Engineering Transformation Goverance - Responding to Change · With a multi-million dollar turnover and over 150 staff across Australia, New Zealand and China, A2K Technologies is

White Paper

Engineering Transformation Governance:Responding to Change

A2K Technologies is an industry-leading solutions, training, consulting and management firm specialising in design technology. With a multi-million dollar turnover and over 150 staff across Australia, New Zealand and China, A2K Technologies is Australia’s largest Autodesk channel partner. Our highly knowledgeable and industry-experienced staff in the infrastructure, building, mining and manufacturing sectors allow us to offer superior support to our customers to help them enhance their organisational capabilities, deliver on project outcomes and differentiate from the competition.

Once equally successful separate entities, AEC Systems, KarelCAD and ADA CADPartners merged in February 2013 to form A2K Technologies. Now, their combined leadership and innovation is driving the highest level of solution expertise, service and support for all of our customers’ design, facilities management, operations, maintenance and construction requirements.

Think Technology. Think A2K.

ABOUT

© 2014 A2K Technologies Pty Ltd. All rights reserved. A2K reserves the right to change any information in this document at any time without prior notice.

White Paper - Engineering Transformation Governance: Responding to Change (1)

JC DavisJC Davis is an international consulting professional with over 25 years’ experience in the engineering industry developing fit-for-purpose solutions that are agile and expandable for business adaptability and growth.

In working directly with clients to evaluate business capabilities and goals, his methodology focus is Engineering Process Transformation. Using a strategic, proven consultative approach and innovative technologies to achieve overall business objectives, he has worked with organisations in the infrastructure, utility, transportation, mining, water/wastewater and manufacturing industries.

Recognised as an industry leader with a significant contribution to the engineering industry, JC has been published in several technical publications and periodicals.

To contact JC, email [email protected]

Senior Solutions Consultant, A2K Technologies



Introduction

In this white paper, we invite A2K Technologies’ Senior Solutions Consultant, JC Davis, to share his thoughts, experiences and observations gleaned from 25 plus years industry experience in design, engineering, management and thought leadership initiatives. Davis shares his insights and best practice guidelines to assist engineering firms in approaching change in a way that realises maximum adoption, business benefit, and initiative success.

As technology and industry continue to evolve, the impact of change within an organisation increases in significance. From a software perspective, we acknowledge the fit-for-purpose systems that can be managed within the software framework itself, but need to emphasise that there are other processes that need to be managed within the overall solution, which create balance between systems and processes. The complexity of this process is punctuated with the collaborative nature of software services and workplaces. In essence, very few processes are isolated, so consequences of design decisions propagate throughout the ecosystem, for better and for worse.

This paper emphasises the need for a true governance system, by explaining the significance of relevant components within a risk and liability framework to position various levels of governance that impact upon the efficiencies of project execution. This paper explores three types of governance to achieve this; Corporate Governance, Engineering (or Project) Governance, and Transformation Governance, with practical implications for success in their adoption.

As the transformation lifecycle is clarified, the potential for organisations to experience the benefits in partnering with expert providers early in the process is explained in the context of the organisation and implementation of transformation governance.



Defining Governancein Engineering

When we look at governance in the broader sense, it has a multitude of definitions. In essence, governance refers to the plan of actions, control of processes, and decision making criteria that controls and defines the roadmap, performance criteria and power, which can then be executed, monitored and measured.

Before examining governance within the engineering industry, I would like to establish the higher interpretation of governance, as governance is a broad term that translates differently depending on the geographical region, industry, industry sub-segment and most importantly, individual roles or position held.

Corporate Governance refers to the method or system by which corporations are directed and or controlled. The governance structure identifies the rights and responsibilities among stakeholders and associates within the organisation and the process in which they operate, how decisions are made, what regulations, standards are enforced, along with how the functional requirements of the business will be carried out. The governance also defines the social aspects of the business in determining the structure and pursuance of their objectives in context of the social, regulatory and market environment. It is the mechanism for monitoring the business and alignment of stakeholder’s interest.

