Dubai, UAE: In a new report, 'The Evolution of Infratech', from international law firm Pinsent Masons, research reveals that globally, 87% of infrastructure investors would be more likely to back a bid in which the technology provider is a member of the consortium, rather than a sub-contractor.
This increasing convergence of infrastructure and technology is heavily reflected in the report findings. 43 per cent of technology respondents anticipate entering a joint venture with an infrastructure company over the next three years, which is an increase of 100 per cent in comparison to their engagement over the past three years. Infrastructure respondents also expect to partner with tech firms with over half of the infrastructure respondents, an increase of circa 50 per cent, anticipating a joint venture in the next three years.
Nick Ogden, infrastructure expert and Partner at Pinsent Masons, commented: "For investors, having technology providers play a leadership role means there are real incentives motivating them to provide the best technology and speed up delivery. Our survey shows that 92 per cent of infrastructure investors will often or always consider technology when making investment decisions over the next three years. This shows that investors are willing to spend the money which will drive this growing trend. Collaboration is already here, and is only going to increase. On projects where infrastructure and technology are truly integrated, you can imagine there is the potential not just to create more efficient assets but also create new markets that haven't existed before."
There are, however, obstacles with this convergence. Both infrastructure and technology respondents cited overcoming cultural differences as the main challenge to Infratech projects once initiated and 37 per cent of respondents thought that the siloed approach to both sectors was a major barrier.
"Infrastructure needs to learn from tech firms and start changing from the inside-out by bringing technology into all aspects of their operation. Both sectors will need to bring together their commercial objectives, whilst understanding each other's varied risk appetites, commercial drivers and business models," Ogden added.
Agreeing data requirements and standards was identified in the research as the second biggest challenge for projects where technology and infrastructure are integrated, with regulatory constraints ranking in third place. A clear majority of respondents, 91 per cent, prefer an open access model with ownership of any data captured by Infratech. However, the same respondents report that data captured by Infratech is available to all in just 62 per cent of the projects they work on.
Bill Smith, Dubai-based Infrastructure Partner at Pinsent Masons, commented: "Clear leadership is needed from governments to ensure that data and information security regulations are fit for purpose in order for the benefits of Infratech to be fully maximised. Despite the rapid pace of technological change and digital disruption, the UAE is a prime example of how beneficial Infratech can be when clear guidelines are put into place.” He continued, “The clear vision of both His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, and the Dubai Government is to firmly cement Dubai's place as a world-leading smart city. Under their stewardship, we have seen Dubai take a leading role in embracing Infratech for the benefit of its residents: for example, by the establishment of Smart Dubai Government (SDG) whose express mission is to 'deliver world-class smart services and infrastructure to create happiness'. This statement encapsulates the very essence of Infratech, and what it is intended to deliver into the future."
Interestingly, the report shows that monetising data from infrastructure comes fairly low on the list of ways Infratech is seen as adding value, mentioned by only 21% of all respondents. However, Pinsent Masons' view is that data will have significant potential as a revenue generator and its value must not be overlooked.
"Data monetisation will become a more significant feature for those involved in Infratech, particularly once the opportunities and risks are better understood by the Infratech ecosystem, and robust data sharing arrangements and data standards are in place to support emerging business models," added Simon Colvin, Technology Partner at Pinsent Masons. "Across our global markets, we are seeing interesting PPP models emerge that incorporate data monetisation as part of the financial base case, so the success of the project will depend on revenue streams from data generated by project assets. This underlines the views of the investors, that there are new revenue streams and value to be driven out from this digital and data transformation," he concluded.
'The Evolution of Infratech' report is produced in association with the Institution of Civil Engineers, techUK and Mergermarket. In total, 300 people were surveyed, including direct equity investors in the infrastructure sector and senior-level executives from the infrastructure and technology/ communications provider sectors. Respondent companies were all global leaders in their fields and include those listed on FTSE 100, Amsterdam Stock Exchange, Frankfurt Stock Exchange, Korea Exchange, Tokyo Stock Exchange and NYSE, among others.
The companies involved were split between the UK, Asia-Pacific and EMEA. The survey included a combination of qualitative and quantitative questions, and all interviews were conducted over the telephone by appointment. Results were analysed and collated by Acuris and Pinsent Masons, and all responses are anonymised and presented in aggregate.
Additional in-depth interviews were conducted with experts and executives from a selection of infrastructure and technology firms, as well as universities and public-sector bodies. The findings were also discussed at a roundtable event with senior representatives from a range of stakeholders. The results of all the interviews and the roundtable helped inform the core messages of the report.
About Pinsent Masons
- Pinsent Masons is a global 100 law firm, specialising particularly in the energy, infrastructure, financial services, real estate and advanced manufacturing and technology sectors. The firm employs over 2500 people in total, including over 1500 lawyers and more than 400 partners. The firm's international footprint encompasses six offices across Asia Pacific - including in Sydney and Melbourne - two offices in the Middle East, an office in South Africa and six offices in continental Europe. The firm also has comprehensive coverage across each of the UK's three legal jurisdictions.
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