Digital Disruption and other fairy tales.
In the first of a series of articles, Richard Buckley sets out to demystify digital by guiding maritime leaders in how to make the most of it.
‘Digital Disruption’ is threatening the future of traditional business. Or so we’re told.
“Look what digital has already done to the music industry, to film and TV!”
“Look at how it has disrupted and reinvented business models in commerce, hotels, even taxi services!”
In fact, the last of these has even given us a new word: Uberisation. How long before your business is Uberised? Are you at the cutting edge of Uberising your industry? Or are your competitors? Maybe you should take your eyes off your screen and look over your shoulder!
Or maybe we should all calm down a little.
I have spent the past 25 years helping digitise companies in different industries. And as an engineer and technologist at heart, I’m the last person to argue digital doesn’t matter. But I’ve also lived through numerous hype cycles, and seen that while new technology can deliver transformational results, it’s more common to see grand claims failing to materialise. That’s rarely because the technology lacks the desired bells and whistles. More often it’s because the problem it’s supposed to solve has been poorly defined, or it’s simply been poorly implemented or adopted.
Perhaps things are changing, though. 2019 was the high-water mark for talk of a digital revolution in maritime. While the pandemic of 2020 slowed large-scale digital initiatives, it actually accelerated the adoption of technologies that could support remote working: Zoom calls, virtual conferences and Microsoft Teams discussions became routine, while legacy systems were rapidly reconfigured to support access from outside the office. Modern technologies became essential to everyday operations. As the industry now considers the new ‘normal’, the opportunity and appetite for more wide scale digital transformation is apparent – and, crucially, transformation based on real technology meeting real needs.
The key to applying any technology is a clear vision of what it’s meant to achieve, whether that’s enabling remote working or something even more transformative. Digital has had the greatest impact on those industries like music, in which digital media can fully replace the previous technology. Or those industries like hotels, where (easily digitised) bookings rather than bricks and mortar actually drive value. Uberisation particularly lends itself to industries where peer-to-peer technology can cut-out the middleman – or introduce a new, digital middleman!
It’s not obvious how you would go about ‘uberising’ the extractive industries, or agriculture. Or shipping. That’s not to say digital has no role to play. I know first-hand what a massive difference it can make in shipping. But that’s because my job now is helping ship owners and operators use this technology to enhance their existing business operations (something I’ll be writing about regularly). Not to bring about some magical ‘disruption’ to reinvent the fundamentals of the industry.
No one has yet figured out a way to upload shipping containers to the cloud to be downloaded on demand on the other side of the world. Nor is anyone about to do so. Shipping is and always will be about moving tangible goods from port to port, which means consuming bunkers and employing skilled seafarers to operate vessels safely and efficiently. And on that note, I’m very sceptical about claims that we will ever see ‘autonomous ships’, as I’ll argue in a future article.
For me, the real value of ‘digitisation’ in an industry like shipping is as a proxy for organisational transformation. The foundations for transformational change are significant and exciting. Cheap, connected devices (the Internet of Things) can capture high frequency-data from equipment and people. Artificial intelligence and robotic process automation can learn from and improve on human working practices. Platform technology can integrate fragmented data to provide contextual insights. And collaboration tools and mobile devices can enable organisations to be ‘always on, always aware’.
By building on these foundations, shipping organisations can make better decisions, reduce the manual workload and improve safety and welfare, all of which means delivering tangible value and winning new customers. Shore-side, I’ve seen how digital tools can help overcome departmental silo-building, facilitating decision-making based on exception management rather than needless bureaucracy.
As the technology evolves and is smartly implemented, vessels will be able to reduce bunker consumption and emissions by safely navigating more efficient routes; maintenance will be led by the condition of equipment, not the calendar, reducing costs and dealing with issues before they become critical; onboard inventory will be optimised to reduce working capital; seafarers will be more engaged in improving the performance of the vessel. At the same time, crew rotations will be improved to reduce administrative burden and improve the wellbeing of seafarers; on-shore operation centres will have timely access to accurate information about the fleet, so they can focus on the critical operational exceptions; and much, much more!
Buyer beware, however. With the promise of configurable technology and unparalleled insights available through artificial intelligence the temptation to invest in technology first and find a problem to justify it later is all too real. If the pitch is ‘give us your data and let us work our magic’, you’re being sold a fairy tale. Undoubtedly, the capabilities of technology have vastly improved, but it needs to be intelligently applied to real and material problems or opportunities. It’s once you know exactly what you are trying to achieve that digital technology comes into its own.
Of course, while talk of Digital Disruption often has a magical quality, the consequences of the misguided application of technology are all too real – and strategic errors rarely end happily ever after. But the opportunities are equally real. It is inevitable that the progression of digitisation will fundamentally modernise the traditional workflows of the shipping industry. Relationships may also change through the introduction of new digital aggregators and intermediaries. But disruption to the foundational mechanics of the shipping business is unlikely. So let’s drop the idea that every industry is ripe for ‘Digital Disruption’. And let’s focus instead on how digital technology can solve real-world problems. That’s what I’ll be doing in the rest of this series of articles, so I hope you’ll come along for a ride fuelled by problem-solving rather than magic dust!