The Playbook: Driving digital transformation at medium-large enterprises

Digital transformation efforts in the oil and gas sector offer countless benefits, not just when it comes to savings, streamlined processes, and overall agility of your business, but also societal impact and emissions reduction.

In 2023, every business process in this sector can be accelerated and facilitated using advanced digital technologies.

So, here’s the ultimate resource hub to help you chart and navigate your digital transformation roadmap.

Some time ago, the World Economic Forum, in collaboration with Accenture, conducted research on the impact of digital transformation on the oil and gas industry.

As seen above, digitalization has the potential to unlock up to $945 billion in industrial value and $637 billion in societal value.

Now, more than ever, businesses in the oil and gas industry need to adopt digital technologies to stay ahead of the competition.

A sound digital transformation strategy can help the decision-makers to:

• Unlock new opportunities
• Improve customer experience
• Overcome challenges in an increasingly interconnected and data-driven world
  

The cost of not innovating in an era of digital transformation

Digital transformation has been a key strategic objective for many organizations since the start of the millennium.

However, this objective has become increasingly vital ever since the Covid-19 pandemic.

During the pandemic, any enterprise that did not adjust its business strategy and could not offer its products and services in the digital realm quickly became irrelevant, causing many established entities to crash.

Conversely, businesses that were able to adopt and leverage existing technologies grew significantly and could remain competitive.

According to a McKinsey report, the Covid-19 pandemic accelerated digital transformation tremendously, changing how companies do business forever. ^[1] 

Take the oil and gas industry, for instance.

Failure to innovate in digital transformation has far-reaching consequences for the business, including:

• A decline in competitiveness due to the lack of digital solutions that would optimize operations.
• Inefficiencies and higher operational costs due to a lack of technologies: IoT, for example, could help companies optimize their processes, predict equipment failures, and streamline their supply chains.
• Missed revenue opportunities: Advanced IT and artificial intelligence technologies can help oil and gas companies gain valuable insights from their data to optimize exploration and production activities, improve reservoir management, and identify new drilling opportunities.
• Environmental and regulatory compliance risks: Mostly due to inadequate technologies that would otherwise enable companies to monitor and manage their environmental impact more effectively, improve safety protocols, and ensure compliance with regulations.

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Employee experience and creating a culture of innovation

In many organizations in the oil and gas industry, a single executive or a team manages digital or innovation efforts.

However, for companies to succeed in their digital transformation efforts, they need to foster an innovative culture where everyone in the hierarchy has a role to play in the process.

This can be achieved in the following ways:

• Establish clear lines of communication with employees by regularly sharing your vision for the company and evaluating the progress of your current digital initiatives, so your employees know the value of their contributions.
• Provide training opportunities to enable your employees to gain new skills, enhance their expertise, and increase productivity in their respective fields.
• Keep your employees at the heart of every innovation because they'll be the ones using any new innovation the company adopts. You can do this by involving them in the research and innovation process and training them as well.

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Bridging the gap between legacy systems and innovation

Many organizations have an extensive array of legacy technologies deeply ingrained in their operations. While most technologies support new integrations, some may not easily integrate with new innovative technologies. ^[2]

You can bridge this gap by:

• Assessing current systems to understand their capabilities, limitations, and dependencies. This can help you gauge the compatibility of the organization's existing systems with new technologies.
• Defining your integration goals to help you identify the specific outcomes you aim to achieve with the bridging process. This includes everything from enhancing operational efficiency and data management to enabling new digital services.
• Adopting an API-driven approach. APIs enable seamless data transfer between different systems, which allows legacy systems to interact with new applications and technologies.

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Taking smaller steps to a larger goal

Digital transformation doesn't just happen overnight. It is a slow, incremental process involving various stages culminating in your overall goals. The steps include:

Digitization

Simply put, digitization is the process of transforming your data from analog to digital.

The core business processes do not change here; they just become more efficient due to the reduction or elimination of manual inputs, yielding more accurate outcomes.

Digitalization

Digitalization leverages digitized data to streamline, automate and optimize business processes, improving their efficiency and improving the customer experience.

Here, technology starts changing how work gets done or how products are delivered, often creating new opportunities.

Think of an online shop for a brick-and-mortar business.

Digital Transformation

Digital transformation leverages digitization and digitalization to drive customer value and new business ideas.

Organizations can achieve digital transformation by: ^[3]

• Developing a comprehensive digital transformation strategy aligned with the organization's business goals and objectives.
• Assessing emerging technologies and evaluating their suitability to the organization's needs.
• Developing the necessary technology infrastructure to support seamless digital transformation.
• Driving innovation within the organization by actively researching and exploring new technologies and industry trends.

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Wrapping up

Digital transformation is a crucial investment for any business that hopes to stay relevant and competitive. This is especially notable in the oil and gas industry, which struggles with numerous operational and compliance bottlenecks.

Sources

[1] McKinsey. com, How Covid-19 Pushed Companies Over the Technology Tipping Point and Transformed Business Forever,

[2] Onlinelibrary.wiley.com, A paradoxical perspective on technology renewal in digital transformation, 

[3] McKinsey.com, Unlocking Success in Digital Transformations