In the energy industry, many organizations have been waiting to adopt or invest in new technology. But time is running out.
That’s because new technologies are paying off for the competition. New technologies are now “enabling companies to maximize recoveries and profits,” said David Blackmon in Forbes
. And those profits are leading to larger investments.
“Really, time has come in the industry to put more focus on analytics, robotics and automation to achieve goals and create ways to reduce G&A and other costs,” said Grant Thornton Energy Industry National Managing Partner Kevin Schroeder.
“We’ve seen a shift in investment over the past five years,” said Grant Thornton Digital Transformation and Management Principal Nick Vellani. “Technology has definitely lagged in the oil and gas industry, as compared to other industries. Now, we’re seeing significant improvement in pulling data from the field, and translating that data into information that’s useful for decision making,” Vellani said.
The business-driving engine
New solutions can combine the Internet of Things (IoT), analytics, automation, mobile devices and other emerging tech to form powerful business-driving engines – and those engines run on data. That’s why you need to make sure your data is consistent, pure and secure. Without that assurance of data quality, “data trust” suffers, tech investments don’t achieve their intended value and the larger business-driving engines inevitably stall.
Like other organizations across the energy industry, many utilities are already swimming in low-grade data. In Utility Dive
, Illinois Commerce Commission Commissioner Brien Sheahan said “with an ever-growing database of environmental data external to the utility, utilities receive more data than they know what to do with.” Sheahan noted that “the large influx of data created in the last decade has rendered traditional analytical techniques relatively impotent.”
This new data leaves many energy companies anxious to implement new tech solutions, yet hesitant to pick a direction. But the flood of data also illustrates an issue that is even more pressing than the need for new tech solutions – the need to refine the data that fuels the tech.
Refine your fuel
Whatever business-driving engine you build, your first move is not to leap in technology-first – your first move is a series of steps that refine your data and its enablers. Companies thinking about investing in technology are much more likely to succeed, and achieve a greater ROI, if they understand and trust the data moving throughout the organization. Clean data can become a goal that yields its own ongoing benefits across your business, with immediate returns for accounting, audits and risk management.
Map your data
“Defining your master data strategy and hardening your existing data is going to be key,” Grant Thornton Digital Transformation and Management Principal Will Whatton said. A master data strategy helps you create and maintain a map of where you have systems providing and using data across your network, how that data can be standardized, what can be shared, what gaps remain and more. This strategy can be both fundamental and enlightening as you evaluate your security, optimize your network and plan new solutions.
Secure your data
Don’t build a system you can’t protect. “As you implement new technology, your cyber risk always increases – especially as you talk about automation,” Whatton said. IoT and cloud technologies can create unique new risk exposures and compliance issues, so it’s important to understand and leverage the expertise of cloud and other system partners to ensure they secure the services they provide.
Align your data
The energy industry sees a lot of mergers and acquisitions, which means that one company often acquires multiple legacy systems that essentially support the same business process. To eliminate these overlaps, and ensure that new solutions don’t inherit old inefficiencies, companies need to complete an application rationalization effort that begins with a clear view of business processes and aligns them with the most effective and efficient IT solutions.
“It’s extremely important to really conceptualize how you’re going to go about modernizing your IT environment to support business processes going forward,” Vellani said. “It’s about taking a more process-based approach – rather than an applications-based approach – and really looking at what business processes need to be supported, or can be supported, with technology.”
"Everybody is looking at automating different processes but, if you look at OCR [optical character recognition] on the level below that, we see a much larger impact for upstream benefits."
Digital Transformation and Management Principal
Grant Thornton LLP
Digitize your data
Once you have a plan, application alignment and security, you can start bringing in more of the data that’s aligned with your needs. If you’re still receiving paper invoices or other forms that people process manually, those business processes and that information cannot be optimized or analyzed in your system, and they won’t inform your risk analysis or forecasting. “Everybody is looking at automating different processes but, if you look at OCR [optical character recognition] on the level below that, we see a much larger impact for upstream benefits. Because this has traditionally been a paper-based ticket system out in the field, where somebody is writing a ticket and dropping it in a box,” Whatton said.
