CIO’s Guide To Intelligent Resilience In The Energy Industry

Kiran Srirama

After years of volatile and sometimes depressed market conditions, the energy industry is entering a multi-decade shakeup that is rendering traditional business models obsolete. For example, global energy demand will be approximately 25% higher in 2040 than it was in 2015, according to the U.S. Energy Information Administration. And perhaps more significant, giant leaps in fuel efficiency and renewable resources could help counter rising greenhouse gas emissions and water and land pollution.

These changes are certainly challenging by themselves. However, a recent report from a U.N. scientific panel is about to make matters more complicated for energy providers. By 2030, food and water shortages, wildfires, weather disasters, and coral reef die-off will likely reach unprecedented and irreversible levels, unless the world takes action at a speed and scale that has “no documented historic precedent.”

How can energy providers respond to growing dependence and remain profitable, while demonstrating responsible stewardship of our planet? Some industry players are betting they can – with the help of intelligent technologies.

The foundational dynamics of the intelligent energy enterprise

To remain competitive during this time of significant change, many energy providers are increasing their adoption of digital technology to shift away from demand fulfillment to focus on the consumer experience. Very quickly, they are turning commoditized products and services into a source of differentiation and convenience by evolving their business models as well as commercial trading, contracting, and selling processes.

Although these improvements are shaping the industry, there’s still room for more in the coming years and decades. For example, energy players may reconsider their daily drilling operations, diagnostics and inspections, weather-monitoring systems, pressure and flow adjustments, predictive maintenance, asset sourcing and health, supply chain notifications, and mergers and acquisitions.

Getting to this point of digitally enabled scenarios that are competitively powerful, sustainable, and impactful is certainly no small feat. But it can become simpler and faster by building a digital foundation based on the core fundamentals of an intelligent energy enterprise:

  • Financial strength: Acquire the cash flow needed to invest in capital projects with flexibility and ensure a high return on these expenditures.
  • Value chain integration: Tap into end-to-end insights – from production to trading and supply of molecules and stock – to capture the highest value for each molecule explored and produced.
  • Operational excellence: Leverage risk as an extensive element across several dimensions of the business to ensure that asset investments deliver significant business outcomes such as high performance, predictive and efficient upkeep, and competitive product pricing.
  • Efficient cost structures: Handle operational costs and use invested capital efficiently and relentlessly to deliver massive-scale projects, such as floating liquefied natural gas projects, with a long-term payoff.
  • Opportunity portfolio: Optimize assets to comply with regulations and manage operational costs, while following global consumption and demand to merge, acquire, and divest rapidly as the market requires; lower production costs; and improve market offerings.
  • Technology leadership and scale: Enhance long-term value by putting technology and innovation at the heart of driving supply options and efficiency to unlock new solutions and pursue sustainable and affordable energy alternatives.

By combining these elements, energy providers can access real-time data insights to pinpoint consumption patterns to better serve consumers and earn their loyalty by demonstrating sustainable diligence. For example, decision-makers can understand which reward offers and pricing models will reduce consumer churn. Meanwhile, with the same data, consumers can learn from these insights to assess their own energy consumption and receive recommendations for improvement.

Intelligence: core enabler of the future energy industry

With a relentless focus on frontline efficiency and customer satisfaction, core business capabilities and digital technologies can become an inseparable mix. Embedded analytics, machine learning, and automated recommendations can help energy providers increase the efficiency of their core processes and broaden their reach and interaction with customers, suppliers, technology, and assets.

For example, energy providers can reconsider production and sourcing through the lens of supply, demand, market dynamics, and business model execution. A foundational digital platform can help industry players:

  • Simplify supply chains by replacing parts locally with 3D printing
  • Lessen production delays and inefficiencies with sensor-generated data from windmills and heavy machinery
  • Base frequent invoicing on energy use, online marketing, and mobile connectivity
  • Strengthen consumer retention through prescriptive services

Businesses run best when they use data as their fuel. Using intelligent, connected systems to harness the value of data insights allows energy companies worldwide to increase market opportunity, achieve profit goals, and grow market share – all while doing their part to protect our planet.

Discover new scenarios that show how intelligent technologies can help your business shape the future of the energy industry. Get your free copy of “Fueling Change in the Energy Industry Enabled by Digital Technology.”

Kiran Srirama

About Kiran Srirama

Kiran Srirama is a Chief Architect within the Business Transformation Services group at SAP, helping address businesses challenges in the energy and natural resources industry with innovative and agile digital solutions. He played a significant role in development and deployment of SAP solutions across companies, helping them perform well in the challenging energy business environment and helping transform energy companies into the new dimension.