Digitalisation across the Resource and Energy sector is maturing from tentative experiment to application at massive scale. Resource and Energy companies are now striving for digital maturity and realise it is no longer a question of whether they can afford to do something, but rather a question of whether they can afford not to.
According to Gartner, digital initiatives topped the list of priorities for CIOs in all sectors in 2019, with 33 percent of businesses now in the scaling or refining stages of digital maturity and only four percent of organisations with no digital initiative at all, which signals a shift from digital as an option to digital as a mainstream platform.
Unfortunately, not all organisations have reached the level of digital maturity that they are striving for. For some, digital maturity is much lower than their goal - there are often older systems that haven’t been upgraded or are no longer supported and can only be described as remedial.
While technology improvements are being made, the pace of change is much slower than it could be as organisations are sometimes just striving to “keep the lights on”.
Shifting their thinking about digital transformation
Digital transformation should not be thought of as an independent strategy, but as an enabler of business strategy. While Resource and Energy companies face even greater competitive pressures in the coming years, if digital can be implemented at pace and scale, there is value to be captured. The ability to reduce costs, increase plant up-time and safety, whilst improving margins are at risk without companies acting on their digital strategy and executing at speed to realise the benefits the strategy promises.
When looking for investment approval for digital technology, it is rarely difficult to articulate the benefits. It is clear that any improvements in operations include looking at existing processes.
It has been proven time and time again that it is possible to improve business processes by streamlining tasks to enhance efficiency. We are all familiar with the results of inefficient and dysfunctional processes, namely unhappy customers, stressed employees, missing or late deliveries and increased costs. That’s why it is so important to improve processes when they are not working well, in order to improve the overall customer and employee experience, by investing in new digital platforms and tools to improve foundational capabilities.
An innovation culture driven from the top
It is crucial that a refinery’s digital transformation and strategy is driven by its senior leadership and they need to take a step by step approach when approaching this journey. Accenture found that refiners are realising that the last mile of digital transformation around organisation and people changes is very hard to achieve. Therefore, refineries need to ensure that leaders lead, as no digital transformation can be undertaken without visible leadership from the top.
In response to the digital transformation challenge, companies are making long-lasting business model changes, which hinge not only on technology but also on their leadership. They need to be relentless about focusing on value in terms of both benefit realisation and new ways of working.
Mitigating the risks
A starting point is to look at key areas – data and process - that is, leveraging data as an asset, getting the process and underlying layer right while ensuring the technology does not compromise security and safety.
As levels of digitisation increase, so does the risk of cyberattacks, as was seen in the recent LockerGoga ransomware attack on one of the world’s largest aluminium producers, Norway’s Norsk Hydro. It was forced to revert to manual operations on some processes and the attack has cost the company an estimated US$50 million. Just recently Finnish oil refiner Neste admitted to suffering an “extensive information system failure” and it is not yet clear whether the cause is a cyberattack, but it has resulted in major delays in product distribution that will impact customers.
These attacks are just two of many and should act as a red flag to organisations about the growing number of cyberthreats essential operations face, as their attack surface grows with increased automation, more instrumentation and a rising number of connected assets.
Where to start
Knowing where you are on your digital transformation journey will let you set the goals needed to execute on the strategy, stay competitive and grow. Establishing a baseline of where you are at, where you want to be and a roadmap – with people, process and technology - to getting there is essential.
Where are you on your digital journey?
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