Transfer your data
Your network is your pipeline. If you want more live data from the field, you will need a network that’s robust enough to transfer it. “That’s truly the foundation of the next-generation energy IT environment,” Vellani said. You need to consider the range of connection options, including satellite, microwave, hardwire, and wireless, and look ahead at advances like 5G. “5G is much more than just getting to Facebook faster on your phone,” Vellani said. “It truly is about the ability to do augmented reality and virtual reality in the field, on the fly, and providing a real difference.”
“Modernizing your network and communication strategy, so that everything is communicating seamlessly and efficiently, is going to be critical to trusting and using that data moving forward,” Whatton said.
Manage your data devices
Many companies want to reduce the number of traditional hardware assets they manage. “One VP of IT told us ‘I want to get out of the laptop and server business. I want everything to run in the cloud. I want to focus on operating my business as well as possible.’ And a lot of technology leaders are looking at doing that,” Whatton said.
But that doesn’t mean there will be fewer devices to manage. “What’s happening more and more is their burden is being shifted to managing devices in the field – SCADA [supervisory control and data acquisition] devices, measurement devices and other remote and mobile devices,” Vellani said.
As your employees conduct more business through mobile devices, make sure you have a mobile device strategy ready for compliance and risk management. Even if you haven’t explicitly distributed devices or developed mobile apps, your employees are likely using their own devices to access their email, internal web pages or other information. Make sure you understand this usage and adapt your security protocols and business processes accordingly. If you want to further develop mobile access, start by implementing a bring-your-own-device (BYOD) policy for interested users. “People don’t necessarily want to carry multiple devices,” Vellani said. If you do distribute mobile devices, make sure you have a plan and resources to configure, secure and support them.
Data is the new clean fuel
By planning and refining your security, systems, data and devices, you will have a clearer view of the tech solutions that you need to develop, and a clearer path to quickly move them to market.
Those quick moves will provide competitive advantages, and they will also help meet stakeholder expectations. When discussing ROI for new solutions, “most CFOs today are saying ‘I need something in under 12 months’… there’s not a lot of tolerance for two or three-year ROI payback,” Whatton said. If your data and infrastructure are already refined, a proof of concept or other small project can achieve results within those parameters. And that can get your foot in the door with implementing a new technology. Large enterprise initiatives will take longer. Yet, they are important to help develop the company’s data resources into the future. Your future initiatives will rely on quality data across the enterprise.
Clean and differentiating data will become an essential resource for your company.
That’s why developing and refining your data must become a larger enterprise goal, beyond a single project or solution. Vellani pointed out that stakeholders often look for new solutions to provide ROI in reduced headcount or other direct impacts. But rather than focusing on traditional ROI, Vellani said, “focus on values for the organization, related to data cleanliness and what that means from a reporting standpoint. Can you close the books quicker because you have cleaner data? Can you reduce risk to the organization? Those things can be measured. They’re not direct measurements related to exactly what you’re doing, but they are downstream effects.”
When your organization understands data’s long-term strategic value, and its immediate benefits for accounting, audits, tax and compliance, then clean data becomes a goal worth funding. That creates a path to fund the solutions driving the goal. ROI discussions can take the longer view of preparing the clean data and efficient systems you will need in order to enable evolving tech solutions. Because the most powerful business-driving engine is an innovative strategy with a combination of technologies fueled by clean data.
“These specific technologies are great tools but, when you bolt them together to solve business problems, that’s where the real power and the real disruption are coming,” Whatton said.
National Managing Partner, Energy Industry
+1 405 415 3550
Principal, Digital Transformation and Management
+1 832 476 3780
Principal, Digital Transformation and Management
+1 832 476 3639