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“New Normal” brings Digital Transformation in the Built Environment

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Construction Week of September 8, 2021, shows us how the “new normal” brings digital transformation in the built environment in an article by Mina Vucic. It is no more than a step however small but lucrative and most importantly in the right direction. Here is how it is.

How the “new normal” brings digital transformation in the built environmentan article

Asite speaks on changing the ways in which cities operate by “using technology to enhance collaboration through data sharing”.

Middle East cities have been leading the way in smart city development, acting as pioneers in implementing innovative, sustainable, and integrated solutions to become greener, more efficient, and better places to live. 

Disruption and innovation have changed the way specialists think and operate across sectors, particularly in the past year as the COVID-19 pandemic has pushed most industries out of their comfort zone and into digitally-enabled environments.

Nathan Doughty, CEO of Asite Solutions, commented on the topic at the BIM Middle East 2021 Conference & Expo, held on 6 and 7 September at the Crowne Plaza Dubai hotel.

Doughty said that in order to effectively drive the digital transformation of cities, the industry should focus on enhancing the precision of structural data.

He added: “The number one method we should be prioritising in order to achieve our goals at corporate, governmental, and global levels is using technology to enhance collaboration through data sharing.”

Some of the examples Doughty shared in the real world include COVID-19 track and trace systems, satellite-based navigation, social media in smart cities, artificial intelligence (AI), machine learning, and most importantly off-site construction and BIM.

Placing his focus on the modern construction methods Doughty emphasised: “In order to retrofit and repurpose the assets we must focus on creating energy-efficient buildings, decarbonise the built environment, and improve digital infrastructure’s operational efficiency.”

According to Asite’s CEO, one of the key methods to achieve those goals is to drive the circular economy, designing out pollution, keeping materials in use, and regenerating natural systems.

Doughty added: “We must emphasise the use of digital technologies on smart buildings, embedding sensors, gathering data, and analysing the information received to make informed decisions.”

Although the pandemic has challenged the traditional methods of construction, many organisations are now adopting BIM in the industry, providing a platform of know-how that can be built on for future technologies and more sustainable cities.

OPEC Member Calls for Change

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The above image is for illustration and is of Reuters.

Natureworldnews.com post on how an OPEC Member calls for Change and urges Oil Producers to invest more in Renewable Energy is written by Rain Jordan.
Let us see what it is all about.

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OPEC Member Calls for Change, Urges Oil Producers to Invest More on Renewable Energy

Before a critical Opec conference, Iraq’s finance minister, one of the founding members of the global oil cartel Opec, issued an unusual plea to fellow oil producers to shift away from fossil fuel reliance and toward renewable energy.

(Photo : Getty Images)

Ali Allawi, Iraq’s deputy prime minister, urged oil producers to seek “an economic rejuvenation based on ecologically sound policies and technology,” such as solar electricity and even nuclear reactors, to lessen their reliance on fossil fuel exports.ADVERTISING

“To stand a chance of minimizing the worst consequences of climate change, the world has to radically transform the way it produces and uses energy, burning less coal, oil, and natural gas,” he wrote alongside Fatih Birol, executive director of the International Energy Agency. Livelihoods would be lost, and poverty rates will rise if oil earnings begin to fall before producer countries have properly diversified their economies.”

OPEC Meeting

Ministers from the 13 Opec member states will meet virtually on Wednesday to discuss possible output cuts as oil prices fluctuate. Opec had agreed to raise output as nations recovered from the Covid-19 epidemic, but sluggish markets have led some to propose that the rise be halted.

Last month, US President Joe Biden made a contentious appeal for Opec to raise oil output, even more, keep oil prices from increasing and help the US economy recover. But, unfortunately, his appeal was turned down.

Fuel Step Up

(Photo : Pixabay)

In an unprecedented step for the fossil fuel companies, the Opec summit may also address the climate problem ahead of the crucial UN climate negotiations, known as Cop26, set for Glasgow in November.

According to Allawi and Birol, current oil price instability, fueled by the pandemic, is merely the beginning of troubles for producers. The climate issue will not only need a shift away from oil, but it will also have a particularly negative impact on the Middle East and North Africa, where increasing temperatures are already causing severe problems.

