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There is widespread recognition in the upstream industry that
digital transformation is critical for operators to survive and
thrive (research by industry analysts IDC reveals that upstream
organizations committed to spending
an average of 3.7% of their 2020 revenue on digital
transformation). However, few organizations have seen
significant value so far from the digitalization initiatives they
have undertaken.
What is preventing these companies from realizing ROI? In large
part, the issue lies in the challenge of translating the strategy
—which is set at the organizational level— into manageable
initiatives and targeted deliverables that can be identified,
operationalized and measured by individual teams and business
units. Tackling digital transformation at the organizational level
results in an unwieldy and overwhelming project, which encompasses
everything and solves nothing. Ultimately, energy operators that
want to see greater impact and ROI from their digital
transformation programs need to make these initiatives focused,
measurable and deliverable.
By following the four steps outlined below, upstream energy
organizations can support and define a digitalization initiative
that is achievable and designed to produce a measurable, positive
impact on operational costs, efficiency and time to decision.
Step 1: Prioritize change management. Many
digital transformation initiatives fail to gain traction because
the project leaders do not take into account the magnitude of
change required, and the energy and planning needed to manage the
impact across multiple stakeholder groups. While technical
considerations are important, so are communication and engagement
strategies. Communicating the transformation imperative and
translating organizational goals at the stakeholder level requires
careful planning if the initiative is to earn the trust, engagement
and commitment of the various constituents involved.
Step 2: Begin with data management. Before
investing in workflow automation, make sure you have the tools,
talent, and processes in place to manage your data. When data is
not consolidated, validated and monitored, it is not capable of
driving automated workflows effectively, which in turn reduces the
effectiveness and ROI of these solutions. Despite widespread
agreement about the importance of data management ,
only 27% of those surveyed in recent research by IDC actually
practice master data management (MDM) to create a single source
of truth. Without this foundational layer, investments in workflow
technology cannot move operations forward effectively.
Step 3: Map the workflow. When IHS Markit
supports a client in a digitalization effort, we start by taking a
step back from the technology itself and focusing instead on the
manual or hybrid workflow processes they currently have in place.
We help them identify the most data-intensive workflows and map
them out in granular detail, including the different functional
groups involved, the applications used, the sources that the data
is being pulled from, and the touchpoints and swim lanes that
connect (and separate) people and data throughout the workflow.
This step can be conducted internally or with guidance from a
process management expert. Once the workflows have been mapped,
they can be analyzed to determine where the greatest amounts of
time and other resources are spent. Applying digitalization to
these areas will have the greatest impact in terms of reducing
time, saving costs or enhancing decision quality and speed.
Step 4: Quantify the value. Mapping the
workflow in detail also enables a business unit to quantify the
benefit of a digital transformation initiative in a tangible way
and make a compelling business case. Once the workflow has been
defined, the cost of the current manual or hybrid processes can be
quantified in terms of personnel hours saved per cycle or per month
and in terms of opportunities missed due to protracted decision
times. This information can also be used to measure the success of
the initiative against the expectations set during the planning
stages. Being able to quantify the value and prove success in
measurable terms will help to gain organizational buy-in and pave
the way for future digitalization efforts.
As the upstream energy industry emerges from an eventful year,
the need for digital transformation has never been greater. In the
face of industry volatility and complexity, and a shift to remote
work, the ability to streamline and digitalize operations will
enable companies to continue to adapt and thrive. By focusing on
change management, data management, workflow mapping and value
quantification, the industry can put solutions in place that live
up to the promise of digital transformation and deliver measurable
ROI.
