Digital Oilfield 2.0
Feature Articles, Nov  27  2009 (Digital Energy Journal)

- We are now moving to phase 2.0 of the Digital Oilfield, where vendors are expected to not just provide technology, but also ensure that their customers achieve business success with it. by Dutch Holland, PhD, Holland & Davis LLC

Digital energy technology was once known more for being new, exciting and promising than for actually re-shaping how the oil and gas industry works on a daily basis. The Digital Oilfield (DOF) concept, having been in play for awhile, lets companies be more organized, more focused and operate with less waste.

Dutch Holland, PhD, Holland & Davis LLC

What is new today about DOF is how decision-makers view and manage it.

The new business model is for vendors discovering they need to take their customers all the way to the bank. They must be able to work with a client who is diagnosing a field and determining what digital technology can do, all the way through planning and execution – to ultimately deliver business value.

Practically speaking, providers must move away from extolling and supporting the next “sexy” app and transform themselves to be able to provide complete solutions all the way to client success.

No simple challenge, this means that no longer can an app be “dumped by the door” by solution providers with the comment: “Technically, it does everything it’s supposed to. If your (oil and gas client) engineers can’t use it - well, that’s beyond the scope of our assignment or responsibility.”

A more-timely expression to replace “DOF project” may be a “business transformation project enabled by DOF technology.”

When companies focus primarily (or exclusively) on getting technology up and running in the organization, they are actually steering their people in the wrong direction.

Companies should re-title the box in which they have been working and start re-directing digital technology resources more toward achieving business results.

Another major shift among solution providers (or vendors) is they have expanded their business pitch and, without modesty, are saying they can cover the solutions landscape from A to Z.

Essentially that entails going from diagnostics to design, to development of applications and infrastructure, getting systems ready for the company, getting the company ready for the systems and infrastructure and even, in some cases, managing DOF infrastructure.

That means they are either capable of supporting each oil and gas company all the way from diagnosis to operations ... or they are not.

Solution providers are making all the “right comments” for DOF 2.0 success but they have to do more than just talk, they have to “walk the talk.” In order to serve their customers from A to Z they must have major new organizational/business competencies put into place.

Unfortunately for some vendors, transforming the way they operate, especially if they are product-oriented, may prove to be a Herculean task which is to say utterly daunting or even impossible.

Why? To “walk the talk,” providers must embrace and become proficient in all three elements of the transformation paradigm: technology, processes, and people.

They must be able to modify customer technologies, help modify their customers’ work processes as well as helping customers align their people and performance systems that oil and gas companies currently utilize to manage them.

Organisational change

A multi-part model, Engineering Organizational Change, already exists for vendors to mature their business to the DOF 2.0 level. Instead of letting customer RFPs slowly drag them into the new era, they can proactively engineer their way to a more mature operation.

First, it is critical to tackle a transformation initiative to mature a provider’s way of working with a “project mindset.” Therefore, providers must begin by forming an internal project to effect the change i.e., turning the initiative into a disciplined project to mature their organization’s services to be able to serve customers from A to Z.

Second, DOF providers must develop and communicate a broader vision to their associates/employees. In one respect, they should let employees see themselves in the near future engaged with the customer in technology, work processes and people alignment. And this is perhaps the biggest change because previously the vision would have only seen solution providers and customer employees working solely with the technology.

Additionally, providers need to develop and communicate how their organization will support customers in the DOF 2.0 era. That support is expansive --from diagnostic to design, to infrastructure, to system and business readiness, sometimes even to operations, i.e., from A to Z.

Third, the providers’ internal work processes will need to be altered or added. Now they will have to break the mold and add work processes that go beyond software selection, implementation and systems integration to processes and methodologies that focus on preparing customers for the use of the technology to create business value: increased production and maximized recoverable resources.

Fourth, the providers’ internal tools/technology will have to be altered or added to support A to Z work processes, which might include adding models and simulations that detail the business readiness process and collaboration tools that can be used both by customers and other vendors (a sticky situation for most providers).

And fifth, providers must alter their people management systems by setting up new organizational leadership structure with Value Creation (as opposed to “Technical Operations”) as the focus. Additionally, new value-oriented job descriptions must be written, business readiness people must be brought on board, employees must be trained on business value/readiness ... from A to Z. Getting business user feedback will be critical.

For providers willing to invest in transforming their own competencies, three goals can be achieved: longer-lasting customer relationships, they can more likely keep their “seats,” and they can keep the door open to selling the next round of whiz-bang digital technology and services.

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