The utilities and oil and gas industries are in the middle of what might be their biggest transformation ever. Will the old recipes still work?
Twelve months to go. Twelve months in which Ian Cain, managing director, Customer Service and Retail at UK public utility Thames Water, must equip his company to survive the turbulent times ahead. The water market in England is set to open up to competition in April 2017, for business customers initially and for private households later on. “Our customers will be expecting us to up our game,” says Cain.
Meanwhile, Peter du Plooy, CIO at South African oil company Engen Petroleum, is tackling challenges of a different kind. Faced with low oil prices, the digital transformation, and the need to seek out new and value-adding services, his mission is to secure the future sustainability of his company. In a nutshell, du Plooy needs to cut costs so that Engen can invest in new technology.
Attending the recent International SAP Conference for Utilities 2016 in The Hague, Netherlands, Cain and du Plooy put into words the concern that is currently rife in the industries these two represent. Namely, how will we survive in a world where, as futurist Gerd Leonhard put it in his opening keynote, “Everything is changing at an exponential rate”?
In the above video SAP customers and industry experts report on how they are embracing the energy revolution and on the key role that cloud solutions will play in the future.
According to Leonhard, the next five years will be mind-boggling ‒ no matter what sector of industry you operate in ‒ and he advised his audience to get up to speed on topics such as artificial intelligence, learning machines, robotics, and the Internet of Things (IoT).
“Cognitive computing will open up enormous opportunities for energy providers,” Leonhard explained, and he referred to the efficiency gains and cost-savings that would be possible when routine tasks vanished and no longer relied on humans to perform them. Yet to be successful with new business models, he said, enterprises would have to be ready to collaborate and share information on a grand scale, “even with their fiercest competitors.” He referred to this phenomenon as “hyper-collaboration” and called on the industry to weave a “global energy network.”
Profound structural change
Marie-José Nadeau, chair of the World Energy Council, described her industry as facing enormous challenges and a profound structural change, and she highlighted three major driving forces in the transformation. The first was digitalization, which was improving business efficiency and the use of energy resources. The second was decentralization, which was fostering local energy generation and new forms of storage. The third was the continuing trend to “de-carbonization,” which, she said, the industry needed to address urgently, particularly in light of the intensified pressure to reduce carbon dioxide emissions that had resulted from the international agreement reached at last December’s Climate Change Conference in Paris.
Although she expects the share of renewables in the global energy mix to increase, Nadeau predicted that the traditional oil and gas industries would “be around for many decades to come.” Finally, she expressed her conviction that it was those companies “at the forefront of digitalization” that would emerge from the energy revolution on the winning side.
Henry Bailey, global vice president, Utilities Business Solutions, described the industry as building a “digital energy network” that would reflect the new structures of power generation, transmission, and consumption. While Ken Evans, global vice president, Oil and Gas Business Solutions, confidently predicted that the digital transformation would make it possible to “supply everyone on the planet with safe, reliable, affordable energy.”
This, naturally, was all grist to the mill of the SAP team headed by Peter Maier, general manager of Energy and Natural Resources, whose conversations with customers returned repeatedly to the importance of cloud solutions for the energy sector. Drawing on a wealth of examples, Maier demonstrated to an audience of some 900 customers and partners from 60 nations how innovation and the digital transformation are enabling new business models and more efficient processes that will revolutionize our working lives in the future.
For more insight on digital transformation in the oil and gas industry, see Low Oil Prices Prime Oil And Gas Industry For IoT Adoption.