In the light of the past two years and the physical challenges that the global pandemic has caused to business – working and meeting with colleagues and customers, managing supply chains, understanding daily business barriers – digital transformation has suddenly become one of the most critical business imperatives of our time. Arguably, without the now ever-present need to work at home at the drop of a hat, access corporate data remotely and support cloud-based working, digital transformation may well have remained in the still be in the ‘talking shop/nice-to-have’ stage in our industry.
Now in 2022, the concept of digital transformation is far more widely seen and understood as the correct corporate response to this fast-evolving digital world. It’s no longer up for debate that companies large and small need to embrace digital transformation to stay relevant and retain high calibre people in an ever-changing, unpredictable and competitive environment.
The shock of the pandemic forced businesses across the world to fundamentally change old operating standards in exchange for innovative and disruptive models to keep up with market evolution and growing customer expectations. One of the key words of the pandemic as far as business is concerned has been ‘pivot’ as businesses have sought to adjust their focus, change their service model, alter their customer base, in order to stay afloat. Digital transformation has been forced rather than embraced but it’s allowed for a fuller and valuable gathering and using of data – often (and preferably) anonymised data – to support superior management decisions and streamlining business processes, with the ultimate purpose of making the best use of resources to achieve the successful outcomes every company needs.
This shouldn’t be a surprise. Pandemic aside, digital transformation has always been about changing corporate and individual mindsets and encouraging cultural change that allows companies to continue to be reliable business partners and deliver value to their clients, all via a digital context.
Digital Transformation in the Oil and Gas Industry
The definition of digital transformation applies differently to every business. It comes in multiple forms, depending on the industry, geographical area, or even the markets where a company operates. That’s why we see industries, like automotive or aerospace, which embraced change much earlier than many others, have enjoyed notable and substantial outcomes, compared with industries where digital transformation before the pandemic was still in its infancy.
The Oil & Gas industry stands in the latter category, at least it did but the crises of the past two years has galvanised some key players to drive forward plans they already had in slower motion. It’s still true to say though that for Oil & Gas businesses, particularly in the US, but also in the UK and Europe, the pace of digital transformation is varied at best. The industry in Asia, on the other hand, has been making diligent and dramatic steps towards digitisation and data intelligence implementation and continued apace, pandemic or no pandemic.
Alongside the pandemic, the drive to carbon net-zero has also intensified digital transformation discussions in the UK, although many companies still have a great deal of time to make up before they can talk about a true conversion to a digital business model. In the US surprising numbers of large and small operators alike continue to rely far too often on pens, paper, and spreadsheets, focusing on data capture rather than on data management in multiple business spheres. In the area of maintenance and inventory (which Arnlea knows best), some systems are old and prone to error, which leaves little room for data-driven decisions and long-term growth. Like it or not; the conversation around digital transformation in this industry is still rarely more than just talk.
It’s a paradox. Oil & Gas companies operate in a highly technological industry but are reluctant to go all-in with digital transformation. In terms of drilling, UK operators use the latest technology to reach new sources of oil and natural gas to meet national and global energy demand, while reducing the environmental impact of energy production.
On the other hand, they’re at least a decade (and more in many cases) behind the automotive industry when it comes to the digitisation of their internal operations. Most operators use SAP enterprise software yet on the whole, large numbers of Oil & Gas plc still seem content to stay in this halfway house, unwilling to deploy integrations into the SAP landscape from cloud-based servers, holding on almost stubbornly to on-premise servers – with many potential pitfalls ahead. Those few Energy businesses making those changes are also those embracing the bigger energy demands of this century, to their credit.
Making Digital Transformation a Higher Priority
At Arnlea, we see digital transformation as a two-step process. In the first stage, companies need to go digital in all business areas, including our specialism of asset management. Once this phase is completed, the next stage is to move to SaaS software products to facilitate substantial step-changes in the gathering and then sharing of anonymised data which can be used to identify patterns of behaviour, process and purchasing to optimise business operations, to revolutionise the whole industry in which they all operate.
In this second stage of the digital transformation process, it is the value and efficiencies that come from sharing their data, in anonymised form, which will support industry growth. In this scenario, they can analyse information from multiple sources and make educated predictions about future outcomes, even automate decision-making using artificial intelligence, with financial benefits for all parties involved.
Our industry is on the cusp of this second phase. Even in the past two years, there have been sea-changes in the way some of the global brand leaders have pushed forward to take this next step. Many though are still hesitant when it comes to even allowing their data to be stored in a highly secure cloud, let alone to begin to agree to anonymised data sharing. It’s hard to believe but we have witnessed, in more than one company, situations in which the business operates multiple instances of SAP, instead of a shared centralised SAP environment. Data-sharing can be rare between different business units in the same company, let alone sharing data with third parties.
This objection to data sharing keeps the industry blocked in old business models and is preventing growth. But change is coming and those that are striding forward, embracing digital transformation now, together with a higher focus on Big Data, means they will be the Energy companies that will thrive in a business environment that’s been under pressure for years. The accelerated changes forced by the pandemic, and the drive to net-zero, means savvy operators are realising they can no longer wait to upgrade their processes and systems and that is something we are able to move with them – and be that step ahead that they need – so that they can continue to meet their commercial core needs for years (decades) to come.
For more information on Arnlea’s experience and capabilities contact the Business Development team, by calling +44 1224 620000 or emailing email@example.com.