Today, digital technology is a crucial facilitator in the oil and gas industry. It reduces cost, increases workforce productivity by making faster and better decisions. However, it is still difficult to translate digital efficiency into better financial performance and business growth. This is an issue faced by many oil and gas companies. The examples set by the digital transformation would force oil and gas leaders to look for innovation. Primarily in the digital technology strategies and new business models.
Digital Transformation is not yet delivering where it truly counts in a better financial performance for oil and gas companies. By comparison, the digital transformation experts in other industries have used digital to unlock higher value. Particularly in essential businesses, supply chains, and new business models within and across industries. They master the layers of intricacy business processes, and leverage from it significantly.
Within the past few years, digital technology initiatives have acknowledged the value of using easily scalable business models. We know that these companies have transformed every element of their traditional business model. This includes their customer engagement model, manage assets, and schedule, operate essential services.
Comparing digital transformation initiatives to asset-focused oil and gas companies might seem unfair. However, it is relevant to consider how other digital technology companies have effectively adopted. Particularly to new business models that are less asset-focused. So, it is useful to consider how the oil and gas sector might be interrupted. And what they might do in response.
Transitions due to Digital Transformation in Oil and Gas
The oil and gas industry was a comparatively early adopter of sensors, real-time monitoring equipment, automation, and data analytics tools. It is now time to develop them better as well as start investing in the new digital routes.
Although, we believe that the oil and gas industry had failed to take many opportunities. Particularly the ones that are derived from using data and technology in more critical ways. In the oil and gas industry, Digital technologies have not yet been utilized to drive transformation. It is slowly improving, but still, the industry is going through difficult times. Low oil prices, delayed capital investment, and general cost-cutting operations continue to undermine profitability and shareholder value. But, as the oil price has stabilized, the investment and intention to grow is returning to the industry. Even if the focus and scale of this intention continue to be uneven. In fact, according to the recent surveys on the impact of digital technologies in the improving sectors, 15% of companies are focusing on digital as an investment priority. These include new initiatives still interrupting rather than supporting investment plans and priorities.
Climate Change Regulation
Climate change regulation is rising in many countries. Oil and gas companies are beginning to shift their strategies and business models to be less dependent on fossil fuels. Such changes and the adaptation is visible. More big players are investing in clean and renewable energy and cleaner energy-transportation infrastructures. It is against this background every day; the interest in digital technologies is increasing. That is the reason we believe that changing the economics of the industry is necessary. It will provide absolute levels of investment. It means oil companies must understand and believe in the benefit of digital transformation. They should start to invest more in the new digital technology initiatives to manage this transition better.
Opportunities of Digital Transformation in Oil and Gas
Oil and gas companies need to act positively. Identifying and utilizing digital technology as growth and adding value forced by proactive planning strategies, and investments. We know that many oil and gas companies are carrying out the digital transformation program. This is to drive efficiencies in core business operations. Those who are adopting digital technology as a strategy beyond efficiency are finding that technology can build integration across the business. It can also increase reusability, reduce investment repetitions, and open their business to new opportunities. Even more importantly, these companies avoid building new initiatives with outdated thinking and technology. They know that an excellent digital strategy sometimes will require changes in leadership or additional leadership skills. It most likely requires new skills and talent.
New platform-based business models could drive the most intense global economics since the tech revolution. Companies are utilizing the cloud services, custom software solutions as open-source and reusable software, and mobile app platforms. This allows them to create value for themselves and with their partners, communities, and customers.
Declining oil prices make it harder for oil and gas companies to focus on growth and new business development. While companies are now reinvesting, levels of investment in R&D are unlikely to change substantially and are often separated from digital transformation plans. New products and services built with digital technologies can benefit the business, particularly when they build directly on R&D. High performer oil and gas leaders understand the need to expect similar value from software and analytics as they do from the core business itself, and they invest accordingly to reveal the value.
Read more about Custom Software Development
Impact of Digital
It might contain risks, but many are now realizing that even big players are not protected from the impact of digital technology and also need to prepare themselves for the future. At the same time, they still invest in their core business while releasing capital to innovate. They also realize that the digital transformation will allow companies to be more agile and employ a more integrated operating business model. Units of the requirement will be seen as reactions to real-time opportunities, based not only on growth goals but also informed by customized customer engagements based on optimized services and solutions.
A shift in the balance of power is challenging for any sector, the oil and gas industry included. All industries are now dealing with a more customer-centric world. Nowadays, customers, especially Millennials and Generation Z, want personalized services, seamless experiences that enhance convenience, choice, and price as a self-service portal. We believe that the best digital performers are learning to focus on the customer experience across retail parts and the wholesale of the business, including integration with supply chain and procurement. Digital technology is becoming increasingly important in global supply chains, not only enables companies to create more efficient processes but also by exploiting an ecosystem of the new marketplace.
Today, most oil and gas companies continue to invest in systems to handle huge volumes of data in fast, secure, and flexible ways. They are utilizing the power of the cloud and mobility to create cost-effective and safer operating environment. The leaders in digital technology are developing strategies that enable the merging of information technology and digital innovations with business operations technology.
We believe that oil and gas companies hold themselves to high-performance standards with an increased focus on safety and business processes. Digital technology is being viewed as the next wave that can result in a step-change in safety effectiveness, growth, and value formation.
Texas Software has significant experiences in providing custom software solutions in the Oil and Gas domain, which will ease the digital transformation for oilfield service companies with a better customer experience.
Contact us for a free evaluation to discover your options for developing a custom software solution!