Engineering Governance, commonly known as Project Governance, is a sub-set of Corporate Governance, but with specific focus and respect to engineering function and role. This is where the strategic elements come together to answer the ‘how?’. Anything that no longer contributes value to the organisation should be assessed for termination or transformation, to maximise value of resources to more valuable endeavours.

Transformation Governance is governance of change when it occurs. Traditional systems are out; more innovative systems and processes are in. The Engineering Transformation Governance component supports the overall governance with specific tools to achieve business objectives and goals.

The diagram below provides the visual dependencies of governance and their dependant relationship.

Corporate Governance

Engineering Transformation Governance

Strategy Project Execution

Engineering Governance

Capability

BusinessStakeholdersCSR (Corporate Social Responsibility)

Risk and Liability Organisational Process

Engineering FunctionExisting Needs Future Needs Implemention RiskManagement Fit For Purpose Solution Core Competencies

OrganisationProfitResource and Effort

Best PracticesRisk and Liability

Demand Compliance

Figure-01 Governance Dependencies



Transformation Governance starts at the decision making process and continues through implementation, transformation and into adoption.

When you look at the extension makeup of these dependencies, the key point is to examine the pre-selection activities that contribute to overall capabilities and the portfolio section process. See Figure-02.

Figure-02 Extension Hierarchy

When an assessment of new software or processes begins, it is controlled by Transformation Governance. Engineering Transformation Governance focuses on the specific engineer function capability, in aligning with Corporate Governance, business function, and delivery expectations. Software is only an enabler, and Transformation Governance addresses the core competencies that will be leveraged from the software in comparison to the overarching goals of the organisation.

In Engineering Transformation Governance, the focus is on business goals and capability first, which will then define the processes that fit-for-purpose software will follow to promote the overall ROI.

Software capabilities are vastly beyond engineering function alone. Defining the organisational social structure in relationship to collaborative engineering process creates a rising demand for quality expert advice in the boardroom, as these capabilities have greater effect, value, and risk overall. These social dependencies create the need for organisations to re-examine their considerations for implementation and governance.

Transformation Governance defines the balance between software and process,

integration and automation to maximise ROI, and retains the organisational alignment.

ExecutiveManagement

SeniorManagement

Project ProgramManagement

CorporateGovernance

Existing / NewProjects

EngineeringGovernance

Project Execution

StrategyCapability

EngineeringTransformation

GovernanceBusiness

TransformationInitiative

PMO

SponsorPortfolio Selection

Transitional Program

Risk and Liability of Transformation Handled Internally



Understanding the Risks and Impact of Change

Most organisations still operate within the walls of the organisation itself regarding organisation goals, vision and direction. Shareholders and executive management execute great governance in regards to the high level execution.

More often than not, the consulting world needs to incorporate the balance between business processes and technology in regards to Project Governance and Transformation Governance levels. This is where a consulting firm, such as A2K Technologies, is usually called in to assess the current status and/or provide damage control to the organisation.

At this stage, the investment has already been made and the expectations are not rationalised. All of these elements need to be quantified, assessed and measured prior to change, which is where expert advice is critical.

Most engineering organisations leverage internal stakeholders to combat change. With engineers designing and operating within a complex variety of systems, they develop specific refined skill sets that are niche in their speciality to address customers’ needs, but do not usually focus on the industry capabilities that can address their needs. Figure 02 illustrates a traditional process that distributes the responsibilities for implementation internally.

Implementation failure appears to be widespread due to the lack of rationalisation and validation of the capabilities and impacts early on. Although engineers are increasingly trained in systems and processes for the entire engineering lifecycle, it’s becoming clearer that expertise is required.

Gaining advice and validation of the impacts upon the business are important as early as possible for consideration in a balanced solution, as expert providers are able to provide advice based on a big picture point of view.

The potential negative effects of poorly-organised

change are often not recognised until failure occurs.



The Importance of the Expert Provider in Change Implementation

Given the rate of evolutionary change in industry, driven by technology, understanding the software beyond the

technology is critical, as the socialistic impact is

changing the way we do business holistically. The collaborative nature of modern software enables a new level of impact that needs to be considered in terms of liability and risk.

