application. In the next step, the risk-control matrix can be an essential factor in continuously improving and developing the TCMS.

Conclusion

As a result, the TCMS can reduce the corporate risk of TCMS incidents, take into account the due diligence of company management, and provide orientation for employees.

[1] Product Compliance, Volume 1: Product Compliance System;
VDA QMC; 1st edition; November 2023
[2] Compliance Transformation 2025+, PwC study.
[3] IDW Auditing Standard: Principles of Proper Auditing of Compliance Management Systems (IDW PS 980 n.F. 09.2022)
[4] Product integrity; VDA QMC; 1st edition; November 2018

Der Beitrag Introduction of a technical compliance system – an interplay of compliance, R&D, and quality erschien zuerst auf ManagerWissen.

Revolutionizing Business: PLM & PCMS Tackle Regulatory Hurdles and Fuel Innovation

Regina Gödde — Tue, 25 Feb 2025 10:34:30 +0000

Increasingly stringent regulatory demands for product compliance and the growing number of sustainability requirements put companies under increasing pressure. How can development, production, and sales meet the rising expectations? Product Lifecycle Management (PLM) and Product Compliance Management Systems (PCMS) offer forward-looking solutions to master this complexity. The combination of PLM and PCMS breaks down information silos and enables close collaboration across departmental boundaries—the result: more innovation, efficiency and safety.

EU countries are serious about their commitment to consumer protection and sustainability and are holding companies accountable. Among other things, the EU has agreed on the introduction of a digital product passport, which provides strict standards for product quality, safety, and the environment. This provides companies with a framework for building environmental and resource protection requirements. Information commitments include information on durability, interchangeability of components, repairability, reusability, resource efficiency, and CO₂footprint. This “transparency offensive” will be deployed gradually, with the first requirements introduced as early as 2027 for sectors that include textiles, electronics, plastics, and construction. Failure to comply can result in high penalties. Companies are, therefore, required to adapt to this at an early stage in order to secure competitive advantages and protect their brand reputation.

PLM is the most important, useful tool for companies to plan, control and map the entire lifecycle. The central retrieval and management option for all product information enables early integration into the development process, with optimizations that can be implemented faster and cost-effectively. In conjunction with a Product Compliance Management System (PCMS), conformity checks are also possible in real-time. Compliance with regulatory requirements can thus be ensured early in the product lifecycle during the development, procurement, production, or sales phases.

This article covers, among other things:

Compliance with regulatory requirements with the help of a PCMS. The systematic management of product-related regulatory requirements through a dedicated PCMS enables companies to adequately identify and implement increasingly complex legal requirements. Shorter and more secure development cycles provide a significant competitive advantage over the competition.
The transformative potential of PLM. Improved data visibility enables frictionless collaboration and makes it easier for cross-functional teams to access critical compliance information. This also fosters a culture of accountability and informed decision-making.
The benefits of integrating AI and ML into PLM. The integration of artificial intelligence (AI) or machine learning (ML) allows companies to analyze regulatory changes and their potential impact on product compliance in advance. This proactive approach makes it possible to anticipate challenges, identify compliance gaps, and take effective remedial action promptly.
A digital thread supports sustainability goals. Companies receive a dynamically adaptable view of a product’s data in a PLM system. The product-related information flow is continuously fed with all relevant data to ensure end-to-end traceability and control. This achieves a link between the digital and physical worlds.
Practical example: Introduction of a technical compliance management system – an interplay of compliance, R&D, and quality. A technical compliance management system is intended to help reduce risks associated with compliance requirements. When introducing such a system, there are various success factors to consider. This includes a clear understanding of the interfaces to compliance, legal, quality, and research & development (R&D), as well as the risk-based approach to defining the focus of the TCMS. In the practical article, Dr. Christian Gabriel and Dr. Jörg Metzger go into more detail about these two points and show how companies can benefit from a well-implemented tCMS.

Compliance with regulatory requirements is a decisive factor for market success. It is, therefore, crucial for companies to master complexity and make data-based decisions. Through the comprehensive integration of PLM and PCMS solutions, it is possible to efficiently manage the regulatory flood of requirements and maintain product compliance. The article provides recommendations for an investment-safe introduction and optimization of corresponding systems. Using successful case studies, shows the tangible benefits of early implementation and describes how companies can achieve a significant ROI in the long term.

Product Compliance: Mastering Current Regulatory Challenges with Confidence

Compliance with regulatory requirements is one of the biggest challenges for management. Requirements have become more stringent in recent years due to the increasing complexity of regulations and development dynamics. This is reflected in surveys like the PwC Global CEO Survey and the PwC Global Risk Survey. In addition, the regulatory environment is subject to ongoing adaptation, which means that companies are faced with the task of adopting instruments such as product compliance management systems for risk minimization and liability avoidance.

Compliance management systems have proven themselves in the past to ensure legal conformity and avoid rule violations. They help companies fulfill their duty of care and to protect themselves legally. A central aspect of this is the well-known motto “Follow the Money.” Payment flows are tracked to detect corruption or price fixing, or the origin of funds is determined in order to track down money laundering or sanctions violations. However, new regulatory requirements and the increasing number of high fines due to defective products have led to a realignment in compliance management. In recent years, there has been a significant shift towards stronger monitoring and safeguarding of the product area. Companies today are much more focused on implementing compliance structures along the entire value chain to minimize the risk of product defects and associated compliance violations.

This development marks a paradigm shift. Companies are recognizing that a comprehensive and preventive compliance strategy goes far beyond the integrity of finance-related processes and also affects the product itself. Compliance must be understood as an integral part of the product lifecycle in order to meet regulatory requirements, maintain consumer trust, and ensure the long-term success of the company. In this era of change, an agile and future-oriented compliance strategy is essential to meet ever-growing demands and secure competitive advantages.

Definition of product compliance and differentiation from quality management

The technical term product compliance does not yet have a uniform legal or generally applicable definition. Companies, industry associations, and consultancies have defined or explained the term in a similar way, although there are certain industry-specific nuances. It is only since 2016 that the increased use of the term has been observed in German-language literature. Based on various published definitions, product compliance can be described as follows: It is the adherence to product-related regulations that are binding on a company over the entire lifecycle of a product. In the German-speaking world, the term “technical compliance” is also used.

Productlife Cycle Management is a holistic strategy across all domains. Source: PwC

For decades, the focus of product compliance has been on safety compliance. This focus had the decisive advantage that customer requirements and regulatory requirements were usually congruent. This allowed quality management to concentrate strongly on meeting customer requirements. There are now a large number of product-related legal requirements focused on, for example, environmental and health. These new requirements can quickly lead to conflicting goals, not only between time, cost, and compliance but also between key quality criteria such as the shelf life of the product or the fulfillment of the requirements from the PFAS regulation (more on this later).

The distinction between product compliance management and quality management systems (QMS) is crucial to making the most of the advantages of both systems. While quality management traditionally focuses on compliance with functional requirements to meet customer requirements, compliance focuses on regulatory requirements. The latter contain a large number of non-functional requirements, for example with regard to environmental or data protection. Another key difference is that compliance includes not only compliance with regulations but also the risk of deliberate manipulation. This is less present in quality management. It is thus focusing more on controls, necessary segregation of duties and the involvement of the company’s legal representatives. Consequently, QMS and PCMS complement each other, ideally both to ensure product quality and, at the same time, to control liability management.

This extended approach to product compliance management becomes more important as the complexity of products increases. A current example of this is software integration into products, as is the case with modern car keys. In the past, a simple metal key stored in a case was sufficient. In total, these used perhaps three materials, manageable production steps, and a transparent process chain from A to Z. Today, the key is often no longer recognizable as such but as a card with a chip or an electronic module. More and more materials, integrated circuits, and software components are being used. These innovations increase complexity and represent an additional hurdle for compliance with regulatory requirements and for product compliance management. Compliance with the increasing regulatory requirements is determined not only by the physical properties of the product but also by the integrated software. This requires a holistic and flexible compliance strategy.

The Product Compliance Management System continues to be a young discipline with varying distribution. While 52% of the 21 companies surveyed as part of the PwC Compliance Transformation Study of the automotive industry currently have an independent PCMS, this proportion is only 17% in other sectors.

New legal requirements for companies

The European Union has set ambitious goals for a sustainable future. These include promoting the circular economy, protecting the environment and habitats, and strengthening consumer rights. To achieve these goals, various initiatives and legislation are being launched, including:

Digital Product Passport

The Digital Product Passport originates in the European Circular Economy Strategy and is closely linked to the Ecodesign Regulation. The Digital Product Passport creates a basic digital infrastructure for the recycling of products. In the future, many products will be provided with clearly identifiable markers in order to make information such as their CO₂ footprint, repairability, or toxic ingredients easily accessible. Corresponding laws and projects are currently expected by 2027. The starting point was formed by traction batteries over 2 kWh. The use of the product passport is anchored in the EU Battery Regulation and will be mandatory from February 2027.

PFAS

Per- and polyfluorinated alkyl compounds (PFAS) are a group of chemicals used in many everyday products. These include packaging, medicines, surface coatings, cosmetics, and electronic devices. They can have significant harmful effects on human health and the environment and are now found everywhere, from the lowest point on earth to breast milk. The EU has, therefore, taken measures to regulate PFAS to reduce the risk. The latest proposal is being revised and will be explored by various economic sectors by September 2024.

Successful PLM story requires board commitment, a clear vision and harmonization driven E2E processes. Source: PwC

EU Data Act

The EU Data Act is a new legislative project that aims to strengthen the governance of data in the EU. The Data Ordinance regulates the use of AI and data sharing, among other things. The focus is on individual access and the rights of users while at the same time ensuring the protection of personal data. In November 2023, the Council of the European Union adopted the EU Data Act, which will officially become enforceable in 2025.

Product Safety Regulation

The Product Safety Regulation (ProdSV) defines the requirements for the safety of products on the EU market. The Council of the EU adopted the ProdSV in April 2023. It ensured the safety of new consumer products, especially against the background of the digitization of products and the challenges of new business models. Due to advancing digitization and numerous different sales channels, the legislature has provided many changes that challenge economic actors in ensuring product compliance.

EU Deforestation Regulation

The EU Deforestation Regulation (EUDR) aims to stop global deforestation. The regulation prohibits importing products associated with illegal logging into the EU. This includes not only wood but also raw materials such as rubber, coffee, beef, palm oil, or soy. The EUDR was finally adopted in June 2023 and will become enforceable at the end of 2024 with a transitional period of 18 months.

These examples show that the EU legislature is taking a comprehensive approach to sustainable products. The focus is on the entire lifecycle of a product, from raw materials to the use of data and AI to market surveillance and product updates.

