Digital transformation in infrastructure

Digital transformation across UK infrastructure

7th November 20194 Minutes

Curzon Consulting have partnered with Victoria Trukhanovich to deliver an MBA research project at Cass Business School, on the topic of digital transformation.

Over a series of articles we will explore existing challenges, business requirements, relevant technologies and strategy that needs to be applied by infrastructure organisations in order to design and perform transformative digital change successfully.

In this introductory piece we present a summary of findings on the current state of digital adoption across the infrastructure industry, including the transport, utilities and construction sectors.

Using digital transformation to address challenges

The challenges that companies operating physical infrastructure face include:

    • aging assets
    • frequent incidents of underperformance
    • capacity congestion
    • inefficient capital and maintenance programmes,
    • strong regulations
    • dissatisfied customers

Digital transformation is increasingly viewed as an enabler to address these issues, providing opportunities for infrastructure companies to achieve significant gains in areas of system resilience, capacity utilisation, asset productivity, process efficiency and customer engagement.

Lagging digital maturity

Yet, the digital maturity of infrastructure companies lags behind that of many other industries. Although level of maturity varies across and within sectors, the majority of infrastructure companies have not started to implement digital technologies on a wide scale and digital activities are fragmented. Due to a number of legacy factors, infrastructure companies often lack the capacity to build a clear digital vision and drive technological change throughout the organisation.

Empirical evidence from digital transformation projects, conducted by Curzon Consulting with UK transport infrastructure network owners, water and sewerage companies and airport operators, reveals the common challenge of an inconsistent approach to digital integration. Companies often run innovative, technology-enabled initiatives on a project-by-project basis without systematically integrating technologies in line with strategic objectives.

The digital transformation strategy challenge

A dispersed digital agenda was thus found to be the most pressing challenge for companies to solve in order to assert direction within the transformation process and consolidate digital initiatives around achieving clear business objectives.

This study asks how infrastructure companies should go about developing an effective digital transformation strategy. The urgency of addressing this challenge is exacerbated for companies in competitive markets as digital leaders and emerging start-ups are well positioned to identify adjacent niches and secure dominant shares quickly.

The role of technology

To offer a summary of digital strategy recommendations, we seek to:

  • assess the potential of critical digital technologies to deliver industry objectives
  • identify key capabilities enabled by technological advancements
  • examine the evolutionary timeline of digital transformation
  • analyse organisational functions affected and value outcomes generated

Developing a framework for successful digital transformation delivery

Once developed and agreed at the corporate level a digital strategy framework can be used by infrastructure companies to evolve from an ‘adapting- enterprise systems’ approach into a smart network operator approach. Although each digital transformation programme will have a degree of uniqueness, the framework developed within this study offers a high-level plan for successful development and delivery of digital change in infrastructure sectors.

Effective transition to the state of being a digital-champion also requires a company to make important early decisions often targeted at legacy factors that would otherwise inhibit change. Those decisions include establishing a strong leadership position, engaging an appropriately skilled workforce, removing silo-based barriers, instituting cultural change in the corporate mindset and addressing ways of working throughout the organisation.

This article marks the first in our Digital Change for Infrastructure series.

Sign up to receive our insights

Subscribe

* indicates required
Tick here to also receive London event invitations
Your sector

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

transport case study Curzon Consultin

Evaluating structural entity options for a new arm of government transport body

The issue

  • Embryonic consulting business established one year ago by a local government body responsible for transport, to monetise and deploy in-house specialist experience
  • Consulting business deeply embedded in one of the organisation’s existing holding companies
  • Business had not yet established the appropriate frameworks for managing revenue, project delivery, Intellectual Property and assets
  • The client wanted to review the optimal entity structure for its Consulting business in order to better drive commerciality
  • Strong desire to set up the Consulting business using an entity structure that fostered commerciality and leveraged in-house resources in the most optimal way
  • Clear focus on building a profitable revenue funnel, self-financed growth, better IP and asset monetization, capitalisation on tax benefits, simplified and robust governance and transparent risk management
  • Aim to start competing for, or partnering with big organisations to, deliver Advisory, IP and Operations & Maintenance contracts

What we did

  • Conducted an exhaustive benchmarking exercise to provide the client with insights into how other service utility organisations have established successful Consulting businesses
  • Defined a robust set of design principles and considerations for reference throughout the operating model design exercise
  • Identified and shortlisted a set of structural options following a complete option evaluation in terms of feasibility and suitability
  • Conducted end-to-end scenario testing, using carefully selected in-flight example bids, across the shortlisted structural options
  • Refined the final structural model based on outputs of the scenario testing, for proposing to the client’s Finance Committee.

transport case study Curzon Consultin

The results

  • A benchmarking report, providing a crystallised view of the comparator landscape, including assessment of comparator suitability, and a summary of key insights and recommendations
  • A report outlining the full assessment of entity options against a set of robust criteria and the rationale for down-selection
  • A recommended structural model, clearly outlining three distinct entity options catering to the distinct requirements of each activity stream
  • A high-level timeline illustrating implementation options and a trajectory of maturity
  • A concise, crisp report containing key messaging for the Client to socialise to key stakeholders in order to secure Board approval

