Technology partnerships and acquisitions key to Bureau Veritas' digital drive
Most questions about partnerships and acquisitions directed to shipping leaders tend to be swiftly rebuffed. Not so in the case of Philippe Donche-Gay, president of marine and offshore and deputy chief executive at Bureau Veritas, the French classification society.
As the man in charge of all operational functions and information systems at group level, accelerating the classification society's move into the digital world is the priority for Donche-Gay, and he is the first to recognise that complementing internal talent with skill and systems from outside is vital.
Referencing the recent Maersk and IBM blockchain deal, Donche-Gay tells Fairplay that the industry will see more and more technology partnerships of this kind.
“It is the normal mechanism to test innovative solutions. This doesn’t mean it is the end solution, but it is the beginning. We know blockchain can be a technology that can be quite meaningful in the future, but it is at the very early stage. We have the bitcoin but that is about it,” he says.
BV has a pilot blockchain project in the food industry, involving the traceability of tuna where its role is to check the veracity of the information that is put in the chain, and the group is assessing who it can work with to leverage technology to transform its business.
“We are looking at technology partnerships with the IBMs and the others because they control this technology. They are among the few groups have invested billions in research and development and we will have these types of alliances too.
“We have already partnered with Dassault Systemes on 3D modelling, an area very relevant to marine where many class societies thought they could develop the technology by themselves before they realised it was too much and too big.”
In December, BV also agreed a partnership with Avitas Systems, a GE Venture company, using artificial intelligence and advanced analytics for inspections in its power and utilities business and there “will probably be another three or four [such partnerships] by the end of the year. Partnerships give you access to the technology so you can test and progress,” Donche-Gay tells Fairplay.
So is BV betting on any preferred technologies? “If you look at what we need for inspection, we have to test a bit of everything, says Donche-Gay. For marine, the classification society will continue to look closely at technologies around 3D modelling and data collection - using drones and sensors - as well as the capabilities of machine learning and AI in a data-rich environment.
Testing all the new technologies is easier if you are in a big group, says Donche-Gay, as you can apply it in a number of different fields. The hope is to leverage the group to test technology in other markets that will be applicable to the marine environment.
“We are 65,000-person business and this gives us a competitive advantage. Sometimes people say 'you are BV and marine is just 10% of your business'. To which I say precisely, we will leverage the rest [of the group] to fuel the engine of marine activity."
Conscious that the world will look different 10 years from now given growing digitalisation, one of the challenges is that rate of employees’ skills becoming obsolete is extremely high.
You never know what the right mix is when it comes to enhancing people’s technology knowhow, says Donche-Gay. "We have to invest in teams to make sure that they can use all the modern tools but sometime when you go deeper into the understanding of the technology - for example validating software - it can be difficult to convert people. You often have to recruit and, quite frankly, in this case acquisitions are the way that you can position yourself."
According to Donche-Gay, the group reviews acquisitions regularly but given the shape of market, the priority in terms of acquisition is not necessary offshore or marine, but rather those that can compensate for downturn of these sectors.
But that hasn’t ruled out such acquisitions entirely. The group acquired TMC Limited and Marine Assurance & Consulting in 2016 and loss adjusting business MatthewsDaniel late in 2014 and there clearly is an appetite for more. “BV may have started with marine, but if you look at our evolution, two-thirds has come from acquisition, so it is something we know how to do,” he says, pointing to its Smart World initiative which involves buying companies with technology relevant to certification.
The classification society will continue to look at specialist companies in the area of software assurance and cyber security. "It is too soon to say what [we will buy] but in terms of positioning the group, but we will require these kinds of acquisitions because the skillsets they bring," he adds.
There is no question that Donche-Gay is well placed to direct BV’s digital drive. Holding a degree in engineering, he cut his teeth in information systems. He started his career and spent a decade at IBM “the best sales school you can find”, followed by 10 years at Capgemini, the technology and outsourcing consultants, and unlike many people that just land in the shipping industry, his move into maritime was a conscious decision.
The Frenchman, who joined the group’s industries and facilities division in 2008, was working with the senior leadership team to find a successor to Bernard Anne in 2012 when the idea was mooted that he should consider taking the role.
“In my career, I have always been hunted so I sometimes think that I didn’t take the decision. The one time that I did take the decision was when I joined marine,” he tells Fairplay. And it is a decision he doesn’t regret.
“On discovering the maritime world with many of its defining characteristics, I fell in love with it. It is a fascinating industry. There are lot of positive attributes to shipping," he says. One of the most positive is that people in the industry tend to enjoy what they do.
"Even though I am not a naval architect, my engineering background gave me an understanding of some of the issues that we have to address as a classification society," he explains.
The element he had to get used to was the notion of very cyclical markets, “the roller coaster of ups and downs”, and his priority was to try and understand the cycle to take the necessary measures to maintain an acceptable level of profitability and to do it in a way that protected collective knowhow, goodwill and strong relationships with clients.
“I now understand more about how shipowners see life; the art of taking the right wave at the right moment, but like in other business areas the cycles tend to get shorter and this has consequences for everyone. The fluctuations in capacity are very difficult for the shipyards to manage and a little bit of oxygen in new orders would certainly help.”