The aim is always:

to reduce ecological and social burdens,
strengthen the circular economy,
protect consumer rights.

Risk of sanctions and damage to the brand

Companies have to react accordingly to the new regulations, also because, in the global economic environment, there is a clear trend from the voluntary commitment of companies to criminally sanctioned regulations. This development can be observed in particular in the US, where violations of compliance regulations can have significant financial consequences.

A fictitious case illustrates the possible consequences of compliance violations in the US. If a company causes damage of 50 million US dollars, this can result in a penalty of 500 million US dollars, depending on the severity of the incident. The calculation of such penalties is based on US Sentencing Guidelines, which take into account the company’s offense level and culpability score. The Offense Level is a numerical value that reflects the severity of the crime, while the Culpability Score measures the offender’s culpability to determine an appropriate penalty. Multiplying these factors can quickly lead to a substantial fine. In addition to the fines, other costs may arise, such as compensation payments, buyback obligations, court costs, and legal sanctions, as well as loss of market share and reputational damage.

PwC offers a variety of different services around the topics of Compliance and PLM, which ideally complement each other. Source: PwC

A real-life case illustrates the importance of brand reputation and the potential consequences of compliance violations. A cycling gear manufacturer ran into trouble when a new, 2022 version of the equipment experienced software issues. After a local television report on possible risks, the EU country’s consumer protection authority stepped in. It imposed a ban on sales in the domestic market in early November 2023, which quickly expanded from international retailers to a global ban. As a consequence, the affected dealers not only had to stop selling the products but also had to recall equipment already sold. Although the manufacturer criticized the investigation methods of the consumer protection authority and successfully sued to stop the sales ban, the decision came too late. On the day the ban was lifted by the administrative court, the company filed for bankruptcy. This underlines the importance of effective product compliance, close cooperation with market supervisory authorities, and coordinated crisis communication to protect a company’s brand reputation.

Consistent compliance with regulatory standards

Due to cross-industry digitization and the use of agile development methods, technology cycles are becoming shorter and shorter. At the same time, the regulatory requirements applicable to a product are increasing rapidly. As a result of these two opposing forces, product compliance is increasingly becoming a central factor for the time-to-market of products.

The early consideration of regulatory requirements over the entire product lifecycle is essential to stay ahead of the competition. This starts in the ideation phase, in which possible compliance requirements for a product must be identified. During development, these requirements must be continuously reviewed, tracked, and, if necessary, adapted. The advantages of integrating compliance into this process at an early stage are manifold:

Reduction of development times: By considering regulatory requirements early, delays and rework in later development phases can be avoided.
Lower costs: Early integration can help avoid additional costs arising from adapting the product to regulatory requirements after development is complete.
Increased market safety: A compliant product reduces the risk of fines, product recalls, and other legal consequences.
Improved brand image: A company that makes the best possible effort to comply with regulatory standards is held in higher regard by customers and business partners.

A structured PCMS allows companies to manage compliance requirements sustainably. Effective product compliance management should include all essential processes and methods required to comply with regulatory requirements. In addition, it is important that all employees in all relevant departments are informed and trained on the applicable regulatory requirements. This helps ensure that compliance requirements are taken into account throughout the organization. The standardization that goes hand in hand with the systematic approach of a management system also enables a significant reduction in additional effort.

What are the benefits pf a PLM?

PLM for enterprise-wide data transparency

Originally, PLM was used as a digital tool to manage product-related documents and CAD data and to enable collaborative work through “check-in” / “check-out.” However, thanks to further developments and flexible integration options, a modern PLM system can now map complex process chains in order to better understand and control them. A product-centric approach enables the tracking of data and information about the product over the entire lifecycle, including the respective areas of design through recycling. An ideal basis for sustainability, as the product cannot be viewed in isolation but holistically with the involvement of users, manufacturers, the economy, and the environment.

PLM thus offers a strategic approach to managing the product lifecycle. It involves a mix of processes, systems, and people with the goal of optimizing product-related data and workflows within an organization. It is important that business processes are first optimized and harmonized before the digital transformation begins. PLM is a comprehensive framework that enables companies to efficiently manage product information. It is a central point of contact where data from different sources and departments converges. This unified platform improves collaboration, drives better decision-making, and ensures consistency in product development and management. Adopting PLM is not only an IT project and requires the attention of senior management to be successful.

By collecting and evaluating relevant data from the manufacturing process and use phase, also with regard to environmental impacts and performance, sustainability, and product information can be optimally linked, and dependencies and relationships can be identified. In addition, the technical basis for the definition and measurement of sustainability goals is created. The often abstract concept of sustainability is now filled with content.

In this way, not only meaningful, data-based sustainability indicators can be created but also orientation for the entire industry. This is necessary because only a comparable and measurable assessment of environmental impacts will lead to an industry-wide boost for sustainable product development, production, service, and recycling. PLM is destined to provide the data basis for these KPIs (Key Performance Indicators) in order to comply with and enable global benchmarks.

This can be achieved with PLM ecosystems that go beyond a linear view, i.e., are flexible and adaptable to meet product and compliance changes at any time. This is because companies have to adapt to permanent changes and new regulations in the long term. This is particularly true for companies that operate internationally.

Comply with the EU product passport with PLM

The imminent introduction of the EU product passport is a major challenge for companies that have to comply with strict quality, safety, and environmental standards. PLM is proving to be a critical enabler in managing this complexity, making it easier to meet requirements by providing a structured approach to managing product data. It centralizes information relevant to meeting requirements and allows real-time assessments and validations to be performed throughout the product lifecycle. This real-time monitoring ensures that products comply with regulatory standards from the design phase to market launch. In addition, PLM promotes collaboration between different organizational stakeholders by enabling interdisciplinary teams to work harmoniously to achieve compliance goals. PLM minimizes errors and discrepancies by providing a single source of compliance data, reducing compliance risks.

Data Management with PLM

A key benefit of PLM is the simplification of data management at different stages of the product lifecycle. Consolidating product-related data into a central repository allows PLM systems to easily access, share, and retrieve critical information. In addition, communication rules can be applied to avoid loss of information, e.g. through email communication. This centralized approach improves data quality and integrity while reducing the risks of fragmented or distributed data. It enables consistent documentation of compliance-relevant information and ensures that regulatory requirements are consistently met throughout the product lifecycle. PLM also simplifies workflows by automating repetitive tasks, increasing operational efficiency. Through standardized processes and automated workflows, PLM minimizes manual errors, accelerates time to market, and ensures compliance measures are seamlessly integrated into product development and manufacturing processes.

Respond proactively to change with PLM

In addition to data management, PLM systems offer a proactive approach to identifying and addressing regulatory issues. The integration of artificial intelligence (AI) and machine learning (ML) enables PLM systems to perform predictive analysis. AI and ML algorithms integrated with PLM solutions enable the analysis of historical compliance data and regulatory trends. This allows organizations to anticipate potential changes, identify compliance gaps, and proactively initiate corrective actions.

Various compliance requirements must be met along the different phases of the product life cycle. Source: PwC

PLM represents a forward-looking approach to compliance management, helping organizations keep pace with changing regulations. Essentially, PLM is not only used for data management, but also for proactively dealing with regulatory subtleties. It plays a critical role in navigating the complexities of the European Product Passport, helping organizations ensure compliance, mitigate risk and foster innovation as they grapple with the changing regulatory landscape.

In the context of compliance, the digital thread can be used in the following ways:

Implement proactive product compliance management with a central platform to detect potential violations in advance.
Create a digital thread for each individual product throughout its lifecycle with complete visibility across all systems.
Develop a flexible PLM system that can be easily adapted to new regulations for existing products.
Automate the creation of product-related documentation and the associated legal obligations to provide evidence.
Implement improved variant management.
Integrate with artificial intelligence (AI) for automated incorporation of regulatory information and changes.

Integrating AI and ML into PLM Systems

New analytical methods

With AI and ML support, PLM systems can analyze large amounts of regulatory data. This way, companies stay ahead of the ever-changing compliance requirements. The main strength of AI lies in the recognition of patterns and trends in large amounts of data. Using this approach, valuable insights can be gained for decision-making.

Compliant products are the result of having PLM associated with Corporate Compliance. Source: PwC

Know what’s coming

AI and ML algorithms can predict regulatory changes and assess their potential impact on compliance. This proactive approach allows organizations to anticipate and prepare for regulatory developments.

Detect errors before they occur

AI and ML identify compliance deviations by analyzing data from various sources, such as product specifications, regulations, and customer feedback. This allows companies to take proactive measures, such as implementing corrective actions and process improvements, to ensure compliance throughout the product lifecycle.

Improve product quality

An example from the automotive industry: Automotive SPICE v4.0 is a widely used framework for evaluating and improving software development processes in the automotive industry. The integration of AI and ML into PLM systems can improve the implementation of Automotive SPICE v4.0 and enable companies to achieve higher process maturity and product quality.

Implementation and optimization of PLM systems

The implementation of AI and ML in PLM systems can affect the complexity of the software solution and also affect costs. Careful planning – also in cooperation with partners – is therefore useful. Three points are in the foreground:

Keeping costs under control

Companies should carefully consider their specific requirements and consider working with experienced vendors who offer customized solutions. In addition, investing in employee training and change management initiatives can help alleviate concerns about complexity.

Create a roadmap

The successful adoption of AI and ML in PLM requires a well-defined strategy. Companies should define goals, coordinate stakeholders, and develop a roadmap for implementation. Working together in interdisciplinary teams and involving end-users in the decision-making process can foster a culture of innovation and ensure a successful rollout.

Achieve ROI

Early adopters of AI and ML in PLM can gain a significant competitive advantage. Organizations should focus on measuring and communicating their implementation efforts’ return on investment (ROI). This can include quantifying compliance improvements, efficiency gains, and improved product quality.

PLM provides an opportunity for change and sustainability

The integration of AI and ML into PLM systems provides organizations with a transformative opportunity to improve regulatory analysis, compliance management, and optimization of the entire product lifecycle. By following implementation and optimization best practices, organizations can unlock the full potential of AI and ML, gain a competitive advantage, and drive both sustainable growth and sustainability.

Against the background of the increasing complexity of compliance and safety regulations in connection with the pressure to innovate on the part of manufacturers, it is becoming increasingly important to think about sustainability from the beginning of the product lifecycle. Manual systems reach their limits when it comes to overseeing the impact of changes on current and planned products, and because time dependencies are not recorded. PLM systems help to develop sustainable solutions by using insights from products already in use to better size new product generations and thus save material or reduce wear, for example.

The earlier sustainability is considered, the better.

