Inside the changing world of business operations

As global challenges continue to pressure operations leaders, what the industry needs is a fundamental rethink – of purpose, of function, and of place.

Operations leaders have been inundated by all kinds of unforeseen challenges in recent years. From challenges associated with the COVID-19 pandemic, disruption in supply and demand, supply chain challenges, an uncertain labour force, cyber security threats, and emergent technologies, the operations landscape has been fraught.

According to some, the near future holds little promise of calmer operational conditions as disruptions in global trade, the ongoing energy transition, and increasing automation from AI continue to hold sway.

“The need for modernisation [in operations] is becoming increasingly urgent,” said Kevin Evans, chief executive of APAC at ActiveOps.

In its most recent quarterly OpsTracker, Active Ops reviewed performance data from July to September 2023 to consider what trends will determine the operations landscape over the coming 12 months.

Tracked against five key metrics – agility, control, effectiveness, efficiency, and focus – Australia and New Zealand’s operations functions have been slipping, albeit slightly: “Australia and New Zealand’s grip is loosening on its long-held status as best-performing region,” explained Mr Evans.

Compared with the end of 2022, Australia and New Zealand’s operational performance was down by over 1 percentage point compared with the US, whose performance has continued to steadily improve, to now sit at 58.9 per cent. This was a 2 per cent quarterly improvement, up 8 per cent from the same time a year prior.

To consolidate Australia’s position as a top performer in operations, ActiveOps said the following trends need to be observed and effectively responded to.

1. Advanced AI is coming

It’s hardly controversial to claim that AI will affect any given business function, operations included. According to ActiveOps, operations leaders tend to believe that the impact of advanced AI tools will be gradual – and more a story of job augmentation rather than replacement.

That said, from healthcare to banks, finance, and retail, operations functions have already undergone considerable change due to AI integration – leading one commentator to argue that AI integration in operations is not about efficiency, rather “it’s about transformation”.

2. Cleaning up your data

Generating data is not the challenge, as operations teams are in no short supply. The challenge, according to Mr Evans, is turning the data into actionable insights that can move the needle on operational performance.

Some research suggests that up to 73 per cent of data generated by businesses goes unused. “Data serves as nothing more than the (crucial) resource from which intelligence can be gleaned and action taken. In short, data doesn’t matter if it isn’t actionable,” explained Coolfire.

As noted by Mr Evans: “Organisations need to get their data in order by dismantling traditional data silos and creating a centralised 360-degree view of the business to improve planning and resource management.”

3. Operations as a business partner

Modernising operations will involve significant costs for many organisations. Getting access to the necessary funding will require a redefinition of the operations function, said Mr Evans, as, traditionally, operations functions have been seen as a cost centre.

“Ops leaders can turn this around by adopting a similar technique as IT leaders have done in the past and position operations as a business partner that can save the organisation money,” said Mr Evans.

The right kind of investment in operations is no sunk cost.

4. Hybrid working 2.0

As the hybrid work debate rages on, it will serve operations leaders to gather data on hybrid employee performance. As noted in a recent HR Leader article, many of the pull factors for returning to work are difficult to corroborate with data. Without objective data to point to, many employees will be reluctant to give up the many benefits of hybrid work arrangements.

The term “hybrid work” can also apply to AI-augmented jobs: “By using a hybrid of the two [human and robot], organisations can unlock greater efficiencies and improve performance outcomes,” explained Mr Evans.

5. Investing in team culture

Building on the hybrid discussion, operations leaders will be wise to consider the human impact of operations shake-ups. Including employees in the transition process can help to enfranchise and motivate the adoption of new processes and technologies. Business leaders tend to be more optimistic about AI than their employees, who often fear being replaced. Investing in your human workforce can help to smooth the transition.

“As organisations look at how AI can help re-engineer the way ops is run, operations leaders need to ensure they don’t lose sight of the human side of the workforce and ensure their people are engaged in the transformation journey,” said Mr Evans.

“Not only does this mean finding change agents within the business who can champion new ways of working, it also means investing in team culture and empowering individuals to speak up.”