Cover Story: Digital journey

In today's technology-powered world, when we talk about digital transformation, digital journey and IoT, all these elements comprise a collective journey, powered by unprecedented digital data growth

Toros Emre Esim, regional digital strategy advisor, Middle East, North Africa and Turkey, Orange Business Services.
Toros Emre Esim, regional digital strategy advisor, Middle East, North Africa and Turkey, Orange Business Services.

Orange Business Services (Orange) has global expertise, experience and understanding of business outcomes in the industrial sector as many of its customers operate in the sector. Orange helps businesses worldwide make a profitable transition to Industry 4.0 by enabling them to improve operations and business transformation through digital and IoT (Internet of Things). The company fosters collaboration across the value chain, with a co-innovation approach to transform and deliver scalable technologies that meet the needs of industry customers.

Oil and gas (O&G) companies are prime candidates for leveraging an integrated IoT strategy to transform business operations for many reasons, not least of which is their relative digital immaturity compared to other industries – a 4.68 on a scale of one to 10, according to MIT Sloan Management Review and a Deloitte 2015 study.

The IIoT (Industrial Internet of Things) market will go through a phase which is likely to see the emergence of a ‘platform of platforms’. This means some of the platforms will not only connect to machines but also to other platforms that will enable delivery models through a distributed architecture.

Regional progress on IIoT

The regional and global O&G and petrochemical manufacturing industries are facing challenging times. These companies are focusing on cost optimisation and higher levels of efficiency. “Our O&G customers face the challenge of their unique characteristics – they are asset intensive, and operate in real time from remote locations,” says Esim.

Remote monitoring of production and manufacturing assets is nothing new for the industry but there is also lot of pre-existing equipment that is not instrumented. “So, many of our customers have an acute understanding of the potential benefits of IIoT. However, we could characterise their attitude to IIoT deployments as a ‘cautious bi-modal’ approach rather than big-bang,” remarks Esim.

Given the fragmentation in the standards and the highly proprietary nature of the legacy operational technologies, the cautious approach is understandable. But with market footprints at stake, those companies increasing their operational efficiencies are gaining ground at the expense of those adopting a ‘wait and see’ approach.

Benefits of IIoT

The fundamental value proposition for IIoT is similar to the lifecycle benefits of IoT, which are to connect, aggregate, monitor, analyse and optimise. A lot of the focus on IIoT has been directed to the sensing layer, which is where the data is captured, and traditionally monitoring was how the captured data was leveraged. But it is in the analytics and sharing data context across different applications, which is where the real value resides.

According to Esim, IIoT’s key value propositions and main benefits in the O&G refining and petrochemical manufacturing sectors are predictive and preventive maintenance, improved operational efficiency, reduction in unplanned production downtime, improved safety for the operational staff, and ability to implement uniform security practices across plants.

In a study, Petrotechnics has indicated that the most common objectives of the O&G and petrochemical manufacturing industries are to increase operational performance (58%), reliability of operations and maintenance (57%), and increasing HSE performance (40%). “If you map these objectives against the benefits that can be driven by IIoT, it becomes clear why there is such a growing interest in using IIoT and the transformation it brings in,” points out Esim.

Collective digital journey

For the O&G companies, cost-effective data management has now come into play. IT has now become relevant to the entire business and not merely a back office function or afterthought – IT is now central. In today’s technology-powered world, when we talk about digital transformation, the digital journey and IoT, all these elements comprise a collective journey, powered by unprecedented digital data growth.

In today’s O&G industry, companies often need to utilise data in a new region where they have not operated before, which would typically require a data centre. Operating in a new region brings uncertainty and flexible storage can be used to mitigate some of the potential problems related to investing in infrastructure.

Digital transformation

Looking at the transformation objectives of companies is a good way to explain its impact. A downstream company would be looking to become insight enabled (internally and externally), connected (with customers, partners, suppliers and employees), context aware (about the industry, customers and competition), and highly agile (dynamic to change and faster to bring solutions to the market). The role played by technology is crucial but is not the only core in enabling transformation in organisations.

“Orange uses a digital transformation framework that enables us to address transformation holistically. The framework consists of a digital roadmap to establish the course of action; digital enablers to prepare the environment and infrastructure; digital inside to drive collaboration and productivity throughout the organisation; digital outside to transform your partner and customer experience; and innovation to drive continuous and concerted efforts to drive improvements and flexibility,” elaborates Esim.

This framework follows a logical and structured approach that enables transformation to happen at a company level. “Based on our experience, efforts in trying to transform parts of a company – but not the whole – fail to generate the returns that are expected by the business stakeholders. We advocate a customer and partner focused transformation that drives the technology requirements. Therefore, IIoT is a component and enabler of transformation but should not be perceived as the driver of the transformation process,” states Esim.