PLM also improves communication and coordination between stakeholders inside and outside the organization. It is possible to work from one platform, from the procurement and design of components to the disposal of hazardous materials and the reuse or recovery of other elements. The PLM application serves as a central control unit to ensure the consistency of the data, including the integration of modern technologies. The importance of this holistic view in terms of sustainability is also shown by calculations by the European Court of Auditors, according to which decisions in the design phase can account for up to 80 percent of the environmental impact of a product. This means that the earlier a company considers sustainability aspects in the product lifecycle, the better.

The advantages lie not only in the reduction of CO₂ emissions but also in an overall leaner and more efficient way of working. In addition, exchanging information enables the transfer of ideas and experiences. Systems and networks are emerging with cross-functional teams, third-party vendors, and geographically dispersed employees, leading to faster and more innovative product development. By integrating different players, it is not only possible to better meet environmental requirements but also to improve production efficiency and product quality. Sustainability does not take place in silos but requires cooperation, partnerships, and alliances. However, this networking can only succeed organizationally if technical integration is guaranteed.

Linking the digital and physical worlds

The digital thread is the ideal connecting element of the product lifecycle; in the PLM system, it enables the digital and physical worlds to be linked and provides a dynamically adaptable view of an asset’s data, as the product-related information strand is continuously fed with all relevant data to ensure end-to-end traceability and control.

Conclusions

Flexible PLM systems form the basis for engaging all stakeholders, meeting regulatory requirements, and ensuring product compliance. Companies that understand and implement new requirements better than their competitors – whether from a compliance or competitive perspective – extend their advantage; they are more creative, profitable, and faster. They gain a deeper insight into their value chain, which can be used for both the past and the future. After all, possible cascade effects of small changes at the beginning of a process chain can only be understood and analyzed in complex systems with digital support – ultimately leading to a better, greener and legally compliant product.

Der Beitrag Revolutionizing Business: PLM & PCMS Tackle Regulatory Hurdles and Fuel Innovation erschien zuerst auf ManagerWissen.

The Evolving Role of the CIO: From Service Provider to Technology Enabler

Regina Gödde — Tue, 25 Feb 2025 10:13:19 +0000

In today’s rapidly evolving technology landscape, organizations must not only keep pace with the latest advancements, such as AI, Cloud, Data Analytics, and Metaverse, but also assess their potential and impact on operations. To navigate this complex terrain, the role of the Chief Information Officer (CIO) and their respective IT organizations have become more critical for the company’s success than ever. This article explores the evolving role of the CIO in advancing a technology-enabled organization and discusses key elements that drive success at the Electronics business of Merck KGaA, Darmstadt, Germany.

“We are the partner of choice for digital technology enablement for our businesses to support the company’s growth” – Frank Ott, CIO at the Electronics business of Merck KGaA, Darmstadt, Germany describes the impact of the IT organization with a mindset shift. IT organizations move away from being mostly service providers towards act ing as strategic partner. Managing and living this shift requires clear guidance and organizational adjustments to be successful. Therefore, the IT organization at the Electronics business of Merck KGaA, Darmstadt, Germany has revisited its key functions and implemented an effective IT Business Partner network aligned with the respective business organization to focus on scaling digital technologies while meeting demands of the respective business units. The CIO’s ambition wasto “make partnering with IT easier”, which is a com mon business request confirming the high interest to increase interactions with IT.

Focusing on the CIO’s Key Functions

The role of the CIO has changed in recent times. To be truly accepted as a strategic partner, the modern CIO must fulfill two fundamental functions within an organization, being the technology enabler and at the same time the solution provider.

1. Being the trusted partner of choice (technology enabler function):

The CIO must empower the IT organization to become and remain the trusted partner of choice for the business concerning all classical as well as new technology areas around digital, data and IT topics. By establishing a strong foundation of technological competence and business know-how, the CIO can ensure that the IT organization becomes a valuable resource for the entire organization. This is going hand in hand with bringing the technology driven IT organization close into the business functions.

2. Starting with the value potential (solution provider function):

The CIO is deemed to ensure that the organization invests in the right technologies and solutions that address specific opportunities and needs of the respective business functions. This involves prioritizing the right challenges to be addressed rather than being distracted by too many new solutions. By starting with the root problem and understanding the conditions for success, the CIO can guide the organization towards the most suitable solutions. This approach ensures that the organization‘s technological investments align with its objectives and deliver tangible value. It is also crucial to ensure meaningful scaling, allowing technology investments to serve multiple purposes and optimize return on investment.

Creating a Skilled Network of IT Business Partners

To effectively address both, the technology enabler and solution provider functions, the CIO at the Electronics business of Merck KGaA, Darmstadt, Germany has established a network of IT Business Partners. These IT Business Partners act as single points of contact for the business, providing guidance and expertise on digital, data and IT matters.

IT Business Partner ensure that the IT strategy of the company meets the needs of the business units and is effectively implemented. They are therefore an important
strategic interface in
the company.

To be successful in their role, IT Business Partners are equipped with a deep understanding of both technology and the business, enabling them to translate business requirements into actionable technical concepts. With this knowledge, they can consult and advise the business in making informed decisions about technology investments.

The IT Business Partner is not just an executor, but much more a partner to find and implement the best suitable technologies.

At the Electronics business of Merck KGaA, Darmstadt, Germany this skilled network is capable of adapting to rapid technological changes and has simultaneously adopted a business unit-oriented setup ensuring it is closely aligned with the corresponding business organization.

Addressing the Biggest Value Pools

It needs to be emphasized that different upcoming technologies can easily trap the organization run ning behind all sorts of technologies, often with out scaling or synergy potential. It is easy to find a singular use case, which can be approached with new technology, but more important is to tackle the areas giving access to the biggest available value pools. By starting to emphasize the opportunity to be solved and to find suitable best-in-class solutions for these cases, companies can generate above average returns.

„IT investments are business investments.“
Frank Ott, CIO Electronics business at Merck KGaA, Darmstadt, Germany

The Electronics business of Merck KGaA, Darmstadt, Germany also looks at technology options beyond having the right use case available just in time. Nevertheless, overcoming the dilemma of just having pilot projects as well as not being able to scale technologies is a must-have change demand.

The role of IT Business Partners at the Electronics business of Merck KGaA, Darmstadt, Germany:

They act as single point of contact between the business and enabling functions.
They combine technical expertise with business know-how.
They live a technology-driven and solution-oriented mindset.
They are integrated, strategic advisors for the business.
They enable business through strategic fuctional roadmaps.

The IT Business Partner is the change agent in ensuring that the business case focus is kept during opportunity identification, solution selection and implementation. A mindset shift also needs to come from within the business organization that digital technologies are given a chance to prove their superiority against traditional technology changes more often.

Practical Examples

1. Digital Transformation in Quality Control:

To demonstrate the evolving role of the CIO as both a technology enabler and solution provider, let‘s consider a practical example in the Semiconductor industry. In this scenario, a company operates production sites that rely on manual, paper-based processes or has digitally isolated procedures. To enhance operational efficiency and gain a competitive advantage, the company aims to transition from reactive quality control measures to a data-driven and integrated approach. A digital enterprise twin is envisioned to optimize the supply network.

Efficiently achieving this digital transformation requires seamless access and processing of data generated throughout multiple enterprise processes. The utilization of diverse IoT devices, sensors and actors necessitates an automated approach, with the physical equipment integrated
into a standardized network. Addressing these technological challenges requires the convergence of IT and OT technologies and robust Cybersecurity measures. To unlock valuable insights using a digital twin, closed feedback loops must be established, which seamlessly integrate horizontal and vertical core business processes. Additionally, the digital architecture must be lean and scalable, accommodating newly built sites as well as retrofit ting environments.

Identifying technical solutions aligned with business needs demands a collaborative „One Team“ approach that integrates various disciplines, including IT, OT, Engineering, Data Science, Process Development, Manufacturing and Supply. In this context, the IT Business Partners at the Electronics business of Merck KGaA, Darmstadt, Germany play a pivotal role. They oversee and connect different disciplines within the realms of digital, data and IT, ensuring effective coordination, alignment, collaboration and a holistic approach throughout the digital transformation journey.

2. Move to more Cloud Usage:

IT Business Partners encounter a constant influx of external inputs. Among these discussions, the prevailing theme is that cloud technology is the future. However, merely migrating on-premises activities to the cloud doesn’t automatically yield the anticipated value-add. Cloud adoption, in and of itself, is not inherently superior or more cost-effective. Considering the technology enabler and solution provider function, the IT Business Partner needs to find the right balance between a cloud first vs. cloud smart strategy.

To successfully transition to the cloud, the IT Business Partner must again embrace the role of a change agent working hand-in-hand with the business. This shift involves more than a straightforward migration – it’s a profound transformation. Not only must internal IT processes be reevaluated, but equally critical are the adjustments to business processes. Once this awareness takes root, the journey towards cloud-like behaviors within business operations can commence.

Key Considerations for Cloud Adoption

1.Defining the End Goal:

Every cloud migration should have a clear purpose. Without a well-defined objective, organizations risk being caught “between the chairs” – struggling to decide between full cloud adoption and maintaining on-premises infrastructure. Bold cloud moves, coupled with a commitment to decommissioning data centers, can unlock the true cost and operational advantages of the Cloud.

2. Continuous Innovation:

Cloud usage demands a fresh perspective. Even with a defined end goal, there is no real end state. Regular system updates on the cloud introduce new functionalities. These functionalities need careful evaluation by the IT Business Partner in collaboration with relevant business functions. Most importantly these new functional options must be seen as advantages and not as hassles. The Cloud journey transcends technical shifts. It’s a holistic transformation that aligns IT and business processes. By embracing innovation and strategic goals, organizations can fully realize the benefits of the Cloud.

Conclusion

As technology continues to evolve at an unprecedented pace, the CIO‘s role in building a tech-enabled organization is multi-faceted and crucial for organizations to stay ahead. By focusing on enabling the IT organization to be the trusted partner of choice and keeping the value potential at the center of solution-seeking, the CIO can guide the organization towards effective and impactful technology investments.

The partner of choice:

The IT organization must become the preferredpartner for all corporate functions. This requires a strong foundation of technological competence and business acumen. A key success factor is to network IT with the specialist departments or even integrate it into them.

The value-adding partner:

CIOs must meet the specific requirements of the business units. It is no longer just about providing technologies, but about the creation of concrete and sustainable added value.

The Electronics business of Merck KGaA, Darmstadt, Germany has implemented an effective network of IT Business Partners to translate business needs into technological solutions. By
nurturing the skilled network and fostering a digital mindset, the CIO empowers the organization to adapt to technological changes, identify valuable opportunities, and drive successful digital transformation.

In conclusion, the CIO, redefined as a strategic partner and technology enabler, along with care
fully selected IT business partners, is crucial in navigating the complexities of the modern IT landscape to drive sustainable business success.

