Is your capital projects leadership team a digital blocker or modernizer?

Posted: February 18, 2021

As industrial organizations around the globe step up their efforts towards achieving digital modernization, one of the most common pitfalls is failing to secure proactive, executive buy-in early on.

Corporate leadership teams tend to keep digitalisation projects at arms-length. While they may partake in an early Project Value Improvement (PVI) activities or gate approvals for funding, most delegate project delivery responsibility and decisions around the corresponding digitalization approach to operational heads and project leads. This disengagement slows digital transformation, but when leaders give way to their natural risk adverse tendencies, they can unintentionally become digital blockers. 

Why the C-Suite should stay involved in CAPEX Digital Transformation

As project spend grows (fig. 1) and complexities increase, risk of delay and cost overruns in the project are high. But the downstream effects of the project phase can be massive. How the operating asset was designed and constructed has lasting, direct effects on the performance of the asset throughout its entire lifecycle, and can also impact industry dynamics, regulatory and even geopolitical relations (Source: McKinsey). And those are things that matter to every leader, everywhere.

Digital transformation of capital project execution is imminent and has proven to help reduce increased project and operational risk. But without genuine, senior advocacy, the road is much more likely to hit a dead end with projects failing to gain the correct level of investment and risk being scaled back or delayed.

Aligning digital modernization with corporate priorities delivers greater value

It is likely the CEO and their direct reports are best placed to identify which parts of the business are most prone to benefit from modernization and prioritize their digital transformation. By securing their early buy-in, project leads become less reliant on continuously making the case for project support with leaders more likely to understand the long-term value to the business.

Everything else flows from here – identifying what information is needed, what trusted data should be sourced, and how that will be consumed. From there, the project team can ensure the right people are brought in at the right time to guide and deliver the project. Being able to articulate this and action the strategy is when companies start to see real success.

Informed technology investment decisions result in more effective digital initiatives

One of the biggest hurdles a digital transformation initiative will face is securing the necessary level of investment to deliver on its potential. Frequently, when a project lacks senior sponsorship to digitalize, concerns over return on investment, security and implementation costs and risks can see the scope reduced thereby impacting its overall effectiveness.

“International investors and operators are finding that project failures increasingly have less to do with reservoir, design or financial conflicts than with misunderstanding and mismanagement of non-technical risk.”

Source: Acorn International, 2019

When a project without senior sponsorship is presented for Final Investment Decision (FID), then concerns over return on investment, security and implementation can see the scope reduced thereby impacting its overall effectiveness.

If the C-Suite is on board from the start, these fears can be allayed early-on by building a strong rapport between senior leaders and the digital transformation partner.  What’s more, where external investment is required, projects that have a digital transformation program in place are 15 times more likely to attract venture capital investment.

When these parties collaborate at the onset of a project, leaders get a head-start on implementing a culture to support their digitalization initiatives fully. This means time-enhanced benefits can be achieved through hiring right, training right, and planning effectively to form processes that support the most effective capital execution delivery program possible – to help you deliver even your most advanced projects – on-time and on-budget.

Leadership buy-in enables sustainable culture of CAPEX modernization

Digital modernization shouldn’t be seen in terms of having a project start and endpoint. The journey to true transformation is ongoing and requires a sustained culture that is open to embracing new technology and ways of working.

This can only be truly achieved when senior leaders set the culture tone and lead by example. They should be seen to be actively involved in the transformation and instil the behaviors and attitudes that a future-focused organization requires to achieve lasting change and improvement.

It’s easy to understand why some senior leaders take a back seat when it comes to digitizing your capital projects. With the myriad of other business challenges to navigate in the current environment, delegating a transformational program to someone who has the experience and qualifications to deliver makes sense – on paper. But, like it or not, sustained transformation with the power to turn an organization’s fortunes around will only be achieved with their consistent support and insights. It’s time for leaders to move from passive blockers to active modernizers.

At AVEVA, we partner with organizations at all levels to support the development of their digital modernization strategy and identify the right tools and process to ensure the journey along their path of transformation is as seamless as possible.

Want to know more? Read our latest whitepaper to learn how we can help your team reduce project risk through deeper collaboration and real-time insights for enhanced decision making.