Metalworkers cannot do without the expertise of technology companies in today’s world. But the cultural difference between these two worlds often proves to be considerable during collaboration, with negative consequences. This raises the question: who then should take the lead regarding digital change projects? A Chief Technology Officer (CTO) who speaks both languages can bridge the gap. How? You can read about that in this blog.
Technology is the backbone of metalworkers by 2022. So like it or not, ICT issues are here to stay nowadays. It’s best to address them as best you can. But then optimal collaboration with technology companies is essential. It is therefore high time to bring the two worlds closer together.
Why do ICT companies work differently than metalworkers?
The cultural difference between companies in the metal industry and suppliers of ICT & technology can be explained. Traditionally, metalworkers have had the attitude: you demand, we run. And they expect that same attitude from their ICT suppliers. However, it is highly questionable whether this is justified. These technology companies, in fact, apply different business models in which there is no longer room for the age-old “who pays the piper calls the tune”.
A tip for metalworkers is to try to understand what their business model is when you start working with ICT vendors. This is because then you know what to expect and what not to expect. And that avoids a mismatch and therefore probably a lot of wasted energy. This will benefit both parties. Within the ICT world, you can broadly distinguish between 3 types of business models:
Licensing and hourly factory
An example. Suppose you are a metalworker working with an ERP vendor. He earns his living partly from licensing and partly from consultancy. Thus, this company’s hourly factory is crucial to its revenue. However, capacity is limited, so consultants must be tightly scheduled.
For you as a metalworker, that means you’ll find yourself in a queue. And then the ERP vendor would prefer that you bundle all your questions together, so that that company can schedule the consultant to complete the full list of questions.
Software as is: subscriptions and licensing
Then there is another type of supplier. It has to rely on subscriptions and/or licensing. In short, this party delivers software as is and only wants to modify software if it benefits the majority of users. So even if it seems like a very easy question for you as a metalworker to solve, if it doesn’t fit into the concept of the “standard product” the vendor won’t do anything with it or will delay doing so.
The third and final category are the custom builders; the ICT vendors who create new software, fully suited to the customer’s needs. It’s all about you, the customer, being very clear in what you want, in your requirements.
Vendors who develop customized solutions benefit from longer-term projects, i.e. more complex issues, because it gives them continuity in their business model. So with such a party it makes little sense to agree on a maintenance contract. Doing small changes is a big hassle for this type of software company and therefore not profitable at all.
Taking the lead in ICT change projects within the metalworking industry
It is at least as important for metalworkers to be in charge of their own ICT change projects. This is for a number of reasons. First, ask yourself what happens when you are not in control. You just take the supplier’s word for it and hope it all works out. However, there are only a very few situations in which you can do this. For example, if it is only about one very specific ICT solution. For example, with a new drawing software package, where no other parties are involved. Then it’s a matter of installing and learning to work with it. It otherwise touches few other systems.
But the moment you need to change something in your ICT landscape that involves several suppliers, you can no longer rely on them to work together constructively. Let’s face it, they are and will remain mostly competitors of each other. Soon those ICT companies will be on the move with each other and won’t be able to work it out among themselves. That risk exists. Behold the reason why in a change process it is better to take charge yourself. You can do that in a number of ways:
- Hire an external project manager to oversee IT projects
How so? That’s a legitimate question. Because remarkably many metalworkers do not hold such a directing role at all. One solution might be to hire an outside project manager for that assignment. The advantage is that someone is in charge and the success rate of the project increases.
The disadvantage is that much of the knowledge gained during the change process goes with the external project manager. How it works, what software is linked together, you name it. Once the project is completed you have lost that knowledge. You don’t want that, because projects are never quite finished. They always require maintenance and updating and then all sorts of things always come to light. So it’s definitely not like you don’t need the knowledge anymore once a project is “done”.
- Utilize a (CFO) Chief Finance Officer
Some metalworkers choose a different approach. They are hiring a Chief Finance Officer (CFO). This financial specialist then also gets the ICT projects on his plate as a supervisor. But this CFO is generally someone with a background in accounting.
ICT is a very different arena. As a result, the CFO takes the lead primarily as an accountant. Not desirable, because talking to an accountant about technical decisions to be made quickly becomes a very difficult conversation. He simply does not understand the subject matter sufficiently.
- Hire a (CTO) Chief Technology Officer
Who then should take the lead? You don’t need to look far. As it happens, the position that solves this problem already exists: Chief Technology Officer (CTO). This role is already a success in several industries, but not yet in the metals industry. And that’s striking, because most of this business hinges on technology.
What exactly does a CTO do?
Many metalworking companies don’t know exactly what a CTO does. To properly map that, we divide his world into quadrants. On one axis are ‘change operation’ and ‘continuous operation’, on the other ‘strategic’ and ‘operational’. That’s what all falls under the responsibility of the CTO.
What exactly do these different components entail? To begin with the first axis, continuous operation encompasses everything that ensures that the enterprise operates digitally without problems and keeps running. Think about security, fixing bugs and making sure there is enough processing capacity. So no major changes, but keeping the entire digital infrastructure up and running continuously. And also: continuously working to improve. Japanese know this phenomenon as “kaizen”: change for the better. What you call a progressive assignment for the CTO.
The change operation involves much larger change issues, where as a CTO you have to think carefully about how you are going to implement the innovation in the existing organization. A different ERP system, for example. These are issues that you must first solve on a project-by-project basis, and then address how to make the change a permanent component of the continuous operation.
Arriving at the quadrants strategic and operational. A CTO must know what is going on in the market, where the company wants to go, and he must translate the changing environment and business objectives into how technology can contribute to it. Then a technology roadmap is created: a timeline that indicates when you will build or purchase which systems and machines and which business objectives you should achieve with them. From there, a project calendar emerges.
Selecting the right ICT vendors and partners is also part of the CTO’s activities. These are typical make-or-buy decisions. The issue up front is then: are we going to develop the solution ourselves or are we going to buy it in the market and outsource it?
In a nutshell, this is the CTO’s job description. And in doing so, he can bridge the gap between the world of metalworkers and that of technology companies, which is so greatly appreciated. Time to consider and look at your own organization. Do you experience a lot of hassle with ICT vendors? And do you lack people in your organization with an affinity and passion for technology? Then you’ve reached the point where you might do well to add a CTO position to your company.
The CTO, digitalization, smart factory and industry 4.0
Digitalization, smart factory, industry 4.0: these are big themes in the metal industry, but they are only slowly getting off the ground at most companies. Not to mention the lack of efficiency. It is quite possible that the lack of the CTO position is one of the biggest reasons for this. The implication? These metalworkers don’t yet make a dent in ICT butter. The affinity with technology is far from the norm.
Fortunately, there is the CTO. Who is strong in specifying the vision and defining the strategy. Who is able to direct and delegate in ICT change projects, contract the right partners and vendors and set priorities. The CTO does not allow itself to be led by the delusion of the day. Above all, he brings two worlds together resulting in good cooperation. Irreconcilable cultural difference? Make way for the CTO as a director and he will prove otherwise.