To buy or build your way to digital maturity?

To buy or build your way to digital maturity?

Shipping companies looking to improve vessel and cargo operations are often faced with, “a myriad of issues relating to how they manage their marine logistics planning and execution,” says Patrick Boles, a senior consultant with Deloitte. During Digital Ship’s webinar held January 12, he explained two different approaches to elevating digital maturity and how the people, processes, and technology involved play a role in improving vessel scheduling, voyage management and many more aspects of ship operations.

In the last 12 to 24 months, Mr Boles has been working with two super major oil and gas companies to develop and implement solutions to address pain points and capture value. Both firms were dealing with manual data input and were lacking a single source of truth. Deloitte worked with both via two completely different approaches to improve their vessel scheduling, chartering, voyage management and the demurrage and financial settlement of activities by these organisations.

Approach 1 – building your way to digital maturity

The first case study Mr Boles discussed was an oil and gas super major with, uniquely, two separate business units. The firm was managing the commercial trading and operational execution of marine cargoes over $2bn in freight spend.  The work was managed locally and on user-developed spreadsheets, required duplicate manual entry, and was lacking a single source of truth. The business was using outlook folders to manage all documents and marine cargo movements. According to Mr Boles, the work required multiple handoffs resulting in excessive communication, and redundant document retention.

“The company had the tell-tale signs of not being digitally mature and all of this resulted in a lot of sub-optimal vessel planning and execution,” he noted.

To help the company better manage its operations, Deloitte deployed its in-house developed platform using agile methodology AgileSAFE development process and a user-centric design approach to deliver a custom cloud-based application on a Salesforce platform. The goal was to establish a single workspace and engagement layer for all of the roles and processes involved across both business units.

Mr Boles explained that the first step was to interview and assess to engage roles across the commodity sector and to understand the roles of the existing technologies. Over 70 interviews were carried out with shipping, supply and trading stakeholders across all key commodities and regions, with the overarching aim to identify key pain points for improvements.

The second step was to conduct design workshops to prioritise pain points and refine them into areas Deloitte could act upon.

The third phase was the first part of the program increment. This involved four scrum teams dispersed globally working over six two-week sprints using AgileSAFE and DevOps methodologies to develop a best-in-class cloud application for the management of marine cargo movements.

Using the agile processes, the first MVP (minimum viable product) was rolled out in 14 weeks.

According to Mr Boles, potential savings of over $40m in three years were identified. They are currently on track for $20m in FY21, he confirmed.

Mr Boles said that to successfully complete a transformation in this way, three key elements were considered at all stages – People, Process, and Technology.

“Planning is very important. A project’s goal should be to show users some of the magic and wow factor to keep them in touch with project. When using agile processes, it is more about speed and getting products out there so you can learn from the work done.”

The build approach to digital maturity. Image courtesy of Deloitte

Approach 2 – Buying your way to digital maturity  

The second project Mr Boles has been working on for another oil and gas supermajor took a more traditional approach to digitalising its business.

The major was managing hundreds of millions in annual marine freight spend, primarily via emails, phone calls and individual spreadsheets. Capability gaps identified by the organisation included planning and optimisation, contract management, spend visibility and control, reporting, process standardisation, system connectivity.

Once the client had chosen Deloitte to help them improve their digital maturity, four potential technology vendors were evaluated, with Veson Nautical’s Veslink IMOS Platform ultimately chosen to help the company manage its processes.

Three weeks of design workshops were then held to refine the business requirements of the oil and gas major.

Following this, a traditional waterfall approach was taken that saw a 3-month global design phase and a 9-month implementation timeline, allowing the project to execute a complex multi-region deployment in just under a year.

In this program there was an additional fourth phase, ‘Sustain and Improve’ that provide hypercare and support to users.

According to Deloitte, over $15m annualised benefits in marine were identified. Using the Veson platform, the client enhanced is visibility on bulk marine shipping across the organisation via carrier data that was automatically integrated into the platform.

The People, Processes, and Technology elements were crucial again throughout this project. “We started early with training once we’d made selection of the tool. There’s no such thing as too much training or too much testing in these projects,” Mr Boles notes. He also believes it is important to, “Take a holistic view of your relationship with the vendor. Honestly, evaluate your potential for lock in and support, and their willingness to support your custom development afterwards. Really make every effort to be an influential customer to them.”

The buy/waterfall approach to digital maturity. Image courtesy of Deloitte

Patrick Boles gave a presentation during Digital Ship’s webinar on January 12 alongside Kris Vedat, head of IT for P&O logistics. Read our article on Mr Vedat’s presentation on transitioning from reactive to predictive maintenance and watch the webinar online.