According to the International Energy Agency’s (IEA) recent global roadmap to net-zero by 2050, global oil demand is expected to fall from more than 90 million barrels per day to fewer than 25 million barrels per day by 2050, resulting in a potential 85 percent drop in revenues for oil-producing economies.

Economic Turmoil

According to Allawi and Birol, economic hardship and rising unemployment risk causing greater discontent and instability in a region with one of the world’s youngest and fastest-growing populations.

Investing in renewables, particularly solar electricity, is an alternative to dependent on increasingly volatile oil prices. They added, “The energy industry might play a role here by utilizing the region’s tremendous potential for generating and supplying clean energy.”

Iraq is a founding member of the cartel, including Saudi Arabia, Kuwait, the United Arab Emirates, Venezuela, Nigeria, and several other African oil-producing countries. In addition, Russia and a few minor producers are included in the Opec+ alliance.

Most have been antagonistic to demands for action on climate change, while some have dismissed climate science, and Saudi Arabia, in particular, has often obstructed UN climate discussions.

Paris Agreement

The International Energy Agency (IEA) cautioned in May that if the world remains below 1.5 degrees Celsius over pre-industrial levels, as laid forth in the Paris Agreement – to which all Opec members are signatories – all new oil drilling must end this year.

When asked about the findings, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, said at an Opec meeting in June, “I would have to voice my perspective that I feel it is a sequel to [the] La La Land movie…” But, “What makes you think I should take it seriously?”

Oil Productions

(Photo : Drew Angerer/Getty Images)

Saudi officials have toyed with climate action in the past, claiming, for example, that the nation might eventually power itself with solar energy. However, no one has urged that oil shipments be halted.

Some oil producers, on the other hand, have chosen a more dovish attitude. For example, Oman, no longer an Opec member, looks at hydrogen as a future low-carbon fuel. The UAE also focuses on hydrogen and renewable energy and has just opened a new nuclear power plant. Other nations in the area with significant renewable energy programs include Egypt, Morocco, and Jordan.

“More than at any other time in history, significant adjustments to the economic model in resource-rich nations are unavoidable,” Birol, one of the world’s leading energy economists, told the Guardian. Countries in the region have made energy transition initiatives. There are encouraging attempts [among oil producers], but attaining net-zero emissions would need far bolder steps and much larger international coordination, as it has for many other nations across the world.”

Read more: LNG Exports from Australia to China Hits Record Breaking Numbers

Related Article: Entirety of Europe Could Face a Staggering Natural Gas Crisis This Winter

Green Neighbourhoods as a Service

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Green Neighbourhoods as a Service

A Bankers without Boundaries made a proposed mechanism to address the challenge of scaling energy efficiency measures in the urban built environment. It is suggested in this article as a Green Neighbourhoods as a Service for all concerned a welcome step in the right direction.

The above image is for illustration and is of Climate-KIC.

Reducing net energy consumption in the built environment is one of the most significant and hardest problems for cities to solve to meet net zero carbon timelines. In our experience, typically, these emissions contribute 30-40% to a city’s total CO2 emissions. In this article we look at why it is so challenging and propose a mechanism to kickstart retrofit at scale.

A Challenging Problem

Reducing emissions in the built environment is an extremely complex problem with multiple components. Many of these complexities arise from an underlying assumption, in nearly all jurisdictions, that solving the problem is the responsibility of individual property owners. Multiple individual actors must make independent decisions leading to a fragmented response to the challenge.

Even ignoring this fragmentation, targeting individual property owners with economic incentives alone is failing anyway due to two interlinked problems

  1. The value of returns (energy savings) is not connected to the capital spend. Returns occur over many decades and a building owner must be confident that they will enjoy those benefits for at least 30 years to have a hope of creating a positive economic case. Most building owners cannot commit to owning the property over that period; therefore, the net present value of energy savings is undervalued by the capital spender relative to its true worth.
  2. Even assuming the building owner can commit to 30 years of ownership, the economics of delivering deep decarbonisation in a way that is attractive to citizens (Deep, Community Retrofit) has poor economic returns (negative IRR) even assuming a 30-year investment period.

Figure 1: Not all retrofit is created equal

If economic rationale alone is not enough, decision making and financing must balance competing goals – economics, decarbonisation, community benefits and social & health impact, which requires a broader viewpoint than an individual building owner.