This requires governance in two separate facets. One is

reducing potential negative impact in terms of risk - the

other is harvesting the positive aspects in terms of ROI.

This leads to the formation of an organisational balance between business process and system architecture.

Few engineering organisations truly understand that implementation of innovative software is no longer just

about the software. The Business Transformation Process Initiative also carries widespread risks to the overall business. The result is an increasing need for accurate and timely engineering advice as a critical factor in organisational success.

We can assume that engineering organisations who develop partnerships with the right providers, who can demonstrate their expertise and knowledge holistically in the business, will have the biggest advantage in providing innovation, premium value and service in tomorrow’s marketplace, by creating balance between organisational process and innovative technologies.

The below Figure-03 illustrates the shift to the Provider Partnership.

Figure-03 Provider Partnership Model

ExecutiveManagement

SeniorManagement

Project ProgramManagement

ExternalExpert

CorporateGovernance

Existing / NewProjects

Ownership andResponsibility

Change

EngineeringGovernance

Project Execution

StrategyCapability

EngineeringTransformation

GovernanceBusiness

TransformationInitiative

Provider

SponsorPortfolio Selection

Transitional Program

Risk and Liability of Transformation Handled Externally

Shift risk and liability by establishing structure



With all the complexities and considerations, engineering organisations are shifting responsibility to the engineering expert provider to provide advice during the assessment and selection process, but even more importantly, assume implementation risks and liability regarding change during the transformation process.

During the conceptual phase (assessment and selection process), external expert advice is a major contributor in enabling engineering organisations to optimise business decisions and get the best balance between performance, risk, and overall costs.

These challenges are attacking engineering organisations from all sides, and current success and profit dictates focus on the engineer’s customers, not the industry advancements and capabilities. Expert advice should come from those that are industry leaders and can demonstrate their knowledge and capabilities in servicing engineering organisations in this role.

We understand that change is a necessary part of every organisation, especially when it comes to technology, and what technologies we choose in response to industry demands. More importantly, after decisions are made regarding the capabilities, providers are managing transformation governance of technology implementations and adoption in the organisation, which can have a far greater impact upon the organisation itself.

With economic pressures and market forces, coupled with more innovative ways of engineering and constructing the built environment, engineering is being redefined as fast as you are reading this, into business roles such as CEO, CIO, COO, project managers, procurement officers, controllers, engineers, scientists and more, with new roles such as BIM manager and drawing officer being defined.

These economic pressures have fostered the need for new ways to combat these changes, and enable engineering organisations to be sustainable and competitive in tomorrow’s marketplace.

Organisations are left with a multitude of questions such as ‘how do we respond?’, ‘when is the best time to respond?’, and ‘what do we respond with’, regarding what technologies and innovative processes to position themselves for today’s needs and tomorrow’s marketplace.

All engineering businesses need timely, expert, and experience-based advice in areas such as identifying opportunities for improving cost, productivity, reliability and growth, to advise on the right business transformation process and software-enabled fit-for-purpose solution.

Let’s face it; no one from CEO to shareholder or senior

management wants to make the wrong decision that could

ultimately become grave for the organisation. Everyone

wants to make the right decision for the right reasons and

mitigate the risks along the way.

“

“

Engineering has an impact on almost every

aspect of our lives, and has a critical, enabling

role in underpinning the success of a wide

range of businesses, large and small, national

and worldwide. Engineering also influences and

impacts upon virtually every aspect of public

life, in national infrastructure such as roads,

water, utilities, and telecommunications.



In partnering with engineering expert advisors, organisations are able to mitigate the risks while maximising the ROI, and are able to quantify the following from the expertise of the provider in relation to the organisation’s governance and expectations:

Expert advisers and providers should be able to thoroughly demonstrate their investigation/validation plan, contingency/risk mitigation plan, and solution creation plan that defines the business case with the following slightly more challenging questions in relationship to the Corporate Governance and alignment:

Without this basic analysis and knowledge that industry expert providers (‘thought leaders’) can provide, attempts at innovative technology and process implementations become tentative, confused, and prone to struggle at the first signs of difficulty.

Implementation becomes ‘let's give it a try‘, instead of ’we will do it, and here's why’.

