April 2019, Vol. 246, No. 4
Features
Investing in People to Unlock Power in Your Data
By Teri Mendelovitz, Vice President, Global Energy & Utilities, North Highland
While energy leaders feel optimistic about 2019, many are facing the challenge of how to maximize their technology. Big data may be revolutionizing other industries, but its potential has yet to be unlocked by most energy companies.
According to the 2019 North Highland Beacon report, 89% of energy leaders cite operational efficiency as a strategic priority in the coming year, yet only 33% feel prepared to address this. Furthermore, none of the surveyed leaders feel very prepared to address data and analytics or digital capabilities in 2019. At the same time, energy leaders are beginning to see that data can be a strong asset for operational efficiency and are looking to capitalize on their technology.
To put it simply, the industry knows data and analytics can help them achieve greater operational efficiency, but they’re not sure how to make this happen.
It’s not surprising that the oil and gas industry finds itself in this place. Many companies, large or small, grew as a result of numerous acquisitions. Rarely did the companies fully integrate their systems upon acquisition. In most cases, there was a decision to put off integration or to tackle it through a future project to attempt to integrate enterprise resource planning (ERP). Often the processes were never fully changed and cultural ways of working weren’t addressed. As a result, the integrations were disjointed or failed outright.
The high profits for oil – until the crash in 2014 – contributed to the lack of integration because companies were making so much money that they didn’t pause to focus on improving efficiencies.
Now, with sluggish oil prices, more companies are choosing to focus on operational efficiency. For many, one of the first places they’re turning is data and analytics.
Technology is critical in achieving operational efficiency, with over half of industry leaders citing data and analytics and digital capabilities as competitive advantages in the Beacon report.
Companies have had SCADA data to measure and control – and have been using measurement data for years. Some organizations completely rely on it to get feeds for pricing, constant wind readings, intermittent temperature readings, and for sensors and alarms. But how do businesses use it, and better yet, marry it through their entire process in order to turn thousands of points of data into real, actionable information? Organizations need visibility into the data they own to gain an advantage in the market. After all, that’s why they invested in these technologies.
Armed with Data
Under the old way of doing things, only the executives who make final decisions for their organizations had broad access to organizational data. But today, employees across all levels benefit from in-depth data. Even machines or robots programmed to make decisions using robotic processing automation (RPA) – and then progressing to Artificial Intelligence and machine learning – use data. The ultimate goal is to have the right information available at the right time and for the right people and machines, allowing those at every level to make informed and impactful decisions.
However, there are many foundational elements that must first be in place before organizations can benefit, such as a common enterprise resource planning (ERP) system, as well as a common data language across the enterprise with supporting taxonomy, definition and governance. This is no small endeavor but is necessary to bring various systems together in a data warehouse or data lake for purposes of reporting, analytics and visualization.
The technology components of this type of project can be bought, implemented and maintained for a price and with a predictable outcome. What’s less predictable, but unbelievably important to success, is the people. They cannot be underestimated and should not be left out of the journey.
In order to begin realizing the benefits of the massive amounts of information that is available, organizations must focus on re-skilling their workforce. Both individuals and teams need to become more agile, collaborating with colleagues from different offices to solve problems. While some companies have already started this undertaking, the investment needs to be bigger and all-encompassing. As digital programs are increasingly incorporated across the industry, the workforce will start to realize that digital technologies are not just a trend but are required for success.
Maximize Technology
Significant effort and investment dollars need to be set aside to skill people in these new ways of working. This investment is much broader than technologies and tools. The strategy should address how the workforce will be effective in the new world of digital capabilities, what tools they need, what training they need, how they will collaborate and if they will still do the same thing as before.
There are various ways organizations can accomplish this reskilling:
Consider digital bootcamps to rapidly train employees on what’s possible and what’s coming
Foster collaboration by having employees work in teams to solve problems, learning from other plants or projects in the next field or on a different continent
Seek collaboration outside the company by working with partners, engineering procurement construction companies and software suppliers. In this area, it pays to think big to unlock potential savings across the value chain
Create teams across silos and allow them to test and see how they can thrive when they are able to work in new ways. Allow people to fail. Fund trailblazing projects and allow, if not encourage, employees to break the rules. When teams succeed, go back and re-write the rules to encourage success or empower talent to try something new.
Building Resiliency
With all of this technological change, where is the industry headed? It is no longer as easy as mapping “as-is” to “to-be” when we don’t know what the to-be will even look like. Technology changes constantly and it’s difficult to predict how advances will impact businesses in five or 10 years (Will you have laptops? Does the platform of the future need cameras?). With this in mind, leaders can’t focus solely on technology and process. Instead, organizations need to build resiliency into the workforce when the only thing that is certain is more change.
Perhaps an easy construct to organize around is the operating model. This can truly be an organization’s competitive advantage, allowing them to build resistance against disruption and vaulting them ahead of others in the industry.
As businesses undertake new programs and ways of working, leaders will want to focus on four key components:
People, obviously, are how companies design their team and structure, choosing team members based on the new roles that are needed (digital champions, for example).
Processes are the systemized communications and standards that establish new ways of working.
Leadership/culture is the overarching vision for the company and mindset of employees, as articulated by management.
Governance and risk provide accountability while helping to manage and mitigate risk.
Of course, there are many more elements under each of these four components, but this represents the type of structure that, if properly designed, can build the kind of company that continuously adapts to changes in technology and workforce needs.
The most important ingredient, however, is engaging and enabling employees. By creating a common definition of what it means to be digital, organizations can unlock greater operational efficiency and foster a technology and digital culture. Including employees on all levels of this digital transformation will allow new technologies to be brought to life outside of the IT department.
Translating the efficiencies created by new technologies into tangible benefits and cost savings will be key for energy leaders in 2019 and beyond. The companies that do it well will have a true competitive advantage. P&GJ
Author: Teri Mendelovitz is vice president, Global Energy & Utilities lead for North Highland, a management consulting firm.
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