Digital future for oil and gas industries
Hexagon PPM APAC is working with traditional energy industry leaders to push for digital transformation.
It’s difficult enough for many B2B businesses to accept the need for digital transformation. It’s even harder to achieve fundamental change in those industries facing entrenched work practices and societal upheavals that threaten their existence.
These are the challenges facing the world’s oil and gas industries, and the digital transformers who want to implement and drive change to keep them competitive.
Hexagon PPM specialises in software solutions for the design, construction and operation of industrial facilities. It aims to help clients turn their unstructured information into smart digital assets and ensure smooth and consistent processes.
This isn’t always easy; many of Hexagon PPM’s clients operate power plants, ships and offshore platform structures. These are often in remote or treacherous locations, and generate a lot of ill-defined data concerning operations and outputs.
For months, Hexagon PPM’s Marketing Director APAC Ljubica Radoicic and her colleagues have been working on a program that explains why oil and gas businesses need to undergo fast and efficient digital transformation to survive the many challenges ahead. They have completed research and client surveys and spoken to experts in the field about what the industry needs to do to thrive in the future. The report on which the program is based, “How to build an Oil & Gas Digital Transformation Ecosystem”, is now a blueprint for Hexagon PPM’s clients across the world.
Radoicic says oil and gas industries face challenges from many angles. One is unstable profitability; a recent fall in oil prices shows how exposed they can be to market variability. The other is the world’s relentless march towards adopting renewable energies, which is gaining consumer and government support. Oil and gas businesses are doing what they can – focusing on improving efficiencies – and many now see digital transformation as the answer.
“The whole industry is in cost-cutting mode: it’s all about how to maximise existing resources and existing operations,” Radoicic says. “Technology is seen as the change agent – it’s sitting at the core of all this.”
Internally, Radoicic says, the project is termed “Industry 4.0”. “It’s all about big data, the Internet of Things, augmented reality, virtual reality, laser scanning – all of this great new technology that’s available to support these industries,” she says. “It’s about moving the physical environment into a virtual environment.”
Hexagon PPM is collaborating with Singapore-based industry expert and former Shell executive Dr Huck Poh for the program. Poh cites a McKinsey and Company estimate that effective use of digital technology could reduce capital expenditure by 20 per cent and operating costs by up to 5 per cent.
“Technologies such as big data and connectivity, for example, will be useful if your organisation is considering the move to new markets – vast sets of real-time data, contextualised by data mining and analytics, take the qualitative guesswork out of understanding customer needs and disrupting established players,” he writes in the report.
“They can also eliminate substantial construction inefficiencies during capital projects and breathe new life into your operational assets through enabling features such
as predictive maintenance and the employment of intelligent analytics for energy efficiency gains.
“Very few of us are questioning the benefits. The real question is, ‘how do you actually do it when the core business itself is under threat and budgets have been slashed?’ The case for innovation is even harder to make when your organisation is drowning in frustratingly complex procedural and decision-making processes.”
The people problem
When Hexagon PPM asked senior oil and gas executives to nominate the most significant single challenge to adopting digital technology, 60 per cent said issues related to people and processes. The main reasons were company workflows and procedures not being ready, complex internal decision-making and buying processes and a lack of support from senior management.
One of the things Radoicic has learnt about digital transformation is that it’s rarely just about the technology. Attitudes play a much more prominent role in how change happens within an organisation.
“Technology is an enabler,” she says. “It’s really about the people, the processes, the culture … and it’s really around the whole change-management process. It’s about the whole environment.”
She says many people believe cost or perceived cost is a considerable impediment to digital transformation, but this was cited as the most significant challenge by just 14 per cent of oil and gas executives surveyed by Hexagon PPM.
“Many businesses fear innovating because they don’t know where to start.”
“The product buy is one thing but it’s really the readiness of the organisation that is probably the biggest hindrance,” she says. “Our survey showed the biggest stumbling block to people embracing new technology is just internal readiness. [They say] ‘we don’t have the right systems in place’, ‘our data is not up to scratch because of all these different functions in silos’ [and] ‘there is a lack of consistency or standardisation of data’.
Often, she says, the people or operational components aren’t ready for the transformation technology brings. “If you don’t have the right skills or the right talent and the right processes in place, and you don’t have the right kind of workflows, your software implementation is not going to succeed. It’s the same in marketing as it is the gas space.”
Radoicic says the digital transformation work she and the APAC team has done for the oil and gas industries applies to any large-scale B2B sector. “Many businesses fear innovating because they don’t know where to start,” she says.
“The ageing workforce is one of the biggest challenges, not just for resource companies but also construction and other industrial or engineering environments. Some baby boomers are tech savvy, but most are not. It’s about how you upskill and manage that transition for people who have built careers for 30 or 40 years.”
One of Hexagon PPM’s recently acquired clients, US-based mobile app platform provider Catavolt, is an example of a business that can help with large-scale transformations, Radoicic says.
Catavolt has a mobile enabling program that focuses on driving “incremental innovation” within a company. “It’s industry agnostic but it’s all about applied methodology,” she says. “You can digitise a specific process within the organisation and prove the value of an ROI on process standardisation and digitalisation through using apps, for example. It’s about innovating processes and building that across a particular function of a company, and taking that throughout the whole organisation. It’s a top-down, bottom-up approach.”
Further reading: 11 top B2B marketing predictions for 2018
Photo: Zbynek Burival on Unsplash