Imagine a world where the rules change as swiftly as technology advances, and a single oversight in regulatory compliance could not just delay, but derail an entire digital transformation project.

A common assumption on digital transformation programs is that the solutions implemented will satisfy regulatory requirements, now and in the future. This assumption is underpinned by another, that regulatory change is slow and predictable. Both assumptions are incorrect.

Digital transformation programs must treat regulatory obligations and changes as a risk to be managed, not an assumption to be skimmed.

Water utilities in Australia face a constantly shifting regulatory landscape, as unpredictable as the weather itself, where a single policy change can ripple through and soak years of progress in an instant. Regulatory changes can be driven by a wide range of needs, think everything from enhanced cybersecurity obligations through to state-driven renewable energy targets. Water utilities need to be able to plan and respond.

Here are three reasons that water utilities cannot simply assume that their digital transformation program will meet current and future regulatory obligations.

1.Dynamic Regulatory Landscapes: The regulatory environment, particularly for digital and technology sectors, is often fast-changing and more dynamic than it feels. Innovations and societal impacts of technology can prompt regulators to update or introduce new regulations to address issues such as data privacy, security, and ethical concerns. An assumption of static regulations could lead to non-compliance if the project does not have a mechanism to monitor and adapt to these changes.

2.Global Considerations: For projects that have a global reach, impact or technology considerations, different regions may have varying regulatory requirements that could change independently of each other. What is compliant in one country may not be in another, and these discrepancies can evolve as countries introduce or reform their digital laws. A digital transformation program needs to be agile enough to accommodate these diverse and evolving regulatory landscapes.

3.Stakeholder Trust and Reputation: Compliance is not just about adhering to the letter of the law but also about maintaining the trust of customers, partners, and regulators. There's a risk that stakeholders may perceive a project that only complies with the current regulations as doing the minimum required by law. Changes in regulations are often in response to public demand for greater protection or ethical considerations. Failure to anticipate and prepare for these changes can harm the organisation’s reputation and stakeholder trust.

How can you ensure that regulatory compliance, now and in the future, is a focus of your digital transformation program?

1.Establish a compliance assurance framework: Upon commencement of your digital transformation program, establish a compliance assurance framework. The trick here is that your assurance framework will need to be digital-friendly to avoid impeding your program. Assurance should be one of, if not the first, functions that should be transformed.

2.Treat regulatory compliance (now and in the future)
as a risk to be managed, not an assumption: Assign a role that is accountable to the program control board for assurance. Their voice should be welcomed by program control board members however it is very important that this role is performed with balance. The role should not be elevated higher than the program team or conversely, diminished to be subservient (or viewed as administrative). This role is part of the digital transformation. Depending on the size and scope of your transformation, this role may require cross-functional resources, operating under their direction, as an assurance team.

3.Embed compliance in the program lifecycle: Integrate a compliance review process into every stage of the digital transformation project lifecycle. These reviews should leverage your new agile assurance framework and enable successful delivery. Avoiding negatively impacting momentum is an important consideration while performing reviews.

4.Perform continuous monitoring and training: Establish a continuous monitoring program to keep track of regulatory changes that might affect the project. This includes setting up a regulatory watch function, possibly enhanced by technology solutions that can alert to relevant changes. Regular training for team members is important.

For water utilities and organisations alike, the ability to not just navigate but to anticipate these regulatory changes will define their success.

By embedding regulatory compliance into the DNA of digital transformation programs, organisations can ensure they not only survive but thrive in the face of uncertainty. Let's move beyond viewing compliance as a hurdle, and instead, embrace it as a cornerstone of sustainable innovation and trust. The future belongs to those who prepare for it today, and in the landscape of digital transformation, the foresight to adapt to regulatory changes is not just an advantage—it's a necessity.

I write about digital transformation weekly. My 📥DMs are open for engaging conversations.