LNS Research continues its series on building a business case for Enterprise Quality Management Software by inspecting the gap analysis process.
Last year was big for the environment, health, and safety (EHS) business function, regarding the technology available to manage it, and industry developments that impacted EHS. For the most part, the trends we projected in our 2017 trend and impacts to watch blog were realized, or at least advanced substantially.
I predict the following trends will be active on the industrial EHS heat map in 2018. Although I won’t claim my crystal ball works right all the time, I’m confident these trends have a high probability of advancing and having a meaningful impact on how EHS is management and how it contributes to operational excellence.
1. Digital Transformation Disrupts EHS Management
The last few years have seen investments in Digital Transformation (aka Industry 4.0) in every industrial sector. Our survey data show 64% of companies have either already started digitalization initiatives, or plan to do so within 12 months, and we see this trend accelerating. So far most of these investments have been made to drive operational improvements in areas like asset reliability, product quality, and manufacturing efficiency.
The EHS business function has mostly been a bystander in Digital Transformation and has been an unintended beneficiary of more reliable assets, reduced emissions, and so forth. This will change in 2018 as Industry 4.0 continues to catch on. EHS leaders will face a “digital inflection point” at which they choose how they will participate in their organization’s digital initiatives. It’s a matter of disrupting or being disrupted, as described in our EHS 4.0 framework.
2. Advanced Analytics Take Hold
Advanced analytics based on the Industrial Internet of Things (IIoT) and Big Data have been prominent in EHS digitalization efforts. EHS software vendors have invested R&D dollars into solutions that take advantage of the large volume and a wide variety of Big Data now available. Early adopters have launched pilots and initial projects in areas such as predictive risk, leading indicators, and prescriptive analytics. This year we are likely to see these early projects come to fruition, and vendor solutions will mature enough for a more mainstream roll-out of machine learning (ML) predictive models. For example, ergonomic risk mitigation has stood out as an area which leverages Big Data for predictive risk management and addresses a widespread and costly cross-industry occupational safety problem. We expect to see more success stories with quantifiable benefits in this area in 2018.
3. Operational Risk Management Scope Broadens
Over the past ten years, the concept of operational risk management (ORM) has become an essential element of enterprise risk management, and necessary for safe, smooth running operations. ORM was elevated to a board-level issue by a combination of high profile industrial disasters like Deepwater Horizon, increased stakeholder demands for risk and performance transparency, and Operational Excellence initiatives.
ORM is a proactive, systematic approach to risk management, using closed-loop processes encompassing identification, analysis, control, and monitoring. ORM has mostly been applied to EHS risks in operations (e.g., worker safety, process safety, occupational health, and environmental) that can harm people, production assets, or the environment. With the rise of new types of risk coming from Digital Transformation (most notably industrial cyber security threats), we see the scope of ORM broadening in 2018. This trend will include other risk categories such as quality and supply chain, as ISO management system standards are harmonized to include same requirements for risk management.
4. Increased Management System Integration
ISO management system standards have been widely deployed across industries as a basis for continuous improvement in business domains such as quality, safety, environment, and risk management, among many others. Historically, these standards were developed independently and did not share a common structure or requirements. With the ISO 9001 and 14001 updates in 2015, and ISO 45001 in 2018, the standards have been harmonized with the same high-level structure and share a common language for crucial requirements such as risk assessment. All updates and future standards will change as well.
This will give organizations more reasons in 2018 to look for combined approaches that integrate all or portions of now independent management systems. Such integration can yield efficiency gains and operational improvement, as well as improve compliance and risk mitigation efforts across disciplines. The trend of a combined approach to leverage commonalities will apply to the enabling information management systems and the management systems themselves, and drive adoption of integrated EHS and environment, health, safety and quality (EHSQ) software platforms.
5. More Systems Thinking
Organizational and people issues, solutions have long been central to EHS management. It is evident from the attention paid to programs for safety culture, employee participation, execution commitment and leadership, behavior-based safety, etc.
2018 sees a continued emphasis on people and organization but in a more holistic context of a systems approach in which all interrelated capabilities are considered in solving problems and driving improvements. Systems thinking considers the inter-connectedness of all parts of a system, including people, process, technology and culture capabilities. This will be reflected in the increased emphasis on concepts like Operational Excellence culture, competency risk management, and organizational change management. We expect significant consideration of human capital issues across the board in 2018, supporting a systems approach to EHS management.
2018 promises to be another exciting year in the formerly staid realm of EHS management, especially when it comes to the application of digital innovations such as IIoT, mobile apps, cloud computing, and Big Data analytics. Digital Transformation is happening in all industry sectors. In 2018, many EHS business leaders will face a choice on how to participate in the most critical business technology trend in history. We believe technology will drive the five trends of 2018, enabling the EHS function to contribute more value to the business. What does Alexa tell you?