Digitalisation is not new, however COVID-19 has sharpened the focus and accelerated momentum
By its very nature, the Oil & Gas sector has been at the forefront of the technological curve at many points in time. So much so that NASA has been working closely with Oil & Gas technologists to leverage their intellectual property in support of man’s mission to Mars and beyond.1 Paradoxically, however, the sector has lagged behind other industries when it comes to shifting towards ‘Industry 4.0’ and although the majority of Oil & Gas operators have now embarked on some form of digitisation, capitalising on the promised gains of the fourth industrial revolution, has alluded many and the pressure is mounting.
Once again, the industry finds itself in a bind. The dual shock of the oil price collapse and COVID-19 has forced operators to shed costs, increase efficiencies and drive shareholder value, all whilst keeping their employees and the public safe. Combine this with a growing momentum to transition to a low carbon agenda, reliant on new technologies to offer smarter optimised solutions and transparent reporting. As a result, Oil & Gas companies need to capitalise on promised gains and ‘supercharge’ their digital agendas.
Key challenges and steps to take
With increased pressure on return on investment (RoI) realisation, Oil & Gas operators are experiencing common challenges in digital strategy implementation
While many challenges are operator-specific and even field or facility-specific, others are being experienced by Oil & Gas operators across the industry and its value chain. Common challenges include:
Data & infrastructure
Given increasing volumes and security risks, data quality, data management and actionable data insights are an ever-increasing concern for decision makers. Data often remains scattered across disparate systems and is not commonly or consistently structured, integrated or developed with a ‘cloud strategy’ in mind.
Business case realisation
Determining ‘true’ return on investment and building a strong, data-driven business case to secure stakeholder buy-in can be challenging. Momentum is often lost as organisations struggle to define and track use cases, and demonstrate tangible value, under aggressive timelines. Additionally, collaboration across business units can be challenging when levels of digital maturity and digital infrastructure vary.
People, organisation & culture
Instilling behaviours, ways of working, methodologies and approaches that embrace digital technologies and solutions within the organisation can also be challenging and result in low user acceptance. Many digital strategies underestimate the availability of talent in the right areas and requirements to drive end user adoption.
Within each challenge area, operators should consider the following core elements and what strategies they can employ to ‘supercharge’ digital transformation.
All organisations are at different starting points and stages along their digitisation journey; understanding where they stand and what progression challenges they are facing is imperative to moving forward.
Data & infrastructure
- Enhance master data management, governance and security
- Continuously map and optimise digital architecture
- Clearly define your cloud strategy
- Opt for standardisation & configuration of software as a service (SaaS) applications
Enhance master data management, governance and security
Data can only be valuable if it is processed and accessible. Ensuring master data management and governance fundamentals are in place will ensure secure and organised data of sufficient quality is available to all employees and machines in real-time. In order to build robust data management, all data sources must be understood and organised in terms of their purpose, criticality and connectivity.
Data governance should focus on continuously evaluating and enhancing data assets, so users have the confidence that it is fit for purpose and decision-makers can steer the right course, grounded in a single version of the truth. Setting clear data governance principles and applying them consistently allows for more effective data mining. Without them, interoperability will remain a theoretical construct.
Finally, strong data management and governance are futile without adequate security. Cyber threats on industrial systems are becoming more targeted, and as a result, more potent and complex. Oil & Gas organisations are advised to implement strict security measures to secure all their networks, endpoints and controllers. While top-tier cloud providers do an excellent job of securing services, it is the client's responsibility to secure applications and data. Aligning the cloud security environment with the organisation's overall security strategy is key.
Continuously map and optimise digital architecture
Digital architecture is defined as the layout and integration of sensors, applications, databases, systems and networks across a company’s operations. Visualising and analysing digital architecture helps identify optimisation and integration opportunities. Therefore, digital architecture should be continuously updated to maintain an accurate global view of a company’s digital assets and their integration.
Oil & Gas operators should have an approach in place for IT infrastructure to ‘keep up’ with the business’s digital ambitions, for example: to manage big data assets, to support planned digital applications and new ways of working. In some cases legacy systems will need to be replaced entirely, and in other cases, new systems and solutions can sit on top of existing hardware.
