Digital transformation in the water industry: Unlocking value through strategic implementation

One of the key challenges in developing compelling business cases for digital investments is quantifying both financial and non-financial benefits to justify expenditures. Aligning digital initiatives with strategic business objectives ensures a clear path to value creation. They should also fit within an organisation’s existing technology stack.

While modelling return on investment and payback periods are often standard for a business case, a more robust analysis considers longer-term benefits, such as impact on the community, as well as identifying clear value drivers, like cost savings, productivity gains and customer experience improvements.

As an example, opportunity cost is often overlooked when evaluating digital investments. Value assessment needs to be comprehensive, considering not just direct costs and benefits, but also the potential costs of inaction in an increasingly digital environment.

Daniel Sullivan, CEO of Iota, reminded water utilities that they don’t need to tackle business cases on their own, recognising that collaboration and learning from other organisations and utilities that have trialled relevant solutions can bring strong benefits.

“We did a lot of literature research and spoke to a lot of utilities before we came to our assumptions within our business case (about water conservation). At the end of the day, there's a lot of subjectivity in it, and so you constantly monitor your case options and your business case, and bank those wins when you get them,” he said. 

Starting with low-hanging fruit – smaller, quick-win initiatives that can demonstrate value and build momentum for larger transformations – can help realise incremental value and ROI in the near-term. It can also build organisational confidence in digital technologies, while allowing a process of learning and refining before larger-scale implementations. This is particularly useful when building on existing systems, allowing organisations to extract more value from current investments while gradually introducing new capabilities.

Nick Tompkins, Asset Lifecycle Manager at Unitywater, highlighted the challenges of managing the many software requests from across a business, aligning them with existing systems and the overall business case and strategy, and investing in chunks based on capability and capacity.

“Transformation relies on digital maturity, but also process maturity. You've got to incrementally improve your business process maturity and align that to your digital or software system maturity,” he said.

From a stakeholder perspective, quick-win initiatives invite people along the journey from the get-go and help overcome digital fatigue – or a sense of being overwhelmed or feeling sceptical about the constant push for new technologies. This fatigue can hinder the realisation of value from digital investments and slow down transformation efforts.

Starting small provides opportunities for feedback from stakeholders, while being transparent about challenges and improving future implementations, making scaling up more efficient and effective.

The human aspect of digital transformation is crucial to success. Investing in change management and stakeholder engagement can cultivate a value-driven digital mindset across the organisation, creating an environment where digital transformation efforts are more likely to succeed and deliver tangible value.

Building digital capabilities and upskilling teams increases practical knowledge, agility and new ways of working as part of any digital transformation program. As part of this, developing a digital mindset is critical, so that the workforce is comfortable, trained and even curious to learn across the board, otherwise technology will not be adopted at scale.

While heavy investment in training, toolbox talks, and the like, may feel over-the-top, it significantly minimises the gap from implementation to actual effective use of the technology or system.

Amir Cahn, CEO at Smart Water Networks Forum (SWAN), emphasised the importance of encouraging innovation by celebrating and learning from ideas and failures, as there is no innovation without failure.

“There's a notion you need to fail fast. However, as soon as you really discourage failure, you're going to stop any innovation project in its tracks, without having contingency plans,” he said.

By defining failure as a first attempt in learning, Amir believes a culture of innovation can be successfully cultivated. Similarly, encouraging cross-functional collaboration can empower teams to identify and pursue digital opportunities, contributing to creativity and out-of-the-box thinking.

Establishing clear key performance indicators and mechanisms for monitoring value creation, including human-centric storytelling, reinforced by qualitative and quantitative measures, shows concrete achievements in digital investments. Continuously tracking performance against defined value metrics and establishing governance processes for ongoing value assessment ensures ongoing success and alignment with strategic objectives.

Jenny Francis, Executive Manager – Digital at Hunter Water Corporation, emphasised transparency as key to ongoing success, including reporting on both short-term and long-term measures.

“From the beginning, you should be making sure you're clear about what you know and what you don't know, and that you regularly update on the things that aren't working as well. Having that core business case helps with understanding what it is you set out to do and being able to put into context the things that are creating issues, whether you're deciding to continue with a project or not,” she said.

As the water industry continues to navigate the complexities of digital transformation, focusing on pragmatic, value-driven approaches are crucial. By cutting through the digital hype, starting with clear business cases, demonstrating quick wins and fostering a culture of continuous learning and adaptation, utilities can overcome digital fatigue and realise the full potential of their digital investments.

A balanced strategy will be essential in ensuring that digital transformation efforts deliver tangible benefits to utilities, customers and communities in the face of evolving challenges and opportunities in the water sector.

Thank you to Amir Cahn (SWAN), Daniel Sullivan (Iota), Jenny Francis (Hunter Water Corporation) and Nick Tompkins (Unitywater) for sharing their insights and ideas as part of our webinar series.