As a result, current solutions, which are frequently designed to be adopted by property owners, are failing. This has led to the paralysis we see in the market with negligible levels of building level improvements which improve energy efficiency (“retrofit”) occurring, despite various subsidy schemes being offered and financing costs being at historically low levels for some time.

Most existing solutions start with a premise that since it is down to individual property owners to commission work on their own properties, it is also therefore assumed that the energy and maintenance savings benefit accrues to them too and that this should form the economic rationale to carry out the project.

Even after discounting other barriers to entry (complexity of deciding what work to commission, project managing multiple trades, applying for subsidies, the misalignment of landlord and tenant incentives in the rental sector) the economic returns are not high for ambitious retrofit and require the property owner to remain in the property for decades to realise them. Therefore, the net present value of these savings is not being leveraged to solve the problem in the most effective way.

The sheer scale of retrofit that is required to improve inefficient buildings is also often touted as a problem. The costs of an ambitious retrofit programme are huge and go well beyond the public purse. To compound the problem the energy savings that can be achieved are not high enough for traditional financing on its own. To achieve this scale public finance will need to be blended with private capital in some way to provide the level of finance needed to achieve the scale required. In addition, retail investment and citizen engagement need to play their part in the equation to increase visibility and feasibility.

An interlinking issue for many countries is that of regional inequalities. Governments, such as the UK, have made levelling up regional differences a key policy initiative. Existing retrofit plans stand to exacerbate this issue. In the UK for example average house prices in London are £661k, but only £200k in the North East and North West. Average loan to value ratio is 82%. Retrofit costs are broadly uniform across the country, so a deep retrofit at £40k would equate to 6% of property value or one third of average equity in London, but 20% of property value or 110% of equity in the North. Clearly a policy led strategy that forces retrofit debt onto house owners would be deeply regressive for the North.

Any scalable solution must address the fragmentation of the problem which arises from individual decision making, allowing more systemic decision making to happen, economies of scale to materialise and progress to finally be made. This requires a fundamentally different approach.

Significant Opportunity

There is also real opportunity in this space.

Figure 2: Opportunities

Green Neighbourhoods as a Service – A Proposed Solution

To address the mismatch between ownership of the capital spend and of the value of benefits, tackle the fragmentation issue, overcome barriers to entry, allow aggregation of projects and matching of different types of finance that will be needed, we propose a new more centralised model which we call Green Neighbourhoods as a Service (GNaaS).

GNaaS envisages the establishment of a central entity in a city or region which designs, commissions, manages and funds deep energy retrofit on a street-by-street scale with incremental community investments at no cost to the property owners, regardless of ownership and usage typology.

  • By centralising the design process, more systemic energy decisions are made, for example around local energy systems and integration with district heating.
  • By centralising procurement, greater economies of scale are realised, improving economics and providing a lead market to the supply chain creating an environment for investment.
  • By operating at a community scale, additional projects such as resilience building, co-working spaces and green infrastructure in the shared spaces can be implemented at lower marginal cost. This drives greater impact and citizen engagement, changing the process from a “retrofit programme” to a “neighbourhood greening and investment programme”.
  • By centralising funding, projects can be aggregated on a neighbourhood scale allowing access to completely different types of funding and crucially removing the requirement of indebtedness for individual property owners, which is a key barrier.

To fund the work, a mechanism is needed to attach the long-term energy and maintenance savings to the centralised funding source. The proposal is that this takes the form of a long term (30 year+) comfort and maintenance contract with the resident. The contract would be embedded into the property deeds so that it automatically novates to whoever lives in the property and does not follow the individual when they move away. Alternatively, the resident would be offered the option to contribute the funding for their property directly in which case they would receive the full benefits of reduced energy requirement going forward without any need to engage in the design, procurement and delivery process.

Figure 3: Operating Mechanism

This is not an ESCO model (1). The resident would retain their relationship with existing utility providers for any grid power that they require post retrofit. The significant reduction of energy use achieved through demand mitigation measures and maximising localised heat and electricity generation would create the financial space for the payment of the comfort and maintenance fee at no aggregate increase in cost to the resident.

Contracting all the energy and maintenance savings to the GNaaS organisation would maximise the potential for return-based finance in the funding model. Implementing governance structures that align the decision-making processes with the overall goals of the city could create a mechanism for social outcome goals to be included in contractual terms.

