Thoughts on the Digital Transformation in E&C

Many write off the topic as just another buzzword, but digital transformation has depth and meaning that should not and cannot be ignored. It will be interesting to watch this change the world of engineering and construction (E&C). Already we are seeing some great startups like Doxel AI use robots and artificial intelligence to improve construction progress reporting as well as technologically progressive companies like Autodesk bridge Building Information Modeling (BIM) and the Internet of Things (IoT) technologies. But we have a long way to go still, especially E&C in the heavy industries – process, oil and gas, infrastructure, etc. According to McKinsey, construction is at the bottom of the list for industry digitalization. There is much to read, watch, listen to, and even experiment with to gain useful knowledge within this most fascinating subject. This post contains a few points based on my opinions from that effort thus far.

No one knows what a fully digitalized world looks like.

When the world wide web became a thing in the 1991, no one knew that we’d be walking around with it in our pocket, doing our grocery shopping on it, that it would be weaponized to serve nefarious people, that it would be ubiquitous throughout the economy, that it would change the ways we saw social issues in real time. Sure, there were those with the vision to predict some of these things, but the public at large had no idea what changes were about to sweep over them in the next 5-10 years. Thought leaders like Robert Metcalfe, inventor of the Ethernet, famously prophesied “I predict the internet will soon go spectacularly supernova and in 1996 catastrophically collapse.”.

In the same way I expect the digital transformation in business to create lots of unintended consequences – some good, some bad. There are jobs that currently exist that will be gone forever and jobs we don’t know we need created. There are unknown technologies that are not even a concept yet that will be disruptive to how engineering and construction work. To their detriment, there will be legacy organizations that move too slow to adapt. There will be startups that seemingly come from nowhere that dominate the market. There will be occupations that never existed before that will be lucrative for those who get in early – did you know that ‘cloud architects’ make an average $142,000 per year in 2019? Remember when the cloud wasn’t even a thing?

Transformation is not an IT project.

It is a total business project. When we talk about digital transformation, we are not just talking about moving business activities to digital infrastructure, though that is certainly a part of it. We are talking about creating holistic and business ecosystems that are interconnected and interdependent. In fact, without it being a fully holistic approach, digital transformation projects within organizations will fail. I believe the ability, or lack thereof, to think in terms of complete closed loop systems will be the single biggest factor in the success or failure of businesses soon. I am not referring to just the businesses who choose to go down the path of transformation, but all businesses. This is not just an IT project to keep up with changing tech, it will include technology, culture, business modeling, operational processes, and more. It will change the org chart and and profit centers.

It is an evolution, not an event.

This will not be a ‘thing’ that will ‘happen’ rather an evolution. As with any evolution the steps along the way will open the business environment to all kinds of unexpected paths to go down. So, it is vitally important when implementing a transformational project that we ask the right questions early, determine the desired results, and decide upon the critical path to accomplishing the core mission. At the speed which technology is changing each milestone in the evolutionary chain will present new challenges to be addressed. As the technological tools transform around us, the team can adjust plans accordingly. Look for blockchain and the industrial internet of things (IOT) to be the fundamental technologies that tie all of this together.

Most companies will do what companies always do when faced with technological change; they will look at it one piece at a time from siloed perspectives. Instead there will need to be thoughtful assessment of the whole operation – where they are and where they want to be in the next 5 years. Map out the existing processes that make the business work, use this assessment to analyze weaknesses. Then use the determination of weaknesses to assign technologies that talk to each other to create resilience. Finally, use the data collected by those technologies to drive decisions and use those decisions and new resources to drive market value for the company. Anything else will be a flimsy and high maintenance non-solution that will, at best, cost unnecessary resources for the company; at worst, sink the company into bankruptcy and irrelevance. It will take a new mindset, the right people, solid processes, and the right tools. Getting this mix right will be critical to success. The time to start thinking about this mix is now.

This is a positive transformation.

This might all sound uncontrollable, but it’s not. It is true that there is nothing that is going to stop this transformation and that sounds scary. It is true that for the unprepared there will be serious challenges to overcome. This has been true of every industry since the stone age that must adapt to technological change. However, for those with the vision to see the benefits of this effort, there is great opportunity ahead. Society needs the next wave of entrepreneurs to solve the big problems of the world and take advantage of the transformation for the sake of progress. The current major areas of economic opportunity appear to be within the realm of the Industrial Internet of Things. Breaking it down into elements that means drones/scanners, sensors, robots, software/hardware hubs, artificial intelligence, digital simulation software, and virtual and augmented reality, all of which is built upon sound data science. These applications will need designers, operators, salespeople, programmers, engineers, consultants, and planners with strong analytical and communication skills.

People who understand whole systems and can communicate visually will have the most success in the job market. Companies who stay knowledgeable with technological advancements, and can build systems that won’t require constant adjustments, will have the best market shares. This is a matter of working on your business or trade rather than in it. Don’t let the bullet train of technological advancement speed past you while you are busy maintaining a road built for the horse and buggy.

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