On Thursday, November 9, LNS Research hosted the webcast, “EHS 4.0: Leveraging Technology to Reach New Levels of Safety and Environmental Performance.” The presentation explained a new approach to EHS management that helps EHS leaders overcome the complexity and risks typical in today’s business environment.
Q1: What is the biggest challenge companies have with their Digital Transformation initiatives?
A1: We see companies continue to struggle to build a robust business case that gets the Digital Transformation initiative approved and funded. In fact, our research survey data show that the inability to obtain funding is the top barrier to getting started with digital. Building a compelling business case for an EHS 4.0 initiative that demonstrates sufficient short- and long-term ROI is difficult, but necessary to get going.
Beyond cost and benefit calculations, the missing link for approval is often adequate stakeholder buy-in, including executive sponsorship that comes from demonstrating concrete support of the organization's strategic objectives. Stakeholder alignment is key, and should occur early and often. Ensuring that the business case addresses the needs and requirements of other value chain functions, operations leaders, and the C-Suite is an effective approach. You need to know who your audience is in the approval process and cater to their goals, not yours. It’s best to pre-sell and get buy-in before the business case is even submitted. Know the answer before you ask for the money.
Q2: How do you figure out where to start?
A2: Start by taking the approach that Digital Transformation, and the underlying business case for it, is a journey rather than a one-time event. You’ve got to get started somewhere with EHS 4.0 then build momentum over time. A successful approach is to begin with the end in mind. That means thinking big, but starting small to get to the end goal over time.
A capability maturity assessment is a good way to identify the right starting point. An Operational Excellence or EHS maturity model is a useful tool to identify gaps and target specific improvement areas. For a low to average maturity organization, the starting point will likely be tactical cost reductions and efficiency improvements at the department or operations level. With increasing maturity, the company can undertake additional initiatives with more ambitious business value objectives at the enterprise level. Remember, you don’t have to do everything at once. In fact, you shouldn’t, since trying to boil the ocean has never worked. Just pick a logical starting point based on capabilities maturity, and make sure to focus on solving a specific business problem with a strong ROI.
Q3: What are the most common mistakes companies make as they digitalize EHS management?
A3: It’s a long list, starting with a weak business case as discussed above. Traditional sources of project failure are things like poor requirements definition, failure to do business blueprinting, lack of functional fit, bad user experience, lousy project management, ignoring organizational change management, lack of sustainment, and so forth. These are all important success factors for an IT project, and can and should be well-managed. What’s more challenging is poor business alignment, which can kill a project before it starts or at any point in its lifecycle. The key is to treat the initiative like the business transformation project that it is, not an IT project.
Business transformation begins by aligning with the strategic objectives of the enterprise. How will this EHS 4.0 project support the company’s key business initiatives in areas such as innovation, market share, financial performance and brand value? How will it help improve productivity, reduce risk, and enable profitable growth? You must know your company’s strategic initiatives and operational goals, map to them, and base the business case on them. Otherwise, the EHS business function risks being isolated out of the mainstream, and therefore unsupported.
Q4: What impact does Digital Transformation and EHS 4.0 have on selecting an EHS software or technology vendor?
A4: When it comes to commercial EHS software and technology, companies are at a variety of starting points. Some may have no software in place, while others have implemented one vendor’s offering as an enterprise standard. Most will be somewhere between these ends of the spectrum.
Whether you have already selected a software vendor, or are going to choose one for the first time, there are certain things to look for to make sure they can support your ambitions. Look at their functional capabilities and how they have changed over time. Equally important, what is their product technology and roadmap? How well have they done in fulfilling previous commitments? Do they have the financial viability and human resources to pull it off? Functionality and user experience are table stakes. For EHS 4.0, I’d look for significant progress on and commitment to advanced analytics including predictive and prescriptive; mobile apps; cloud solutions preferably as a multi-tenant SaaS offering; data management tools compatible with IIoT capabilities, among others. There is a large disparity between vendors when it comes to adopting advanced technologies. Choose wisely.
Q5: What are your thoughts on “EHSQ” … that is integrated environment, health, safety and quality management?
A5: There is a lot of opportunity to integrate siloed environment, health and safety and quality management systems, processes, and technologies, and a lot of potential value from doing so. The ongoing harmonization of current and future ISO management system standards is making this even more feasible and likely to be a good idea. The 2015 updates to ISO 14001 and 9001 now have the same high-level structure and wording around key areas like risk management. And the forthcoming ISO 45001 will too, as will all new and updated standards in the future.
The good alignment of environmental and health and safety is pretty obvious, notwithstanding there are some significant differences. EHS and quality are also well-aligned on factors such as the challenges they face as business functions, a focus on compliance and risk, and they share many common processes such as incident/event management, audits, risk assessment, task management, etc. Integrated environment, health, safety and quality (EHSQ or QEHS) certainly could make sense, as could partial integration. Whether or not it does in a particular organization will depend on many factors such as industry, business unit structure, and the relative maturity of current management systems. LNS is a big proponent of the EHSQ concept, and recommend that companies evaluate it on a case-by-case basis.