Executive viewpoint

Too often, oil and gas companies remain focused on the cost and efficiency benefits of technology, and how they can optimize their core businesses today, to drive faster and better decisions tomorrow. Accenture research1 shows that most companies are not scaling their digital proof of concepts and are challenged in unlocking full value from their technology investments.

With mounting economic and environmental pressures, sustainable growth depends on systematic and sequential adoption of technology to create enterprise systems and business models that are capable of scaling innovations incrementally and repeatedly.

In today’s uncertain climate, digital enablers—such as the cloud and data analytics along with greater automation—have become fundamental to how oil companies can continue to operate safely and securely. Agility, flexibility and responsiveness are key to managing in difficult times.

How can oil companies create enterprise systems and business models that are capable of scaling innovations repeatedly and, thereby, give organizations the strategic agility that they need? It is not easy, and many companies struggle to scale innovation for value, resulting in a widespread “Innovation Achievement Gap.”2

Future energy system. Technology will arguably become even more important in the future energy system, which will utilize a wider range of technologies and business models, all dependent on digital innovation. This will be more diverse, fragmented and volatile than previously; industries like wind power, for example, have many more variables, than say, gas-powered generation, and will need stronger predictive analytic capabilities to realize their full value.

This also will need oil companies to minimize hydrocarbon emissions and carbon usage while generating greater efficiency from current infrastructure and value chains. In short, the oil industry needs to better harness IT and digital technologies to continue playing a meaningful role in the low-carbon energy mix.

The oil industry has an opportunity to accelerate its digital journey by observing how other industries have adopted digital and other relevant technologies to successfully transform their business models. This theme will be central to ENGenious 2020, now scheduled as a virtual event during Sept. 22–24, where the authors will be presenting further material.

Prioritizing technology value. The event will showcase the most innovative oil companies already scaling and driving value from technology. By continuing to scale their core businesses, adapt business models and create capacity for new investment and direction, their technology bets are succeeding and creating new value.

Technology value capture should now be a priority for every oil and gas company, by not only creating proof of concepts and collecting new tools, but by thinking in terms of systems (as opposed to point-solutions). In this way, they can start to outpace competitors in terms of both revenue and margin growth.

In an Accenture survey of more than 350 oil and gas companies. a small minority (10%) of “leaders” are showing three times more revenue growth on average than those who were lagging (21%). These leaders are able to realize more value from their technology investment and adoption. In fact, the gap between the leaders and laggards in this sector is the largest of all the industries measured.

Evolving mindset. These leaders are not only building a system that allows for a seamless flow of product and service innovations from one process to another, they also believe that humans and machines can bring out the best in each other. They are creating conditions, whereby innovations within their organizations, as well as in their ecosystems of partners, can be scaled for value. Systems include:

• Boundaryless: Blurring boundaries to create space where ideas and partnerships can flourish. Such systems utilize the cloud, have a uniform approach to data, security and governance, and explore more unconventional partnerships.
• Adaptable: Learning, improving and scaling by themselves, eliminating the friction that hinders business growth and decision-making. This includes enterprise-wide use of automation and AI, a continuous data supply chain in the cloud to power AI, and a stable but modular, flexible, decoupled and constantly evolving innovation architecture.
• Radically human: Allowing systems to talk, listen, see and understand just like humans, bringing simplicity to every human and machine interaction. Thanks to technologies, such as natural language processing, computer vision, voice recognition, and machine learning, such systems are now becoming less artificial and more intelligent.

Mind the gap. Understanding how to drive value from technology allows companies almost infinite opportunities to improve how they operate. All companies can learn to implement them by undertaking small and progressive changes, which do not require huge capital outlays. Such approaches can include investing more in innovation; managing and scaling those investments well; trusting the data for insights; and nurturing the talent involved in its delivery. Closing the innovation gap enables technology value creation—it all starts here.  

^{*Editor’s note: This op-ed was co-authored by Julie Adams, who leads Accenture’s Energy research team.}

REFERENCES

1. https://www.accenture.com/us-en/insights/energy/trends-digital-investment
2. whttps://www.accenture.com/us-en/insights/future-systems/future-ready-enterprise-systems.