Comment: Monetising the digital revolution

Oracle's Sam Friedman says that regional oil and gas companies need to go beyond simply upgrading their technology systems and truly embrace the benefits of digitisation if they are to create real economic value for their operations

Sam Friedman is the executive director - oil and gas industry at Oracle Corporation.
Sam Friedman is the executive director - oil and gas industry at Oracle Corporation.

There can be no doubt that the oil price collapse in 2014 has shaken the industry, and the most stable of its organisations. The prolonged fall in oil and gas prices, and the prospect of only modest recovery, has compelled the industry to apply rigour to operational performance and economics.

While new finds will always be the cornerstone of growth strategies, striking a balance between new asset development and existing asset optimisation is becoming increasingly important, particularly as operational expenditures are squeezed. Meanwhile, the ever-growing concern over cost cutting; the downsizing of new initiatives, and their direct impact on safety; continuing innovation; and the attainment of operational excellence have all exacerbated the challenge for energy companies.

The digital transformations recently embraced by some oil majors are encouraging steps towards improving operational efficiencies and the associated costs. We, at Oracle, realise that the oil price crisis is disruptive enough, and that it calls for more than just a rapid reduction in cost through downsizing, or budget cuts across the organisation.

We believe that companies need to go beyond simply upgrading their technology and truly embrace the benefits of digitisation if they are to create economic value. To do this, companies must link technology deployment with specific business priorities, such as increasing the agility of their operations, improving safety and operational integrity, reducing cost, and improving operational efficiencies.

Meanwhile, companies need to realise that the demands on information technology (IT) are changing, not just due to the increasing sophistication of today’s technology innovations, but also due to the fact that IT departments are expected to rapidly scale their resources while retaining the flexibility to adapt to these disruptive events and changing business needs at the drop of a hat.

Furthermore, since business performance in the oil and gas space is increasingly reliant on a company’s analytical prowess and real-time decisions, success is about becoming a what we refer to as a “predictive organisation”.

Oracle has been on the forefront of such revolution, helping numerous oil and gas companies to navigate their way through a digital transformation in a manner that enables them to maximise the economic value of their investments.

Oracle’s approach relies on three pillars. Firstly, Oracle Cloud leverages economies of scale to provide cost-effective models for oil companies to manage their ever-growing volume of data at a lower cost.Secondly, the Internet of Things (IoT), with its cognitive machine learning and social networks enables the next generation of transaction-centric applications with collaborative computing capabilities and interaction processing. And, thirdly, Big Data Analytics and mobile technology empower users with context-sensitive and location-based services for faster decision-making processes.

These three pillars will each play fundamental roles in oil and gas companies, simply because efficiency is no longer the only performance measure for these companies. Time to market is critical as businesses compete on how quickly digital innovations get to consumers in the downstream world. Reliability is also paramount in the midstream sector of energy trading and tansportation. And the ability to green-light more investment or research and development (R&D) projects in upstream operations will differentiate the leaders from the rest of the pack.

As the Abu Dhabi National Oil Company (ADNOC) Distribution stated, “it is no longer about just taking advantage of inexpensive, virtualised storage to meet the ever-growing data needs, or enabling better leveraging of the technology, but simply about how to quickly – and at a fraction of the current cost – equip teams with the resources they need”.

Rather than weeks or months, the supporting infrastructure for a project could be set up in just a few days. In fact, by eliminating typical IT constraints, such as limited resources, time-consuming maintenance, and incompatible systems, businesses can be freed up to pursue growth and innovation, while allowing for the greater IT-delivery performance that is absolutely necessary across the board.

That kind of rapid start-up means that companies could try many new ideas, quickly rejecting the ones that aren’t viable in favour of those that are most promising, and that’s just the beginning.

Digital transformation is all about becoming a predictive organisation: an organisation that can anticipate potentially disruptive events and quickly and efficiently take the necessary steps to either avoid them altogether, or to take the disruption into account and operate their assets optimally based on this knowledge.

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