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Energy companies power through disruptions

Five predictions, four practical actions

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Energy companies power through disruptions You want to be on the right side of disruption. In business, new technologies and other innovations often unleash disruptions that cut through conventional models and redefine the winners and losers.

Many recent innovations in the energy industry have focused on the processes in the field—but artificial intelligence (AI), the internet of things (IoT), cloud-based solutions, and other IT revelations are about to slice through the market.

So, how do you stay on the right side of IT disruption?

Predictions: Tomorrow’s opportunities To determine where and when your organization should move to stay on the right side of disruption, it’s important to understand the opportunities, where they fit, and when they become a fit for you.

In the energy industry, evolving opportunities can be categorized into five areas:
  1. market channels
  2. market management
  3. operations management
  4. operations support
  5. corporate management

Where do energy companies have opportunities for transformation? Energy companies power through disruptions

1. Market channels The Utilities and Services markets within the energy industry will be focused on integrating online and mobile platforms, improving customer acquisition and enhancing service. Market channel transformations focused on digitizing customer interaction will not be a priority for Upstream, Midstream or Downstream markets in the near future. These markets expect customer interaction to continue largely as is today with minimal disruption.

Some “gig-based” service providers are also likely to emerge by 2022. Imagine Uber for truck drivers—independent drivers who want to use their trucks to generate revenue with their excess capacity. They just need a platform to market and sell those services, and private equity funding and corporations are already developing platforms for both reallocated services and entirely new on-demand services.

While customer acquisition and service transformations will be limited to specific energy markets, there is a broader expectation on the near-term horizon for market channels to evolve integrated industry platforms. These integrated platforms will be expected to give companies real-time insight into upstream, midstream and downstream processes to identify where products are, where services are, and when jobs are going to be completed. Customers across the industry desire real-time access to data across industry markets to improve forecasting and execution. As a result, industry software and technology providers are already developing tools to deliver that functionality across the industry.

2. Market management Retail utilities and service companies are already starting to leverage business intelligence and analytics platforms will help companies predict customer behavior, understand how customers make purchasing decisions, and determine how to price certain products. Companies will be able to put market plans in place to react before customer shifts actually happen. There is a lot of potential, but these first market management opportunities are primarily on the retail side. The majority of the industry is leveraging business intelligence and analytics platforms the add value on the back office or operations side of the business.

Also note that, while you might hear a lot about chatbots and customer support automation in other industries, customer service and account management for the majority of the energy industry for the predictable future will still be based on face-to-face or over-the-phone personal interactions.

3. Operations management Field devices and IoT will enable real-time and even predictive enterprise asset management. IoT will drive predictive analytics with the goal of reducing downtime, especially on compressors or system bottlenecks. These predictive IoT systems will become a standard over the next two to three years.

Artificial Intelligence will accelerate strategic drilling and production decisions, leveraging the data that companies have about how to drill wells. Systems will analyze factors like drilling techniques that were used to determine what made wells successful and high-producing. While a lot of innovation has happened in the field, now the technology is getting smart enough to help build predictive models and improve the process.

4. Operations support Blockchain is a huge topic in the energy industry, and a lot of CFOs and CIOs are asking how it can be used. So far, attention is being paid to Blockchain on the supply chain side with the use of smart contracts. Imagine a platform that automatically and immediately reconciles your purchases and your service level agreements, rather than needing someone to manually review contracts at 30-day intervals to determine whether agreements were met and what payments are due.

Also, wearable technology will help automate enterprise health and safety compliance and reporting. Imagine workers at plants or field sites wearing devices that are measuring heart rate, stress, or other base biometric data while tracking location, so an artificial intelligence platform can help predict possible safety issues and send warnings ahead of time.

5. Corporate management Over the next three years, the energy industry will move toward a target of 40 percent optimization through automated tasks—a lot of that will be on back office manual processes in areas like accounts payable. Robotic Process Automation (RPA) will reduce the need for additional growth related to back-office headcount, and “Low-code” platforms will help business users automate tasks across three or four different applications without requiring in-depth coding knowledge. Scanning and natural language recognition systems will also help accelerate the move away from remaining paper-based systems.

Practical actions: Today’s preparations With so many opportunities on the horizon, and technologies evolving every day, what should energy companies do first? How can companies prepare now, and what are their next priorities?

When should energy companies be prepared with transformational technologies? Below is a roadmap of emerging technologies based on Grant Thornton polls, direct feedback, and past successes with hundreds of energy clients.

1. Define your master data strategy Your company needs to define a master data strategy and harden existing data to quickly integrate new technology. That means establishing a data model that accurately and completely represents your products and services. For instance, you need to ensure that “the way you describe” a product is the same across the organization, so that a system which tracks particular characteristics will be able to integrate across the organization. Make sure that unique identifiers are actually a true representation of each product or service itself, to avoid going through re-engineering exercises to integrate systems later.

2. Optimize your network and communications Your company needs to modernize and optimize your network and communications strategy to plug and play cloud platforms and services. Most energy companies still use on-premises (on-prem) systems for a significant portion of their infrastructure and applications. But there is a lot of pressure to move to the cloud. Some of this is driven by solution providers. Some solution providers now only pay sellers a commission when they sell cloud solutions—the sellers get nothing if they sell on-prem solutions. And, some providers are sunsetting their support for on-prem solutions. But the move to cloud-based solutions is also reaching a point of critical mass, where companies without a cloud strategy may soon find that their developers and their partners have limited options for integration and innovation.

3. Complete an application rationalization Identify opportunities to rationalize and reduce your application inventory, to accelerate transformation speed. Application rationalization is an important step to developing an application portfolio, and it begins with looking at your current applications to ask: How do these propagate within the organization? How do they enable the business? Consider this rationalization, together with your network optimization, as you form your master data strategy.

4. Establish a device management strategy Ensure that you have a framework to help users understand where assets are, how the company is using them, how they’re being impacted, and how they could be optimized going forward. This includes actively identifying opportunities for automation.

Final considerations As you move to stay on the right side of disruption in the energy industry, here are five overall steps to consider:

  1. Define your future state target and the metrics that will gauge your success (such as availability, reliability, or even peace of mind).
  2. Assess the delta between today and your target, in terms of technology, people (including skills and culture), and process.
  3. Identify the best practices for your industry that should guide your effort. For instance, some energy companies have had success with design thinking methodologies that use rapid prototyping to create proven concepts to address immediate business needs rather than initiating more formal development projects.
  4. Understand the change you need to make, the top pain points that hindered you in the past (such as outages or a lack of agility), and the top opportunities that you want to pursue in the next two to three years.
  5. Establish a road map to get you to your future state, and the governance you’ll need to keep you from returning to past behaviors.

Always be on the lookout for automation opportunities at every stage—automation will not only optimize your processes, it will help you attract new talent and offset retirements as you move forward.

And remember: disruption isn’t a temporary state. It’s a new perspective—a new way of life.

Contacts:

Kevin SchroederKevin Schroeder
National Managing Partner, Energy Industry
T +1 405 415 3550


John StilwellJohn Stilwell
Principal, Business Applications
T +1 913 272 2721


Rick GarciaRick Garcia
Managing Director, Enterprise Technology Strategy and Innovation
T +1 312 754 7350


Will WhattonWill Whatton
Senior Manager, Digital Transformation and Management
T +1 832 476 3639