by Vino Govender, Executive: Strategy, Mergers and Acquisitions, and Innovation, DFA
The term technology is wide and far reaching – it refers to a plethora of things. It can refer to manufacturing technologies, process technologies, and building technologies, for example. This article focuses on the technology that is today and for the foreseeable future going to fundamentally change the way we operate businesses, and develop, adopt and consume products and services – a technology that has and will continue to create new business models while disrupting the existing. This is digital technology, and the article will look at its role in public–private partnerships (PPPs).
Public–private partnerships are by nature large-scale projects that draw on a multitude of resources, including funding, skills and expertise, and innovation capability and capacity. The projects deliver public services to business and people citizens, hence there is a public-service-delivery component to this. The projects also deliver value to the private industry partners, hence there are business- and operating-model components to it as well. And lastly, these projects deliver augmented capacity and capability to the public-sector partner, which means that there are also management and governance components to these projects.
Digital technologies can play at least three key roles in enhancing the delivery and management of PPPs:
- Digital technology and its role in innovation
- Digital technology and its role in augmenting capacity
- Digital technology and its role in transforming business models
Digital technology and its role and innovation
Innovation is a process that may be triggered by an idea to solve a need or problem. However, only if the idea creates value in the way that the problem or need is solved can it be considered an innovation. In other words, innovation creates efficiency and value in solving a problem or creating a new product or service. Innovation is sped up by looking at an issue from a number of angles, collaborating and testing alternatives, applying multifaceted views that support critical thinking, and employing creative problem-solving skills.
Digital technologies play a key role in enabling these innovation processes by bringing resources and expertise from across geographies to work on complex projects. It provides the platforms for communication, collaboration, and creative problem solving. Digital technologies, such as natural language processing and real-time translation, will continue to break down the barriers to communications while further enhancing the levels of collaboration.
In the construction and infrastructure environments for example, building information modelling (BIM) is a digital platform that allows a multidisciplinary team to collaborate on projects rather that each one of them working on their own set of inputs independently. An entire multidisciplinary team inclusive of structural, geotechnical, electrical, surveying, IT, and building-management engineers can provide their inputs and obtain their outputs on a single building, structural, and information model and framework so that problems and issues can be proactively identified and collaboratively and innovatively solved.
Digital technology and its role in augmenting capacity
Capacity is linked to resources, and one of the most critical resources in large scale PPPs is time. When referring to time in the context of digital technologies, the focus is on how digital technologies reduce time in the implementation and operations of PPPs. By supplying the platforms for communication and collaboration, digital technologies provide the services for informed decision-making and problem-solving at speed.
Since PPPs are largely linked directly or indirectly to public service delivery, emphasis has to be made on the availability of these services. We have seen the large number of service-delivery protests and the large costs that are associated with these. However, this is also an indication of the importance that these services have in the lives of citizens.
When it comes to augmenting the capacity to manage and operate these services, scores of technologies, including IoT, data analytics, artificial intelligence, digital twins, and virtual reality, come together to deliver predictive, proactive and preventative management of services assurance and availability.
In the airline industry for example, the jet engine is a critical component, and service delivery – or the lack thereof – can most often be fatal. Jet-engine manufacturers have now deployed sensors on the engine that obtains and sends back the data in realtime time to a central platform for consumption. The data is analyzed to identify any possible risks and to take proactive measures, such as informing the pilot on what to do or aircraft maintenance for proactive maintenance measures. The engine and flight data can be used for a number of purposes, such as pilot training or future engine development and enhancement. As more data is ingested and analysed, machine learning can be used to inform improved autonomous-pilot applications. The realtime data can be used to inform a digital model of the engine – the digital twin – that provides a more contextual view of the engine’s performance and the ways it is affected by other external factors, and well as its impact on the aircraft as a whole.
The very same process can be applied to a power station, a dam wall, and a wind turbine. The value that digital delivers is the predictive and proactive management of these assets that leads to lower total cost of ownership and higher levels of service availability.
Digital technology and its role in transforming business models
Digital technologies have fundamentally changed the way services are produced, purchased, and consumed. We experience this in our daily lives as consumers with services such as Gmail, online banking, Takealot.com, Uber, and Netflix, to mention a few. One of the common ways in which these services have disrupted their traditional predecessors is that they delivered a consumption-based proposition to market. Consumers were able to consume these services when and where they wanted to and only pay for what they consume.
Digital technologies have also disrupted the traditional models and introduced new consumption-based models in infrastructure businesses. In the previous example, the jet-engine supplier moved away from selling the engine to the carrier to providing a consumption-based model based on flight hours and management of the asset. This lowered the cost of purchase for the carrier, but at the same time forced them to ensure that their pilots were trained in a manner that supported optimum use of the engine, leading to the engine staying in an optimal condition for longer, avoiding unnecessary wear on the engine through better pilot and flying practices and procedures.
The engine manufacturer moved from a capex model to an annuity-based revenue model, which gave them predictable cash flows as opposed to lumpy capex-based sales revenues. Digital technologies provided them with the efficiency and scale to deploy, manage, and deliver these services. Perhaps one of the key enablers is the availability of cloud-based infrastructure and platforms to bring these services to life. Once again, these disruptive, consumption-based business models can be extended to power plants, desalination plants, and other relevant PPPs. As consumers, we are already experiencing such consumption models in PPP-based services such as toll roads, but these can extend into the B2B space as well.
Digital technologies can therefore play a key role in accelerating innovation, augmenting capacity, and introducing new business models for PPPs. However, the capabilities that are required to develop and deploy relevant digital applications an services must be scalable and cost-efficient. Cloud-based platforms, including data-ingestion and -mediation platforms, data analytics, application and workflow platforms, and storage and computing resources, deliver the scalable an on-demand infrastructure and platform requirements for cost-efficient digital-applications and services deployment.
However, the ability to access these centralized cloud-based platforms requires the appropriate level of connectivity. For small packet-based sensor connectivity, an IoT network such as the one delivered by SqwidNet, a DFA company, would be more appropriate, since it is purpose build for IoT. SqwidNet is the Sigfox LP-WAN network operator in South Africa, and the network delivers low-cost, low-power, long-range, and secure connectivity and data transmission from sensors. This data then needs to be transmitted from to the cloud-based platforms for consumption, and this is where high-speed fibre connectivity plays a critical role. High-speed fibre connectivity enables the distribution of data across platforms that may be at different locations, as well as the delivery of services across locations. Fibre also has the capacity to exponentially increase data payloads from and growing level of digital touchpoints. As DFA, we deliver the high-speed fiber capacity through an open-access model, thus making its possible for IoT-network providers as well as cloud-platform providers to supply their services more widely and cost-efficiently. This ensures that these services are made available and accessible to users in an affordable way.