This mechanism could provide a theoretical lever to the public authority to leave part of the savings with the resident enabling the mechanism to become a powerful tool in tackling fuel poverty.

Figure 4: Funding Flow Through the OpCo / FinCo model

The Capital Stack That Will Be Needed

From the modelling work we have done with several cities, the internal rate of return (IRR) provided by the energy savings from this blended set of neighbourhood interventions is consistently negative, even assuming a 30-year payback period. But by considering a large enough layer of various non-repayable funding sources, or impact finance, we can move the IRR for the remaining funding requirement into positive territory. Furthermore, adding returns from other sources, e.g. health improvement, can further improve the pay-out profile.

The resulting model creates a potentially multi-billion, stable and low returning financial investment opportunity for sources of patient capital that also value a robust set of impact metrics such as decarbonisation, healthcare improvement, fuel poverty abatement, educational outcomes, air quality improvements or biodiversity gains. We would argue this could be a good fit for sources of capital such as pension funds and insurance companies, which are increasingly demanding products which offer impact related benefits in addition to a financial return, under pressure from underlying asset owners and regulators.

Further, it is a structure that can take in repayable, but zero or ultra-low coupon, finance from multilateral or development finance institutions seeking climate change impact and/or post-COVID recovery funding.

In addition, there is an opportunity to offer participation for local communities to invest through a community bond type structure allowing direct participation in the returns.

For the non-repayable layer of finance, various components will need to be combined.

  • Funnelling existing municipal budgets earmarked for improving energy efficiency of public owned properties into the mechanism
  • Repurposing existing subsidy schemes into the mechanism
  • Additional national/supranational grant funding schemes aimed at decarbonisation and/or post-covid recovery; the work is labour-intensive and community wealth building activities relating to asset maintenance and green infrastructure can be incorporated.
  • The potential to incorporate other outcome seeking pools of funding, for example allocation of healthcare budgets into what would become a preventative programme reducing future burden on the health care system, biodiversity improvement funding etc.
  • An option for building owners to fund the work themselves and have the occupant benefit from the energy savings. They still benefit from the centralised orchestration, better economics and broader impact.
  • Exploration of the potential to accredit such centralised and scaled retrofit programmes as sources of carbon credits for voluntary carbon offset schemes allowing corporates to achieve their own net zero targets by buying credits that directly improve the communities they operate in and their employees live in.

Figure 5: The proposed Capital Stack with illustrative figures

There are significant governance issues to solve in designing how this entity would operate and to align its actions with those of the public sector. We propose it would be a not-for-profit organisation using a standard return-based fund management fee structure to cover its own operating costs, with involvement from public sector officials in supervisory committees etc to ensure alignment.

We are not claiming that this proposal is yet a finalised solution; there are many complexities to work through (several which are being tackled in pilot projects planned in Milan and Zagreb). However, we are convinced that this concept has the potential to unlock the scaling of improved energy efficiency in the built environment in a meaningful way.

Next Steps

  • Integration with a mechanism to help scale beyond pilot phase, taking learnings from models like LABEEF in Latvia to enable an ecosystem of private sector contracting firms to take over the heavy lifting work of much of the OpCo envisaged above, thereby creating competition leaving the OpCo part of the retrofit company as a commissioning and refinancing engine for implementation firms.
  • Technical assistance funding is required to further develop this work, on the finance side, but also to develop the engagement process with citizens, scope out the legal challenges around contracting as well as integration with the supply chain
  • Pilots will need to be run in multiple cities to prove out the concept. We would envisage these covering 2-300 residential units at a total funding cost of €10-15m each. Pilots are in advanced stage of design in Milan and Zagreb) though engagement has begun in multiple cities across Europe including Copenhagen, Leuven, Vienna, Krakow and Edinburgh.
  • Funding providers, including private sector impact finance firms, development finance institutions and philanthropic outcome purchasers will need to engage who are willing to partner with cities to develop these structures so that they can grow to commercial scale.

1 ESCO – Energy Service Company – is a company that provides energy to customers and services to improve efficiency. An ESCO typically sits between the consumer and the utility providers.

Innovators in Indonesia are advancing renewable energy

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Innovators in Indonesia advancing renewable energy as per the Indonesian government strategy that is pushing to almost triple, shortly, the share of renewables in the country’s energy mix. Let us see how.

