Digital Twin of an Organization: Who Doesn't Want a Crystal Ball?
Wouldn’t it be easier to make decisions if you could see into the future? Who wouldn’t want to know in advance whether things were going to turn out well or badly? Learning can be a painful business and our most valuable life lessons are usually associated with skinned knees and broken hearts. In business that usually translates to lost competitive advantage, degraded customer experiences, and an unhealthy dent to the bottom line. Luckily, things could be about to change (for business at least) thanks to a concept that’s already proven very successful in another context. It’s called a digital twin.
What IS a Digital Twin?
If you’ve never heard the term before, think about Formula 1 racing cars. Most have a digital twin, a computer model that reacts to changes in the same way as its physical counterpart. By manipulating the virtual car, the team can predict how the physical car will perform if the track gets wetter or drier, or as the fuel load gets lighter, or if they change the aerodynamics or the fuel management system. They can determine which adjustments deliver the best outcome without touching the car out on the track. And once they make changes in the real world, feedback from the physical car to its digital clone will confirm they’re getting the results they expected.
The engineering world has been using digital twins for years. As the state of the art has become more sophisticated, they’ve been used to model increasingly complicated webs of processes, technology, and human interactions. The city of Singapore has a digital twin, as does the Port of Antwerp. It was only a matter of time before someone saw the obvious potential of digital twin technology for business transformation.
Gartner has coined the term DTO – digital twin of an organization – and defines it as “a dynamic software model of any organization that relies on operational and contextual data to understand how it operationalizes its business model, connects with its current state, responds to changes, deploys resources and delivers customer value.” Like the Formula 1 car’s twin, a DTO is a dynamic digital model, updated with real-world data. We can not only use it to better understand how our organization is currently performing but also to predict how it will respond to change because we can alter various parameters within the virtual environment, like customer demand, resourcing, or channel mix.
Think about that last statement for a moment because it’s game changing. Firstly, a DTO gives you a clear, holistic picture of your organization – a dynamic representation of your models, procedures, and work instructions, based on your operational reality and populated with actual performance metrics. Secondly, it gives you risk-free insight because it’s a virtual playpen in which you can test how your company will react to shifts in the business environment and what changes you should make to optimize efficiency and effectiveness.
By capturing operational and contextual data and creating a DTO, you can plan for the storm before the clouds appear on the horizon, enabling you to create the best version of your organization for any given set of circumstances. As a result, your organization can become more resilient, more agile and enjoy more assured outcomes.
- More Resilient – DTO technology enables you to explore a wide range of disruptive scenarios without any risk to your real-world operations and this new capability for predictive analysis means you no longer have to hope your mitigation plans work – or worse have create one on the fly. Instead, you can proactively build a library of responses which are tried, tested, and ready to deploy. Resilience also comes from having the right controls in place and you can use the DTO to model where best to place them to achieve continuous compliance without impacting efficiency.
- More Agile – Change management and digital transformation become more predictable because your digital twin protects you from the detrimental consequences of unforeseen conflicts between processes and systems. You can transform faster, and the risk of failure is greatly reduced. Change bureaucracy can be eliminated because you’re applying proven interventions to a clearly understood current state. Better risk control. Fewer surprises. Less need to hastily roll back to a known good state and assess the damage.
- Assured Outcomes – Having a clear, accurate model of your current state lets you focus in on the right problems, concentrating on issues that impact key metrics rather than basing your transformation on assumptions. Also, you can compare all aspects of your current operation against best practice and identify process improvements which deliver better customer journeys and quantifiable value.
Is It for Me?
If you’re responsible for the cost, quality, and timeliness of your organization’s operations or for achieving future targets, if you’re an operations director, a COO, or a CFO, DTOs should be near the top of your list of things to read about and understand. If you’re a transformation director, responsible for digitizing, standardizing, or optimizing business operations and their underlying processes, DTOs are worth your attention because they can reduce your risk of failure and increase the value your projects and programs deliver.
Until now, the crystal ball business has a track record of being long on promise and short on delivery, but we believe digital twin technology is set to take the uncertainty out of running and transforming an organization. As for personal life lessons, we’re afraid you’re still on your own there.