The Key Challenges of CIOs in Manufacturing

Posted by Linda Rosencrance on June 15, 2020

Key challenges of CIOs in manufacturing

The rise of new digital industrial technology, known as Industry 4.0, is significantly influencing the manufacturing industry. Consequently, to navigate the Industry 4.0 revolution and remain competitive, manufacturing companies have to improve their business processes and business models.

As the impact of digital transformation on the business landscape continues to create significant challenges for leaders in manufacturing, CIOs in the manufacturing industry are looking to unlock the benefits of intelligent automation, machinery enabled by the Internet of Things, data analytics, and artificial intelligence.

Manufacturing CIOs can no longer just deliver IT infrastructure and services; rather they are expected to have an unwavering focus on business outcomes. In fact, today's manufacturing CIOs are required to be business strategists as well as technical experts, and they're being called on to use IT to fuel business growth.

However, the impact of digital transformation on the business landscape continues to create significant challenges for leaders in manufacturing. Not only are CIOs responsible for harnessing the full potential of these digital technologies, they also share in the responsibility for the successes and the failures of the enterprise.

Here are five key challenges that today's manufacturing CIOs face and how they can handle them:

1. The lack of visibility into application portfolios

CIOs in the manufacturing industry are confronted with an ever-increasing number of applications to manage — the typical large enterprise has over 3,400 applications. The problem is that they often lack visibility into these applications, and especially into how those applications support the business.

To solve this problem, manufacturing CIOs can use the methodologies and frameworks of enterprise architecture (EA) to achieve a transparent overview of all dependencies between applications to show which data lives where, and how that data is transmitted. Enterprise architecture can provide the answers to most questions surrounding a company’s application portfolio management.

EA can help CIOs in the manufacturing industry:

  • Determine the necessity of business applications
  • Determine the amount of functional redundancy in the IT architecture
  • Reduce costs through application rationalization
  • Reduce risk through better understanding of the application landscape’s functional and technical risk profile
  • Increase agility through better support of business demands

2. Cumbersome legacy systems that are expensive to maintain and hinder real-time decision making

Despite the need to adopt new digital technologies, manufacturing CIOs have to deal with legacy IT systems that are still considered critical to operations. However, outdated technology environments also produce silos of redundant information that hamper productivity and obscure relevant information.

Because of these legacy technologies, many manufacturing CIOs struggle to scale their IT capabilities to process data, as well as use that data efficiently to improve and automate decisions to optimize output. To enable their companies to succeed, manufacturing CIOs have to rethink their systems, processes, products, and services as well as their very business models.

To remain on the cutting edge of digitization, manufacturers must leverage EA to plan and prioritize future investments that are focused on internal process optimization, efficient asset utilization, and workflow design.

3. Data security/compliance

Another major challenge for the manufacturing CIO is securing the data, controlling access to that data, and creating a single source of truth.

Data flowing into the organization from connected products, supply chains, and assets creates a higher level of complexity than the CIO has faced previously. To deal with this complexity, CIOs have to effectively redesign the security architecture with robust threat detection, and reliable governance and preventive solutions.

And with data security regulations on the rise, manufacturing CIOs must be aware of the level of compliance in their application portfolios. Having a transparent view of the technology environment can help CIOs identify potential hazard areas and address security vulnerabilities before they become data breaches. EA is a great asset to maintain compliance and avoid crippling penalties from regulatory authorities.

With EA, manufacturing CIOs can:

  • Reduce costs by standardizing and eliminating redundancies
  • Reduce risk through an understanding of the impact and compliance of technology lifecycle management
  • Increase agility through supporting business capabilities quickly using defined standards and reusable patterns

4. The need for visibility into the company's vendors

Manufacturing CIOs need to understand which vendors they use and if there are opportunities to rationalize costs. CIOs want to know how much money the business is spending on each of their vendors as well as the potential impact on users if a vendor is changed. CIOs can manage all this information in one location with the help of an EA tool.

The benefits of using EA management tools for vendor management include the ability to:

  • Reduce costs through supplier rationalization
  • Reduce risk by avoiding dependency on a single vendor
  • Increase agility by optimizing the service portfolio for better service levels

5. The need to understand IT spending

Every manufacturing CIO wants to know what the IT budget is spent on to ensure that investments are in line with the strategic priorities of the business. With an EA management tool, CIOs can drill down into costs by applications, business capabilities, user groups, providers, projects, or IT components.

Benefits for the CIO include the ability to:

  • Reduce costs through more effective procurement
  • Reduce risks by improving project and investment decisions
  • Increase agility by accelerating investment and project planning and execution

Conclusion

To remain competitive in the age of digital transformation, manufacturing companies must have the tools necessary to align business goals with the technologies to meet them. As IoT-enabled technology changes the way the manufacturing industry operates, CIOs must modernize IT to support traditional focus areas, such as product development and manufacturing operations, while catering to emerging business needs.

Still, getting started with EA can seem like a daunting task. It requires dedication, resources, and buy-in from across the organization to build a sustainable program from scratch.

Challenges for CIOs Benefits of an EA management tool for CIOs
The lack of visibility into IT portfolios
  • Determine the necessity of business applications
  • Determine the amount of functional redundancy in the IT architecture
  • Reduce costs through application rationalization
  • Reduce risk through better understanding of the application landscape’s functional and technical risk profile
  • Increase agility through better support of business demands
Cumbersome legacy systems that are expensive to maintain and hinder real-time decision making
  • Planned and prioritized future investments
  • Internal process optimization with future-proof technologies
  • Efficient/distributive asset utilization
Data security/compliance
  • Reduce costs by standardizing and eliminating redundancies
  • Reduce risk through an understanding of the impact and compliance of technology lifecycle management
  • Increase agility through supporting business capabilities quickly using defined standards and reusable patterns
The need for visibility into the company's vendors
  • Reduce costs through supplier rationalization
  • Reduce risk by avoiding dependency on a single vendor
  • Increase agility by optimizing the service portfolio for better service levels
The need to understand IT spending
  • Reduce costs through more effective procurement
  • Reduce risks by improving project and investment decisions
  • Increase agility by accelerating investment and project planning and execution

LeanIX resources for the manufacturing industry

LeanIX has created a free downloadable white paper to help CIOs in the manufacturing industry use EA to deal with the industry challenges they face. Whether you are interested in using EA during digital transformations to consolidate IT and business costs, catalog IT and business landscapes, or improve information sharing throughout stakeholder networks, our white paper can help:

Editor's Note: Linda Rosencrance is a freelance writer and editor in the Boston area. She has written about information technology for more than a dozen years, covering topics such as data loss prevention, network management, mobile application development, big data, analytics, and ERP.

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