There is little doubt that 2020 has been the year that has severely tested our mettle and has left many an industry imperilled and in urgent need of a reboot. But experts believe that the economic slump and consequent expected government investment into infrastructure is one of few positive spinoffs of the catastrophic outbreak and can be a silver lining for rebooting failing industries and organisations.
According to Igor Hulak, partner at global management consultancy, Kearney, these investments could present massive opportunities in digital transformation; transitioning to renewable and cleaner energy; and, an outcome-based ecosystem of collaboration between operators and suppliers.
A re-imagined energy supply is among the key shifts that will shape our new resilient, future-proof business mindsets. Internationally, the pandemic has seen several European countries taking advantage of the slump in demand for energy to wean themselves off coal and into renewables. Nationally, an accelerated implementation of a mixed energy supply, in which renewables and liquid natural gas (LNG) will play a much greater role is on the cards.
“The dearth in demand for oil, and the reduced cost of solar and wind technologies has resulted in a favourable investment landscape for renewables. Government has come on board to facilitate these transitions, and Eskom is poised to purchase power from independent renewable energy producers for use in the national grid.”
Hulak adds that, in the renewables sector as well as other industries, we’re seeing an emergence of novel restructuring of projects so that they become scalable, executable modules. “This flexible, iterative approach obviates the need for lump-sum upfront investments and is congruent with innovative modern business paradigms.”
In South Africa, the fifth round of bidding for independent energy supply is currently underway and government and corporates alike are investigating the recent innovations in battery technology and how to best procure these for greater storage capacity of energy gleaned from non-traditional sources.
For forward-thinking organisations, the Covid-19 pandemic might well be the watershed moment that drove broad-based digitisation and spearheaded the Fourth Industrial Revolution (4IR). Hulak urges businesses that have not yet embraced digital transformation to do so swiftly or risk obsolescence in the face of agile disruptors.
According to Hulak, the promised future of digitisation and 4IR is already upon us and is expressed through the greatly increased carrying capacity of the cloud, the ubiquity of reliable connectivity and greater numbers of people going online and becoming digitally active.
This recognition will drive innovation and expansion and will enable companies to emerge stronger, nimbler and more resilient to future disruptions.
It is widely acknowledged that strategic partnerships, when done right, add mutual value through a less-siloed approach and enhanced efficiencies of operations. Hulak explains that the constrained business climate brought on by the pandemic has necessitated a radical shift toward tactical alliances based on the outcome, rather than adversarial competition focused narrowly on cost and position.
“Rather than the traditional contracting methods of the past, which saw lump-sum risk being pushed onto suppliers, the risk is now shared proportionally, incentivising outcomes and driving towards a common goal”. Hulak adds that in the new reality, data will enable an aligned view of what ‘best’ looks like thereby building trust, as well as prompting realistic, auditable costs and timelines.
Rishad Khan, the South African operations manager for engineering, procurement, construction, and maintenance company, Fluor, believes that early and effective resource-loaded portfolio planning and identification – and engaging strategic alliances upfront – will help mitigate and manage risks associated with key performance drivers of safety, cost, schedule, and quality.
“An example of this early engagement is applying a construction-driven execution approach to enable better-build techniques that drive the engineering and design process, instead of following the traditional engineering and design sequence, and then finding a construction solution and developing an execution strategy. The same methodology can be applied to suppliers. Significant cost savings have been achieved with this approach,” says Khan.
“These shifts toward holistic leadership reflect the increasing sophistication of governance globally and enable the management of often finite resources in a more responsible way with greater oversight. This stands in stark contrast to the adversarial, myopic paradigms of yesteryear,” concludes Hulak.