**Scott Branum** Senior Manager, Digital Transformation Evoqua Water Technologies
Scott Branum | Senior Manager, Digital Transformation, Evoqua
Scott Branum
Scott has a clear philosophy and view on devising strategies for digital transformation initiatives. “When I engage the business units to identify areas that need to be digitalized, I approach these discussions from a business transformation point of view. The idea is to develop a mutual understanding about the current digital maturity of the business and to determine a comprehensive transformation roadmap. I realized it is the basic clarity of thought that is often missing when people talk about digital transformation. From my experience, working with the leadership, helping them think about how the business could evolve, and then how various technologies could be leveraged to help that evolution process, is key to forming a digital transformation strategy. This process of discussion and identification of business priorities provides the long-term vision needed to outline an implementation strategy and making technology decisions that do not require unwinding.” In this insightful conversation, Scott shared his perspectives on what goes into forming the basis for digital transformation. He delves deep into how the Water Industry is evolving to adopt and invest in digital initiatives, and how the industry can leverage digital solutions to engage in more proactive meaningful business propositions for customers.
The Digital Maturity of the Water Industry
On a scale of 1 – 10 – with one being the least and 10 being the most - I believe our industry is somewhere around 4 in digital maturity. The typical approach has been, hey, look, we have some connectivity where we're generating some data. Here's a portal that a customer can log in to and try to extract value from. I believe the market has not responded well to this approach, because they don't have the expertise, desire or the time to transform data into value themselves. The approach and expectation of customers willing to pay for connectivity is an outdated concept. Unfortunately, the water industry is yet to realize this. When you move up the digital continuum, you realize that every product made must be digitally connected in a way that is as much for your benefit as the customers’. The data that your product is generating can have more internal value as compared to your customer as it enables a better business model. A company may not understand or realize that their product is generating unique data that can't be recreated. As an industry, we don't think in these terms. We think of balancing the costs of building a remote monitoring solution with the revenue generated. At Evoqua, for our Water-One system, we provide connectivity with the solution. This has been a huge cultural shift for us. However, we still have a long way to go as an industry – when everything in the business is connected and there is a systematic structure to extract value from the data being collected, that’s a 10.
The Digital Adoption Catalysts
There are multiple catalysts that can drive digital adoption in the Water Industry and one thing common to all of them is that they promote better relationship with the customer.
Customer Relationship as a catalyst - Typical transactions in the water industry are still very traditional: I sell you an equipment with a service contract through which I ensure serviceability for the equipment. If we are not bound by the service contract, you may have to shell out a huge sum for maintenance later. This approach is built to ensure that the risk is reduced at every point in the relationship with your customer. Whereas the water-as-a-service approach is built around the single source of truth-driving transparency which enables a managed risk model business partnership.
Business opportunity as a catalyst: When you sell a piece of capital equipment and it's not connected, your conversation with a customer gets limited. Instead of a ‘low value conversation’ with your customer, why not have a scenario where your connected solution was intelligent, collected data, and identified opportunities for process improvement? This possibility can lead to a much more well-informed, higher value and a more intimate conversation with the customer.
Customer demand as a catalyst: An average end-customer does not care how they get their water or what it takes to get it. However, Industry 4.0 is all about removing the veil and driving transparency. By bringing more data points to reiterate quality, a service provider does not only showcase its value, but also demonstrates more accountability and awareness for the entire industry. Although people may not know the difference between a ceramic membrane technology, dissolved air flotation, or clarifier, they do understand that phosphate levels are going up, which is bad. Thanks to Industry 4.0, there is now more societal awareness of these types of challenges.
Where and When to Start?
Digital transformation is not rocket science. The pandemic is a very good lesson on the importance of a connected, touchless infrastructure. As you begin that journey, limit the number of platforms and services used and focus on the things that have commonality across multiple parts of your business before moving on to other areas. This methodology ensures that they can be developed once and redeployed many times. Finally, make sure that you have the right organizational alignment: from the business, through the supply chain and everything in between delivering on your transformational value to the market.
Water Industry and Digitalization Opportunities
When people talk about digitalization, there are two ways to look at it. First, the approach of leveraging digitalization by fixing leaks, improving quality and creating water solutions for the smart city, for example. This ‘smart’ space has now become over-crowded. The second approach is more practical and real-world, with a huge untapped market of water treatment solutions for the industrial space and beyond - large petrochemical plants, F&B industry, etc. Due to the universal need and use of water, be it a small customer or a large customer, the macro trends of the business provision and the aligned trends more or less remain same.
