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Digital "needs to be led by people who understand it" - Accenture's Andrew Smart

Thursday, April 18, 2019

Digital technology has far more of an impact than just relocating roles, says Andrew Smart, a managing director who lead's Accenture's Energy business it is about operating faster and better. But it must be led by people who understand it.

The changes digital technology implementations make to the oil and gas industry are far deeper than simply moving. some roles from offshore to onshore, as happened in the first round of 'integrated operations' projects, says Andrew Smart, a managing director who lead's Accenture's Energy business

We are talking about different ways of operating, with better use of data and a wider range of computing capability.

We 'are at a point where we can imagine doing things differently,' he said. For example, changing where in an organisation certain decisions get made.

The fundamental way the industry works - exploration, drilling, production, operations - will not change, of course.

But there can be a 'different set of operational characteristics,' he said. For example, companies could change the way they do engineering, so it is much more standardised and simplified, with more modular implementations, leading to more predictability in how projects are executed.

The industry could also become much more integrated, rather than operate in disconnected silos.

A big challenge with digital technology in the oil and gas industry remains getting systems deployed at scale (throughout the company), after they have been proven to work in a single project. For example, companies develop a new way to do maintenance inspection but then don't use it everywhere. Projects can compete with other projects for attention.

'I would say the industry is still not at the point where it knows which ones it wants to scale and has a ready mechanism for scaling them,' he said.

The industry has formed a consensus that digital is important and 'we need to build real understanding and capability,' he said.

As an organisation, Accenture is focussed in helping organisations get clarity on how they can fundamentally transform to boost efficiency and agility, he says, as well as helping them understand what the key concepts are, what new organisational constructs are needed, including process and standards, and how to take advantage of proven concepts. Getting there 'requires leadership engagement and determination,' he said.

Working better

There can be efforts to 'increase the clock speed of operations,' doing everything faster.

Here, there are lessons to be learned from the unconventional oil and gas industry, which has a different culture and attitude, one that is more cost-conscious and operationally-orientated, he says.

One difference between the unconventionals and conventionals industries is that the pressure to change can be higher, with investors expecting better returns on shorter-term time horizons, and continuous improvement in performance.

There is also higher competitive intensity in the unconventionals sector, with investors looking to support those companies who can make the most money out of their capital and deployments, he says.

As a result we have seen 'a sharper and more dramatic overall performance trajectory in unconventionals than we've seen elsewhere.'

The US unconventionals sector has used technology to its advantage. Although it isn't necessarily true to say that the unconventionals sector is more 'digital' than conventionals, he said.

The unconventionals sector can work on shorter cycle times than in conventional environments, which means that companies are under pressure to show performance within a timeframe of perhaps a year. This pressure means that people cannot lock themselves away easily in silos, he said.

Across the upstream sector, the pressure to improve productivity and efficiency is mainly applicable to drilling and operations domains, rather than exploration.

But explorers should not be left out. Digital technologies 'offer cost and performance improvement to all forms of analytical activity, of which exploration is clearly one,' he said.

Digital improvement managers

Mr Smart's idea is that companies could employ 'digital improvement managers', with a brief to look for ways that companies can improve their processes and standards, backed up by technology.

They would understand what technologies are available. They would keep up to speed with changing technologies and what is possible, including knowing what is happening beyond the industry.

A common mistake is that people believe that all they need to do to get the benefits of technology, is to deploy it.

'It is not simply a matter of adding additional technical resources, AI capability, or design thinking based skills,' he said. 'It is about engaging the whole workforce and even more importantly the leadership in new ways of working. And it will certainly require some new skills.

Some oil companies are already trying to set up this sort of capability in a centralised way, making different technologies available to their managers and leaders.

Understanding all the digital technologies can be like 'horizontal rain', with so much more to know, he said. 'So much has been written and published on every dimension of the digital potential.'

Companies need to consider whether to invest in a new solution, knowing that if they wait a little longer, there might be a better version on the market. So the decision making can take a great deal of expertise.

If digital improvement managers are enabled, they could also keep track of which technologies are providing crucial benefits, because it is not always obvious, he said.

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