The waste sector can be disrupted by nimble businesses using technology with industry needing to prepare and react through good use of IT, says Mark Abbas – CMO & director of business development at AMCS Group.
OPINION: The increasing presence of tech disruptors in the waste management and recycling industry indicates that the biggest threat to most businesses is presented either by companies that don’t yet exist or established operators that have relentlessly embraced digitalisation to move their business forward.
The fact that the world of waste and recycling has been comparatively slow to embrace technology makes it potentially more vulnerable than other sectors to disruption. Certainly, if you are spending a disproportionate amount of time worrying about what your local competitor is doing then you are probably looking in the wrong place.
On the face of it, it may seem impossible to prepare for a hidden enemy but there are things a business can do to improve their ability to react to new entrants into their market and to increase the barriers to entry. So, what can waste and recycling operators do to ensure they are prepared for this almost inevitable disruption when it happens?
The first thing is to know your enemy. Tech disruptors are by their very nature normally very asset light, often providing access to the assets of others in order to deliver a service. Generally, they are also unrestricted by geographic barriers making their physical location pretty much irrelevant. The use of technology to significantly reduce operating costs and improve services levels results in highly nimble and skinny business models that can react to change almost instantly. They will look to exploit markets and businesses which don’t demonstrate these characteristics, rely heavily on old traditional business models and are unlikely to have the infrastructure or skills to defend themselves.
It is important to note that for the foreseeable future there will still be a need for logistical and processing capability to manage the waste we produce. It’s unlikely this will look like it does today, and it doesn’t take too much imagination to see a driverless collection fleet with A.I. and robotics replacing humans on the picking lines in our materials recycling facilities. However this infrastructure looks, there is little doubt that a new tech-based entrant into the market is going to look to work with businesses with whom they can more easily integrate their own IT and systems.
On a very practical level, a move to the cloud can be a valuable and highly effective first step for most operators. Cloud based systems provide the ability to be far more flexible and support change at a far greater rate than on-premise systems. They also more easily enable the adoption of the Internet of Things (IoT), AI and other advances. In fact, a move to the cloud is really just another manifestation of being asset light, removing the need to support your own datacentre or IT infrastructure and employ staff.
Another key to future success lies in the organisational mindset and that of its leaders. Businesses that embrace change and see it as positive are far more likely to have adopted robust business models and infrastructures than those who view it as a necessary evil or simply choose to bury their head in the sand. Businesses that have successfully utilised technology to realise commercial and operational success are invariably those that have fully committed to digitisation and have placed it at the heart of their business.
Defence against new business models shouldn’t be seen as the only reason to move your systems to the cloud, however. The move to a more circular economy and the demand for increasingly resource efficient business models mean that customers are going to expect continually higher service levels and access to data. This heightened appetite for information and 24/7 availability is something that can only really be supported by cloud-based systems.
There are signs that the tide is beginning to turn. Our recent Digital Transformation report showed that whilst over 60% of waste management companies gave themselves a failing grade when it came to the application of new technologies, more than 80% of participants believed that digital innovation was important for their business success. 64% of those surveyed expected to see an increase in their IT budgets with 20% looking at an increase of over 5%. It was also interesting to note that nearly 70% believed that the best place to invest right now is in digital transformation rather than fleet size.
Ultimately, waste management companies are only really left with two choices. Either they carry on as they are and pray that they are able to manage any disruption when it occurs, or they are proactive and make changes that can both protect their businesses and support its continued growth. Citing a lack of resources is unlikely to stand up as much of an excuse when change actually does arrive with companies like ours that have the industry knowledge and are able to provide access to the technology and skill sets that are required.
Author: Mark Abbas – CMO, AMCS Group