Central Verses Decentralised
A wide variety of applications quickly leads to a proliferation of different processes and data structures. And these slow digital transformation down. This is why Atlas Copco Compressor Technique’s business is changing course: the IT department is reinventing itself while making the most of digital technology.
Far-reaching digitisation has always been a challenge. And all the more so when it comes to a company with some 43,000 employees that operates worldwide and that also targets different markets with different solutions. Atlas Copco's products include compressed air and vacuum solutions and industrial tools. In addition, its employees perform all the necessary servicing work and help customers optimise processes and make them more sustainable. All with great success.
Close to the customer and market
With 19,400 employees, Compressor Technique is Atlas Copco Group's largest business unit and accounts for 45 per cent of its total sales. To remain successful in the future, digitalisation is of crucial strategic importance for this business unit. However, its decentralised organisational structure creates both opportunities and challenges. "We work with divisions that focus on specific products. All are companies in their own right, with their own operational structure and corresponding responsibilities. This decentralised structure allows divisions to respond quickly to new customer demands and changes in the market. Which, of course, is good for our innovative strength. So we want to keep it that way," emphasises Kris Feys, vice president IT/IS compressor technique at Atlas Copco.
"Meanwhile, all those divisions also have a lot of say when it comes to what they do," he says to highlight the other side of the story. "This has created a very diverse application landscape over the years. And that is increasingly starting to work to our disadvantage. To start with, those many different applications cause compatibility problems, which means that we as a company cannot make optimal use of all available data. In addition, it takes a lot of time to keep everything up and running. So much time sometimes that our central IT organisation has little capacity for digital innovation.
A digital backbone
The plan now is to build a modular IT architecture that serves as a kind of digital backbone. And that should still allow divisions to build their own applications, but in a way where everything is and remains compatible. All this should produce a solid and reliable system, where datasets are created according to the same principles and everyone therefore works with the same 'reality'. In addition, new modules can easily be added. And because the maintenance of such a central system is largely done by the software supplier, the central IT department will soon be able to focus much more on innovation.
To really become more agile as a whole company, however, it is important to convince the divisions that they can also benefit from a centrally driven IT architecture. "There is still an area of tension there," acknowledges Edwin Kock, associate partner at PA Consulting. "Because despite being a modular system where customisation is possible, it still means that divisions have to say goodbye to the applications they are currently still working with. So they do lose some of their local autonomy as a result. We therefore help Atlas Copco outline the bigger picture and show how that ultimately translates into benefits for both the entire company and the individual divisions."
"A big advantage for the divisions is that the business and IT will come together to discuss where they want to go and what is possible," he continues. "IT has an advisory role in this that is more integrated with the business. They will also ensure that the new applications will soon all be able to communicate smoothly with each other and be well coordinated. This prevents unclear situations or misunderstandings, which in turn helps to optimise processes in a production chain, for example. This happens not just once, but continuously, where the different departments and divisions can also learn from each other's experiences. Continuous optimisation, in other words."
This kind of major digitalisation takes time; Atlas Copco knows that too. That is why the company has given itself five years to develop the new IT architecture, implement it throughout the company in close cooperation with the divisions and prepare all its employees to use it.