Clearly define your cloud strategy
Today, most Oil & Gas organisations do not have a formal cloud strategy, which sets out a coherent approach to cloud usage – optimising resources and costs, while ensuring continuous access to real-time data for oilfield intelligence. A cloud strategy is an outline for the role of cloud in an organisation, not a plan to move everything to the cloud.
Digital leaders, such as chief information officers (CIOs), chief data officers (CDOs) and chief technology officers (CTOs), develop and update a cloud strategy to ensure cloud decisions align with corporate goals and account for all necessary factors and potential risks, and the C-suite buy-in. Some companies have even created a ‘Cloud Council’ composed of stakeholders from across the business, which demonstrates its importance beyond the core digital teams.
A clearly defined cloud strategy is also critical for preparing for and supporting artificial intelligence and machine learning solutions. A comprehensive cloud strategy includes a business baseline, service strategy, financial models, workload assessments, security assessments and requisite elements. For national oil companies specifically, cloud strategy has warranted renewed focus given the massive attainable benefits that can be achieved when deployed at scale across their organisations. This has had to be balanced with restrictions around data sovereignty and national regulation.
Opt for standardisation & configuration of software as a service (SaaS) applications
Standardisation in an enterprise digital environment allows faster scaling and time-to-value. Traditional solutions require a tremendous amount of customisation and a large amount of custom code. With enterprise SaaS solutions we observe a push towards standardisation and configuration as opposed to customisation. The more configuration is built in: the faster the time-to-delivery, the easier it is for customers to adopt and the more integration there is with existing processes. High standardisation and configuration also allows for easier version migration. When it comes to SaaS, less is often more.
Business case realisation
- Design a holistic and coordinated digital programme
- Take a ‘business-led’ (not technology-led) approach to requirements capture
- Establish strategic partnerships with win-win scenarios
- Reduce development cycle time with ‘turbo-innovation’
Design a holistic and coordinated digital programme
To reap the benefits of scale, a holistic approach to digital strategy across an organisation usually yields better results. Although, in some instances, a specific line of business may require a tailored approach and infrastructure. Digital strategy and transformation maximise benefits to the organisation when implemented across teams and functions, not in isolated pockets. While use cases clearly vary across the organisation, core technology enablers such as cloud and application development tools can be standardised and integrable.
Take a ‘business-led’ (not technology-led) approach to requirements capture
Typically, technology-led approaches result in lower user adoption and behavioral change, since end-users do not see a clear link between deployed solutions and their day-to-day requirements, challenges and opportunities.
Establish strategic partnerships with win-win scenarios
This foundational element cannot be stressed enough in terms of its criticality. Given the rate at which the digital ecosystem is expanding – to now include large corporations, small-to-medium sized vendors, integrators, startups, think-tanks, research bodies and universities – the organisations that will win at digital strategy implementation are those that intelligently build partnerships that complement their offering rather than those who attempt to build all capabilities and solutions in-house.
These partnerships often yield win-win situations through the design and roll-out of high-RoI solutions, where both parties have a vested interest in sustainable implementation performance rather than just an up-front deal. An appropriate balance should be struck between the protection of proprietary technology and the development of high-performing solutions.
C3.AI CEO Thomas M. Siebel: “This initiative is about combining the efforts of global leaders to accelerate the digital transformation of the energy industry to new, safe, and secure energy and to ensure climate security”
Reduce development cycle time with ‘turbo-innovation’
‘Turbo-innovation’7 is an approach to reduce the innovation cycle time in building digital platforms and solutions. This is done through strict scope, data source management and leveraging ‘pre-fabricated’ front- and back-ends, resulting in increased success rates, reduced time-to-value and overall de-risking of initiatives. ‘Turbo-innovation’ utilises a framework that aims to realise tangible solutions and value over six weeks. Early phases are completed in a cross-functional setting, with rapid innovation cycles that allow frequent course corrections based on insights gained.
People, organisation & culture
- Adopting agile culture
- Achieve behavioural change
- Consider a layered approach to upskilling
- Integrate and blend data scientists within business units and engineering teams
Adopting agile culture
The pursuit of real and rapid innovation through digital will inevitably result in some failures – an agile culture can support the celebration of failing and the ability to fail fast.
Organisations with an agile culture can adopt innovative solutions to internal and external challenges more easily and build their flexibility to alter direction mid-stream if conditions change. Enabling, and in fact, encouraging teams to fail fast fosters innovation and is a cornerstone to an agile culture.