Organisations partnering with experts are taking a managed, realistic approach in their response to technologies and innovative processes that will ultimately determine their marketplace in tomorrow’s engineering world. By leveraging

external advice, engineering organisations are able consider the

broader commercial context of the solution in terms of market

and capability.

Why buy it?

What are the benefits?

What does it cost?

What are the alternatives?

What are the risks to realising those benefits?

What are the impediments to implementation?

What happens if we don't invest?

What people resources do we need to commit?

Over what period of time?

What are the future mandates?



Complexities and Considerations of Change

The below diagram illustrates the complexities encompassing change as a response to both industry and customer demand, which the provider’s reports and proposals should provide answers for.

As previously mentioned, change within engineering organisations is compounded by the evolutionary change within the industry itself, which requires expert advice in order to thoroughly address all the organisation’s considerations prior to implementation of change selection. Organisations should seek these competencies from an advisor, and thoroughly understand the provider’s capabilities in regards to the organisation, not software.

Now that this paper has established valid points for expert advice in the implementation of change within the engineering environment, coupled with the impacts and co-dependencies, let’s examine the critical downstream aspects of implementation, by way of the transformation lifecycle. This is where engineering organisations are able to rationalise their decisions and experience the results.

Figure-04 Complexities/Consideration of Change

Complexity Considerations

Greater demands =increased risk and libility

What are the risks to realising the benefits?

Industry competition =Tighter budgets

How to respond?

Client demand = shorter timelines

What resources? Whathappens if we don’t invest?

Innovation inspires greater demands

What to buy? What are the cost? What are the benefits?

Transformation Implementationand Governance



The below diagram Figure-05 illustrates the implementation of change lifecycle. This is where transformational governance is critical to the success of implementation, which illustrates the results of good governance through the conceptual phase.

Existing ability - this is the current (pre-change) state of the engineering organisation in relationship to their current capabilities. It represents their ability to respond to rising demands, or adapt to new processes and systems that will expand their capability in tomorrow’s marketplace.

The transformation lifecycle begins during the implementation phase. There are many business transformation implementation success stories, both simple and complex, that have shown enormous achievements and success. One common thread is

that all of the organisations recognised the need for expert engineering advice early on, and identified a provider who could fulfil the role and take ownership in their success.

These reasons suggest the rising need of engineering organisations

to be partnered with an engineering expert provider. Their role is to provide advice to all levels of management for any implementation consideration, and perform the tasks of transformation governance within the project itself.

Transformation Lifecycle

Figure-05Transformation Lifecycle

Objective/goal (enabled through change)

Existing benchmark without change

Transformation Lifecycle

2

1

1

Engineering organisation’s goals - represents where the engineering organisation wants to be, with respect to a successful business transformation project that respects the balance between processes and technology.

2

Predictable loss of production - any transitional change to a project or process results in initial setbacks or loss, as a by-product of the change.

3

Change timeline - the recovery time as a result of change. This is the time needed for transitional change to revert to the engineering baseline (capability prior to change). Mitigating this timeline is the primary responsibility of the expert provider.

4

Functional path - represents the forecasted path or ability as a result of change. This is both the forecasted expectations and rationalised ROI for the business.

5

3

4

5



Risk Rationalisation and the Role of the Expert Provider

Although engineering organisations recognise the complexity and influencers that may impact upon their success regarding transformation, more often than not, the risks are not rationalised and therefore failure occurs. The result for most firm stakeholders is disappointment. The measureable result from engineering organisations is profit loss, loss of confidence, damage control, and ultimately limitations in providing services that exceed customers’ expectations. In short, loss of profit short term; loss of opportunity long-term.

Let’s face it, it would be great if we could just show up, deliver and implement new technology, and enjoy immediate success. It is tempting for anyone to think of governance in this way. However, with innovative software, the risks to the overall business can be catastrophic and could ultimately prove fatal. Software today creates parallel paths for the business by providing a conduit of automation that integrates with all business lines, collaboration and standardisation.