Der Beitrag The Evolving Role of the CIO: From Service Provider to Technology Enabler erschien zuerst auf ManagerWissen.

On the Right Track: How Deutsche Bahn is Using Artificial Intelligence to Optimize its Service and Operations

Regina Gödde — Tue, 25 Feb 2025 10:11:09 +0000

Punctuality, customer satisfaction, and a shortage of skilled workers: These are the key challenges currently facing Deutsche Bahn. How can digitalization, automation, and targeted deployment of artificial intelligence (AI) help master them? As the following insight into Deutsche Bahn’s digital transformation shows, there are many applications where AI can play a role – ranging from routine processes to AI-driven process optimization right through to AI-driven analysis of social media channels.

These days, rail is more popular than ever. Passenger numbers are rising, and the share of rail in freight transport is set to increase to 25 percent of the modal split. But this rise in demand must contend with an infrastructure in need of renovation and with a growing shortage of skilled workers. That’s why German rail operator Deutsche Bahn (DB) is shaping up for the future by embracing digitalization and automating various processes in different business units and areas of work.

Machines and AI are helping DB offset the declining number of skilled workers – for example, by automating time-consuming routine checks, such as manual inspection of freight car tarpaulins. This lightens the load on employees, freeing them up to focus on more value-adding, varied, and interesting tasks. Data analyses help further enhance the quality of DB’s services and provide passengers and companies with even better information.

How AI Is Driving Customer Satisfaction

Data Power and AI Enable Highly Complex Real-Time Analyses

With some 4.65 million passengers daily, DB Regio is Germany’s market leader in regional and local public transport and plays a pivotal role in the German mobility landscape. The DB Regio network is an important backbone for green mobility in conurbations, large cities, and rural areas.

Every day, DB Regio’s operations generate millions of data points – from sources including train operations, maintenance work, and customer feedback. The company leverages this data to ensure that its business processes and customer solutions are sustainable and efficient. Information from all business units is provided to the cloud-based data, analytics, and visualization platform OneSource in accordance with defined standards. And the quality of the data from the source systems is subject to AI-based checks.

This ensures a transparent source of consistently high-quality data for analytics and AI applications throughout the company. To ensure the technical accuracy of this data, DB Regio has also implemented a data governance system, which encompasses all the people, processes, and technologies involved and ensures that data is used effectively for maximum long-term value.

“Customer satisfaction, increased capacity, AI analyses: To better manage these challenges, a sound base of quality data is essential. That calls for a standardized data platform, which can function only if there’s an end-to-end quality control system for data – one that spans the whole company.”

Tanja Schlesinger

At DB Regio, it’s particularly important that data is available rapidly and reliably, especially for highly complex real-time analyses, such as scheduling of trains with tight timing and complex structures. A data-driven application supports planning processes by accurately forecasting the impact of scheduling interventions and enabling AI-driven optimizations. This avoids waiting times and congestion on busy routes and has helped reduce total delay times by 58,000 minutes over the past year.

Innovative Analytics Tool for Optimized Passenger Information

Passengers on regional and local transport place great value on being kept up to date about train arrival times, delays, cancellations, and alternative travel arrangements. Timely and consistent passenger information is therefore key to achieving high levels of customer satisfaction.

Transparent processes and comprehensive data analyses are used to identify information gaps and quality issues in communicating information. The aim is to understand which sources of information (for example, the DB Navigator smartphone app) passengers use at which point in their journey.

A multidimensional analytics tool delivers insight into how customers rate criteria such as the timeliness, comprehensiveness, and reliability of forecast times. The tools also shed light on differences in perception between commuters and leisure travelers, and between passengers on suburban and regional transport. Continuous improvements in passenger information will make rail a more attractive travel option and increase customer satisfaction.

Targeted Customer Communication – Also in Social Media Channels

To ensure that data is used optimally and to support sound decision-making, the Regiolytics dashboard tool visualizes extensive analyses of social media channels, providing a digital picture of customer communication and interaction. Regiolytics has shown, for example, that AI-generated suggestions for day trips achieve significantly better results and considerably improve user engagement – reducing the bounce rate by 50 percent, increasing average visit time by 50 percent, and doubling user loyalty. In this way, Regiolytics supports data-driven decision-making and helps tailor content to customer needs more effectively, creating content that is more relevant for customers and optimizing the use of resources.

These examples illustrate how DB Regio is addressing the lack of skilled workers and making regional and local transport a more attractive, environmentally friendly, and sustainable option. DB Cargo is also successfully leveraging data and AI to play its part in Deutsche Bahn’s Strong Rail initiative.

Improving Efficiency and Transparency with AI

Leveraging AI to Drive the Digital Transformation of Rail Logistics

DB Cargo, Deutsche Bahn’s rail freight company, is one of Europe’s leading providers of rail freight transport, operating in 17 European countries. As such, it has a key role to play in the modal shift of road freight to rail. Eventually, the company aims to replace 30 million truck journeys every year with rail. With the help of AI, rail freight transport is becoming more efficient and competitive, which is crucial if more road freight is to be transferred to environmentally friendly rail.

Through the company-wide adoption of AI, DB Cargo is making rail transport more attractive for customers and improving transport routes, while also improving its profitability. Real-time analysis of large data volumes using machine learning methods and AI algorithms calls for considerable processing power, which is provided by scalable cloud infrastructures. This allows complex algorithms to be processed in parallel and distributed across several computers.

Freight Car and Order Tracking with AI-Assisted Forecasting

For its Wagon Intelligence project, DB Cargo has equipped its entire freight car fleet with GPS devices and sensors. The resulting position data is then linked with existing systems, enabling automatic mapping of departures and arrivals, border crossings, and the position of freight cars.

The data generated is also linked with context data, such as order and infrastructure data, to generate value-added business events (VABEs for short). This information can then be used to check whether the movement of freight cars is in line with the customer’s order; in other words, whether the freight car is in the right place at the right time.

The major benefits are rapid information provision and end-to-end transparency, enabling DB Cargo customers to track their freight cars throughout Europe in real time. In conjunction with DB Cargo’s recently rolled out customer service and sales application (casa), this approach makes customized, easily accessible logistics solutions a reality. The real-time data is used to provide customers with AI-driven forecasts about the arrival time of their freight cars, for example. The result: more attractive services, higher revenue, and greater profitability.

Fewer Delays, Improved Maintenance, and Better Customer Service – All Thanks to AI

AI-driven process optimization: AI systems can optimize rail capacity, reduce delays, and compensate for the shortage of skilled workers.
One-stop provision of quality-assured data: The cloud-based data platform OneSource supports innovative, customer-oriented solutions.
Visual AI for fleet maintenance: AI-assisted camera diagnostics enable intelligent quality assurance, cost optimization, and prediction of maintenance tasks.
Real-time analyses in freight transport: DB Cargo customers can track their freight cars live and receive AI-assisted forecasts on the arrival time of their deliveries.

Smart Automation of Manual Maintenance Processes

Optimizing maintenance processes, a central area at DB Cargo, increases productive operation of the freight car fleet. This, in turn, improves transport quality for customers, accelerating the shift in intermodal freight transport from road to rail. The move from manual to automated visual inspections is helping tackle the shortage of skilled workers.

With the aid of AI, damage to the interior and exterior of freight cars is detected quickly and efficiently. In particular, this allows minor damage to be repaired swiftly, reducing the costs associated with damaged freight cars, and improving maintenance and servicing quality.

Smart predictive maintenance is one of the areas that DB Cargo is focusing on. The aim here is to return freight cars out of maintenance and into productive operation more quickly. To shorten the inspection process, a total of thirteen camera gates were positioned on the humps at eight classification yards. Up to 10,000 freight cars a day are scanned for damage, creating up to 300,000 high-resolution images. These extensive data sets were used to train an AI to detect specific damage. As a result, more than 70 percent of freight car damage can be detected at an earlier stage of the logistics process, and the findings of the analyses made available to maintenance plant employees. This makes for more precise maintenance and allows repairs to be coordinated more efficiently.

The AI now also detects cargo residues or defective roof tarpaulins automatically. This lightens the load on employees and reduces inspection times from several hours to just a few minutes.

DB Cargo has also joined forces with the steel industry to trial automated scrap detection. Detecting scrap at an early stage, before deliveries arrive, makes it easier for customers to schedule incoming freight cars for optimized production processes.

In addition, DB Cargo is using AI to analyze brake-disk thickness. Here, the technology helps identify maintenance requirements in good time and complete the work proactively, reducing the number of unscheduled freight car outages during operation. Through this and other initiatives, DB Cargo is highlighting the interplay of AI and digital innovations, making its rail offerings a more attractive option than road transport.

Conclusion

AI is a game changer for rail freight transportation, both in terms of improving customer satisfaction and maximizing process efficiency. The effectiveness of the technologies is already being felt throughout the Group. AI is now an integral part of the long-term corporate strategy and will be continually expanded. In addition to increasing capacity and optimizing train services, it also contributes to greater customer satisfaction and reduces delays. All of which strengthens rail as an attractive, environmentally friendly, and sustainable transportation system that has a key role to play in climate-neutral mobility and the successful decarbonization of transport in Germany.

Der Beitrag On the Right Track: How Deutsche Bahn is Using Artificial Intelligence to Optimize its Service and Operations erschien zuerst auf ManagerWissen.

How ISS is Transforming Facility Services with the Cloud, IoT, and AI

Regina Gödde — Tue, 25 Feb 2025 09:50:26 +0000

In just three years, Danish facility management services group ISS, which has over 350,000 employees, has taken its digital transformation to a new level, turning a small IT support function into a global, agile IT organization. Technology is now a clear USP for the ISS brand. Digital products developed in-house complement the group’s traditional services of cleaning, food services, facility management, and workplace experience. None of this would have been possible without the cloud, the Internet of Things (IoT), and AI.

Technology Leadership in a Non-Digitalized Industry

With a history dating back 120 years, leading provider of integrated facility services, ISS, is one of the 40 biggest private sector employers in the world, with more than 350,000 employees in 30+ locations around the world. Equipping the workforce with digital tools offered the potential to bring vast improvements for both people experience and operational efficiency throughout the company.

In addition to cybersecurity, cloud platforms are the key to a stable, secure, integrated, agile, and scalable IT infrastructure

However, there were also significant challenges associated with this. These included a major financial setback in 2020 due to the coronavirus pandemic, a cyberattack, as well as uncertainty among customers about whether the future of the workplace would be more home or office based. The facility services market is complex, diverse, margin sensitive, and not digitalized for the most part. It is also difficult to recruit specialists and retain them in the long term. In addition, due to the increasing focus on sustainability and climate neutrality, ISS aims to transform the more than 50,000 buildings in its service portfolio into sustainable places.

