Introducing Intelligent Operations
We wanted to understand the connection between business operations maturity and performance. So in 2020, we surveyed more than 1,100 C-suite and VP-level executives across 11 countries and 13 industries.
Using survey responses and external data, we identified four levels of operations maturity: stable, efficient, predictive, and future-ready.
Each of the four levels is underpinned by technologies that drive efficiency, insights, and increasing capabilities.
Moving up just one level — from predictive to future-ready — yields a profitability increase of 5.8 percentage points and efficiency gains of 18.8%.
Our analysis also included an assessment of what we call transformational value. It characterizes the future-ready state.
It explains how future-ready organizations are primed to capture performance gains and deliver excellent customer and employee experiences.
And our experience working with enterprise organizations across industries attests to productivity and efficiency gains of up to 30%.
Fast-tracking success
We found that:
- Increased maturity raises efficiency and profits: Organizations that were one maturity level higher between 2017 and 2020 were, on average, 7.6% more efficient (lower operating expenses per dollar of revenue) and 2.3 percentage points more profitable (earnings before interest, taxes, depreciation, and amortization as a percentage of revenues).
- Being future-ready brings even more advantages: On average, future-ready organizations we surveyed show a 2.8x boost in corporate profitability and 1.7x higher efficiency than those at other levels.
- Organizations in the stable and efficient levels that reached future readiness by 2020 gained a 2.1x boost to operational efficiency and a 4.1x boost to profitability, compared to their peers that made more moderate maturity gains.
- Operations maturity can boost global profits: Our modeling analyses indicate that if all organizations around the world moved from stable, efficient or predictive levels to become future-ready by 2020, this would equate to US$5.4T in added global profitability.
To measure and predict progress, we looked at where organizations were three years ago, where they are today, and where they’re predicted to be in three years. A majority of organizations have made dramatic progress toward next-level maturity over the past three years. But most (93%) have further to go.
Most are committed to reaching a higher level of maturity in the next three years.
Organizations in high-tech and insurance reported higher levels of maturity than others. In three years, we expect many sectors to leap ahead, particularly automotive, insurance and banking.
The largest future-ready organizations (those with revenues more than US$20B) reported greater improvements in operational efficiency. Seventy-three percent said their performance somewhat or significantly improved over the past three years, compared with 62% of those with revenues between US$2B and US$20B.
These businesses were also more likely to report improvements in their talent mix and reskilling efforts, employee engagement and retention,and ecosystem partnerships. But we predict that small and medium enterprises will get there soon.
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01 Know the ultimate goal
Organizations tend to approach operations improvements too incrementally.
By contrast, those that are future-ready think big and start with the end goal in mind.
They then consider the bold moves it would take to close the gap between their aspirations and their current set-up (something our research shows many don't do).
Among the future-ready organizations in our study, 82% expect to scale leading practices across the enterprise within the next three years. And 86% of them expect business and technology functions to collaborate fully during that period. That's up from the 55% that say they do so today.
By comparison, 28% of efficient organizations expect to realize such levels of collaboration in three years. Just 3% say they are doing so now
02 Know the key steps
Some steps between one level of maturity and the next just can’t be skipped. Here are three that IntellyLabs recognizes as crucial:
Step 1: Automate at scale
By 2023, nearly five times as many company executives expect their operating models to run end-to-end digitized processes compared to today.
Among organizations with future-ready operations, 38% are scaling AI, with 63% planning to have scaled AI in three years.
In stark contrast, just 1% of efficient organizations are currently scaling AI. Less than 20% expect to have scaled AI in three years.
Step 2: Augment human talent with technology
By fostering a human+machine workforce where technology helps people (not the other way around), organizations can allocate work to realize efficiencies. People will then be freed up for more creative and critical thinking—the best way to identify new sources of value.
More than one-third (34%) of future-ready organizations have already adopted an agile workforce strategy at scale. They can tap into ecosystem partners to mobilize people with special skills as needed.
In three years, that figure is expected to rise to 71%. But only 2% of organizations at the efficient level have adopted agile workforce strategies at scale. Just 28% expect to reach this goal in three years.
Step 3: Commit to data-driven decision making—using better, more diverse data
Experience and intuition are vital. However, as business complexities have multiplied, so too has the need for comprehensive, high-quality data to inform decision making. By using diverse data (structured and unstructured, internal and external, value chain vs. siloed) and elevating data quality, executives will be able to combine the best of both in a continuous feedback loop.
More than half (52%) of the organizations with future-ready operations are already using analytics at scale. Just 2% of efficient organizations say the same.
In the past, it would have taken organizations at least three years to advance even a single operations maturity level.
But now, moving ahead is much easier, thanks to the cloud and how it enhances data and analytics. Future-ready organizations reveal an impressive degree of maturity (90%) when it comes to using cloud infrastructure at scale for their existing processes today. And more than 78% are already planning to explore new areas for scaling the cloud and maximizing value in the next three years. With today's cloud services, organizations can pay as they go when it comes to hardware and software, ramping their capacity use up or down as necessary.
03 Know how to leapfrog maturity levels
Future readiness brings organizations a competitive edge and agility. But efficiency and profitability in the short term are not enough.
Being future-ready requires a flexible operating model—an optimized combination of multidisciplinary teams and technologies on demand that work across a broad ecosystem of partners. The goal: Deliver exceptional business outcomes at scale, from anywhere, anytime.
Ecosystem partnerships bring complementary skill sets and more diverse data. Together, they foster continuous evolution instead of one-time, project-focused improvements, and offer access to advanced technologies such as AI and blockchain.
Critically, partnerships also spark innovation.
Partnership models, anchored by a shared vision and mutually beneficial commercial terms, help deliver transformational value and experiences.
Future-ready organizations are clearly focused on the end rewards. More than three-quarters (77%) expect to further their stakeholder experience/ecosystem partnership strategies at scale within three years (up from 31% today). In contrast, 22% of the efficient organizations expect to scale in three years, up from 3% today.
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Discover range of service offerings for various Engineering Services. Let us know your areas of interest so that we can serve you better.