The above image is of Rio Pramudita contributed photo of an off-grid installation in Berau on Kalimantan, Indonesia.

Innovators in Indonesia are advancing renewable energy

By Ines Ayostina

Solar panels in Sulawesi, Indonesia.

The Indonesian government promises to almost triple the share of renewables in its energy mix in the next three years. That would reverse an investment climate in which fossil fuels saw 3 times more capital than renewable energy between 2016 and 2019. It would also require the nation’s monopoly power provider, Perusahaan Listrik Negara (PLN), to approve new projects at a rate that entrepreneurs don’t expect now. Moreover, all the distribution to customers is strictly handled by the state-owned company.

Accordingly, entrepreneurs work with global networks to improve the state’s literacy and risk appetite. One network is the Clean Energy Investment Accelerator. The CEIA works as a joint endeavor coordinated by Allotrope Partners, World Resources Institute (WRI), and the United States National Renewable Energy Laboratory (NREL) to accelerate renewable energy solutions for large electricity consumers in key emerging markets. CEIA brings together corporate buyers in Indonesia and magnifies their joint ideas to develop an enabling regulatory environment for accelerating renewable energy investment and use.

“How renewable energy fluctuates were claimed to be the greatest risk by potential investors to Indonesia,” says Rio Pramudita, a business development analyst for developer Akuo Energy. Because of the intermittent nature of renewable energy, the state-owned company must be ready to supply the client if renewable energy is unavailable. “Renewable energy faced some hurdles because they have to ‘pay’ for the uncertainty that PLN has to bear,” says Pramudita. In that context, a range of partners use a range of tools to promote the country’s renewable ecosystem.

Can renewable energy thrive in Indonesia’s current energy landscape?

Since its inception in 2018, CEIA has formed a taskforce in Indonesia that comprised of more than 25 corporate buyers. These corporate buyers are global firms with operations in Indonesia. They are among the companies who wish to source their energy from renewable sources but have discovered there is limited supply.There are reasons to discern a clean-energy economy growth curve in the country.

Independent Power Producers (IPP) that generate renewable energy remain limited in Indonesia. Currently, they supply 26 percent of national energy, and most lack transmission and distribution connections to sell energy directly to end users. Building distribution lines, of course, is expensive: The other option is to lease existing ones through PLN. “Transmission and distribution lines are a strategic asset of the state,” says Gina Lisdiani, director of Allotrope Partners Indonesia, part of the Clean Energy Investment Accelerator Indonesia.

“Because Indonesia is an archipelago, this transmission and distribution network becomes even more critical,” adds Lisdiani.

Although this means that IPPs generally cannot sell directly to end consumers, or be off the grid, some companies in Indonesia use their own solar panels to operate their factories and manufacturing facilities. For example, PT. Coca Cola Amatil Indonesia has this kind of solar panel arrangement with a capacity of 7.13 MW. However, an arrangement such as this is not completely off the grid. If something goes wrong and the supply falls below what the factory requires to run, PLN would supply electricity to the factory.

If industry has more supply than it needs (such as during the Eid Mubarak vacation period), they can sell it to PLN, a practice known as net metering. PLN smiles on this innovation, perhaps because it improves electrical supply without requiring new investment. “Net metering exists in Indonesia. In some cases, the PLN can reduce the price by roughly 35 percent. The process for obtaining a permit, or simply determining whether it is possible, is not uniform and depends on the location and permit by PLN regional office in the area,” adds Lisdiani.

Private-sector renewable energy purchasing

For generating and distributing renewable energy without running into the corruption that comes with permits, CEIA has worked with PLN to create and disseminate a Renewable Energy Certificate (REC). “It is hoped that it could serve as a catalyst for PLN to build and/or permit more renewable energy projects,” says Lisdiani.

Renewable energy certificates provide a simple way for businesses, institutions and individuals to offset their carbon footprint and support renewable energy. As more companies proclaim commitment to climate action and renewable energy, purchasing RECs allows businesses to source their energy from renewable sources. When demand rises, the possibility to create renewable energy power plants rises with it.

“They [corporate buyers] are also concerned about whether a renewable energy power plant has reached its break-even point. They would rather fund and incentivize generation that is not yet profitable [so they can realize higher returns in the future]. This is critical in order to assist project developers who wish to launch a renewable energy project in Indonesia,” Lisdiani says.

