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Digital transformation: a journey of business, culture and organisation

Published by , Editorial Assistant
Hydrocarbon Engineering,

With numerous industrial process manufacturers clamouring for digitisation, digitalisation and digital transformation in recent years, it may come as a surprise to learn that 70% of related project efforts have fallen short of the goal line. This stems from a lack of employee engagement, inadequate management support, poor cross-functional collaboration, and a lack of accountability, in addition to confusion around the three digital terms themselves.

In spite of the shortcomings, industrial organisations cannot be discouraged, and instead should use these lessons to drive holistic preparations for the digital present. Digital transformation is happening throughout all aspects of modern life, bringing with it some disruptive changes to our societies and industries worldwide.

The process industries are no exception, as Industry 4.0 is changing operations and stakeholder expectations constantly. But if there is one thing that we have learned over the past few years through the global pandemic, it is that many of our old beliefs and ways of working can – and must – be modernised.

Compared to the fast-paced tech industry, conventional process industries – such as hydrocarbon, energy and chemicals – are facing greater challenges for digital transformation due to investments in infrastructure, large personnel bases, legacy equipment, complicated supply chains, long-running business partnerships, complex change management processes, and uncertainty in technological development.

This article will provide a perspective on digital transformation that can help industrial organisations consider the broader business picture of their markets and operations, while effectively clearing the hurdles between where they are now and the digital strides they would like to make. By embracing digital transformation, companies position themselves to remain competitive in tightening markets by optimising business and operational procedures, in addition to providing deliverables in formats and quantities expected by stakeholders.

Digitisation, digitalisation, and digital transformation

To start, it is important to make the distinction among digitisation, digitalisation, and digital transformation. In simple terms, the distinguishing factors can be explained as an evolution in time and technology.

Industry-wide, the digital journey began with the replacement of analogue communication by digital protocols among devices and instruments, which in turn simplified data collection – this was digitisation. Subsequently, process manufacturers became more interested in operational optimisation, deploying algorithms that took dynamic key process variables into account in ways that were impossible previously – this was digitalisation. As digitalisation’s scope and capabilities grew, it reached new individuals, collected more information, and met increasingly complex needs with adaptive models used to make predictions that drive decision-making (see Figure 1).

Figure 1. Digitisation, digitalisation, and digital transformation are related, yet different, and distinguishing the definitions is key to establishing and reaching organisational modernisation goals.

Ultimately, digital capability matured to such an extent that we now build autonomy into local operations, and coordinate in real-time at the enterprise level, transforming the way work is executed – this is digital transformation. Even today, however, digital transformation initiatives are far from guarantees of achieving desired or expected results in the absence of strategically-crafted plans.

Challenges to digital transformation

One of the greatest challenges business leaders face today is clearly articulating the objectives and goals of digital transformation programmes. It is easy to lose sight of the rationale, business impact, and reason for adjustments in the day-to-day rhythm of business, making it difficult for teams and individuals to understand and embrace change. In many cases, these leaders are simply leveraging digital transformation to increase efficiency and productivity, but when fundamental project steps are overlooked, these improvements rarely come to fruition.

On the other hand, the common factor in successful transformations is a focus on – and alignment of – people, culture and value. The technology involved in a digital transformation is much less important than the business and human aspects associated with a project. In fact, the most important technological consideration is the extent to which it enables the people in an organisation to adopt new practices and behaviours, in pursuit of specific and deliberate areas of business value improvement.

When companies run into digital transformation challenges, it is often the result of attempts to roll out programmes and policies too quickly. This can stem from misleading premises, such as the promise of obtaining a complete plant model by simply putting process data through a ‘magic box’. However, as time goes on with few intended results, managers and the teams they lead are forced to revisit essential questions such as:

  • “Where do we start?”
  • “This is complex, can someone else do it for me?”
  • “How do we justify the cost of this solution?”
  • “Will it disrupt our already tight operations?”
  • “Which technology should we really standardise on to ensure usability and future-proofing?”

The process industries require a sound approach to address these questions and establish greater confidence in realising the benefits of digital transformation.

Taking a value-based approach

A value-based approach to digital transformation has proven successful for many organisations. This requires a detailed learning phase, careful consideration of changes to the personnel and organisational structure, and many decisions that come with risks.

First off, the organisation needs to understand its pain points, gaps and opportunities, and it must base its goals for immediate and long-term success on this knowledge. To do so, the organisation must be clear about business objectives and value drivers that underpin anticipated transformational changes, and verify that these can be realistically delivered by a selected technical solution.

This phase often begins with workshops, where broad groups of stakeholders and practitioners discuss the key pain points, gaps and opportunities that affect value capture. Frequently, it becomes evident during these meetings that there are great volumes of value with the potential for capture, but the interdependent relationships among organisational gaps and goals makes this challenging. For example, a company may propose a technical solution to help automate process data analysis, but this does not provide much value if data is difficult to wrangle, engineers are not trained in analytics, or firefighting consumes too much time for new projects.

Another important topic for discussion in these workshops is what the organisation wants to be ‘when it grows up’ into digital maturity, answering questions of how it envisions the future and its own business values. With ever-growing technology offerings – such as artificial intelligence (AI), machine learning (ML), predictive analytics, and supply chain optimisers – numerous software opportunities can be explored, but each must be assessed – not on technological capability, but on value to the business. Such a solution must address topics such as reliability improvements, capacity increases, and quality control.