Achieve behavioural change
When it comes to digital strategy implementation, the dissemination of information and the communication campaign are not sufficient for ensuring results. Rather than just knowing a digital strategy exists in the organisation, people need to feel that they are a part of it and understand how it will benefit their team – this paves the way towards behavioural changes and the modernisation of traditional day-to-day tasks.
Taking one end of the extreme, tech companies like Google have transformed their entire workforce into an innovation churning machine that rapidly produces new products, tests them, fails, succeeds and implements every single day. These behaviours have been embedded into the culture at Google through many years of identifying ideal behaviours and driving campaigns to cement them. Oil & Gas operators should reflect on these practices and look to adopt a similar approach.
Consider a layered approach to upskilling
Investment in capability-building should occur across the organisation, particularly in core business areas, driving up the overall digital acumen in order to accelerate adoption. A layered approach to upskilling can be taken, whereby everyone receives, at a minimum, basic digital awareness and skills.
Digital enthusiasts are then enabled to pursue their interest by enrolling in further training and digital accelerators in order to drive change within their teams. Focus should be applied to developing a pipeline of future digital leaders and innovators. Starting with graduate positions focused on digitalisation and the application of an innovative mindset, organisations should increasingly see digital as a core competency for future leaders.
Integrate and blend data scientists within business units and engineering teams
Data science is a key aspect of the skill-set needed to design and implement digital solutions. With that in mind, data science should be seen as a capability pillar in organisations with true digital ambitions. Furthermore, data scientists themselves should not be seen as an extension of IT teams.
Data scientists should be blended into business units, geological & geophysical specialist teams and engineering teams, working collaboratively from an early stage of challenge or opportunity capture, all the way through to testing and roll-out.
Strangely enough, blending will likely reveal new opportunities for performance improvement through digital that were not initially obvious to business units. Given that the systems used by operations staff and technicians are now increasingly digital, blending of data scientists allows teams to better leverage valuable new operating data being churned out.
A key subject to address in this area has been the availability of data science talent, specifically focused on the Oil & Gas industry – a scarcity which has been brought about by both a crew change and an inclination for younger graduates to gravitate towards industries perceived as ‘cleaner’. Data scientists that specialise in Oil & Gas applications are not plentiful in number, nor evenly distributed across global Oil & Gas hotspots.
Final thoughts
While Oil & Gas companies look to bounce back post COVID-19, gearing towards the new normal, it is time to accelerate the implementation of digital strategies in order to reap the benefits promised by ‘Industry 4.0’. Having a strong digital strategy is nothing without robust implementation. A weak strategy executed perfectly is better than a strong strategy that has failed to implement – one is digital progress and the other is a report gathering dust.
1. “Aerospace Oil & Gas: Technologies for New Horizons,” NASA, accessed March 2, 2021, https://ntrs.nasa.gov/api/citations/20140004423/downloads/20140004423.pdf 2. “ExxonMobil Data Quality Center achieves 95% time savings,” Tableau, accessed March 2, 2021, https://www.tableau.com/solutions/customer/exxonmobil-data-quality-center-time-savings-huge 3. “BP Case Study, Amazon Web Services (AWS),” accessed March 20, 2021, https://aws.amazon.com/solutions/case-studies/bp/ 4. “Shell gives developers freedom to create, reduces IT costs with dev-test solution in the cloud,” Microsoft, August 21, 2018, https://customers.microsoft.com/en-us/story/shell-mining-oil-gas-azure 5. “Innovation, Technology & Digitalization,” OMV, accessed March 2, 2021, https://www.omv.com/en/our-business/upstream/innovation-technology-digitalization 6. “Shell, C3 AI, Baker Hughes, and Microsoft Launch the Open AI Energy Initiative, an Ecosystem of AI Solutions to Help Transform the Energy Industry,” Baker Hughes, 1 February 2021, https://investors.bakerhughes.com/news-releases/news-release-details/shell-c3-ai-baker-hughes-and-microsoft-launch-open-ai-energy 7. PwC Norway 8. “Total launches a “plant 4.0” corporate incubator,” Total, December 18, 2015, https://www.total.com/media/news/press-releases/total-launches-plant-40-corporate-incubator 9. Strategy& Katzenbach Centre 10. PwC Academy 11. Shell Investor Day, 11 February 2021
