Accenture says digitalisation should be strategic, and finding the right mix of technologies could help oil and gas companies unlock an additional $6bn in market capitalisation.
As workers carry out complex – and sometimes dangerous – maintenance work at oil and gas facilities, wearable radio-frequency identification (RFID) tags and pervasive wireless networks track their locations, biometrics, and environment. This is Industry X.0 at work, where technologies come together to digitally transform businesses into smart, connected, learning and living entities. With artificial intelligence (AI) and real-time data analytics, managers are able to respond immediately to developing situations, anticipate the need for backup, reassign teams that complete their tasks early, and even prevent accidents by identifying employee fatigue.
Beyond millions in savings from reduced downtime, the systematic combination of wireless, wearables, cloud, analytics and mobile technologies dramatically improves worker collaboration, productivity and safety. It also leads to improved agility and innovation, and expanded revenue streams for organisations. According to Accenture’s Combine and Conquer study, the oil and gas industry stands to gain more than most, some $6bn in market capitalisation, by hitting the right mix of technologies.
Yet, despite the success of pilot programmes, there is a need for oil and gas players in the Middle East to aggressively push beyond strategy to execution, and scale pilots so that benefits flow to all parts of the company.
Overcoming regional and sectoral challenges
With weaker oil prices, lower demand, and delayed capital investment, oil and gas companies in the Middle East are under pressure to boost productivity through digitisation. However, investment continues to be uneven – in the refining sector, for example, a recent Accenture survey found that only 19% of companies are making digital an investment priority.
A key challenge for the Middle East is developing an organisational culture where failure is part of the innovation process. The digital age demands agility and for companies to be willing to move rapidly through failed attempts while steering projects to success. There needs to be a willingness to invest in digital talent and technology to move forward on the digital transformation journey. Already, a number of companies have recognised the importance of having a chief digital officer to oversee their digital transformation, and the advantage of new technologies.
However, to realise the full value of digital, it is not enough for companies to merely incorporate Industry 4.0’s operational efficiencies. They must leverage the combination of digital technologies that will give them a decisive edge. Industry X.0 pushes beyond point solutions and, instead, presents a roadmap for digital transformation. By using the right mix of technologies, and in the right combinations, companies not only create smart products and connected services, but also reinvent their operating models, production and value chains, leading to new levels of efficiency, new sources of growth, and new customer and worker experiences.
Our study of 900 companies in the world’s 21 largest industrial countries found that five digital technologies in particular—autonomous robots, mobile computing, autonomous vehicles, 3D printing and machine learning—can help companies achieve additional market capitalisation of just over $6 billion.
The actual combination that delivers growth and value varies across industries. Data from the 65 oil and gas companies in our survey shows that for this industry, significant top line value can be unlocked by combining digital twin (8%), autonomous robots (8%), AI (12%), big data (27%) and augmented reality (28%).
For regional players, strategic investment based on this combination will accelerate their transformation, improving performance in terms of safety, operations, cost and ability to quickly develop new assets.
Transformative digital strategies
Oil and gas companies need to leverage the technologies that will allow them to transform their core, enable the next generation of talent and engage effectively with partners.
Transform the core: Upstream companies can gain important efficiencies from digitising and integrating their engineering, production and support systems. Digital twin technologies, which provide a digital replica of physical assets, and connected workers are core elements of this initiative. With digital twin technologies, production companies can optimise efficiency virtually without risking physical assets, train workers without putting them in harm’s way, and move to a predictive maintenance model, reducing unplanned downtime and cost. With wearable technology, workers have constant access to information, whether from a database or ‘live’ from an expert across the world, and receives immediate warnings in potentially hazardous situations. When man, machine and intelligence are combined effectively, the result is end-to-end optimisation across the entire value chain, from reservoir to market.
Source and enable the next generation of talent: Smart plants require a smart workforce. There is an urgent need to prepare both current and future workforces for a workplace where man and machine work alongside each other. As such, they will need to be skilled in key digital areas including AI, machine learning, and design thinking. Already, oil majors in the region are working both internally and with universities and governments towards this goal, training talent for the energy industry. But while progress is being made, it is not being made fast enough, given the region’s rapidly aging workforce and the competition from more ‘eye-catching’ industries.
Re-architect the new ecosystem: As digital technology advances exponentially, companies must share their knowledge to access the full range of benefits it offers, from reduced costs to accelerated innovation. In the last fiscal year alone, Accenture has invested $1.7bn in acquiring digital and cloud-related businesses with experience in AI, 3D visualisation and cybersecurity. This is in addition to a network of innovation centres around the globe that generate ideas and insights for our clients. In the digital age, ecosystem orchestration, open and co-innovation, and technology incubation are key.
While digital is a vital enabler, piecemeal investments will not deliver results. It is time to make a commitment to digital, and to build smart, connected, living and learning entities that deliver on safety, productivity, innovation and financial performance.
Only when pilots are scaled up and strategies executed will the region’s companies take their place on the global stage.