As with many industries, the agriculture industry and its cooperatives are beginning to see dramatic changes in how technology can enable aspects of many business processes, soil and crop analysis, and even traceability of crops. Farming is becoming more and more automated via robotics with soil, crop, and livestock sensors collecting reams of data. However, with an average spend of approximately 1.5% – 2.0% of revenue on information technology (the lowest among any industry), agriculture companies and cooperatives must ask themselves, “are we deploying our IT resources in the most effective and enabling manner possible?” Many Ag companies find themselves simply trying to keep the “IT lights on” as opposed to investing in enabling technologies. Some of those technologies that forward-looking companies are investing in to realize benefits include:
Robotic Process Automation
Through the use of RPA software or platforms, there are a number of back-office processes (order input, accounts payable, journal entries, etc.) that can be automated to provide assistance in the areas of data input, accuracy, and timeliness. This can allow these diverted human resources to focus on higher value-added activities including data analysis.
Sensors and Data Collection
Soil and water sensors can detect the nitrogen level and moisture level, crop sensors help to detect the health of crops and the attack of insects that can destroy crops, and animal sensors help to detect the health and fertility of cows. All of these sensors collect data that can be used in data analytics and, eventually, predictive analytics for better yields, more efficient use of pesticides, and early identification of potentially catastrophic issues.
While individual farmers and cooperatives are not currently developing blockchain applications, end customers may soon be demanding that producers participate in blockchain-enabled applications for the purposes of traceability of crops and livestock. In these cases, farmers and cooperatives may need to make technology investments in order to adequately collect the data the blockchain is requiring.
Data as a Service
One cooperative realized that data is king and now offers a “Data as a Service” cooperative for its grower members. This is a great opportunity for other traditional cooperatives to continue offering more value-added services to its members by acting as a data aggregator and providing leading-edge analysis tools.
While benefits can be derived from these enabling technologies or processes, most small and medium-sized Ag organizations find themselves spending limited capital on updating old servers or network equipment, inefficient and costly software license agreements, and/or IT resources without the skillset to look strategically at the objectives of the business and the delivery model of IT.
Organizations that find themselves in this position often benefit from a strategic assessment of their IT capabilities evaluated against the critical objectives of the business. For example, things to consider in an assessment include issues such as:
- Costs in IT vs. customer satisfaction – – Your IT costs continue to increase while confidence and satisfaction in IT service decrease within the company.
- Reactive vs. proactive – – IT is frequently in “fire-drill mode” and either reacting to un-prioritized requests (squeaky wheel getting the oil) or simply trying to keep the lights on.
- Frequent outages and “IT emergencies” – – Your IT infrastructure (network, servers/compute capability) should really be looked at with almost the same expectation as your utilities (electricity, phone). It’s always on and it simply works. However, if your IT resources are spending more time fixing problems versus enabling the business, your IT operating model is not serving the business. Have they adequately operationalized routine processes so they are easily repeatable by anyone?
- Data – – The right data is not getting to the right people at the right time. Being able to identify the data needs of the business and then enabling those needs is one of the most important and effective contributions IT can make to the business.
- Your technology resources – – Do you have the right number or skill set of IT employees based on the needs of the business?
- Unknown risks – – Have you been hacked or are your systems potentially compromised? If you’re not confident in your cybersecurity, you’re putting your company’s future at risk.
- Scattered vs. strategic: If a business lacks a comprehensive technology strategy, a well-defined roadmap to get from “current-state” to “goal-state,” it will have disparate technology that is scattered across the organization. The result: spiraling costs and unnecessary complexity.
- Is IT keeping up with the pace of change? – – While your business is growing, it will slow if your technology can’t keep up. If you’re frequently hearing “no” from IT when you have new requests, it’s time for a change. Agility is the name of the game in today’s Ag industry.
Our IT Risk & Advisory team at Blue & Co. has helped many small and medium-sized organizations objectively assess how the current state of their IT people, process, and technologies compare to the strategic objectives of the business. This has resulted in IT strategies and roadmaps that are tightly aligned with the business strategies and allow for business-focused (as opposed to IT-focused) spending and decisions to provide the most value possible to the business. If you feel you would benefit from a discussion regarding how the current state of your IT function compares to the needs of your business, we would be happy to schedule a time to discuss your concerns. You can contact your Blue & Co contact or contact our IT practice leader, Tom Skoog at firstname.lastname@example.org.