O&G companies are inordinately large. Sinopec has a turnover of US$304.69 billion, Royal Dutch Shell US$256.83 billion[i]. They have deep pockets and much at stake. Not surprisingly, everyone wants to sell them cool tech. Just nod in the direction of a young worker at an O&G plant and say, “Today’s millennials have different expectations from technology…” and you have the undivided attention of the CIO. Well, it may not be that easy, but you get what I mean.
However, the O&G industry has traditionally been conservative and slow to change the technology it owns – and has shown great bottom lines as proof that being conservative helps. It’s tough to argue with that logic, but look at banks. After 200 years of banking, the big names in the finance services industry are under fire from Fintechs that don’t even have a physical branch. And O&G won’t be any different. It is already certainly under pressure from changing consumption preferences, political trends, demographic shifts, renewables and new business models. And a whole bunch of non-traditional players have already begun to slice the pie differently. Which means that, in a smart world, O&G needs to get smarter.
The question is, should O&G organizations look at technologies like Cloud, mobile, Blockchain etc., and see how they can be used to spruce up operations and bring down costs or should they look at the problems the industry needs to solve and then apply appropriate technology? It is the latter.
The logic is simple: According to some industry forecasts, Big Data and Analytics may grow to over $203 billion by 2020, but can the algorithms used by Tesla to make driverless cars (Tesla can be expected to become one of the major consumers of Big Data and Analytics) be used to make drilling safer? Just because Big Data and Analytics are going to be huge doesn’t mean O&G must rush in to invest in the technology.
Blending domain and technology knowledge to create solutions is important. Take the case of Cloud. Until oil prices tanked in 2016, way below the $100/barrel mark, no one had adopted Cloud for anything other than high-end computing. Cost control was the last thing on the mind of the industry until it was hit by the crude oil glut. Then, when the cents began to count, Cloud was adopted as a cost management measure.
The key to sensible technology adoption is to create a macro level transformation roadmap with each milestone plotted against a business outcome or a use case. Don’t say, “I have to move to Cloud in three years or I have to adopt Artificial Intelligence in two.” Instead, get a technology partner who understands the business vision and can create a step-by-step plan that moves from vision to digital strategy and from there to a technology roadmap. On the way, the organization will discover the building blocks required to leverage the technologies.
We had a chance to put this thinking in action recently. We boarded a ship for an O&G client on a journey from London to Rotterdam to see what the team on the ship was going through and how digital could make their life easier, improve productivity and increase safety. We used our observations on the journey to create digital interventions and then recommended the technologies required. This is called "contextualized digital" in Wipro’s terms -- tie your business problem to the technology, not the other way around.
I can see how the O&G industry is going to be romanced by the Internet of Things (IoT). Many will rush in and enthusiastically “sensorize” old assets, without considering how these sensors in remote locations, often hundreds of miles from civilization, will work. Organizations, however, will go ahead with the investment because they feel compelled to “do” IoT.
There is no denying that IoT is an important technology for the O&G industry. However, my suggestion is to take a step back for a moment and consider which assets need to become smart and how they will access a continuous and dependable supply of energy. And even after you find the answer, be sure to zero in on the use case with a calculable ROI. In all instances of digital technology, consider the use case first.