Getting bang for tech buck a tricky balancing act for shipowners amid innovation risks

Innovation risk with technology adoption is a critical concern for shipowners as they seek to reap the benefits of digitalization to boost efficiency and decarbonize their fleets - and how the various economic, technological and operational risk factors are managed will determine the success or failure of innovation projects.

Automation of operational processes using AI-driven digital tools in areas like weather routing, vessel performance, document processing and regulatory reporting is seen as improving productivity by minimizing manual tasks and reducing human error, while enhancing efficiency, cutting costs, saving time, curbing emissions, aiding compliance and raising safety.

But innovation represents a financial challenge given that implementing cutting-edge technologies has typically required a substantial upfront investment. Shipowners and operators must therefore carefully assess the cost-benefit ratio, considering potential efficiency gains, operational improvements and long-term savings to justify the initial expense.

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.

Compatibility with Existing Systems

Another risk factor that companies must evaluate is the interoperability and compatibility of new technologies with existing systems, given ships rely on a multitude of interconnected systems for navigation, communication and safety. Ensuring seamless integration without disrupting ongoing operations is crucial to avoid downtime and maximize the efficiency of technology adoption.

Rapid technological change means digital solutions can quickly become outdated, making it difficult to procure technology that will remain relevant and deliver value over time, according to research firm Thetius’ study ‘Navigating new financial seas’. The report quotes one shipping company CFO as saying: “This makes it hard to choose the right tool for the right job and work out its ROI.”

The study recommends that shipowners prioritize technology that is “high-impact, agile and scalable”, so that it can easily be upgraded as new solutions come along and is future-proof in relation to constantly changing regulatory requirements and emerging cyber-security threats.

New York-based software-as-a-service company OrbitMI is seeking to smooth the process and mitigate risk with technology adoption with its Orbit vessel performance platform that is adaptable to existing ship systems, requires minimal installation time and has zero upfront costs.

Orbit users can trial the system simply through an access log-in without the need for software installation to determine potential fuel savings and other efficiency gains from performance optimization - thus avoiding costly and time-consuming system rollouts with months of trial and error - to minimize operational disruption and reduce the time to ROI for the client.

OrbitMI CEO Ali Riaz. Photo: OrbitMI

Data management becomes complicated when you have data locked up in multiple systems and, because of this, shipping companies can lose out on improving their bottom line Ali Riaz, CEO, OrbitMI

Collaborative Approach

OrbitMI is also collaborating with complementary software vendors to extend the functionality of its constantly evolving platform and thereby enhance value creation for the end-user, with this collaborative approach exemplified by its partnership with Bureau Veritas Marine & Offshore (BV M&O) that is geared to expanding the Orbit suite of solutions and speeding industry transformation.

Unlike siloed data systems, the Orbit platform aggregates data with APIs from multiple systems and uses AI with machine learning to transform raw data into real-time actionable insights instantly accessible across an organization, facilitating so-called intelligent connected workflows.

“Data insights have to be timely to add value in the fast-moving world of shipping. Data management becomes complicated when you have data locked up in multiple systems and, because of this, shipping companies can lose out on improving their bottom line,” says OrbitMI CEO Ali Riaz.

He says ‘black box’ systems often require heavy upfront investments and protracted implementation processes that can render IT infrastructure obsolete, while hindering data-sharing, aggregation and analysis between various departments for more effective decision-making.

This is corroborated by Thetius’ study ‘Avoiding the digital divide’ that states implementation of process automation projects in departmental silos “exacerbates inefficiencies, increases the risk of error and prevents unified workflow management. It also inhibits the ability to scale automation, lengthening the time to achieve a ROI”.

Clear Methodology and Strategic Goals

The report also states that “ineffective process automation projects [in maritime] can be largely attributed to poor strategy, leadership and a failure to prioritize people”.

It is therefore important for companies to have a clear methodology and strategic goals around technology adoption to ensure they are buying into solutions that are fit for purpose, according to Riaz.

Thetius’ ‘Navigating new financial seas’ outlines a decision-making framework designed to simplify the adoption process and help companies make digital investment decisions to maximize profit, which entails three key steps:

• Identify the Challenges – determine where and why inefficiencies exist, tasks that need to be automated, human skills requirements and the possible impact of regulation.

• Determine the Potential of Digital Tools – assess the maturity of the solution, initial investment and long-term cost, customization needs, future upgradability, installation time and operational impact, integrability with legacy and future systems, and relative impact on different departments.

• Reflect on the Process – determine how well the solution performs through a continuous feedback loop, whether end-users have been able to adapt, the need for training and whether the vendor will modify and tailor the solution to meet current and future needs.

The study states that “CFOs need to assess not only the direct and immediate benefits but also the long-term value such as increased efficiency, better data analysis and competitive advantages that new solutions can bring”.

Integrating the Human Factor

Focusing on the human factor with technology adoption is an important element as elevating human capabilities by leveraging AI-driven automation can ultimately deliver most value. Resistance to change and the need for upskilling of crew members to operate digital solutions are challenges that must be addressed through user-oriented software development and comprehensive training programs.

Recognising the need to integrate people, processes and technology to facilitate effective digital transformation, software companies like OrbitMI and Marcura are developing solutions tailored to the needs of the end-user through close collaboration with clients.

Dionysis Tzelepis, CEO of DA Desk with payment solutions provider Marcura, told the recent Thetius-hosted webinar ‘All hands on tech’ the company engages proactively with end-users in developing and testing its software tools. “It is necessary to know the needs of both the buyer and end-user. Users need to be onboard to understand how this tool can make their lives easier and help them focus on their core tasks. That is why it is important to identify pain points for end-users.”

Similarly, Riaz says systems need to be designed the way people work or think to get the most out of digital investments. "To accelerate adoption, technology must be user-friendly, easy to learn and intuitive so that it does not disrupt the way a shipping company works. When solutions are built with the end-user in mind, they will quickly adopt it and demand more from it, which is when you really generate more ROI as people are pushing the system to do more,” he concludes.