We must constantly innovate to stay competitive in our rapidly changing digital ecosystem. If we look at the technological evolution in the last 60 years, we see constant progression; from steam to electric power during the industrial revolution deep into the internet era which transformed the market economy from regionally to globally focused bringing business efficiencies to a much larger scale.
We are now evolving from the internet of information to internet of values, and companies around the world are transforming their businesses with disruptive innovations. The foundational steps for a successful digital journey are establishing a modern data estate, the desire to change, and the ability to adapt to new ways of working. Digital transformation is not about optimizing existing business processes through new technologies. Innovative technologies may improve profits, but will not transform the organization as much as we need. Digital transformation is achieved through deploying digital technologies to capture and monetize a new value proposition. The goal is to create new business opportunities with innovative business models to penetrate into new vertical markets to create significant business growth and increased shareholders value.
The Oil and Gas industry thrives on large amount of data generated from downstream, midstream, and upstream assets, and the ability to drive actionable insights from data generated from operational technologies is the game changer for the industry to maintain competitive advantage to sustain their dominance in future.
From the very beginning, the evolution of the oil and gas industry has been inherently driven and defined by advances in technology. Unlocking this potential value requires organizations to double down on their commitment to digitization.
The World Economic Forum estimates that digital transformation has the potential to create approximately $1 trillion additional value for oil and gas firms over the next decade. Super majors like BP estimate that technological advancements could increase recoverable oil reserves by around 50% by 2050.
Transforming the organization into a digital business means the creation of new business designs by blurring the digital and physical worlds and leveraging digital technologies that enable the innovation of the entire business or elements of the business and operating models. There is lot of hype in the industry for adopting emerging technologies, so it is very critical for business to carefully choose the right technology for their transformational journey in order to create new business models and revenue opportunities and must avoid following pitfalls to be successful. It is even more essential for the business to understand what values and efficiencies emerging technologies provide and whether there is applicability for integration of these technologies.
- Interaction among emerging technologies such as IoT, ML which create enterprise level efficiencies:
The accelerated growth of data captured from the IoT sensors combined with AI/ML capabilities will yield unparalleled opportunity for organizations to drive business value and create a competitive advantage. Organization should architect the technology landscape to harmonize and manage the flow of IoT data so that it can be used with intelligent data-driven technologies such as AI/ML to get actionable insight.
- Focus on People and Culture vs. Technology:
Success of digital transformation is heavily dependent on people, process and organizational culture. We need to move from organizational siloes to look at the business processes holistically from the enterprise view point. It requires change in the mind set to play team sports with all business partners internal and external to the company. This is a new “co-creation model” – in other words, it blurs the boundaries between operational technology (OT) and information technology (IT) to create a multifaceted ecosystem in which digital solutions are conceptualized, built, and delivered. The “co- creation” model creates an environment that enables teams to innovate autonomously, within guardrails to ensure quality, scalability, and architectural soundness of solutions.
- Deploy unbiased AI systems to not cross the ethical boundaries:
Assess the impact on organizational human factor as artificial intelligence solutions proliferate into the business operations. Oil and Gas industries are heavily regulated similar to pharmaceutical enterprises. Deep learning models often lack explainability of how output was driven. This may pose a challenge for regulators who need to understand the details of how certain decisions were made. Therefore, it is important to conduct risk-based analyses to decide if data science vs. machine learning/deep learning is the right approach to solve the business problem.
- Blockchain to reduce friction and eliminate the cost of networking:
Blockchain is a team sport that avoids building solutions in isolation. If the solution does not reduce the cost of networking, cost of verification, data security, improve transparency and reduce frictions in the transaction, blockchain is not the right solution.
- Change Management, Talent Management, and Culture:
The organizations on a digital transformation journey should not underestimate the challenge that comes with convincing management to adopt new ways of working; requirement for new skills to deploy digital technology, and curating the entirely new digitally focused organization culture which is necessary to succeed with their transformation journey.
Digital transformation is all about creating new business opportunities by deploying emerging technologies at the right place and time, revaluating and reinventing processes and organizational structure, as well as changing mind sets to put customer experience at the forefront for driving insights from the data. There is huge potential for business transformation with emerging technologies, but not without risk. Organizations must closely monitor, track, and have remediation plans for all risks associated with each technology being deployed. Enterprise level risk register would be highly recommended so these risks have global visibility to de- risk the business.