Digital Transformation in the Infrastructure Sector: A Brave New World

Digital transformation is a fact across all business sectors.

This is especially true for companies in the infrastructure sector, which were disproportionately affected by the Covid-19 pandemic. Infrastructure organizations are now seeking ways to future-proof their operations. For that reason, digital technologies will assume a greater role in ensuring operational resilience and driving infrastructure innovation.

Digital systems like robotic process automation, the internet of things (IOT) and 5G cellular networks are bringing new capabilities to the infrastructure area, as highlighted in a recent KPMG Emerging trends in infrastructure report. All of these technologies are now being used to improve traditional infrastructure processes.

From transport hubs like airports and train stations to energy stations and water treatment facilities, core infrastructure facilities are relying on a digital transformation strategy to lead their facilities toward better construction and design.  These innovations are leading to greater efficiency and transparency.

Utility sites in particular are well on their way toward a digital transformation roadmap. Innovations in that sector include smart metering, a technology that records and sends usage information directly to utility headquarters, obviating the need for manual monitoring.

Digital transformation is an integral part of developments in the transportation sector as well. Rail networks, for instance, are utilizing data analytics and IOT devices for the predictive maintenance of rail networks. These technologies also help transportation facility managers predict where a rail line may fail or malfunction.

Emerging market economies are also implementing digital transformation strategies to manage their economic growth and infrastructure investments. In time, developing countries may be able to surpass the technology in mature economies, where these cost-effective digital technology roadmaps are less prevalent.

For example, developing countries have embraced the technological advances of more mature economies, rolling out 4G infrastructure to rapidly improve infrastructure service delivery.

As digital transformation roadmaps become more common, there has been growth in public-private partnerships with capital flowing in from new sources. In addition to traditional banks and government sources, alternative capital like investment banks and pension funds are now providing investment capital for these projects.

Given the abundant flow of capital, the next challenge is one of execution. Since infrastructure projects take place at a large scale, they need approval from top government officials. Once the money and political will are present, buy-in is required from technology providers and best-in-class technology advisors as well. This is where KPMG is playing a role, its team members ensuring that a project stays on course from start to finish as they partner with key stakeholders.

In the years to come, cyber security will vault to the top of the digital transformation agenda. Organizations across the economy will leverage cyber security systems to safeguard their products, users, and facilities. The infrastructure industry in particular can take guidance from the financial industry, where companies have leveraged cyber security to their advantage.

There is also an exciting digital convergence taking place in the renewable energy sector. The corporations that build infrastructure systems are increasingly turning to green power to run their operations.  At the same time, many countries around the world are pledging net-zero carbon targets in the decades to come. Those two factors will help promote the sustainable power sector and likewise promote digital transformation strategies that rely on green power.

Countries in emerging markets are taking advantage of less expensive and common digital technologies to integrate into their infrastructure projects. A number of southeast Asian countries, for example, are building large solar power fields to take advantage of the technology’s falling cost. This is an excellent way to replace traditional energy sources like coal that are carbon polluting. In fact, countries in Southeast Asia are forecasted to nearly triple their solar power output by 2024.

It is important for these nations to maintain good multilateral relations with advanced economies in order to sustain their infrastructure projects and increase their sector knowledge. The Association of Southeast Asian Nations (ASEAN) Secretariat is taking a leading role in this endeavor by coordinating regional initiatives. The Cities Development Initiative for Asia is also helping nations in that part of the world devise best practices for smart cities. Next, watch for the evolution of multi-country alliances to provide sustainable financing for these projects.

By 2040, we believe the infrastructure sector will benefit from large-scale digital integration that will in turn power its operations. As more advanced technological systems are developed, it will be simpler to build a smart and sustainable future, one that is resilient to upcoming challenges.

If you would like to benefit from further insights in the infrastructure sector, explore the following KPMG pages: smart infrastructure, sustainable infrastructure and sustainable finance.

This article refers, in part, to remarks at a roundtable hosted by Sharad Somani, Head of Infrastructure, KPMG Asia Pacific at KPMG in Singapore at the Asia Infrastructure Forum.

This article is based on an article published at KPMG global by Akhilesh Tuteja, Leadership | Article Posted date20 May 2022