An award-winning team

Curzon consulting mca finalist 2019

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

infrastructure sector curzon consulting water

Company-wide performance improvement at UK water utility

The issue

  • Ineffective incentive structure resulting in organisational silos & sub-optimal performance (in-house and contractors)
  • Limited long-term planning and investment as result of weak and inaccurate in-house Asset Knowledge
  • Legacy support services from merged smaller companies resulted in fragmented internal processes
  • Lack of job prioritisation and adequate planning leading to poor productivity & rework

What we did

  • Development and introduction of single performance management framework and incentive system to drive efficiency and customer focused culture
  • Implementation of an Asset Capability Centre focused on three capability areas: Physical Asset Management, Stewardship & Delivery; revalidated proposed Capex and ran adaptive approaches on costs
  • Implemented regulatory compliant Shared Services with revised governance, improved service levels and cost efficiencies
  • Redesign and implementation of new job initiation, planning and scheduling processes

infrastructure sector curzon consulting water

The results

  • 20m annualised improvement in Totex
  • Annualised Capex avoidance of c£18m throughout the regulatory period
  • Annualised Opex reduction of c.£3m
  • 25% reduction in shared service cost base
  • 20% productivity increase in Field work, 30% increase in RFT and 10% reduction in Customer Complaints

£20m

annualised improvement in Totex

£18m

annualised Capex reduction

3m

annualised Opex reduction

25%

reduction in shared service cost base

20%

productivity increase in Field work

10%

reduction in customer complaints

An award-winning team

Curzon consulting mca finalist 2019

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

Improving yield management at a travel & leisure operator

The issue

  • A leading leisure travel group needed to make a change in Yield Management practice to optimise commercial outcomes
  • Profitability under strain due to increased competition and uncertain market conditions
  • A complex and out of date system eroded trust in Yield Management practice
  • Limited understanding of commercial impact of pricing decisions and a lack of operational control
  • No alignment behind informed vision to guide the development, deployment and industrialization
  • Capability gaps
  • Siloed understanding of the potential impact of digital technologies

What we did

  • Market analysis
  • Developed strategy & analytical model to explore critical aspects of Yield Management Operating Model
  • Developed blueprint roadmap to deliver vision & clear programme structure
  • Business transformation
  • Executive coaching
  • People & culture change
  • Flexible approach enabled client to retain ownership

The results

  • Estimates over next four years indicate cumulative improvements in gross margin, uplift in aircraft utilisation & increase in spend per customer
  • Improved cross-functional collaboration
  • Uplift in gross margins for last season
  • Commercial mindset taking hold in organisation

20M

exceeded the gross profit margin improvement target

25%

reduced customer loss

14%

reduction in operating costs

An award-winning team

Curzon consulting mca finalist 2019

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

Curzon Consulting Background

Chairman's Masterclass: "Smart Infrastructure - Improving People's Lives"

Event: "Smart Infrastructure - Improving People's Lives"

12 June 2019

By Lois Taylor12th June 2019

On 12 June 2019 we are joined by Dr Paul Golby CBE, Chairman of National Air Traffic Service, Chairman of Costain Group plc and a member of the Prime Minister’s Council for Science and Technology.

Dr Golby will be discussing how infrastructure organisations can deploy innovative technology to improve people’s lives.

curzon consulting infrastructure bridge

Smart Infrastructure is the latest event in our Chairman’s Masterclass Dinner series, providing UK business leaders with insight for over a decade.

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

Driving performance in public sector infrastructure

21st March 20195 Minutes

Nigel Brannan highlights the importance of mastering the basics for a performance focused infrastructure organisation.

The performance challenge

Public sector organisations have long recognised the need to be more outcome and performance focused. While signalling the right intent, many struggle to translate desired outcomes into tangible outputs from their employees and suppliers.

A general ethos of reducing cost above all else compounds this challenge. Furthermore, the organisations often outsource the problem to a supply chain that is increasingly fragmented and under pressure to bid for contracts at very low margins. Suppliers then hope to make money from variations to the original contract that either were not or could not be specified up front, often taking advantage of their client’s poor planning, organisation or decision making.

The supply chain

Partnerships and collaborations are often touted as mechanisms for delivery assurance and improved performance but there are still significant inconsistencies in their effectiveness and practicality. The biggest challenge is usually to align organisations around incentives, which often involves increasing risk in exchange for higher profit, and ensuring that all parties are focused and organised around a common outcome. This is easier said than done.

