April 2021

How COVID-19 accelerated the cloud adoption future in oil & gas

The need to digitally transform — by taking actions such as streamlining and automating business processes, managing data across the organization and overseeing remote workers — is only greater in the face of COVID-19 developments.
John Tully / SAP
The oil and gas industry has accelerated digital adoption in the midst of the COVID-19 pandemic.
The oil and gas industry has accelerated digital adoption in the midst of the COVID-19 pandemic.

All facets of our lives changed when COVID-19 hit. Face-to-face interactions became digital. Commutes evaporated. Restaurants closed. Schools shuttered. Travel ceased.

But not everything was paused. In the oil and gas industry, some trends only accelerated.

For instance, when prices plummeted at the pandemic’s outset, many analysts predicted ongoing shifts would reach a standstill. The logic was that low hydrocarbon prices would delay digital transformation strategies in the energy industry.

However, the opposite happened: Companies doubled down on their transformation goals and used the downtime as an opportunity to invest for the post-pandemic world. This instinct is what separates digital leaders from the rest of the pack. With greater competition and shifting customer behaviors, the need to increase productivity and reduce operating costs has never been stronger in the energy industry. As a result, one specific area of technology has drawn the attention of virtually every company in the oil and gas industry: cloud computing.

The State of Digital Transformation

The need to digitally transform — by taking actions such as streamlining and automating business processes, managing data across the organization and overseeing remote workers — is only greater in the face of COVID-19 developments.

Fortunately, oil and gas companies have been working together to address these needs for several years. In late 2019, more than 30 of them joined an Accenture and SAP consortium dedicated to defining industry best practices and translating them into a cloud development roadmap that can function as an industry standard. Last year, the group launched several upstream oil and gas solutions based in SAP S/4HANA Cloud. Where transformation is concerned, collaboration and partnerships like these are pivotal.

Why Cloud Meets Our Moment

Oil and gas companies must find ways to differentiate themselves — by reimagining their operating model to unlock step changes in performance and embracing agile ways of working that will ultimately lead to innovative, future-driven organizations.

The cloud can help with that, providing:

  • Agility that enables oil companies to scale up and cut back their resources based on profitability and operational integrity, to improve adaptability to disruptive trends such as the Energy Transition, to ensure faster facilitation of M&A activities, and to lower transition costs;
  • Standardization that supports oil and gas best practice processes with real-time global insights, significant reduction of manual tasks through automation, and cross-departmental visibility and collaboration;
  • Possibility that integrates speed and adoption of new innovations as part of normal business as well as real-time sensor and ERP business data that transforms the oil and gas value chain;
  • Simplicity that increases productivity and reduces operating costs in a fully managed, enterprise-ready platform as well as native, multi-cloud data integration; and
  • Predictability that ensures performance and stability of a global operational environment leveraging a single source of truth.

Cloud technology makes it easier for oil and gas companies to embrace what’s next, no matter what’s going on in the world. Take NexTier Oilfield Systems, for example. Born from a merger of two industry giants, NexTier has leveraged the cloud to help them consolidate disparate systems resulting from the merger, helping them pursue their aggressive growth strategy through data sharing and field operations.  

Cloud will continue to be the great equalizer for oil and gas companies in 2021, regardless of company size. For instance, by allowing exploration and production companies to access bundled ERP solutions with pay-as-you-go models, the cloud facilitates reduced operating costs, greater productivity and higher return on investment. This is why SAP is seeing high demand from E&P companies for all-in-one, integrated cloud solutions — they’re proven and simple to install.

This is also part of the reason why we recently introduced ‘RISE with SAP.’

Rising Up, Together

RISE with SAP’ is SAP’s new SaaS offering — a single offering on a single contract — that provides a clear, actionable path to the Intelligent Enterprise for every customer. It also allows oil companies to migrate their existing ERP to the cloud, public or private.

And although practices and processes in oil and gas continue to become more standardized, the private cloud option can be a game-changer for some. Namely, businesses can now transition their existing on-premise installation to the cloud and maintain the vast majority of the benefits of an on-premise environment and application. SAP S/4HANA Public Cloud only facilitates Greenfield implementations; meanwhile, the private cloud option makes it possible for companies to move to the cloud without having to start from scratch.

Whichever way companies go, the mission of the ‘RISE with SAP’ initiative is the same: tailoring cloud solutions to companies’ exact needs, reducing the total cost of ownership, enabling faster time to value, and providing the flexibility all modern oil and gas companies need.

A Transformation in Transition

Technology and transformation will be an integral part of the oil and gas industry’s future no matter what comes next, and companies are making advancements by the day — boosting safety, increasing automation and lowering costs. To build a better oil and gas future, the cloud is a necessity.

About the Authors
John Tully
John Tully As the managing director the South for SAP North America, John Tully is responsible for the region’s profitability and strategic direction, and oversees marketing, services, human resources, finance, and all client-related activities. He leads a team that champions customer success in more than 25 vertical industries, including energy, retail, consumer products, and high tech by ensuring the full power of SAP technology, Services, and partner ecosystem are leveraged to accelerate their digital transformation.
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