Although there seems to be a rise of firms soliciting expert engineering advice, the majority of engineering firms are trying to tackle this internally, or with little external help, and are struggling to respond to change. Even after responding, they face the same difficulties in implementing the desired solution.

Negative experiences with expert providers such as ‘over-selling’ and the inability to deliver on agreed objectives; may have led to some engineering firms questioning the value of software providers and their ability to make a bottom-line difference in their business.

It is however, important to understand that there are expert provider organisations that have taken the lead in employing and sponsoring true industry and engineering experts with real world engineering experience and expertise of software within global engineering businesses - as A2K Technologies has demonstrated. Such an expert provider organisation is then best placed to provide a consulting service and advice as the expert, to address the complexities and provide solutions that exceed expectations.

Engineering

Governance is

focused on the

control that is present

through the hierarchy

of the organisation

with respect to

engineering function.

When it comes to good engineering transformation governance and expert provider selection, several key points are more relevant in the engineering/architectural world than ever before. Engineering Governance is focused on the control that is present through the hierarchy of the organisation with respect to engineering function. This control is an important lever for executive management, who are ultimately the decision makers, and responsible for the organisational governance required to ensure all stakeholders and shareholders involved in the transformation implementation of innovative technologies (systems and processes) will meet requirements of both the customer and the business.

“

“



If organisationally we agree that the transformation implementation will meet or exceed expectations, then it’s a ‘no brainer’ that the organisation is doing the right thing. However, this basic assessment ignores the component of complexity that may be involved. Adding these factors and understanding how complexity manifests is key to proper governance, and a primary attribute of the engineering expert provider role.

There is a multitude of literature describing complexity that offers significant depth and breadth on the topic. For this paper, it is more simplistic in the form of Murphy’s Law – ‘if it can go wrong, it will go wrong’; and in today’s world, ‘at the worst possible time’.

The below diagram (Figure-06) shows the client/provider relationship, with an example of change that occurs over the life of the program, and/or measurable change over a period of time due to industry forces.

Figure-06

Client(Organisation)

TransformationProvider(Thought Leader) PMP PMO

Operations CapabilitySystems Capability

BusinessRequirements/Needs

Vision

Development Capability

Transformation Solution

Innovative Softwareand Processes

Shorter timeline = Shorter transition

Concurrent engineering

Changing scenariosChanging requirements

Multiple usesLegacy re-use of systems

High level visionDetailed requirements needed

More changeChange management = change of capabilitiesChange of expectations variance

More re-useMigration of data and business processes transition

Integration with othersystemsInteroperability

Service not platform

Industry demandsand requirements

Multiple resourcesMultiple teams

Multiple phases, stages, software

Risk mitigation, quality assuranceprogram health check



On the client side, industry forces and market drivers indirectly influence the need for transformation. As a result, these needs demonstrate limitations of the client environment that alter the nature of the need, as shown. The result is that the client indicates the desired capability to be delivered, not necessarily a product or system. Unfortunately, there are many vendor providers that elevate their software benefits, and sell the fulfilment of their product to the client, without a ‘whole of business’ perspective, or true consideration of the long-term impact on the client’s organisation and their stakeholders.

In Transformation Governance, most of the complexity and associated risk the client had previously is transferred to the expert provider. The more automated and innovative the solution is, the greater the complexity of the solution to the client.

There are many more associative complexities than Figure-06 shows, but the primary point is that successful implementation of new technology solutions in an engineering environment requires more than just software. It involves strategy by way of a business transformation project that requires Transformation Governance through experienced providers who demonstrate the expertise and associated skills. This offers clients the confidence and security to transfer the complexity and associated risks to the providers, with assurance the provider will meet or exceed the expectations.

Engineering organisations tend to strategically position themselves to capture market share based on segments that can be addressed with current skills and resources, or developed skills and resources. It is vital for executive level leaders to understand the engineering issues so they are well-informed when responding to demands with respect to engineering function. The decision makers are now playing in a far more complex environment that requires accurate engineering advice in order to perceive the risk to management. It is critical for the decision makers to recognise that they are not expected to have all the knowledge to make these decisions by themselves.

Those making decisions rarely know whether they are receiving accurate, sufficient engineering advice, and therefore do not perceive a risk and do not manage it.

