We live in an era of accelerating innovation, with new technologies changing the way we work and live. Companies are swamped with messages about the potential of digital technologies to transform or even disrupt their business and it can be difficult to separate the hype from the reality. Which are the new technologies that can truly add value to an organisation, and how do companies leverage the potential of digital to deliver measured improvements in their business operations?
The oil and gas industry has been operating in a challenging business environment in recent years, which has led to a focus on cost-cutting and efficiencies. Companies have re-scheduled projects, down-sized teams and reduced costs across the board as they re-shape their business to be competitive in today’s price driven environment.
The role that technology has and can play in this context is important. It can be tempting for companies to cut technology projects as non-essential, but some of these projects also have the potential to deliver very real savings. In the area of Integrated Operations (IO), new solutions are delivered that integrate elements of new technology, process and organisational capability (people and teams) to deliver real benefits for the company, as well as for the individual. Appropriate application of new technology, including solution design and an understanding of how the technology can genuinely impact the business, has been shown to deliver proven value in terms of reducing costs and increasing efficiency.
The oil and gas industry has a great foundation to build on for new digital technologies. There is a wealth of historic and current data on all aspects of exploration and production. This offers a significant opportunity to leverage digital technologies to extract more value.
But all this needs to be done in the right way. Good technology implemented in the wrong context will not deliver effective results. Developing a “digitalisation strategy” only delivers value if that strategy is tied to business drivers, rooted in the appropriate business context and aligned with other internal and external initiatives. Randomly starting pilots in a ‘dash for digital’ is not a well-designed and managed strategy. Sure, the new digital world brings opportunities to trial new ideas, ‘fail fast’ and learn quickly, but that needs to be embedded in the reality of impacting the business, influencing decisions and delivering value.
The fact that new technologies can bring significant benefits is generally not disputed. What is questioned is how a company can best take advantage of digital ways of working to help their organisation transform and move forward?
The concept of Integrated Operations or Digital Oil Field was developed in the late 90s and early 2000s, as oil and gas operators started to collect data in real-time from producing facilities and wanted to understand how to get value out of that data. Since then, many lessons have been learned about effective ways of using technology and real-time data to deliver true business value. Many of these lessons are equally valid as we look at the next generation of digital technologies and consider how they can be applied to business.
With extensive experience of working and delivering Integrated Operations projects, Wipro has identified seven key learnings to help companies take full advantage of the opportunities offered by new and emerging technologies, and how to avoid repeating mistakes from the past:
1. Understand the business impact
This sounds obvious, but too many companies start new technology projects or pilots without thinking in detail about how the business will use the results. If we are mining data for new insights, how are those insights going to be translated to decisions and actions that impact the business? What will an engineer do if they receive an alert about a potential issue? Understanding the process impact is a lesson from other IO projects, and something that is very relevant for new digital technology pilots. Just providing the technology – however well it works – is not enough to deliver the change and desired business impact.
2. Build multi-disciplinary teams
Successful digital projects require multi-disciplined teams with both IT and oil and gas domain knowledge. Data scientists and other IT experts can work to mine the data for potential insights, but functional engineering expertise is needed to analyse and validate those insights and identify the right action that needs to be taken in order to generate real business value.
3. Value your data
Some in the industry assume that IO or digital technologies can only be applied in modern fields with high levels of instrumentation and real-time data. This is not the case. There are great examples of IO delivering value in old onshore fields with limited instrumentation and infrequent data transmission. Some data is required, but there is a lot that can be done with existing data, at whatever level. Any company can deliver more value out of the data that it already owns and collects.
4. Expect data problems
Poor quality and unstructured data is a fact of life in the oil and gas industry. Great progress has been made in some areas in recent years, but we still have a lot of poor quality data. Digital pilots will bring visibility to data problems. Expect this, and plan for it – data issues will need to be addressed in order to extract value from digital technologies. That’s not to say that all data problems need to be solved first, or that a company can’t start the digital journey now, but digital initiatives need to be aligned with improvements to data management and data quality processes. Digital pilots can highlight or prioritise areas for data clean-up, or digital activities can be focused initially on areas where data quality is high.
5. Develop a strategy
Think about the long-terms goals of the organisation and develop a digital strategy to complement and support those goals. A digital strategy is not built by asking everyone what should be digitised and prioritising the associated list. This ‘bottom-up’ approach will generate some ideas to improve the way today’s business is done, but it won’t direct the organisation towards any long-term transformational goals. Employees will have some great ideas, and these need to be harvested, but don’t mistake good ideas for a proper strategy. A strategy does not have to be highly detailed, and it will need to be flexible and evolve as a company progresses on its digital journey but, having that high-level target of what the company is trying to achieve provides a framework against which new ideas and pilot results can be evaluated and prioritised.
6. It’s a journey
Transformation will not happen overnight. There is no doubting the potential of new technologies to transform, but the journey will take time. Businesses should look to take small, smart steps to encourage innovation, and at the same time, balance that with an over-arching strategy that allows innovation results to be clearly evaluated, prioritised and harvested. Digital technologies lend themselves to small ‘sandbox’ pilots, which can encourage innovation and experimentation. However, this does not transform an organisation, and companies need to have processes in place to provide some level of central governance, which considers: how is the success of different pilots going to be measured? How are successful pilots going to be deployed and supported across the wider organisation? How do we evaluate where to focus our limited time and resources?
7. Integration, not just automation
Don’t just look at automating existing activities with digital technologies. Automating today’s processes can certainly deliver some efficiencies, but there could be more opportunities for real transformation by digging deeper. Why is the process run? What are the desired outcomes? Are there ways to deliver the same outcomes in a different way? Many of the processes in the oil and gas industry have remained virtually unchanged for years. There could be opportunities for significant transformation if we take a step back and consider business outcomes, rather than just automating today’s work. IO has taught us that value can be delivered by collaborating and integrating across functions, and new digital technologies offer us new ways of integrating our data and bringing together different disciplines to derive key insights.
In summary, new and emerging digital technologies offer tremendous potential for the oil and gas industry and there are promising results emerging from early pilots. At the same time, there are challenges associated with understanding where to target efforts, which technologies to use and how to manage innovation. There are valuable lessons from the first generation of IO and Digital Oil Field projects that can and should be applied to help businesses take best advantage of the opportunities offered by new digital technologies.
Helen Gilman is the Vice President & Managing Consultant of Oil & Gas at Wipro Limited. Bart Stafford is the Senior Partner at Global Upstream Production Practice at Wipro Limited.