In 2021, therefore, the Supervisory and Management Board committed to the goal of making ISS the technology leader in the facility services industry and developing ISS Smart Tech for people, places, and the planet.

The Interplay of IT Strategy, Organization, and People Focus

Our digital strategy is based on three pillars:

The global ISS tech team provides customers and employees with intuitive digital solutions, such as a smart.cleaning app for the scheduling and management of shifts and tasks. It also developed the MyISS platform, which gives every employee a digital identity and access to various services.
ISS tech products are offered on a scalable and cyber-secure cloud-first infrastructure.
The company’s globally integrated tech team is responsible for developing and managing a modular ISS Smart Tech Ecosystem. The three central tech team locations comprise the newly opened Technology Center in Porto, which focuses on software development, the hub in Warsaw, and the Group headquarters in Copenhagen.

A successful digital transformation relies on close cooperation between IT and the other departments within the company. Ensuring that IT management is represented on the relevant boards is crucial to ensure fair and equal cooperation. The global CIDO is therefore an integral member of the international company’s central Executive Group Management team. There is also a CIDO in each region and each country organization as part of the regional or local management team, with a direct reporting line to the global CIDO.

ISS pursues a product-oriented approach, meaning that an agile product team accompanies an ISS service product throughout its life cycle. IT and tech employees are represented in these teams, which helps to ensure close cooperation between business and IT across all levels. For IT, qualitative criteria such as satisfied users and, where developed for external customers, the commercial success of a product are much more important than the number of features or components developed.

As a people company, ISS believes that people make places and places make people. With more than 350,000 employees worldwide, creating a sense of unity and belonging is a major challenge. Technology can play a key role in this, which is why ISS set up the global platform MyISS. Available as an app or website, MyISS offers a central platform and resource for accessing the latest news, tools, and information, and learning more about the corporate culture and values. So far, it is available to 125,000 users, and more rollouts are to follow this year. MyISS has replaced local, sometimes unmaintained platforms and is constantly delivering new features, such as payroll accounting, office news, and events.

ISS’ strategic approach to digital transformation:

Digital transformation as a differentiation strategy: ISS has evolved from a company with traditional IT support to an agile, technology-driven organization. This move has clearly set the ISS brand apart and added digital products to the offering.
Establishment of a secure and scalable IT infrastructure: ISS is pursuing a cloud-first strategy to create a flexible, scalable, and secure environment for its digital services. This will enable the company to adapt quickly to customer requirements and use resources efficiently.
People experience: Digital solutions promote a sense of belonging and unity among the more than 350,000 employees worldwide. With MyISS, ISS has created a global platform for the sharing of experience.
Integration of AI and IoT in facility management: Using IoT and AI enables data-driven facility management to optimize operational processes and set new standards in service.

Over Ten Countries Have Already Migrated to the Cloud, with More to Follow in 2024

In addition to cybersecurity, the cloud is the key to meeting customer demand for a stable, secure, integrated, agile, and scalable IT infrastructure. A global bank, for example, expects all of its service partners to comply with the highest cybersecurity standards and zero risk when sourcing digital solutions from ISS. The fact that ISS solutions are hosted in the cloud is a big advantage.

ISS therefore continues to invest in state-of-the-art cybersecurity technology and a cloud-first architecture. Ten countries are already in the cloud, with more to follow this year, business case permitting. The use of cloud services that can be individually adapted to customer needs offers many advantages. For instance, cloud platforms offer scalability and agility, meaning that services can be provided quickly and capacities easily increased or reduced without the need for long-term investment (sunk costs). This is an important factor both for the company itself and for customers. In ISS’ experience, the cloud is also more cost-efficient in the long term in most cases.

Technology to Reimagine the World of Work: ISS Smart Tech 4 People, Places & the Planet. Source: ISS

From a central cloud transformation office, ISS conducts analyses in conjunction with the country locations and then manages the migration.

Data-Driven Facility Management with IoT in Buildings

As the largest cleaning company in the world, with more than 40,000 customers, ISS expects its services to be of the highest quality and efficiency. IoT plays an important role in this as the company is equipping customer buildings with sensors to work smarter and more efficiently. With many airports, hospitals, factories, and office buildings in the company’s international portfolio, the data from the sensors can be used to analyze and optimize business operations and increase customer satisfaction.

ISS’ customers want to leverage the data to understand their buildings and employees better and to save costs and energy. ISS’ Building on a Page solution is the control tool for data-driven facility management. The customer sees the most important information and live data about the building on one interface, the ‘page’. Key figures for the buildings include occupancy rates, financial data, and sustainability metrics. ISS is currently also working on an AI feature that will provide automated answers to user questions.

Artificial Intelligence Boosts Productivity and Employee Experience

The topic of artificial intelligence is currently dominating the world of technology and business. In the facility services industry, ISS sees enormous potential in redefining energy management, improving building sustainability, enhancing the workplace experience, and increasing operational efficiency. To gain maximum value from this disruptive technology, however, it is essential to develop a sustainable strategy, prioritize use cases, and put in place the necessary capabilities. To this end, ISS has launched a global AI program involving employees from across all departments and regions, which aims to consolidate AI use cases, promote collaboration and knowledge sharing in an AI community, and build a global AI portfolio.

In order to use AI successfully and responsibly, ISS has launched a global AI programme that brings together employees from different functions and regions. The aim is to develop and consolidate AI use cases, promote collaboration in an AI community and build a global AI portfolio.

AI will continue to be incorporated within ISS’ digital products for employees and customers wherever it offers tangible benefits and where responsible use can be assured. The company has a strict policy to use AI in the workplace only if it promotes unity, encourages human creativity, or supports well-being.

This might include, for example, developing chatbots based on generative AI for contract drafting (e.g. “Which services are included in this contract?”) or to support sales with the creation of text for quotations and tenders.

AI is also embedded in the company’s Workplace Experience app. In a hybrid working world, encouraging employees to spend more time in the office can be a challenge. The Workplace Experience app was developed with these new ways of working in mind and to connect people with each other and their workplaces. The app is used by customers, but is also used in ISS’ offices. Employees now have the digital office in their pocket. The app’s features are designed to improve wellbeing, engagement, community, and productivity by offering room and desk booking, indoor navigation, and event

information, for example. With the support of Microsoft and other partners, the app is continually updated with additional AI-assisted features; for example, for office visit forecasts or with chatbots that improve onboarding or make day-to-day work more productive.

After three years of digital transformation, ISS has found that a clear digital strategy not only helps to improve internal processes and the employee experience, but also supports sustainable business development and differentiation from the competition. The strategic use of the three technology pillars cloud, IoT, and AI is key.

Der Beitrag How ISS is Transforming Facility Services with the Cloud, IoT, and AI erschien zuerst auf ManagerWissen.

The Technology Revolution: Mastering the Challenges of Radical Change

Regina Gödde — Tue, 25 Feb 2025 09:47:26 +0000

Yesterday, chatbots. Today, video AI. Tomorrow, a seat on the board? Technology is more important than ever. Generative AI has disrupted the market at a pace that was unimaginable until recently. Meanwhile, the cloud is paving the way for more technological revolutions. These developments are radically changing how companies work – from product development right through to aftersales. What are the organizational and operational factors that you should consider if your business is to generate value going forward?

Suddenly, everything started moving incredibly fast. After decades of AI research, the Large Language Model ChatGPT was launched in November 2022. What came next was a wake-up call and heralded the dawn of a new era. In just five days, five million users signed up for the tool. They used it to write essays for school, develop business plans, draft letters to lawyers, and provide support with programming. And in just a few weeks, the technology had swept through society and the economy like wildfire. It has changed our daily lives and is now disrupting long-established business processes. Generative AI, a term formerly unknown outside scientific circles, is now part of our everyday vocabulary.

AI has made it very clear what exponential technological growth feels like – and how fundamentally it impacts strategies and decision-making processes. In the future, this radically different pace will become the norm. And one of its effects will be to transform the role of CIO.

Unlimited IT Resources for All

It’s worth noting that none of this would have been possible without another revolution: the cloud. Initially, companies used the cloud as a way of radically reducing costs by outsourcing servers, data storage, and networks. Today, it has a much higher strategic value, offering organizations almost unlimited processing power. According to IDC, one in four German companies already use the cloud to gain rapid access to innovative technologies such as AI. Additionally, Accenture Research has found that companies that use the cloud to transform their business models and products develop innovations up to three times faster than their competitors. Most future business models and sources of revenue are likely to be based on the cloud.

Keeping a Cool Head in a Fast-Paced World

These developments show that we’ve now entered an “exponential age of technology”. And this brings with it the danger of companies finding themselves overwhelmed, especially in Germany. Given the current unpredictable business environment and increasing global competition, managers are looking for ways to boost their resilience against a backdrop of uncertainty. At the same time, they want to secure their future by driving innovation and developing business opportunities. To master these challenges, they must implement revolutionary technologies and completely rethink processes while maintaining ongoing operations.

But Where’s the Added Value?

Another challenge faced by companies is the value gap. Many decision-makers, from CEOs to CFOs, are unsure which of the countless innovative cloud services and platforms offer true added value. And most companies still have no use cases for their specific business. Often this is simply because technologies, ranging from AI to the Industrial Internet of Things, are seen as a matter for IT and are therefore only touched on at board level. That’s something that has to change.

“Every board should include a seat for a Technology Steward.”

Five Key Pieces of Advice

Nowadays, every company – from consultancy firms to retailers – is a tech company. Managers and employees alike must adapt to this. To remain competitive in this new environment, you should consider the following points:

1.Accelerate Innovation – Shorten Project Times

Military conflicts, inflation, disruptions in the supply of raw materials: Geopolitical and macroeconomic uncertainties have been on the rise for years, and the situation looks unlikely to change. New technologies are key to enabling rapid responses to changing markets and the swift adoption of new business models.

But lengthy implementation projects are not the way to go. In the past, a planning horizon of five to seven years was the only option. Today, this approach is totally out of tune with business reality. Projects that run for more than two years often prevent organizations from reaping the added value they’d hoped for. That’s hardly surprising when what originally appeared to be an innovation is already outdated by the time it goes live – or turns out to be nothing more than hype.

“Lengthy technology projects don’t meet today’s entrepreneurial requirements”

Standardized and rapidly adaptable cloud services enable enterprises to avoid these pitfalls. Here, it’s important to identify the points at which your project can be broken down into smaller subprojects, each delivering its own quick wins. For example, instead of redesigning the entire supply chain at once, start out by redesigning material requirements planning, then tackle procurement, and so on.