I categorize these into three types
The water service industry is notoriously inefficient. The size of the opportunity in the industrial space is exciting. Many smart-water initiatives are underway in Chicago and Cincinnati. However, that market is quickly saturating, whereas the industrial space is considerably untapped. Any digitalization initiative can provide value-based outcomes for this sector and lay claim on a huge business opportunity.
However, the overall offerings need to be thorough. Oftentimes, the technology intuitively makes a lot of sense. There is a lot of inherent value in its implementation, but whether the customer appreciates the value and is willing to pay for it needs to be considered. Understanding and formulating a well thought out business model is very important to achieve this. It is necessary to understand that technology must never be the focal point of any business model. The focal point must be the value being delivered for the customer. All that the customer cares about is the value they will be able to derive from these sensors to accomplish their business goals. I have observed, at least in my industry, service providers are not investing time to ideate on how to translate, leverage and transform the data that the digital systems generate. The customers do not want to log into a portal and manage their systems - they're paying us to do this for them. Developing a comprehensive business strategy, backing it with technology and the organizational structure that can deliver the real value proposition, can be a game-changer for players in the industrial sector.
Building the Digital Capabilities
‘Rent’ versus ‘buy’ is a traditional conundrum. However, I think it is a journey to be accomplished. This question must be revisited at each significant milestone in the digital maturity journey. In my opinion, during the initial stages, building or learning digital skill sets in-house does not make much sense, as there is a lot of risk. Hence, hiring and maintaining specialized resources with the needed skill sets to deliver on the digital promise and investing in relevant platforms and solutions is more feasible. For many companies, I believe that the rent model is probably more suited for the short term. Establishing partnerships to help accelerate their journey is important.
It is heartening to see that niche companies in digital technologies are getting into the water industry. This has reduced the cost of technology adoption, especially the AI and ML driven technologies. As these solutions are becoming more commoditized, their adoption is increasing, and the overall benefits are percolating through the customer eco-system. There is of course the question of technology becoming the ‘differentiator leveller’, but I believe that technology on its own is only an enabler and its combination with the business strategy, implementation approach, business governance, and resource skill set is what makes all the difference.
How much is too much?
The water industry is like ‘cats and laser pointers’ when it comes to technology – the shiny thing grabbing our attention and we constantly chasing after it. I encourage the quest for innovation, new solutions, robotics, and new ways of doing things. However, throughout my career, I have witnessed the struggle of businesses in mapping creativity, curiosity with the ability to leverage technology to its fullest potential. I have always seen technology being used to solve problems of ‘today’. Technology will always outpace implementation and creativity, but the real challenge is to create a structure where someone thinks of deploying disruptive technology in novel ways.
For instance, most organizations have reduced the concept of digital twins to a technology that enables visibility. It is important to understand the concepts in their right sense to use them effectively. Digital Twins in their right form provide the ability to use data, change data parameters, simulate responses, replay scenarios, change parameters and analyse resultants to better predict the outcomes. To me, that is the standard that the industry will begin to work towards in the next five years when discussing digital twins. I think there will be a significant increase in the percentage of municipalities adopting and implementing digital twins.
Role of Digital in Black Swan Events
With COVID-19, at Evoqua, we decided to adopt digital transformation more aggressively and expedited the projects that were on the backburner. This level of disruption has forced us to relook at the possibility of deriving value from our digital initiatives. We have a lot of connected solutions, with insights drawn from these devices that provided a unique value addition for our customers. We created reports and dashboards that provide us much more visibility. Recently, we have started using this data to drive the automation on reporting side that makes incident/exception management easy and effective. This helped us to identify the areas of time and energy investment to ensure customer availability. Moreover, we didn't have to be on site to provide these insights and were able to minimize the expenses and risk. We were able to tell our customers the real-time condition of their systems, assure business viability, especially within the healthcare industry. Overall, the pandemic has given us a newfound focus and commitment to accelerate our digital transformation.
Business Rapid-fire
Biggest takeaway from the New Normal As leaders, we have to start sensitizing our employees on the needs of the new normal and lay clear expectations about the new ways in which the value of work will be measured as compared to the pre-pandemic world.
A new normal trend that you think would continue I think for the next three-four years, everybody will be expected to have some level of machine learning and AI implementation experience. That is going to be a rapid trend.
According to you what will define 2021? 2021 will be a year of consolidation. The digital market in the water industry is very fragmented right now. With the pandemic, sustainability and survival are the key priorities for this market segment. I think we are seeing it already with some of the acquisitions that are taking place and I think we will see three, four large companies acquire core competencies to consolidate a very fragmented market.
