Key challenges to digital adoption experienced by South African infrastructure project owners

KEY HIGHLIGHTS:

• For digital initiatives to occur and an innovative culture to thrive, the tone must be set at the top

• A more agile thinking across the industry is required currently there is a strong reliance on the mantra "what has worked in the past will work again"

• There is a need to integrate across partners in the ecosystem so that efficiencies can improve the entire work environment.

Key challenges to  digital adoption experienced by South African infrastructure project owners

Some of the key challenges to digital adoption experienced by  South African capital projects owners include the following:

i) Lack of support from leadership

With a lack of understanding and strong strategic digital leadership, there is a deficiency of buy-in. Digital adoption in capital projects needs to be approached from a strategic perspective, rather than just ‘off-the-shelf, plug-and-play solutions’. With a lack of appreciation, capability and understanding of basic technology from leadership, tech may be seen as a black box to the older generation of leaders.

A general mindset of being complacent and relying on what has worked in the past is a key inhibitor to digital adoption at leadership level and across organisations. However, if leadership does not embrace digitalisation and see that this cascades down throughout the organisation, it is unlikely to happen. For digital initiatives to occur and an innovative culture to thrive, the tone must be set at the top.

ii) Bringing along the workforce

As there is a strong reliance in the industry on the ‘old way of doing things’, with the mantra of ‘what has worked in the past, will work again’, there is a requirement for more agile thinking across organisations. This requires managing expectations of the workforce and equipping them to overcome the barriers of digital adoption (especially when digital is seen to threaten rather than to improve jobs).

This requires that the workforce understands the entire endto-end project value chain and how they add value to a project; and it requires communication on what digital is, how it will affect the workforce, what tech is available and what changes should be anticipated.

It includes teaching digital fluency, linking digital needs to employee KPIs, and to driving appropriate communication around people-centric technology whilst demonstrating the benefits of the projects that have adopted digital to change the organisational narrative. 

Appropriate change management and investing in the digital quotient of the workforce, i.e. by investing in free Wifi, digital learning platforms and the opportunity for the youth to upskill and develop their own digital skills, are part and parcel of this. The most important skills to have though are soft and human skills.

iii) Funding

A challenge to digital adoption in the industry is funding. This is particularly acute in the mining capital projects sector given the cyclical nature of commodity prices. It is further exacerbated  by conflicting objectives of cross-functional departmental teams.

Another funding challenge is justifying spend on digital adoption given existing infrastructure and assets that are in place and the significant outlay of funds they require.

iv) Existing infrastructure/legacy systems

As capital projects can be in remote locations, the ability of organisations to embrace digital technologies may be hindered by infrastructure challenges associated with those locations.

For example, due to a lack of internet and bad reception (which are typical challenges in many locations across Africa), a lot of funding and time may be spent on improving infrastructure, specifically IT infrastructure, before making investments in digital technology.

Furthermore, a bad experience with technology in one area of the organisation may restrict the willingness and ability of people to change their behaviour in another area. Also, as systems for various functions exist across organisations, there is a need to integrate across partners in the ecosystem so that efficiencies can improve the entire work environment.

One such example is the need for a single platform or system to access data (data collected from tenders, costings, design, etc.) by all relevant stakeholders in the organisation. 

Collecting and drawing insights from the data to learn from mistakes must be a key focus. While it is difficult to innovate off old, legacyinfrastructure, the lack of confidence in itself (i.e. if digital will actually deliver on the proposed and expected benefits) is a significant barrier.

v) Demonstrating the benefits of digital

A progression toward industry readiness and embracing changeis a function of clearly demonstrating the associated value of digital adoption and transformation. Owners’ costs are expected to decrease with the adoption of certain technologies.

The expected Return On Investment (ROI) from digital adoptionvaries and ranges from as high as 15% to incremental or small improvements to ROI,including one to five additional percentage points. Projects with higher uncertainty naturally require a higher than normal ROI, with brownfield projects that have a higher risk also demanding a higher ROI.

However, while ‘low-hanging fruit’ projects can demonstrate quickwins, these do not necessarily demonstrate the holistic benefit, which is a barrier to digital adoption across the project lifecycle.

vi) Other industry challenges 

As alluded to in a Deloitte Africa 2019 report, South Africa’s “current market conditions and socio-economic circumstances, mining companies not only need innovative business models to deal with cost, capital, efficiency, talent, technology and digitisation; but also new strategies to manage rising stakeholder demands, strategic risks related to their ‘social licence to operate’ and increased regulatory requirements linked to socio-economic priorities”.

Given the pursuit of multiple objectives, including a ‘social licence to operate’ there is a need to understand how industry-wide collaboration on the applications of digital in capital projects (within the framework of what can make the mining industry as a whole more competitive internationally) could take place. At the least, there is a need for ecosystem partners to work together to realise the benefits of digital.

This article was extracted from the De Loitte's Africa Construction Report 2019 to access the report click here