Due Diligence Needed for Maritime Tech Adoption to Minimize Risk with Digital Transformation, Says OrbitMI
Rapid technological change, complex regulation and competitive pressures are driving digital transformation in the shipping industry. But navigating a confusing software landscape can be difficult, and sound decision-making is essential to minimize innovation risk, according to OrbitMI.
Industry spending has soared in recent years on intelligent process automation solutions geared to boosting efficiency, reducing costs, curbing emissions and improving safety for shipping companies, with research firm Thetius estimating this market will grow at a CAGR of 13.8% to reach $26 billion by 2027.
The benefits of these solutions, intended to automate time-consuming manual tasks and eliminate human error, are clearly evident, with Thetius citing a 95% increase in productivity, a 30% reduction in costs and time savings of up to 30% among companies surveyed for its study ‘Avoiding the digital divide’.
Frothy digital marketplace
Inevitably, this has given rise to a frothy digital marketplace with an ever-growing array of applications in areas such as voyage optimization, vessel performance monitoring, cargo and vessel tracking, pre- and post-fixture, procurement, crew and vendor payment, as well as other administrative tasks.
The latest overview of the maritime technology landscape from Skysail Advisors shows there are now around 160 software vendors - of which 24 alone are offering vessel performance monitoring solutions - with ongoing merger & acquisition activity and company exits affecting the composition of this market.
Against this backdrop, OrbitMI’s CEO Ali Riaz emphasizes the importance of due diligence in decision-making processes when making software investments, with the potential longevity of the vendor a key factor.
“Companies need to dive deeper before deciding by determining what they want to achieve at a strategic and tactical level. Think quality over haste. There is risk on both the buyer and vendor side, so finding the right product fit and focusing on long-term partnership are beneficial for all parties,” he says.
Sustainable solutions
New York-based software-as-a-service (SaaS) company OrbitMI, which was spun out of Stena Bulk five years ago, is now investing in product development to expand its suite of applications predicated on the Orbit vessel performance monitoring platform after recently forging a landmark partnership with class society Bureau Veritas.
Riaz believes the collaboration with BV strengthens OrbitMI’s position in the marketplace as a trustworthy supplier of sustainable solutions, giving clients clear visibility about its ability to cater to their requirements over the long haul as technology evolves in tandem with shifting regulation. This is especially important given the need for new data-driven solutions for decarbonization to gain compliance with green regulations such as the EU ETS, CII and upcoming FuelEU Maritime, he adds.
According to Thetius’ recent study ‘Navigating new financial seas’, among the challenges with digital adoption are sourcing and implementing future-proof technology that remains relevant and delivers value over time due to rapid technological evolution, as well as adopting solutions that are integrable with existing systems and can be adapted in line with changing business needs. Consequently, it states that new solutions should be “high-impact, agile and scalable”.
Given financial risks, shipowners and operators must carefully assess the cost-benefit ratio in making digital investments, considering potential efficiency gains, operational improvements and long-term savings to justify the initial outlay. Return on investment (ROI) can be a moving target, dictated by how well aligned the digital solution is with the actual needs of the business, integration with existing systems and compatibility with the end-user, which can all prolong the time to payback.
‘More push than pull’
Maritime technology specialist Jochem Donkers, principal consultant with Skysail Advisors, believes “a lot of technology adoption is more push than pull”, with some opportunistic vendors looking to capitalize on market demand by promoting products that are innovative yet do not have a product-market fit and may not meet the requirements of the shipowner to tackle a specific task.
Donkers says, while any IT project will have a degree of uncertainty, shipping companies need in-house competence to evaluate vendor offerings when developing digital systems, in the same way as a naval architect is needed to design a ship.
“There needs to be an understanding of the scope of what is needed and an assessment of risk. The more one understands about the opportunities and limitations of technology, the more one can understand and derisk digital investment projects,” he says.
The issue of innovation risk was highlighted at the recent Thetius-hosted webinar ‘All hands on tech’ where Angelos Stamatiadis, Director of Pools Finance with Signal Group, said: “It is not easy to evaluate different technological solutions but the initial evaluation process is really important.
“There is a risk of adopting a sub-optimal solution that can leave you worse off than when you began. Unfortunately, we have seen this in the industry.”
Decision-making framework
Despite pressure to make software investments, Stamatiadis added: “The approach should be to carefully assess the solutions to decide on which one best meets your needs, looking at the long-term gains, rather than rushing into a decision based on what the market says about which works best.”
Thetius proposes a decision-making framework that entails identifying the challenges of technology adoption, assessing the potential of digital tools and reflecting on the process through a feedback loop to determine whether these tools are performing in line with expectations and business needs.
The research firm’s strategy director Nick Chubb told the webinar: “Often we can end up with a sub-optimal solution because we do not ask the honest reflective questions: is this working effectively and doing what was intended, and are we getting the expected return on investment? Having that reflective process means better decisions can be made going forward.”
The price of failed IT investments is not only lost time and money, but also that technology adoption becomes stalled and companies may be left with systems that can quickly become outdated amid the fast pace of innovation and a shifting regulatory environment.
Easing process of tech adoption
Riaz says: “The most acute pain point for shipowners is opportunity cost due to time wasted on implementing a solution that did not work, especially with the clock ticking on new regulation.”
OrbitMI is easing the process of technology adoption and mitigating financial risk through its subscription-based SaaS platform that can be trialled with no upfront costs, unlike ‘black box’ solutions that typically require heavy investments in IT infrastructure and can often entail protracted implementation processes with lots of trial and error.
In contrast, the Orbit platform is essentially a suite of scalable and adaptable solutions that are compatible with existing systems, which enables rapid onboarding. Multiple APIs from various vendors are integrated into the platform to facilitate data-sharing with intelligent connected workflows and actionable insights that can deliver greater productivity, versus siloed data systems that hinder interaction between company departments and slow down business efficiency.
“To make effective progress with innovation, shipping companies must have a clear understanding of their requirements and definite criteria to evaluate vendors based on their longevity, credibility and ability to provide future-oriented, flexible and collaborative solutions tailored to the needs of the end-user that can deliver value in the long run,” Riaz concludes.