By | March 6, 2019

A few weeks ago, I had the luxury of taking time out of helping to integrate Petrotechnics and its market leading Operational Risk Management software into our new home at Sphera to attend the ARC Industry Forum in Orlando, Florida. The forum was a global mecca for digital transformation professionals.

And it was also like being a kid in a digital transformation “candy store.” So many sessions and so little time. Everywhere I looked there was a session I wanted to attend. They offered real practical insight about how companies are doing on their digital journeys. It just wasn’t possible to make a bad choice, but I had to choose.

Here are my top takeaways from the ARC Industry Forum:

The ROI Is Already Here

While survey data both from ARC Advisory and our 3rd annual Operational Excellence Index (published on Feb. 26) point to companies still early on in their realization of digital return on investment, the word at the forum was different. Survey data might be understating the real tangible returns that companies are already seeing.

  • One company spoke of their impressive end-to-end integrated digital operations that could transform Oil & Gas operations.
  • Another talked about $50 million in annual savings as a direct result of using machine learning to help improve pipeline inspections.
  • Another explained how it was able to reduce construction costs for new plants by more than 10 percent.
  • Yet another company found a way to increase production with the same resources by more than 7 percent annually by providing operators with real-time visibility of production data.

Common to all of these and other digital transformation projects currently driving ROI was the focus on the following:

  • Improving insight into operations.
  • Reducing plant downtime.
  • Moving from reactive to proactive operational decision-making.

Interoperability Is a Pre-requisite

It is critically important to design your future information technology and operational technology infrastructure open for tomorrow with standards (e.g., Open Platform Communications Unified Architecture [OPC UA]), application programming interfaces, openness and flexibility at its core. Technology is changing so fast that you need to make sure you don’t get locked into proprietary dead ends. Vendors who can’t support interoperability across business processes and systems really shouldn’t be at the table.

Optimizing Around the Edges Is a One-Way Ticket to Obsolescence

“Research shows that since 2000, 52 percent of companies in the Fortune 500 have either gone bankrupt, been acquired, or ceased to exist because of digital disruption,” according to an article that appears on The Harvard Business Review website. “The collision of the physical and digital worlds has affected every dimension of society, commerce, enterprises and individuals.”

Against this backdrop, many organizations spoke directly about the need to transform to survive. And this starts by re-imagining the way people, processes and technology interact. If you’re going to disrupt the status quo, you need to understand how you’re going to build bridges between functions and constituencies to improve the broader value chain and what it means for the people involved. Too often functions or small groups have focused on domain-specific activities when the true potential for transformation exists end to end.

But the key lesson was to try not to overextend yourself “at first” because, in most organizations, you’re very likely to crash and burn or run headfirst into one of three scenarios:

  • Senior management’s lack of patience.
  • The wall of middle management resistance or the “concrete middle.”
  • The lack of frontline adoption.

Many spoke of their successful journeys down the path of rapid prototypes to proof of concepts to pilots to production implementations and then end-to-end scaling. And they also talked about the need to be constantly thinking about “who else” in the organization could benefit.

Building a Digital Culture Is More Than Data Scientists

Building a digital culture is more than hiring data scientists and tech-savvy millennials. People who can translate domain business processes and know-how into digital are your most valuable resources. Embedding domain expertise into digital thinking and systems may very well separate those who succeed from those who fail. With the oft-stated figure that 75 percent of the workforce will be composed of millennials by 2025, the clock is ticking as the big crew change accelerates.

But the challenge is bigger. A transformational attitude must permeate the company. Ignoring the culture is asking for failure. This requires top-down and engaged leadership that needs to deliver bottom-up value. You need to truly understand what your people on the ground need to do and how they should be doing it; otherwise you’ll create silos. People transform organizations, not methods.

This level of alignment is critical. People need to be enabled with technology-supported business processes and the tools that allow them to change or improve the operating culture. And this starts with visibility and transparency. As one person said, this “can help shift people from being hunter-gatherers of data to insight enabled operators.” It’s a huge paradigm shift.

Beware the Sugar Binge       

We are now squarely in the period of #digitaltransformation. Embrace the change … before it’s too late. But choose wisely as there are too many sweet-sounding options in the digital transformation candy store. Focus on how you can create the most value in the shortest period and prioritize those options. Trying to do too much too fast can give your organization more than an upset stomach.

The Digital Train Is Leaving the Station

The digital conductor is shouting, “All aboard.” Markets already are being disrupted. You have to disrupt yourself or someone will do it to you. Often, we don’t realize it until it’s too late. But the road to #digitaltransformation is not a straight path. There will be hiccups. There will be challenges. Thus, the need to rapidly experiment, and learning is the key.

Let Me Know What You Think

If you’re interested in discovering more about the state of Digital Transformation in hazardous industries, our 3rd Annual Operational Excellence Index is chock full of insight of what industry leaders had to say. Download the free industry report.