Digitalization has fast become the latest “in” for ICT, and for Norway it is no exception, – it rages through all businesses and organizations, private as well as public and governments. And if this is not enough, the latest and brand new theme regarding digitalization that will catch a lot of interest, is the term DTO – Digital Twin of an Organization.
It is important, – very much so, that the Boards and its members need to acquire knowledge about what this is all about, how to execute a successful digitalization strategy, and most of all be able to guide the CEO and the executive team through the investments needed, and how to measure the ROI and success.
So then, what is the DTO – the Digital Twin of an Organization? In the physical world, the digital twin is a digital replica of the assets, processes, and systems that comprise a physical object (“thing”). It creates a living simulation that updates and changes as its physical parts change. It originated in the industrial sector, which leverages digital twins in order to optimize the operation and maintenance of physical assets such as windmills in a wind farm. General Electric argues that this technology can boost one wind farm’s energy production by as much as 20% and create $100 million in extra value over the lifetime of the farm. Recently though, Gartner has applied the idea to business as well, saying:
“A digital twin of an organization (DTO) is a dynamic software model of any organization that relies on operational and/or other data to understand how an organization operationalizes its business model, connects with its current state, responds to changes, deploys resources and delivers exceptional customer value.” (Marc Kerremans, Market Guide for Digital Twin of an Organization Technologies).
The DTO enables the dynamic virtual representation of an organization in its operational context providing a 360-degree view of an entire enterprise, it:
- digitally represents people, processes, documents, data, and assets as they exist in the physical world.
- orchestrates events and relationships across complex and constantly evolving digital ecosystems.
- assesses the potential impact of change to make informed decisions and accelerate digital transformation initiatives.
Gartner follows up on this claiming that within the next few years, organizations who utilize a Digital Twin of an Organization to transform itself and business models will turn a 70% failure rate, often experienced currently, of transformation into a 70% success rate. Creating such a virtual copy of an organization will help business leaders, including the Board Members, to explore their options, engage in scenario planning, and minimize the risk of the organization’s chosen path, all through a digitalized correct virtual model of the organization, or defined parts of one to focus on – the DTO’s. The thinking goes even further to three versions of interacting and interrelated DTOs – the DTO for organizational structure, the DTO for operations (processes, products and services), and the DTO for performance (effectiveness, financial results, ROI). All three developed in parallel and synchronized.
Even as this thinking is currently new, several actual DTO business cases have already been documented. Here are some:
- Ideation – relentless innovation: the BIG PICTURE and a multi-dimensional context for ideation.
- Governance – enable business users and IT to digitize and integrate the frameworks, processes, knowledge assets, documents and governance policies into a comprehensive solution for managing the interactions between the suppliers, producers and consumers that encompass the extended digital business ecosystem.
- Digital business optimization and transformation – a no compromise real world mirroring the digital canvas upon which you will paint the big picture that is your digital business ecosystem.
- Program/portfolio management – programs/projects will be better aligned with the overall mission and strategy of the organization and more easily managed and adapted as changes in situations dictate.
For many organizations, digital business holds the key to future growth; however, the challenges associated with the full integration of digital business can be overwhelming and costly. Organizations need to keep up with market changes and innovations while at the same time optimize their cost structure and develop new products and services to remain competitive. Simultaneously, the digital age is increasing the magnitude of opportunities for the companies that know how to react but also increasing the difficulty of getting it right. While technology can relieve people of mundane tasks, the remaining tasks and business capabilities are becoming increasingly complex – whether it be synthesizing vast and disparate pieces of information or dealing with customers in a world where customer centricity is expected 24/7/365.
Some of Norway’s leading firms are already involved to a great extent with usual digital twins, such as Equinor, Aker BP, Kongsberg Digital, DNV GL Digital and others. The DTO concepts will follow with the most efficient development methods and platforms leveraged.
Gunnar Eriksen, an experienced global management consultant from Hønefoss, Norway, resides in the U.S. with a focus on process effectiveness and business solutions enabled by IoT and IIoT.