Every business faces different challenges, but achieving operational excellence can help drive a cycle of continuous improvement and adaptability.

Every business faces a unique set of challenges and opportunities. Approaching these from the individual point of view of the organization is essential to executing a consistent and reliable operational strategy that helps to strengthen the company’s position in the competition. This is the goal of operational excellence.

What is Operational Excellence?

Operational excellence is a mindset that encapsulates the tools and principles an organization needs to create a company-wide culture of excellence and deliver maximum value to its customers. The concept was first formalized in the United States in response to a crisis among large traditional companies that lost market share due to an increasing volume of high-quality products imported from Japan in the 1980s.

In the context of today’s increasingly technology-driven marketplace, operational excellence largely revolves around the adoption of carefully chosen digital solutions and custom workflows built around them. At the heart of this is an integrated approach to business operations that gives everyone in the organization a complete picture of the value stream to the customer. This gives employees the opportunity to continuously optimize that value stream and solve problems before they become a problem to the detriment of customers.

The role of change management

Excellence that adapts to change

The principle of operational excellence was first introduced with a view to modernizing outdated business processes to meet the evolving global market of the 1980s. Today, however, change is much faster and more unpredictable than ever. This is largely driven by the constantly evolving technology landscape and the changing customer expectations that come with it.

However, other factors such as globalization and the risk of global trade wars it brings can also create massive disruptions, as we have seen with the coronavirus pandemic or the sanctions imposed on Russia in response to the invasion of Ukraine. Such challenges have a particularly worrisome habit of surprising entire industries, further highlighting the need for a more resilient approach.

Corporate resilience, like operational excellence, can only be achieved if companies can quickly adapt to changing market conditions. This is arguably the greatest challenge facing today’s businesses, especially in the case of large enterprises managing staggeringly complex global supply chains. Together, these factors are the driving force behind the ever-growing need for operational excellence. So building a company-wide culture of operational excellence starts with change management.

Depending on how they are chosen and implemented, digital solutions can help or hinder operational excellence. On the one hand, outdated legacy systems, such as internal servers and software, are expensive to maintain and lack the scalability and flexibility needed to adapt to changing environments with sufficient speed. On the other hand, a scalable and integrated approach that uses software-defined models such as cloud computing and software-as-a-service (SaaS) facilitates change management and, in turn, operational excellence.

To give a recent example, take a look at how companies have dealt with the pandemic, with varying degrees of success or failure. Faced with a sudden flood of work-from-home mandates and countless other disruptions, millions of organizations around the world were suddenly forced to make radical changes to their operations overnight. Many incumbents, especially those with a more conservative outlook, have had to make changes not only in their technology environment, but also in their entire business ethos.

Companies that successfully weathered the storm have been agile and technology-driven. In these companies, employees already relied primarily on cloud-hosted resources, such as web-based software and virtual desktops, that could be accessed from any device with an Internet connection. As such, knowledge workers were able to move to the home office environment almost immediately and continue to perform their roles normally.

Other companies were less fortunate. For example, those who relied on desktop software and other in-house resources were unable to simply bring their own computers and work from home without completely changing their operational and technological infrastructure. Instead, critical apps and data were stuck on office machines and couldn’t be accessed anywhere else. In these cases, companies had to make major changes very quickly, often at the cost of reduced security and efficiency.

Adapt to change with a software-defined company

Operational Excellence

Cloud-hosted software offers virtually unlimited scalability. Instead of installing applications on dedicated workstations or internal servers, one just needs to open a new user account to give an employee or team access to all the tools and data needed for a particular job. With a single, consolidated database where all business-critical data resides in the cloud, employees can access their work from any connected device in any location.

Business computer hardware no longer needs to be constantly updated or replaced, as employees can use their own devices to complete their work. In addition, SaaS products are proactively maintained by their suppliers, eliminating the need for software maintenance and patching. Ultimately, this allows companies to scale their computing resources with demand, meaning they can adapt to change to achieve continuous operational excellence in virtually any situation.

At its core is an integrated business management system, hosted in the cloud, providing a single source of truth (SSoT) for the entire organization. This breaks down the barriers between different departments and removes information silos, as everyone has access to the same data. In addition, an integrated approach fosters a collaborative culture that modern businesses depend on to deliver value to customers in a consistent and timely manner. This is important not least because the customer journey involves multiple touchpoints, and the overall experience customers have when doing business with your company has by far the greatest impact on bottom line.

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