All for All – Democratize Technology

Many companies subscribe to the long-outdated but still widely held belief that the business units’ job is to take care of the business while the IT department makes sure that hardware and software keep running. But in today’s world, this dogmatic approach poses entrepreneurial risks. Technology is now at the heart of every business process. And this means that each and every employee must get to grips with it. How can generative AI help with developing a go-to-market strategy? Or drafting legal documents? Or analyzing business models? These aren’t questions that the IT department can answer; the answers must come from the relevant business units. In fact, these units can often implement suitable solutions right away – in line with clearly defined compliance and governance rules, of course. And if there’s currently no suitable solution on the market, they may use low-code/no-code tools to create one of their own.

At some companies, this paradigm shift is coming about almost as a matter of course. But don’t assume that this is always the case. Be sure to communicate the new expectations to your employees and provide the tools and learning resources they need to meet them.

3.Break Down Silos – Build Multifaceted Teams

As new technological options proliferate, the time available to evaluate and test new technologies and use them to shape new processes is becoming increasingly scarce. Traditional organizational structures are simply not up to this. What companies need instead are multifaceted product teams that draw together experts from across the company. This provides you with the necessary 360-degree view. The team’s task is to quickly assess the impact of a specific tech project on other business units and processes, and to reach an immediate decision.

“Multifaceted” doesn’t just entail complementary skillsets and experience, but also diverse mindsets. In an era of exponential technological progress, this is often more important than decades of expert knowledge.

4.Hire for Mindset – Not for Skills

By contrast, up-to-date tech skills are among the very scarcest resources. Virtually all companies are vying to attract the few technology experts on the market. There’s not much you can do about this situation, but you can change the way you deal with it.

“There’s not much we can do about the shortage of skilled workers, but we can change how we deal with it.”

Skills and knowledge are becoming obsolete faster than ever before. Every training program and curriculum lags far behind the market. As a result, your applicants’ qualifications are less important than they were just a few years ago.

Today, what counts is mindset. Companies need talented people who embrace change, people who are enthusiastic about technological trends and eager to try out new things. Adapt your recruitment efforts to reflect this – because this will be the core competency of the coming years. Talents of this kind become influencers, spreading their enthusiasm for technology throughout the organization – even among team members who may be reluctant to embrace change.

5.Changes at Board Level – Giving Technology Stewards a Seat at the Table

To reiterate: Technology can’t remain a matter for IT departments alone. It’s an integral part of your business. In view of this, it’s not just the business units that need a change of mindset, but above all the Management Board.

Every company needs a technology steward who can gauge whether planned technology projects can actually deliver the desired added value and whether they’re a good fit for the company’s existing architecture. Ideally, this steward should have a permanent position at the highest management level, but that’s not always possible or at least not at once. In such cases, the minimum requirement is that the steward be on an equal footing with the Management Board in discussions and have the power to approve strategic decisions from a technical perspective. So, this is more than merely an advisory role.

Operational Implementation – Notes on the Cloud Strategy

So much for strategic considerations to address the sheer volume of disruptive technologies and the speed with which they’re coming onto the market. As shown, artificial intelligence and the cloud hold the greatest potential because they pave the way for further innovations. This is where your operational priorities should lie if you want to generate maximum benefit in as little time as possible.

“Use the evergreen principle wherever possible.”

When it comes to the cloud, the focus is on scaling across the entire enterprise:

Map your business processes via standardized cloud platforms wherever possible. For some 80 percent of processes, this has long been easily achievable. Only depart from the standard for processes that are real differentiators and give your company its competitive edge.
Establish a workflow for running structured checks on the deluge of new cloud services and discuss their business potential with the relevant decision-makers.
Use the evergreen principle: Cloud providers regularly deliver innovations within the scope of their services, automatically keeping you up to speed with the very latest technology. This saves resources, but it calls for a different form of change management.

“The bottom line: AI must deliver tangible business value.”

Generative AI: The Time for Experimenting Is Over

While cloud platforms are well established, investment in generative AI is still in its infancy. In fact, 73% of German companies plan to increase their spending on data and AI projects this year. But what should you bear in mind when it comes to implementation? In the past twelve months, Accenture has completed more than 1,000 GenAI projects worldwide. Based on our experience, we recommend the following:

Enter into partnerships with universities, think tanks, or technology companies. This will help you gain a better understanding of the opportunities, limits, and risks associated with AI. It will also help increase your company’s AI maturity.
Forget the experimentation phase and go all out on AI projects that you can and want to scale going forward.
Only implement projects that deliver genuine added value for your customers. Too many initiatives only appear groundbreaking or exciting at first sight. So, be sure to consider EBITDA before every project.

Real-World Examples

Businesses are staking their claims in AI right now. Over the coming 12 to 18 months, they’ll be aiming to drive forward and scale up their AI projects as quickly as possible. This is the general trend in view of the speed with which many technologies are transforming our world. Companies that keep on trying to perfect new products and processes before rolling them out will be left far behind, with no chance of catching up with the competition. The following pages give you an insight into big-name companies’ technology projects and show how these companies are addressing the new normal. You’ll also learn more about the work of the CIO of tomorrow. I hope you’ll find this inspiring reading.

Der Beitrag The Technology Revolution: Mastering the Challenges of Radical Change erschien zuerst auf ManagerWissen.

Digitalization in the Lufthansa Group

Regina Gödde — Tue, 25 Feb 2025 09:06:08 +0000

This interview provides a comprehensive insight into the digital transformation in the Lufthansa Group and the crucial role of the Digital Hangar. The focus is on agile collaboration models, enterprise architecture and cloud technologies that create the cultural and technological basis for future innovations. The Digital Hangar is at the heart of this transformation and will make a significant contribution to the long-term competitiveness of the Lufthansa Group.

Christoph Fuchs: Mr. Spannbauer, can you tell us something about the context of the Digital Hangar and how the Lufthansa Group came to create this unit?

Christian Spannbauer: The Lufthansa Group has the Digital Hangar to drive digitalization forward holistically and strategically. The pandemic was a disruptive turning point that forced us to act even faster and develop a clear, focused approach to digitalization – one that puts passengers even more at the center. Digitization must be understood comprehensively in such a context: it concerns the core business model as well as the underlying technology and architecture, the “operating model” (i.e. the way the teams work together) and, of course, the established culture. All these aspects must be considered holistically in order to achieve a sustainable transformation.

Christoph Fuchs: That sounds like an ambitious project. How did you go about initiating this transformation?

Christian Spannbauer: We deliberately decided against a “greenfield” approach. This would have given us the freedom to start from scratch – at least in theory. But in such a large and established group as the Lufthansa Group, this is simply not realistic. Instead, we have opted for an integrated transformation that runs in two strands:

The first strand is the medium to long-term renewal and streamlining of our existing IT architecture. This includes, for example, the consolidation of various data warehouses into a central data platform. Enterprise architecture plays a central role here in reducing complexity and gradually modernizing existing systems.

The second strand concerns more short-term measures: We have created a technical abstraction layer that allows us to develop business logic, for example, without having to intervene in the old legacy world. While this has created additional complexity, it has also given us the flexibility we need to decouple the teams from each other and enable parallel work.

At a glance: The cornerstones of the Digital Hangar in the Lufthansa Group

The Digital Hangar, the digital business unit of the Lufthansa Group, sets new standards for the digital product experience of customers.
Digital products are deployed and scaled much faster – for noticeably positive effects across all platforms.
Catalyst for the development and scaling of agile working methods in the Lufthansa Group, in particular promoting the autonomy and personal responsibility of the teams.
Advanced technical platforms with modular architecture concepts, highly scalable cloud technology and modern AI applications.
The Digital Hangar will make the Lufthansa Group more future-oriented, customer-oriented and efficient.

Christoph Fuchs: This is somewhat reminiscent of a classic 2-speed approach, in which old and new systems are operated in parallel and you end up with two separate IT departments. Was this a conscious decision?

Christian Spannbauer: In fact, we deliberately decided against a classic 2-speed model, as we are convinced that only a holistic approach that adapts the approach (agile/non-agile) to the respective task will lead to success in the end. In the case of plannable tasks or if time-to-market is secondary, we equally choose a classic project approach. It is important that the chosen approaches do not imply any evaluation of the teams. Another important goal was to create a clearly defined target image together so that all teams know what they are working towards. To promote cross-disciplinary exchange, we have established “Communities of Practice” in which an exchange takes place regardless of team membership. In this way, we have managed to combine both worlds and establish a common understanding of the goals of digitalization.

Christoph Fuchs: That sounds like a demanding task for management. How did you overcome this challenge?

Christian Spannbauer: Management plays a decisive role in such transformation processes. The understanding of management as a mere ability to manage teams is no longer adequate in this area. Especially in the past, managers were often seen as generalists who took care of “people issues”. But that is far from sufficient in such a context. For a successful digital transformation, it is essential that managers also bring a strong content perspective (“thought leadership”) and actively shape the technological and strategic direction. They must be able to understand the challenges of digitalization and develop solutions together with the teams. Without the necessary expertise and understanding of the interrelationships, it is almost impossible to initiate real change and transformation.

Christoph Fuchs: What exactly do you mean by a “real transformation”? How can you tell that an organization has actually made this change?

Christian Spannbauer: A real transformation cannot be measured by implementing agile methods or frameworks alone. From the outside, two organizations that work according to agile principles can look very similar: both work with Scrum, have appointed product owners, and conduct sprints. But that doesn’t necessarily mean that both organizations are truly agile. The difference often lies in the subtleties of the way they work. Do the product teams really work with equal members on an equal footing? Or is there one person who de facto dominates the team and enforces a classic waterfall model? Often, the agile approach is reduced to the iteration of software delivery (i.e. the actual implementation in code) instead of starting with exploration and solving the overarching challenge. In these cases, the result is often that numerous features – i.e. new functions – are integrated into the software, but their relevance for the customer or the challenge to be solved is not guaranteed. An organization that works in a truly agile way empowers teams to act autonomously, but not uncoordinated, and to take responsibility themselves. This is illustrated by the principle “you built it, you run it, you own it”.

Christoph Fuchs: What is the decisive difference in the way the Digital Hangar works?

Christian Spannbauer: The main difference is that we give our teams clear goals (“outcomes”), but we don’t tell them how they should achieve these goals. We focus on empowerment. This means that the teams have the freedom to develop and implement their own solutions. Management creates the framework
conditions and ensures that teams have the necessary resources and tools to do their jobs successfully. We’ve found that this approach leads to more innovation because teams aren’t constrained by bureaucratic processes or rigid constraints. It’s about delivering results – the ways to get there can be designed flexibly. Nevertheless, it is important that the teams proceed methodically, e.g. choose appropriate metrics to track and ultimately ensure the achievement of goals. This is the real performance and innovation booster.

The Lufthansa Group’s Digital Hangar is a driver for a holistic digital transformation – with agile methods, innovative solutions and an effective enterprise architecture to optimize the customer journey and create a future-proof IT landscape.