These enabling conditions and potential incentives are essential for project developers from the start of the project. “A new project developer without a portfolio will face enormous challenges. One of them is obtaining financing from a bank,” Lisdiani explains. “And REC has the opportunity to play a significant role in resolving some of the issues.”

The first solar off-grid system in Indonesia to serve communities

Despite hurdles, there are reasons to discern a clean-energy economy growth curve in the country. Akuo Energy, a renewable energy developer, has developed the first solar off-grid electrification systems that powers three villages in Berau, Kalimantan.

Because Akuo Energy is off-grid, it both generates and distributes energy directly to customers without running through the state pricing system. This project was mostly funded by the Millennium Account Challenge Indonesia and United States Agency for International Development (USAID). The solar off-grid is managed by a joint venture between Akuo Energy and the village-owned company (Badan Usaha milik Desa; Bumdes), with the latter owning the majority.One common misconception is that since Indonesia is a tropical country situated on the Equator, we would have been able to deploy solar energy everywhere.

The joint venture was able to obtain the required permit by presenting their project in front of the ministry, emphasizing the importance of electricity access in these three villages and how their distance from the transmission line is so far that the state-owned company cannot benefit from it. There is also a regulation that restricts the price they may charge customers; the ceiling is the price set by the state-owned company. If the joint venture wishes to raise the price above what the state-owned company has set, they must present the case to the Regional House Representative with rigorous justification.

“One common misconception is that since Indonesia is a tropical country situated on the Equator, we would have been able to deploy solar energy everywhere,” says Pramudita, who trained as a mechanical engineer. “There is a lot of heat in Indonesia, but what we need for solar panels are photons. As a result, different renewable energy technologies would be appropriate in different parts of Indonesia.”

Some parts of Indonesia are cloudy most of the year, while others are not. East Nusa Tenggara is one of the few places in the world where it is never cloudy. “Other locations such as some parts of Sumatera, the south coast of Papua, and West Java are not suitable for solar panels but are suitable for wind turbines,” explains Pramudita. Indeed, a study shows that Sukabumi and Garut, in West Java, are among the potential sites for wind turbines.

In a challenging environment, organizations and businesses such as these show a way forward. CEIA brings together renewable energy buyers and consolidates a unified voice to the government, whereas Akuo Energy is able to operate off-grid solar panels. This demonstrates a few of the opportunities for patient renewable energy investment in Indonesia.

This story first appeared on: Clean Energy Finance Forum

Shaping the future of Human Resources

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Zawya’s TECHNOLOGY gives Shaping the future of Human Resources by Dr Ahmad Khamis, all the importance that is due to it in the GCC region.

The above image is for illustration and is of Entrepreneur.

The presence of rich data resources has enabled businesses to segment and personalise their products and services, which has provided an opportunity for these companies to rapidly expand into new spaces of innovation. All these adjustments have had a profound impact on the structure and functioning of the workplace. As a result, this has created a need for organisations to rethink how they hire, engage, develop, reward, and lead their workforce  

OPINION

Technology is changing the way we live and work, stirring businesses into adapting effortlessly. Every business, regardless of industry, now has the need and potential to evolve digitally and consequently, globally.

The presence of rich data resources has enabled businesses to segment and personalise their products and services, which has provided an opportunity for these companies to rapidly expand into new spaces of innovation. All these adjustments have had a profound impact on the structure and functioning of the workplace. As a result, this has created a need for organisations to rethink how they hire, engage, develop, reward, and lead their workforce.

From “for whom” to “with whom”

High performing organisations have begun to operate as empowered networks, coordinated through culture, information systems and talent mobility. This requires companies to redesign the organisation itself with new operational models to be implemented at different levels. The fast-paced business activities demand that firms are not encumbered by legacy practices, traditional systems, and behaviors that consume resources such as time and money but do not deliver the desired results in return. This has led to the popular question; “for whom do you work?” to be replaced by “with whom do you work?”

HR Management was primarily designed as a compliance function in an organisation, with a focus on managing talent, processes, and transactions. However, constantly changing business and organisational structures require a flexible, data-driven, and highly skilled human resource system that can attract, retain, and develop talents. HR is transforming into an innovative consultancy with a broader scope and responsibility to design, formulate strategies, and enhance the entire employee and employer experience.