To assess these sorts of characteristics, companies should follow these steps:

  • Align the organisation on the value measurement metrics, and quantify values for resolving each pain point, closing each gap, and capturing each opportunity so that the priority and focus are apparent company-wide.
  • Understand the organisational capabilities required for creating necessary changes, the barriers to adoption and deployment, and the specific roles and requirements of technical solutions in helping facilitate these changes.
  • Identify an initial source of funding, seed project, or initiative that can be leveraged to introduce digital-enhancing technical solutions, and apply a return on investment (ROI) perspective when doing so.
  • Map and quantify the impacts of any prospective solution on company-wide capabilities, both positive and negative.

Value metrics should not be purely financial, but rather encompass a broader assessment of organisational impact. For example, training engineers to use a modern advanced analytics solution can save time each day by automating work, while also empowering them to solve process problems that were previously elusive. With high engineering competency through digital technologies, organisations can also more quickly adopt industry best practices and efficiency gains (see Figure 2).

Figure 2. All components of value generation within a company are related because they each play a vital role in supporting core business value.

It is important to link digital transformation opportunities with company key performance indicators (KPIs) to continuously measure the success of and build support for efforts in the journey.

Managing risks

Digital transformation journeys come with significant risks as well, such as disruptions to normal operations, wasted investment, significant rework, and potential hits to workforce morale. To manage the risks, successful companies often form a specialised project or venture team that is chartered to develop a roadmap capturing a holistic view of the journey, and to keep stakeholders engaged along the way. The roadmap should include each step of value delivery, with investments that facilitate short-term implementations while also preparing future improvements.

The project team serves as the alignment builder and change management champion internally, while interfacing with vendors externally. Throughout the development phase of a project, resource requirements and schedules should be specified, along with risk management strategies. To mitigate risks, project teams must ideally:

  • Develop a strategic roadmap and multi-year (if required) work plan to help navigate the warning signs of risks and prepare alternative paths forward.
  • Prepare a plan for progressive introduction of seed projects, along with rapid rollout and expansion of new proven capabilities. The plan should be agile, with the flexibility to adapt as new risks and obstacles are encountered, and as the organisation learns and increases competence.

Driving success

Successful companies exert great effort and resources throughout and beyond digital transformation projects by working through details, setting clear goals, managing deliverables, facilitating alignment among stakeholders, managing change processes, sticking with a plan while making necessary course adjustments along the way, and communicating and celebrating positive results within the organisation.

Companies need to also understand digital transformation is a journey, without a final destination. As successes are achieved, business planners must remain in touch with industry and market developments, and be able to recognise when further organisational enhancements are required.

Case study: enterprise-wide digital transformation

A multinational oil company implemented a rigorous workflow for process monitoring, with the goal of delivering insightful process unit performance analysis based on plant data to teams each morning at the beginning of a shift. The results of the digital transformation effort empowered operational teams to address immediate threats and leverage predictive analytics to mitigate developing issues prior to failure. The success was predicated on continual collaboration among business, operational, project, and external teams.

To begin, the company engaged various vendors, looking for a partner who could help advance its digital capabilities and transform its workflows. Ultimately, the company partnered with Seeq, an advanced analytics solution provider, assisting the company with project implementation on the business end in addition to providing the software solution for staff use.

The cross-organisational team developed a series of templates to project what deployment would look like across the company, reaching hundreds of business teams and numerous operating sites around the world. This careful planning laid the groundwork for initial successes, with teams experiencing positive results almost from the outset of solution deployment.

Figure 3. A multinational oil company engaged Seeq to help guide it along its digital journey, and supply it with an AI/ML- and cloud-based advanced analytics solution for operational and business optimisation.

Encouraged by initial successes, the company accelerated its rollout of the Seeq solution across its operational groups, facilitating data integrity, transparency, and connectivity, along with increased collaboration capabilities throughout the organisation. It found the application was very scalable, influencing the decision to apply it to business functions beyond operations for deeper insights informing production and business decisions (Figure 3).

Digital transformation in progress

The most successful companies are quickly observing that digital transformation is more than a technological advancement within an organisation. It must also permeate business procedures and workplace culture to provide sustainable improvements that advance company core values. Some cornerstones of the effort include:

  • Clearly-defined KPIs, providing metrics for project success at every stage.
  • Collaboration, empowering teams to leverage resources from anywhere in the enterprise to quickly clear hurdles.
  • Data integrity, increasing confidence in information used to create insights, and minimising the need for rework due to poor quality.
  • Digital event data, facilitating learning from every operational and business procedure, in addition to knowledge retention.

With today’s industrial standard of accessible operations around the clock from anywhere in the world, companies cannot overlook digital transformation and expect to remain competitive. These advancements are empowering organisations to become more predictive, collaborative, and insightful, while achieving desired KPIs more easily. However, it is not possible to install a ‘magic box’ and suddenly align all procedures. Digital transformation is a journey that must be carefully planned, mapped and executed. It is happening all over the world and is irreversible, but the victories will go to the organisations taking strategy to heart. When leaders define the vision, managers execute the plan with a value-driven approach, and employees are empowered and supported through business and culture changes, companies can leverage the benefits of digital transformation with capability, efficiency and competency.

Article written by Chris Hamlin, Mike Dou and Chris Fletcher, Seeq Corp.

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