A digital operating model
To gain value from digitalisation, organisations must align their digital ambitions with their operating models.
If organisations are serious about gaining value from digitalisation, they must embed it in their culture, governance and operating model. When this doesn’t happen, digitalisation initiatives are prone to failure, reveals the latest digital maturity assessment by the UK’s Infrastructure Client Group. Peter Slater explains.
‘My organisation sees the benefits of digital transformation, but they remain out of reach,’ says a typical respondent to the 2020 digital maturity assessment published by Mott MacDonald on behalf of the Infrastructure Client Group (ICG). ‘My organisation lacks the necessary structure and vision to catalyse change. Its operating model is ineffective in delivering digital objectives.’
Just two fifths of respondents to the assessment, ‘National recovery, digitally driven’, said their organisation has an operating model that is fit for purpose when it comes to driving an effective digital agenda. The assessment involved 450 respondents representing 14 organisations – all of them leading UK asset owners and operators from the transport, energy, defence and water sectors. Responses were gathered and analysed for the ICG using the Smart Infrastructure Index, our digital benchmarking tool.
The misfit between digital ambition and operational readiness is hindering the infrastructure industry’s ability to benefit from digitalisation. Engrained structural and cultural obstacles have to be addressed. Organisations should apply the following three principles to align their digital ambitions with their operating models – effectively creating digital operating models.
Put people first
A significant portion of the industry’s workforce believes that digital transformation will lead to job cuts. Who’ll support an initiative that they think will render them jobless?
Organisations must communicate to their staff the reasons for digitalising, what it means for them, and how it will be achieved – including the roles that staff need to play to enable it. Staff need help in understanding the benefits for the organisation and its customers, and in seeing the benefits for them. Digitalisation will almost certainly involve change for people; they also need help in making the necessary changes.
Digitalisation frequently involves greater agility and flexibility than people are used to. Agile working needs to be built into the organisational culture and normalised. People need to be acclimatised to more rapid cycles of change, different working relationships, dynamics and processes, and prioritise the customer.
All of this takes time and effort – a point highlighted by another report ‘The people-side of digital transformation – lessons from infrastructure’, that we and fellow consultant Lane4 published in March.
Alongside staff, organisations must also work to ensure that suppliers and partners understand and support the digital vision and objectives. Choice of contracts should encourage innovation and agility in pursuit of better outcomes through digital.
Be flexible
Agility and tolerance of rapid change are defining cultural characteristics in the IT software industry. Infrastructure organisations must become more comfortable with them too, as they seek to accelerate the pace of digitalisation. This is because digitalisation both enables and requires rapid cycles of learning and improvement.
Digitalisation also supports agile and remote working practices – something professionals have become accustomed to since March 2020 through cycles of remote working due to COVID-19.
Be holistic
The digital operating model should encompass and align all aspects of governance and strategy, led by a clear vision, goals and objectives. Executives need to show commitment and leadership for digital as part of a holistic approach to organisational direction and management.
Digital systems need to be fit for purpose, reliable and secure to build confidence across the organisation. Digital needs to be accessible, inclusive and rapidly become ‘the way we do things’ for everyone.
Case Study - A Digital Operating Model for Connect Plus
Carrying 15% of all UK motorway traffic, the M25 orbiting London is managed under a 30-year design, build, finance and operate concession by Connect Plus, a partnership between contractor Balfour Beatty and investors Edge Orbital Holdings and Egis Investment Partners. The contract runs until 2039, and Connect Plus is looking to maximise efficiency with the aid of digitalisation. It appointed Mott MacDonald Digital in 2020 to develop a digital operating model, having previously assessed its digital maturity using the Smart Infrastructure Index.
With the digital transformation lead at Connect Plus and other senior stakeholders, our team mapped the digital capabilities of its operational business Connect Plus Services, plus those of its contractors Jackson Civil Engineering, Skanska, Tarmac and Osborne. This highlighted strengths but also gaps, covering: working relationships between all the partners; skills required for effective digital working; and cultural, behavioural and governance barriers to digitalisation. Our review also covered available and appropriate technology and opportunities for data capture.
The insights informed a series of recommendations that will underpin the future digitalisation of the business:
- Establish a central function to co-ordinate digital activity, address key capability gaps and provide strategic direction.
- Create clear and repeatable processes for digital change, supported through overarching policies and standards that include information governance, integration and architecture requirements.
- Set up a central data science and analytics capability to look at data flows across the business and identify opportunities to improve the accuracy, reliability and availability of data.
- Develop a shared vision for Connect Plus and its delivery team with digital as a core theme, to unlock value throughout the remaining years of the contract and for Highways England when the M25 is handed back.
Read our summary of the digital benchmarking report ‘National recovery, digitally driven’
Read ‘The people-side of digital transformation – lessons from infrastructure’
Assess the digital maturity of your organisation using the Smart Infrastructure Index