Transforming a business environment requires a new HR system that is more tactical and strategic as opposed to administrative. A strategic HR team has the potential to build a team of employees most suited to the company’s requirements. Moreover, digitising functions will enable senior management to focus on functions such as increasing the market share of their business, growing their customer base, driving product innovation, increasing sales, and helping the company be more responsive to the market, among other operations.

Shifting to a company-wide interrelated function

An organisation’s HR has evolved from a silo away from core business plans and activities to a department that cofunctions with management, to further understand business needs, and most importantly, to enable and empower their key resource: employees. With the rise of disruptive technologies such as block chain, AI, machine learning VR/AR, and people analytics, the suitability of HR practices has greatly expanded. Every HR department owns a variety of data, including payroll, social media, employee engagement surveys, leadership assessments and developments, performance reviews, recruiting, and exit interviews, which if conducted correctly, can guarantee key insights for future business decisions.

The two shifts taking place that play a significant role in shaping this industry’s future are the options on how companies support traditional HR practices, and talent retention in an environment where employees are capable and eager to transfer to new workplaces. The GCC region has a stable regulatory framework, excellent infrastructure, and a diverse range of talents and capabilities among its residents and expats. Furthermore, the region’s present interest in harnessing technology and innovation is projected to assist GCC enterprises’ human resources departments. It is estimated by the World Economic Forum that 41% of all work activities in Kuwait are susceptible to automation, 46% in Bahrain and Saudi Arabia, 47% in the UAE, and 52%in Qatar. As compared to 2015, 21% of core skills required across all occupations was different in 2020 in the GCC.

Professionals that can combine extensive industry expertise with cutting-edge analytical tools to quickly modify corporate strategies will be in high demand. Crowdfunding sites, remote and virtual work, and other online platforms are gaining popularity. This necessitates HR departments in GCC organisations managing a distributed and virtual workforce, integrating freelancers, and mitigating the constraints of online work. Furthermore, it necessitates businesses to foster a culture of continuous learning and knowledge of the changing infrastructure among their staff.

Organisations can utilise people analytics and predictive talent modelling to identify pain points and prioritise future analytics investments. Data analytics can also help businesses correctly identify employees who are on the verge of leaving and persuade them to stay with more informed efforts. This not only increases customer satisfaction but also lowers costs.

Rebranding human resources

Several significant innovations are having an impact on today’s HR functions. Companies choose solutions that allow for ongoing performance monitoring, obviating the need for formal quarterly or half-yearly staff reviews. The process will become increasingly automated and streamlined as firms adopt a single data model to enable real-time KPIs to measure and analyse performance. Firms demand real-time management, and HR must respond by leveraging analytics and data in creative ways to improve staff management.

The majority of today’s workforce are incredibly tech-savvy and want a consistent and distinctive experience on a daily basis. The workforce will increasingly include millennials who expect cutting-edge technology to support them in their employment, necessitating the organisation’s ongoing invention of new ways to engage the workforce.

As the power of technology grows, technology needs to become a trusted partner at work, augmenting an individual’s role in smart ways so that the employees can focus on those aspects of the job that require human touch and skills. Artificial intelligence enables large-scale efficiencies and serves as a foundation for many of the new technologies that businesses are adopting.

In many firms, HR functions have been rebranded, with phrases such as “employee experience”, “people management”, and “human capital” to signal a shift in the brand. Organisations are still grappling with how digitisation will fundamentally alter human work and in what ways humans and the emerging machine co-workers will work together. This is likely to create new value for customers and the firm. It is high time to reimagine work across the enterprise and HR with digitisation and automation.

Dr Ahmad Khamis is the co-founder & CEO at BLOOVO, a technology company founded in 2014 specializing in the provision of AI-powered recruitment solutions. Ahmad is a seasoned private equity and venture capital professional boasting over 17 years of multi-national experience. His career has seen him in senior roles at several blue-chip companies in the MENA region and premier consultancies. He holds a bachelor’s degree in Economics from University College London (UCL), Diploma in Accounting and Finance from the London School of Economics (LSE), Masters in Finance from the University of Leicester and a Doctorate in Financial Economics from Manchester.