Could Digitalization be the Secret to Success Your Business Needs?

Things did not happen as predicted for the oil and gas industry in 2020.  Once the COVID-19 outbreak transformed into a national emergency, most experts forecasted a significant downturn in our industry.  Without commuting, road trips, and air travel less gas would be consumed–and crude prices were already extremely low at $40-$45 per barrel.  With that forecast, we anticipated the industry would not have the extra capital to continue alternative energy development and companies would take a temporary hiatus.

digitalizationTurns out the crystal ball wasn’t accurate.  Major companies within the industry quickly pivoted, realizing their future depended on becoming really efficient quickly and not letting the ball drop on innovation.  As Deloitte reported in their 2021 Oil and Gas Industry Outlook, there was no hiatus to be had:

 “In fact, supermajors like BP and Shell strengthened their net-zero goals by targeting reduction of O&G production or investment by up to 40% over the next decade.”  Another surprising result of the pandemic is the increased focus on digitalization as a way to help achieve these higher clean energy standards.”1

And how would they accomplish this with less capital?  By transforming an industry that has traditionally existed in a stage of low digital maturity into one that optimizes technology from the oil field to the customer’s tank.  In the industry, this is referred to as “digitalization.”

The possibilities for cost savings are quite significant.  According to Audun Martinsen, head of oilfield services research for Rystad Energy, digitalization could save the oil and gas industry $100 billion or more.2

Digitalization covers a myriad of ways computer technology can be used to automate, expand, and analyze processes that have traditionally been accomplished manually. The benefits of digitalization are many:

  1. Digitalization means better information. Transforming static information into a format that can be processed and analyzed with computer technology provides the organization with much more accurate information.  As a result, companies can better understand their current position and forecast trends and needs going forward.  Artificial Intelligence (AI) can further expand the possibilities by making decisions or adjustments based on learned algorithms.  The business becomes smarter.

Olivier Vicaire from Orange Business Services provides his insights about improved information specific to oil & gas:

“In an industry that operates across a high-risk environment, fast and informed decision making is critical. AI [Artificial Intelligence] is showing enormous potential in streamlining production processes and allowing for more intelligent, automatic business decision making such as predictive analytics.”3

  1. Digitalization technology allows businesses to provide more services to consumers. The future of fueling stations will likely look very different than they are today, and many of these changes may happen within the next 10 years.  For example, with new technology, consumers may be able to order fuel to be delivered instantly to them where they are versus filling up at the pump.  Fuel stations might have pumps with increased functionality that allow consumers to personalize their fuel mix to best meet their specific vehicle’s needs.

Thomas Caldwell explains how digital technology will transform fuel stations by 2030:

“The customer front line is where a new set of smart IoT devices will drive improved customer interaction. For example, we have the ability now to remove humans from the purchase of fuel and switch to a self-serve model where new machine technology is the primary customer interface. New technology advances in AI and machine learning drive these machine interfaces to be smarter and will push them to improve customer experience.”4

  1. Digitalization can transform employees’ work. Simply said, employees who enjoy their work and feel they are making important contributions create value for the organization.  Back in 2013, Harvard Business Review reported increases of 22% in productivity as a result of employee engagement.5  Digitalization removes much of the manual “grunt” work from employees’ responsibilities and replaces it with tools, automation, and data so they can focus on creative problem-solving, critical thinking, and informed decision-making. That type of work provides employees with a greater sense of value and purpose.

Deloitte reported this about how important employee engagement is to the oil and gas industry:

“In our postelection poll, 59% of O&G executive respondents highlight the productivity and engagement of employees and knowledge exchange among employees as the biggest remote working challenges for the industry.”6

How will you use digitalization to transform your business?

Whether you own a single fuel station or operate a network of convenience stores, there are opportunities to use digitalization within every business.  At WEnd Consulting, our team is constantly surveying the marketplace to identify technology solutions for every size of company.   Many of the businesses we work with realize significant transformations from adopting new technology and implementing modern software solutions throughout their operations.  Contact us today to learn more about how we can help your company be more successful in 2021.

  1. Dickson, Duane: Facing the Challenge of Transformation in the Next Decade.  2021 Oil and Gas Industry Outlook, Deloitte Development LLC, 2020. 

  2. Shafto, Jodi: Oil, gas industry looking to digitalization to cut costs, advance ESG goals. S&P Global Market Intelligence, November 30, 2020. 

  3. Digitization fuels growth in the oil and gas business. Orange Business Services. February 4, 2019. 

  4. Caldwell, Thomas: Digitally Tranforming the Petrol Retail Industry Through AI And Smart IoT.  Forbes, January 7, 2020. 

  5. Baldoni, John: Employee Engagement Does More than Boost Productivity.  Harvard Business Review, July 4, 2013. 

  6. Dickson, Duane: Facing the Challenge of Transformation in the Next Decade.  2021 Oil and Gas Industry Outlook, Deloitte Development LLC, 2020.