It’s up to engineering organisations to evaluate the risk in conducting a transactional type business, or addressing the implementation as a Business Transformation Project, and selecting the right provider who can maximise their experience and potential profit.

As a result, the provider’s primary objective is to deliver a service of excellence that creates balance between software and process, integration and automation, to maximise ROI and retain the organisational alignment.



Improving transformation governance is a journey with the goal of sustainable, profitable revenue from new products that truly transform businesses.

Approach the engagement as a business process improvement initiative; software is only an enabler.

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CONCLUSION

In conclusion, this paper has rationalised that today’s change is more complex and challenging than ever before, due to rising demands, shorter timelines, and complex problems requiring more innovative solutions. This requires engineering organisations to look at the co-dependencies of engineering software within overall business function and organisation governance.

The risks are high, and the risk of failure can prove grave to any organisation in today’s market that does not place emphasis on the value of transformation governance. This leaves us with some best management practice considerations for change implementation:

Implementation of change requires senior management buy-in and sponsorship.

Approach the engagement as a business process improvement initiative; software is only an enabler.

Improving transformation governance is a journey with the goal of sustainable, profitable revenue from new products that truly transform businesses.

Many providers claim expertise in business, but over-sell and under-deliver. Organisations should select providers based on their ability to demonstrate capabilities and expertise of industry and transformation governance.

Avoid complexity and over-engineered processes. Leverage providers that focus on the business objectives and goals, and provide true thought leadership, including governance skills for managing the complexity and risks.

Software is only an enabler. What’s required is much more: integrative configuration with business lines, processes, and organisation models.



By following these best practices, an organisation can ensure maximum adoption, business benefit and initiative success. An experienced provider that can demonstrate transformation governance will enable engineering organisations to realise sustainable, profitable revenue for new products via improved value, success rate, throughput and time to market.

Organisations should focus on desired capability to be delivered, not a product or system.

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“

Organisations should focus on desired capability to be delivered, not a product or system.

Through provider partnerships, engineering organisations are shifting responsibility to the engineering expert provider, which requires due diligence in selecting a partnership that can support the business holistically. The importance of price can be superseded by the value of the return – if the expert provider selected is right.

The most common reason for implementation of change failure is not realising the affects and risk to business early on, and rationalising the appropriate plan that mitigates the risk while maximising the profitability to the organisation.

Governance is key and transformation governance is critical to managing change.

Focus on decision making first and tasks second.

Avoid the ‘trough of disillusionment’, which can create a barrier to adoption. This is where new business processes are not accepted by everyone, the project team is frustrated, and there is a loss of executive focus.

Launch is when the most important work begins. This requires careful planning and the right governance expertise to ensure success.



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Grisogono, AM, 2004, ‘What do natural complex adaptive systems teach us about creating a robustly adaptive force?’ from 9th International Command and Control Research and Technology Symposium, Copenhagen: US DoD.

Hurley, E and Grant, H, 1995, ‘Probability maps’. IEEE Trans. Reliab. R-124, 13-28.

Nendick, JV, Hassan, M, Urwin, EN, Ng, GAL, Siemieniuch, CE, Sinclair, MA, 2006, ‘Good Engineering Governance - an issue for Ergonomists’, Proceedings of the 16th International Ergonomics Association Congress (IEA2006), Maastricht, Netherlands, 10-14 July, 2006. Doc. No. 0468.

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1800 223 562 (AU) or 0508 232797 (NZ)[email protected]

A2K Technologies is an all-encompassing technology solutions provider for the engineering, architecture and manufacturing sectors. We have become a trusted technology advisor to our customers through the sheer breadth and depth of our service offering and technical expertise, which is unsurpassed in Australia and New Zealand. Our operations, resources and infrastructure equate to the highest-level of technical support, and the widest product offering of design technology software and hardware.

At A2K, we will always strive to “Deliver better. Deliver more. Exceed expectations.”

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Engineering Transformation Goverance - Responding to Change · With a multi-million dollar turnover and over 150 staff across Australia, New Zealand and China, A2K Technologies is