Christoph Fuchs: Can you give an example of an innovation that has emerged from this type of cooperation?

Christian Spannbauer: A good example of this is the development of our new Lufthansa app. Our teams, which include experts in user experience (UX), development, and product management, have worked closely together to consider how they can optimize the customer experience. The result is an app with a server-driven user interface (UI) that allows us to dynamically adjust the user interface with low loading times and provide a seamless and personalized experience for our passengers. This innovation would not have emerged so quickly and so effectively in a rigid, hierarchical working model. The opportunity for all team members to contribute their ideas and knowledge at an equal stage has accelerated the development process, significantly improved the quality of the final product and also made our customers happier. Just recently, our app was named the world’s best airline app at the World Aviation Festival.

Empowerment and flexible solutions promote innovation, as the award-winning Lufthansa App shows.

Blue Box End

Christoph Fuchs: Server-driven UI is an exciting concept. What is the technological basis on which the Digital Hangar operates, and what advantages does this architecture offer the Lufthansa Group?

Christian Spannbauer: The Digital Hangar follows a multi-cloud approach as part of the Lufthansa Group strategy and relies on cloud services from Microsoft and Google, which offer us the flexibility and scalability we need in such a dynamic environment as the aviation industry. Cloud technologies play a central role in our infrastructure, as they allow us to react quickly to new requirements while optimizing the costs of operating our IT systems. By using cloud-based platforms, we can integrate and process data very flexibly. This opens up completely new possibilities for us in areas such as data analysis, automation of processes and personalization of our services for our customers.

Christoph Fuchs: What role does enterprise architecture play in the connection of old and new systems?

Christian Spannbauer: Enterprise architecture is a strategic key to our digital transformation. It creates the structural foundation through common vision to connect both old and new systems and ensure that they work together seamlessly. This applies not only to technology, but also to processes and collaboration between teams. Through clear principles and standards, we ensure that the systems can be scaled efficiently and at the same time are flexible enough to respond to new requirements. What’s special about us is that we not only break down technological silos, but also break down cultural barriers to create a unified architecture community that works both ways—from the legacy world to the most advanced cloud-based systems.

Christoph Fuchs: Where do you see the future of the digital hangar and digital transformation in the Lufthansa Group?

Christian Spannbauer: In the coming years, the Digital Hangar will play a central role in further advancing digitalization in the Lufthansa Group. We will continue to develop the insights we have gained in recent years for our customers, but of course also for our employees and the entire operations department. Artificial intelligence and automation will be crucial technologies from which we expect a lot. In addition to the customer experience, the focus is on increasing efficiency and achieving sustainability goals through digital solutions. The Digital Hangar will continue to be the innovation platform for the Lufthansa Group, where new ideas can be developed and scaled quickly in order to secure our competitiveness in the long term.

Result

Christoph Fuchs: So we see that the Digital Hangar represents a decisive step in the digital transformation of the Lufthansa Group. At a time when the aviation industry has faced immense challenges due to the Corona pandemic, the Lufthansa Group has taken a clear and strategic approach to digitalization, which enables the company to both modernize its IT architecture and establish agile ways of working that promote rapid response to customer needs and market changes.

Mr. Spannbauer, thank you very much for the interview and the interesting insights into the digital transformation of the Lufthansa Group!

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Increased efficiency by simplifying the IT landscape

Regina Gödde — Tue, 25 Feb 2025 07:58:08 +0000

In today’s dynamic business world, efficient IT strategies are critical to success. The 6R strategy, Gartner TIME methodology, Development Technology Radar and Clean Core offer valuable tools for optimizing IT landscapes. They promote the standardization, harmonization and integration of new technologies, drive innovation and reduce costs. Find out here how these methods can help you strengthen your competitiveness and react agilely to market changes.

Simplify IT: Tidying up the IT landscape – introduction, big picture, TIME methodology

In order to reduce IT costs and facilitate the integration of company acquisitions, simplifying the application landscape is essential. This also enables the optimization of business processes (e.g. technical ERP templates) and their costs. The application of methods such as the 6R strategy or the Gartner TIME methodology supports companies in making their IT more efficient.

A tidy IT landscape not only saves IT costs, but also reduces operational (Opex) and investment costs (capex) in other areas of the company. For example, standardized ERP solutions can be used to standardize business processes in different locations. This enables the establishment of so-called “shared service centers” that take over central support functions (such as HR, accounting, controlling, etc.) for several countries. This avoids each country having its own support departments, which reduces costs while reducing operational costs (Opex).

Complicated and expensive IT structures, the so-called “application zoo”, often arise when there is no clear IT strategy or companies are acquired. This complexity not only increases the IT operating costs (Opex), for example through additional software licenses and specialized personnel, but also the investment costs (Capex) for the maintenance and further development of the many different systems. In addition, this complicates transparency and reporting in finance departments, which in turn leads to additional workarounds, e.g. to prepare monthly or annual financial statements.

A central task of the IT strategy is to keep the IT landscape lean and standardized in order to avoid unnecessary investments (capex) and high ongoing operating costs (Opex). This means clearly defining which business processes are supported with which systems. This prevents new systems (shadow IT) from being introduced uncontrollably and unnecessarily complicating the IT landscape. If this control is missing, IT costs and complexity are further increased by redundant projects.

The Application Portfolio Matrix (TIME) evaluates applications in terms of Technical Fit and Functional/Business Fit. Source: Evonik

In practice, methods such as the 6R strategy or the Gartner TIME methodology help to analyze the IT landscape and make recommendations on which systems should be removed, retained, modernized or replaced. A tidy IT landscape thus not only reduces opex and capex, but also facilitates the integration of new companies (post-merger integration) or the outsourcing of corporate divisions (carve-outs).

Clean Core: Practical Tip for Business Addressees, SAP Consolidation, Guiding Principles

Clean Core is an approach to standardize and harmonize SAP systems by means of Guiding Principles in order to promote innovation and maintain a solid technological basis. The Clean Core approach focuses on ERP systems that are as close to the standard as possible, while also incorporating cloud-compliant extensions and integrations. Strong governance is required for every technical dimension of Clean Core SAP.

The clean core approach helps companies to make their SAP systems more efficient and future-proof. The aim is to avoid in-house developments as much as possible and to use the manufacturer’s standardized business processes. When moving to SAP S/4HANA, many companies are taking advantage of this opportunity to consolidate their systems and harmonize workflows.

This standardization often requires an adjustment of the way of working in the departments and leads to intensive discussions about the best solution. In order to maintain an overview and protect the Clean Core, so-called “Guiding Principles” (GP) are used. These guidelines specify how much standardization is needed and when adjustments are warranted:

GP1: Use of the standard solution.

GP2: Extension of the standard only if necessary.

GP3: New solutions replace existing adaptations if they are more suitable.

GP4: Temporary adjustments only in exceptional cases.

These principles help to avoid too much fragmentation of the IT landscape and ensure that projects can be implemented quickly and efficiently. For example, one company was able to successfully integrate a major acquisition with 1,500 ERP users and ten global production sites into the global SAP system within nine months.

Dev Tech Radar: Practical Tip for Tech Addressees, Lifecycle Management Using Technology Radar Using the Example of Development Technologies

The Development Technology Radar helps companies assess trends in development technologies to make informed strategic investment decisions about which technologies to pursue and which to avoid.

The Development Technology Radar supports the analysis and evaluation of technologies along their lifecycle phases and thus supports strategic selection decisions and investments in technologies.
Source: Evonik

The world is becoming more and more complex, and especially when it comes to technologies and innovations, companies have to distinguish between short-lived trends and long-term stable developments. This is particularly important when it comes to digital business models and the automation of processes. There are many options when it comes to technology choices, and it’s often hard to predict which trends will prevail in the long term.

Optimize your IT landscape: With suitable strategies and methodologies to more efficiency.

Enterprise architecture helps to manage this complexity. It provides a model that maps technologies and their use in applications. This allows you to quickly identify outdated or unwanted technologies. A Development Technology Radar, for example, shows which technologies are used in the company and in which phase of their life cycle they are.

The radar supports the strategic selection of technologies and helps to set clear guidelines for developers. This ensures that the IT strategy is aligned with the corporate strategy and that investments are only made in future-proof technologies.

The figure below shows a typical development technology radar of a large company. On display are over 100 different development technologies that are used in the various phases of the life cycle. The circles present the technology assessment in four levels from undesirable to fully suitable. On the basis of the radar, internal and external developers are pointed out to desired technologies and necessary measures are planned for existing applications with undesirable technologies. In practice, the Development Technology Radar should be integrated into IT strategy and governance to establish a unified and integrated process that also includes alignment of corporate strategy with IT strategy and requirements management (functional and non-functional requirements) in the selection of technology and innovation decisions.

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Effective Enterprise Architecture – An Important Building Block for Corporate Success

Regina Gödde — Mon, 24 Feb 2025 13:34:48 +0000

We look ahead to 2026: The manufacturing company has had two difficult years: Markets and customers changed rapidly, acquisitions and sales brought a lot of disruption, and IT lagged behind. But the difficult years were used for complete digitization. In development, marketing, sales and service, the teams now work seamlessly together and adapt flexibly to market changes. The introduction of an enterprise architecture (EA) played a decisive role in this, as it was the only way to seamlessly connect business and IT. This helped to adapt the corporate strategy and thus made a decisive contribution to digitalization. In this special, we’ll use best practices, trends, and real-world examples to show you how to prepare your business with EA to increase agility, reduce costs, and improve business and IT integration by 2026.

What does enterprise architecture do?

Enterprise Architecture (EA) is a strategic approach to analyzing and designing a company’s structure and processes. It combines business strategy, information technology and organizational procedures and creates transparency about processes and information flows. The benefits of EA lie in improved decision-making, faster adaptation to market changes and cost reduction through optimized use of resources. EA promotes innovation and strengthens the competitiveness and long-term strategic orientation of a company. An „EA roadmap“ helps to better plan and implement future developments. Similar to a map, it provides „navigation instructions“ for the targeted design of company processes and concretely implementable recommendations for action.

Anchoring architectural competence in the organization

Innovative companies distribute architectural expertise across the entire organization, creating a strong network for short- and long-term measures. Traditionally, enterprise architects have often evolved from technical solution architects. In view of the increasing complexity of IT landscapes and their interlocking with business processes, enterprise architects today also have to take on strategic and department-specific tasks. The role of the „Chief Architect“ is of particular importance. He acts as the „primus inter pares“ within the architectural team and plans the architecture of the entire company or a large area. The first companies have recognized the potential and are positioning the Chief Architect in parallel with the CIO or in the strategy department. Special training formats such as „Chief Architects Labs“ or architecture bootcamps increase productivity and quality.

