In this in-depth interview series, speakers from Enablon’s offer fresh insights on EHS management, risk and resilience. Pete Bussey, analyst with LNS Research, presented on driving business efficiency through smart EHS management. Here’s the process that Bussey shared for leveraging technology-enabled EHS management to achieve operational excellence.
Pete, as a research analyst for LNS, you’re on the leading edge of trends in the EHS industry. What weighs heaviest on the minds of EHS managers right now?
As with any part of the organization, EHS managers are focused on adding value to the business. This means aligning with and supporting strategic and operational objectives. We explore this question in our Manufacturing research survey, which shows that the top operational objectives for industrial companies are improving efficiency and ensuring operations are in compliance. So, EHS managers are heading in the right direction by focusing on operational excellence and managing risk, including risks of non-compliance.
How exactly do you define ‘business efficiency’?
‘Business efficiency’ is getting the most output with the least amount of inputs. Of course this relates to doing things at the lowest cost possible. Reducing cost is not only about not spending money, but also reducing the impact of other costs, such as those associated with time, quality, reputation, and other potential costs that can affect business results.
The bottom line is that when you’re efficient, you’re operating in a more cost-effective way, which involves doing a better job of allocating resources. This applies not just within the four walls of the plant, but also to how an enterprise interacts with suppliers, customers, business partners and others in the extended value chain.
At a high level, how does a company go about achieving business efficiency?
The pathway to business efficiency is information. Having the right information at the right time for the right people enables better, faster decision-making to help drive efficiency. The key is to use information to increase productivity and reduce risks that can lead to inefficiencies.
And what sorts of challenges can EHS managers expect on the road to efficiency?
Our research shows that the top barriers to EHS performance improvement are fragmented systems and data, and lack of cross-functional collaboration. Not surprisingly, the basic challenge is the existence of silos, whether they are of systems, people, or communication.
I find it interesting that when the same question is asked about manufacturing improvement, the top challenges are exactly the same. So, in a sense, EHS is part of the silo problem, and can also be part of the solution to improve cross-functional operational excellence.
So, you’ve explained that improving EHS performance leads to improved overall operational performance. What needs to happen to improve EHS performance?
The starting point is to step back and take a big picture approach. This involves aligning with the organization’s strategic objectives and ongoing continuous improvement initiatives, such as Operational Excellence, Lean, or whatever it might be called.
Also key is avoiding a “silver-bullet” solution mentality. Improving efficiency and performance will take the right combination of people, process, and technology capabilities. Over time, as I mentioned, EHS has tended to operate in a siloed fashion, with information stuck in organizational and informational silos. Improvement depends on changing that.
What role do software and technology play in helping companies improve EHS performance?
EHS software systems and technology help on several levels. They can streamline individual tasks and processes such as incident management; automate a whole functional area such as safety and health; and enable an EHS management platform in which most EHS activities are integrated in a single system. Beyond that, the degree to which an EHS platform is integrated with core business systems such as ERP, or even the extended supply chain, can add a lot of value in terms of efficiency and effectiveness. The value EHS contributes depends on the degree of business integration achieved.
In our EHS Management survey, we see that well over half of industrial organizations have not implemented dedicated EHS software yet. Of the companies that have implemented EHS systems, most of these are standalone systems. So modern technology is underutilized for EHS.
Part of the reason for this relatively low adoption is that the software and technology tools that have been available haven’t been up to the task, perhaps too limited, too difficult and expensive to deploy, or too difficult to maintain or sustain the implementation of the software. Another factor is it takes a while to transition. A lot of companies are getting by on spreadsheets and homegrown software but are recognizing they need to upgrade. The availability of better software solutions and increased pressures on the EHS function have converged such that companies are making the decision to improve and are seeking better solutions.
Can you give us an understanding of these solutions?
The basic development is the availability of cloud-based EHS management software solutions such as the Enablon platform. Some of the advantages are a broad functional footprint; modularity, which makes deployment easier as opposed to implementing a monolithic technology; more flexible licensing; ease of deploying new functionality; and more powerful analytics.
In addition to EHS platforms, other technology innovations are enabling new ways of capturing, organizing and analyzing data. This is based on the Industrial Internet of Things (IIoT), which in turn is enabled by smart devices, Big Data analytics, mobile solutions, and cloud computing. Together, these emerging technologies are providing a lot more information to support decision-making. I recently wrote about this “Digitalization” of EHS management.
In a post on the LNS blog, Matthew Littlefield called Enablon a ‘company not scared to openly share its technology and business views with the market and a flair for discussing the success of its customers and own business.’ What would you add for those who are just getting to know Enablon?
Well, I’ve seen Enablon steadily evolve and mature as an enterprise software vendor. In fact, watching Enablon reminds me a lot of how things unfolded at SAP. As I explained in the SPF Americas 2016 writeup, Enablon’s maturation as an enterprise software company is demonstrated by its shifting focus to customer value, broader solution footprint, introduction of industry-specific solutions, and incorporation of technology innovations.
So going back to business efficiency, how do systems such as Enablon support that goal?
Operational excellence is based on a cross-functional platform that aligns people, process and technology capabilities, and mobilizes them toward strategic and operational objectives. This platform is dependent on a number of business functions operating together. We see the key pillars of operational excellence being: 1) operations/manufacturing, 2) asset performance management, 3) quality, 4) energy management, and 5) EHS. If any one of these is not performing well, or collaboration among them is poor, the operational excellence platform becomes unstable and inefficiencies will surface.
Quite simply, EHS systems enable operational excellence by integrating EHS into everyday operations. They help overcome the two main barriers to performance improvement: fragmented systems and lack of cross-functional collaboration.
But really the game-changer here is the emerging technologies I mentioned before, especially Big Data and advanced analytics. With predictive analytics, companies are better able to move from reactive compliance to proactive risk management. It’s about having new information and insights to anticipate the next thing that’s likely to go wrong, and preventing it: to be predictive and even prescriptive.
I’ll sum it up by saying that business efficiency isn’t all about getting rid of people and cutting costs, but rather about continuous improvement based on information.
I’ve had the pleasure of interviewing you following two different Sustainable Performance Forums now, and in each I come away knowing more. What are the benefits in your view of the SPF conference series?
I see the SPF events as bringing together a community that’s focused on common goals. There’s no substitute for being able to network with your industry peers and learn from each other. And it’s a great forum for Enablon and its customers to learn from each other about what the priorities should be, and the roadmap to get there.
Over time, an industry’s ecosystems form around successful enterprise software vendors like Enablon, with partners playing a key role. The SPF conferences are the ideal place for all the players in this ecosystem to gather, learn and improve together.
If you liked this post, feel free to explore the LNS EHS Research Library to learn more about approaches to aligning people, processes and technologies to make informed decisions when it comes to improving EHS performance.
Download this e-book from LNS Research on driving EHS performance with technology and learn how to monitor and manage EHS performance in relation to Operational Excellence to ensure growth, boost the bottom line, and improve brand image.