For major, complex infrastructure projects, it extends beyond the physical construction effort to incorporate the planning and design phases. The public and political outcry at the spiralling cost of many high-profile programmes, or fear that they will overspend significantly, comes from a perceived inability to nail critical decisions, and plan and design in a reasonable timeframe. There are many political reasons why the champions of HS2, Hinckley Point C and Heathrow’s third runway continue to say those projects will deliver for the quoted costs, but the odds are that they will not.

The role of innovation

Innovation and digitisation play important roles in improving the performance of infrastructure organisations. Much of our work involves implementing innovation and digital strategies, but we do it through the lens of following the money. That means mastering the basics of productivity and performance, which starts with knowing what your core success measures are and how you are performing. In infrastructure delivery, you need right to left planning. This means working backwards from the answer on what needs to be in place and by when to hit key milestones and performance outcomes.

The move towards a performance management culture

Curzon & Company is currently partnering with a major public sector infrastructure client to move the organisation towards a performance management culture.

There are three stages in addressing the performance challenge –
Scan, Focus and Act:

  • Scan establishes the baseline, trajectory and key drivers of performance. One critical output is a single version of the truth across scope, activity, cost and risk
  • Focus is about prioritisation and channelling effort to where it has most impact. Major wins often come from an emphasis on looking forwards and addressing future risks rather than reporting historical performance.
  • Act means actually doing things differently. It involves engaging the organisation and their partners at programme and project level to adopt new ways of working. Common measures, good information and ‘heartbeat’ disciplines get results.

None of this is rocket science, but it is remarkable how many organisations struggle to put it into practice.

The benefits

Our client now has transparency of previously hidden efficiencies, providing them and their regulator with the confidence that they are meeting their commitments. They can manage the affordability of the programme proactively – a key benefit where scope requirements evolve over time.

They are offsetting build cost risks by focusing on high-cost elements with standardised product design and productivity benchmarks. Most importantly, they are deploying tools and disciplines at project site level where success (or failure) is delivered.

The successful partnership between the client team and Curzon continues, helping to strengthen the foundations as the client migrates towards a new operating model.

raconteur

This article originally featured in Raconteur, March 2019

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

Curzon Consulting Background

Chairman's Masterclass: "Society is demanding a step change in Infrastructure delivery"

Event: "Society is demanding a step change in Infrastructure delivery"

13 March 2019

By Andrew Morgan13th March 2019

On 13 March 2019 we are joined by Andy Mitchell CBE, CEO at Thames Tideway Tunnel.

He will be speaking about how evolving societal needs are demanding a step change in the Infrastructure sector.

curzon consulting infrastructure bridge

Smart Infrastructure is the latest event in our Chairman’s Masterclass Dinner series, providing UK business leaders with insight for over a decade.

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

aviation value chain

Capturing a greater share of the general aviation value chain

The issue

  • An inherent lack of commerciality where services were being provided to incumbent FBO at no cost
  • A lack of understanding of customer requirements
  • A high operational cost was carried to manage changing customer needs & poor pilot & broker practices
  • Customers transit through the airport was poor & the lounge & facilities provided were outdated
  • Other airports were capturing market share by offering a superior service offering

What we did

  • Smarter commercials & charging for service identified for revenue growth i.e. Marshalling
  • Affiliated 3rd parties identified to provide onward travel & concierge services along with proposing a discrete duty free offering
  • Levying cancellation charges when appropriate to drive improved customer behaviour
  • A customer journey redesign to address concerns & recapture market share

aerospace image

The results

  • Within 4 weeks the project identified growth opportunities to double existing revenue & double the share of the value chain
  • The future strategy proposed changes to existing practices and partnerships
  • Redefined customer proposition was suggested to maximise revenue & improve customer experience

An award-winning team

Curzon consulting mca finalist 2019

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

Curzon Consulting Background

Chairman's Masterclass "The Unbankable Sector of Outsourcing"

31st October 2018

Event: "The Unbankable Sector of Outsourcing?"

By Andrew Morgan31st October 2018

On 31 October 2018 we are joined by Adrian Ringrose, former CEO of construction company Interserve.

Adrian will explore how the outsourcing market has developed over the years, the current disequilibrium between risk and reward in large outsourcing contracts and the opportunities for a different, but prosperous sector.

curzon consulting infrastructure bridge

The Unbankable Sector of Outsourcing is the latest event in our Chairman’s Masterclass Dinner series, providing UK business leaders with insight for over a decade.

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us

Curzon Consulting Background

Chairman's Masterclass: "Leadership and Legacy"

11th October 2018

Event: "Leadership and Legacy"

11 October 2018

By Andrew Morgan11th October 2018

On 11 October 2018 we are joined by Paul Dreschler, CBI President and Chairman of Bibby Line Group.

Paul will share his views on the role that business and business leaders have in shaping the future of Great Britain.

The Unbankable Sector of Outsourcing is the latest event in our Chairman’s Masterclass Dinner series, providing UK business leaders with insight for over a decade.

000 days 00 hours 00 minutes 00 seconds

CONTACT US TO FIND OUT HOW WE CAN HELP

Contact us