Challenges in measuring success

EA activities should always be made measurable. Examples of metrics (KPIs) include: realized cost savings potential, number of projects without architects, reuse of architecture assets, number of cross-departmental applications, number and skill of IT architects, and EA maturity compared to the industry benchmark. The EA maturity level varies greatly in German-speaking countries. While digitalization-focused companies (e.g. car manufacturers, energy suppliers and logistics companies) rely heavily on EA, EA is still underrepresented in digitally less developed industries such as the public sector and retail. Companies and institutions in all industries can benefit from EA if they use it as a strategic tool that goes far beyond IT support.

Balancing agility and long-term planning

While long-term IT planning used to be standard, today project projects are implemented much more iteratively and agilely. This development presents architects with the challenge of keeping an eye on the „big picture“ and at the same time having to deliver results at short notice. This is precisely one of the main strengths of an EA, which allows the interaction between agile teams and the higher-level EA management to be controlled via suitable governance and accompanied with suitable EA tools.

Source: Deloitte

Exploiting the potential benefits of EA with modern tools

Modern EA tools, together with business capabilities provide comprehensive transparency about the IT landscape, identify design potentials and help to better integrate the entire IT into business processes via (AI-generated) roadmaps. This allows risk assessments of extensive projects – such as major SAP transformations or M&A activities – to be made more precisely. EA thus offers an end-to-end view of all relevant components (IT and business) and creates a transparency that is often obscured by firmly anchored silos in the company. This creates room for manoeuvre that can otherwise only be achieved through elaborate reorganisation measures. For example, cloud activities, which often take place in an uncoordinated manner, can be implemented much more effectively using such tools.

Recommendations for a successful implementation of EA

From numerous projects for the introduction and further development of Enterprise Architecture (EA), some essential recommendations for action have emerged:

EA is a “top priority” and part of the corporate strategy:The classic approach of anchoring EA in IT is outdated. EA should be designed from the perspective of the CxO or the business unit and be anchored in the respective business unit strategies or close to the board. This is the only way to plan and implement a digitization strategy holistically. Only then is the interaction with IT determined.
Tip: Define key stakeholders and involve this group regularly in order to reflect on short- and long-term goals together. Integrate EA goals into annual business unit strategic planning.
Implement EA quickly, leanly and iteratively:Proceed iteratively: Define what you want to achieve with EA, by when and with what effort. Determine the status quo (maturity level across processes, organization, business, capabilities) and create a compact EA framework that covers all actions as a leitmotif.
Tip: Use agile architecture methods and plan your activities in monthly sprints.
Understand EA as a “spider in the web”:EA translates between business and IT. Use it to break down silos and optimize value chains in terms of processes, capabilities and IT assets. It is crucial to find the right degree of freedom between central specifications and decentralized flexibility.
Tip: Define overarching guidelines (e.g., for cloud strategies), while teams can set individual preferences on their own.
Anchoring in management:Enterprise architecture must be “lived” in management. Managers should be aware of the EA design principles and integrate them into their work. This can be anchored initially through special training and then requires continuous governance.Tip: Conduct regular leadership training and workshops to teach EA principles.
Use of IT tools:When introducing EA, an IT tool should always be used. Complexity increases exponentially with the number of applications, processes, data, and actors. Powerful AI-supported tools can help here.
Tip: EA tools can be made usable within weeks and can be connected to existing data sources with little effort.
Quantify EA success from the start:KPI frameworks allow EA to be properly steered in the area of tension between “optimization” and “innovation”. As a result, many questions regarding the profitability of EA can be addressed from the very beginning.
Tip: Develop a dashboard with KPIs such as cost reduction, process optimization, and innovation rate.
Clearly defined governance:Collaboration in a virtual, overarching and agile organization can only be successful if dedicated EA governance is introduced and continuously adapted. This includes rules for collaboration and decision-making, defines communication, and integrates EA into all relevant decision-making and design processes.
Tip: Establish a governance board that regularly reviews compliance with the EA Principles and makes adjustments.

Result

Implemented correctly, enterprise architecture is an indispensable means of successfully managing the increasing complexity of corporate landscapes. Companies that use EA strategically gain agility, innovation and efficiency, as the following examples impressively show.

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Enterprise Architecture as a Success Criterion of Digitalization

spieler_dev — Fri, 07 Feb 2025 10:03:34 +0000

As Germany’s largest electricity grid operator, the energy transition poses major challenges for E.ON, but also great growth opportunities. The „connection boom“ in the distribution grid in Germany is historically unique. Since 2020, the number of follow-up inquiries at E.ON has increased almost fivefold. Group-wide, more than half a million new connections to the E.ON distribution grid were realized in 2023. This corresponds to an increase of more than 50 percent compared to the previous year. In this article, you will learn about the importance of enterprise architecture and digitization in this context.

In view of these magnitudes, it becomes clear that the complexity of the energy transition cannot be solved by the expansion of grid infrastructure alone, but above all by digitalized and efficient grid control as well as by flexible control of renewable energy plants and electric cars.

In addition, the restructuring of the energy system is changing the fundamental consumer behaviour of customers and producers, who expect new digital products for energy efficiency and their networking.

Enterprise Architecture Management (EAM) as part of digitalization plays a central role in effectively mastering the challenges of the energy transition. E.ON uses this methodology in a targeted manner to meet the challenges of the energy transition and decarbonization.

Holistic development planning drives the targeted modernization of technology and application landscape, which enables cost efficiency and process optimization. The use of cloud technology makes the integration of customer systems into the energy system and the use of new products, such as bidirectional charging or flexible electricity tariffs, a reality. The stronger focus on data and its efficient use by AI will drive the digitization and automation of the network infrastructure. By implementing digital twins, essential steps of infrastructure planning can be automated. The comprehensive protection of the digital landscape and the ongoing optimization of cyber security are part of the holistic architectural approach.

The transformation to an “all-digital” company is therefore the logical consequence for E.ON and will thus become an essential part of its business strategy. For the E.ON Board of Management, Enterprise Architecture Management has become a tool for successfully shaping the digital transformation.

How E.ON is giving digitalization a new significance in the company

Hardly any other industry in Germany has changed as much in recent years as the energy industry. Europe needs a smart energy infrastructure for sustainable, secure and affordable energy. E.ON has responded to this and realigned the company. With a clear strategy, E.ON is focusing on three clear priorities: digitalization, sustainability and growth. Given the impact on the European energy market, E.ON is in a position to play a key role in shaping the decarbonization of our society like no other European energy company. We are investing massively to meet the rapidly growing demand for energy infrastructure.

The fact that decisions on digitalization are of fundamental importance for the value creation and long-term competitiveness of the E.ON Group is represented by a separate Board of Management department. This has been headed by Dr. Victoria Ossadnik for more than three years. This means that trend-setting architecture and IT issues are now being discussed and decided at board level.

Common Technology Platform. Source: E.ON

Modernization and rationalization of the application landscape

In the past, the IT organization focused on creating synergies and increasing efficiency. Modernizing the application landscape was a subordinate priority.

This has changed fundamentally as part of the digitization strategy with the introduction of the „Common Technology Platform“ (CTP). This defines reference architectures and standards for the Group at all levels of value creation. On the basis of these references, all of the Group’s IT units develop target architectures and concrete plans for the modernization of systems and applications. The aim is to align the IT landscape of the respective business units with cost efficiency, agility, innovation and resilience.

E.ON is paying particular attention to the „cloudification“ of the application landscape. Within two years, all applications were migrated to the cloud and E.ON’s 5 own data centers were closed. Although not all applications were optimized for operation in the cloud, benefits for E.ON’s business units in terms of availability, flexibility and cyber resilience have already been achieved after the „lift and shift“. In the next step, the applications are successively optimized with the help of the available cloud services.

Source: E.ON

As an operator of critical infrastructures, system availability is a key indicator by which IT at E.ON can be measured. Availability and significant disruptions to the IT landscape are explained to the Executive Board in quarterly reports. It quickly became apparent that operating in the cloud significantly increases availability due to the high degree of standardization and automation.

The modern infrastructure of cloud providers not only increases availability, but also improves cyber security by closing critical security gaps more quickly or solving them directly.

Automation through consistent standardization of data and systems

Due to varying degrees of regulation in the various EU markets, E.ON’s business is highly regionalized and is operated by independent companies with their own processes and systems. In order to achieve the ambitious EU climate targets in a uniform manner, processes must be standardised across the board in order to be able to manage the transformation of energy systems in the given time. However, standardization of processes is only possible through harmonization and consolidation of the applications and data used for this purpose. This is the only way to efficiently implement digitization and automation and achieve the necessary scaling and speed in grid expansion. Ultimately, standardization is also the prerequisite for the use of artificial intelligence (AI), which offers further opportunities for efficient digitalization.

To this end, key decisions regarding the business architecture and the common IT target landscapes have already been discussed and decided at board level.

Thanks to these decisions, the first digital and AI-supported solutions have already been implemented. One example of this is the use of a digital twin: With its help, connection requests, for example for photovoltaic systems or charging stations in the low-voltage grid, can be evaluated and processed much faster. This makes it possible to answer customer inquiries in real time. Even when a grid connection is specifically commissioned, the tool shortens the processing time from several days or weeks to just a few days.

„Make or Buy“ decisions

For many years, it was sufficient for E.ON to buy software and have the IT infrastructure operated by external providers, as IT hardly served as a competitive advantage in the energy market. But it is now clear that the energy transition will not succeed without consistent digitalization. It is therefore strategically important for E.ON which digital solutions will be developed and operated in-house in the future, as they can open up new business areas and create competitive advantages. E.ON is therefore increasingly focusing on the development of its own software and products – either by its own software team or by acquiring IT companies.

One example of this is E.ON’s XENON platform, which networks and monitors various decentralized energy sources such as wallboxes, batteries or heat pumps. Specially developed hardware is used to connect the customers‘ systems with E.ON’s Home Energy Platform in the cloud to make them individually controllable.

In addition to acquiring successful start-ups, E.ON also relies on a modern operating model for the operation and development of its own products. E.ON is currently converting its IT operating model to agile product teams and significantly expanding important core competencies such as software engineering. This applies not only to software development, but is also intended to support decision-making in enterprise architecture up to the board level.

The Digital Twin from E.ON simulates the grid connection of various decentralized energy sources.
Source: envelio GmbH

IT and architecture expertise on the board

These examples show that enterprise architecture and strategic IT decisions must be understood or even made at the C-level level so that the potential of digitization can be fully realized. This is the only way E.ON can successfully meet increasing customer requirements and global competition. E.ON is pursuing the clear goal of adapting technological innovations such as artificial intelligence at an early stage and strategically integrating them in order to strengthen its own competitiveness.

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