No Match Found
Part three of a major new study of energy companies and their use of technology in operations.
This oil and gas report follows the analyses of the advance of digital operations in the power and utilities and the chemicals sectors, and concludes our surveys of the status of digital operations in the EU&R industry.
Oil and gas companies had faced formidable challenges to their efficiency, sustainability and profitability before COVID-19. As a result of the pandemic, prices have collapsed so severely that the urgency to tackle these issues has increased dramatically. One of the clearest and most viable responses to these systemic challenges is to accelerate digitization strategies to help improve resilience and remain attractive to investors.
Of more than 200 oil and gas companies surveyed, only 7 percent identified themselves as Digital Champions (see exhibit) while more than 70 percent of respondents considered themselves to be in the early stages of digital maturity – that is, either Digital Novices or Digital Followers.
Our study highlights a number of digital technologies and applications that have the potential to transform operations from back office to plants and production sites. These include manufacturing execution systems (MES), cloud computing, energy analytics, the Internet of Things (IoT) and machine learning. These digital applications integrate real-time data and advanced analytics for better decision-making, and underpin applications that can dramatically improve efficiency and sustainability.
Interestingly, our survey found that O&G executives see the most potential in precisely those technologies that combine data and analysis. The top five technologies or planned technologies they identified include:
The Digital Operations Study found that two issues stood in the way of the companies surveyed making digital transformation a business priority. The first was a lack of focus or insufficient understanding of customer and user requirements to sufficiently define the business issue that needs to be addressed. The other was uncertainty about the financial returns from digital investments. This made top executives more reluctant to approve big digital projects. Find several examples and suggestions by downloading the PDF.
In our Digital Operations Study, respondents identified digital talent and skill shortages as a primary hurdle to digitization. To overcome this problem, O&G companies need to both upskill their employees and hire new talent. They should also consider recruiting outside talent to bridge the gap between their current digital skills and those needed for digital transformation.
Our survey found that both organizational dysfunction and lack of leadership are considered to be among the most significant impediments to digitization. Digital Champions have typically embedded digital operating models led by a central governance team – often the Chief Digital Officer (CDO) and a digital steering committee – to oversee the successful execution of large-scale digital initiatives and roadmaps. Gain more ideas about what companies need to put in place on page 11 of the report.
The final set of obstacles to digitization, according to our study, included insufficient collaboration, a low tolerance for failure (crucial for experimentation with new technologies and applications), limited employee empowerment and inadequate knowledge sharing. In other words, a lack of an “agile” culture. When embracing an agile culture, companies need to identify and empower cross-functional teams, brought together to solve specific challenges. They develop “proof of concept” applications
to address a problem, and proceed to test their solutions, such as new digital programs, in small, secure environments.
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