Middle Eastern challenges and advantages

A major challenge in adopting IIoT is the security anxiety of companies and at times by new data management practices. “Our advantage lies in our expertise in serving companies reliably and securely and we have been working with a large client base of O&G companies, representing the full value-chain in the industry. This means we can have proactive conversations based on our experience and address customer concerns on how they would handle the volume of the data generated; how they can securely transmit this data so that central optimisation can be achieved; and what processes can be implemented to help support the sharing of benefits and learning across the company,” opines Esim.

“Our regional customers are already exploring IIoT solutions and undertaking some selected implementation. This is clearly indicative of an understanding of the underlying business imperatives. As the lifelines of many of the regional economies, the future of the downstream companies operating in our region is a critical priority, with continuous improvement needed to remain efficient and competitive,” adds Esim.

The recent volatility in the oil prices and resulting economic impact on the region have once again reminded us of the necessity to further strengthen the downstream industry, to make it more resilient in the face of the market conditions or specific events. IIoT, therefore, has become one of the tools for the Middle Eastern downstream companies to create a more efficient, secure and predictable operational environment, and help achieve their goal of being more resilient.

Significance of the region

The Middle East remains at the heart of the global O&G and petrochemical manufacturing – 35% of all worldwide oil production (based on IEA statistics), 51% of oil and 41% of all gas reserves are in the region. Therefore, it is also natural to see some of the most innovative solutions first being assessed, piloted and put into wider implementation in this region.

The best transformation strategies are doomed to fail if the dominant culture within the organisation does not or cannot support the transformation initiative. This change is not one that can be driven bottom-up; it requires leadership with a vision that drives this change down into their organisations.

A recent study by Siemens and Strategy& (Preparing for the digital era: the state of digitalisation in GCC businesses) suggests that many organisations are gradually building technology capabilities, but lack of vision and leadership, and internal obstacles can impede the process. According to the study, 40% of companies in the region have allocated less than 5% of their total investments to digitalisation activities. Only 37% of companies have a strategy for going digital, and less than 1% of companies have a chief digital officer.

There is more evidence that there is a better alignment between the organisations in the O&G and petrochemical industries and the digital transformation agendas put into place by most of the GCC region’s governments, as part of their national visions / plans. As a fundamental component of national transformation strategies, leading O&G and petrochemical firms are already helping shape the transformation agendas. Those that were lagging are quickly starting to align themselves with the government guidelines to ensure they can contribute to the national objectives.

Three key changes IIoT can bring in

OT-IT convergence: The increasing convergence, alignment and integration of IT and OT (operational technology) with the benefits of optimising processes and reducing costs.

Application-driven manufacturing: Technology is driving the change to Industry 4.0. Innovations such as the IoT, robotics, cyber-physical systems (CPS), augmented reality, 3D printing, enhanced automation, connected fabrication, products and people, are all playing a part in this transformation. There is synergy between IIoT and Industry 4.0, and the concepts are now converging. We are seeing data being used inside the factory by various departments and outside the factory by suppliers, partners and customers, in different ways and with much greater collaboration throughout the supply chain.

Uniform security implementation: Implementation of IIoT allows for new security blueprints to be established allowing for unified security policies and architectures to be applied across production and manufacturing sites.

Refineries and petrochemical complexes of the future

According Esim, predicting the future has probably never been so challenging for the oil and gas refining and petrochemical manufacturing companies. But, based on the experience of Orange in the sector, he suggested the following three developments: (i) Platform-enabled innovation eco-systems will become the standard in the O&G market. (ii) We will see more of the operations technology know-how being centralised and improved with machine learning. (iii) The number of production personnel on sites will reduce and we will see increasing numbers of fully connected forward operating bases, with the majority of interventions carried out remotely.

Other three future developments suggested by Esim were: (i) We will find more robotics being used on production sites in the O&G sector, reducing the number of HSE incidents, thereby bringing the average on a par or below compared to other industries. (ii) Refineries and petrochemical production sites will have their 3D digital representations as default. Some sites will have digital twins for some of the mission-critical assets, improving maintenance and asset optimisation approaches. (iii) Production site drones will be used for an increasing number of purposes, including security and as a way of increasing the reliability of remote monitoring.

Esim was highly optimistic about the role of Orange in the future of the oil and gas refining and petrochemical manufacturing industries. “Orange will remain a trusted partner for our downstream clients and will continue to predict and pro-actively produce solutions that will address the new challenges that emerge, not only with the technology but also to support the changes required at the organisational level,” asserts Esim.

Newsletter

Most Popular

Digital Edition

Oil & Gas Middle East - July/August 2020

Subscribe Now