In the latest in our exclusive series of interviews with the 2017 Energy Digitalisation Summit Middle East speakers, Luq Niazi – Global Managing Director, Chemicals & Petroleum Industries, IBM shares his views on the digital transformation of the energy industry.
IBM is one of the largest technology and services companies in the world. We are focused on helping our clients progress their company strategies and business performance through the effective application of Digital Transformation capabilities and solutions including Enterprise as a Service, Cloud, Artificial Intelligence, Internet of Things, Blockchain and High Performance / Quantum Computing, delivered with deep industry focus and research and development excellence. We are committed to making our clients and the world more sustainable and realizing the vision of a Smarter Planet.
How do you see digital transformation reshaping the energy sector?
Digital Transformation is fundamental for energy industry to reach new levels of performance and innovation. Digital technologies are enabling greater efficiencies and capabilities across the value chain, unlocking new potential and value creation within the enterprise, across the partner ecosystem and the enhanced level of interaction and capability between people and technology.
What is driving innovation in digital transformation – strategy, technologies or both?
There are four key technologies - Cloud Data, Cognitive & Analytics, Internet of Things and Blockchain that are combining to generate significant transformation in the Oil, Gas and Chemicals industries. According to IDC, by the end of 2017, two-thirds of the CEOs of Global 2000 companies will have digital transformation at the center of their corporate strategy. Forward-thinking industry leaders have already identified the potential of these digital enablers and are building new strategies and capabilities to address the skill gaps they have in their organizations that are required to unblock the potential of digital transformation. To accelerate adoption, organisations will need to combine deep industry skills, digital technology expertise, research capability and a culture of continuous experimentation and learning. Together, when applied in a focused way to key business challenges, they have the potential to deliver significant innovation and improvement to top and bottom line performance.
How is IBM driving innovation in digital transformation?
Industry specific Digital Transformation is core to IBM’s strategy and is embedded in everything we do. Through IBM's AI technology, we have one of the largest footprints of Cognitive / AI initiatives as applied to the Oil, Gas and Chemicals industries and we are accelerating these programs both with individual companies and with industry consortia. We are further enhancing these capabilities with our Cloud and IoT platforms and partnership. Furthermore, building on our recognised leadership in Blockchain and our experience from other industries, we are also defining how to apply secure and trusted network technologies to realise new efficiencies across industry value chains.
How will the customer journey be impacted by Digital Transformation?
This really depends on which part of the value chain you are working in. In Exploration and Production for example, Digital Transformation is helping radically compress the time it takes to find new reserves and accelerate their production at scale. Across the Chemicals supply chain, it is helping optimize product development, plant operations and enhance customer delivery promise. In Downstream Operations it can provide greater insights to improve plant and equipment reliability as well as safety for employees and better management of the environment. In Fuel Retail, Digital Transformation is delivering superior customer service through multi-channel touch experiences across the sales and customer loyalty life cycle. The possibilities are many.
Are you able to give a use case study or an example of a company that has applied digital transformation in the energy sector and how this has tangibly improved its business?
Yes, I will share a number of case study examples across the value chain – in Upstream, Downstream and Chemicals – during my keynote presentation on Tuesday Dec 12th
What are some key indicators of better measuring/assessing customer’s satisfaction along this journey?
There are a number of different key indicators/measures of success to show progress towards Digital Transformation and customer satisfaction. The nature of the measure is very much dependent on your particular focus i.e. whether you are focused on achieving enterprise-wide capability building and digital transformation or business unit/process specific digital transformation. For example, at the enterprise level clarity of strategy and cultural adoption is key. So knowing if there is a digital strategy, and if it is understood by employees is the important measure. Similarly, are the company goals and objectives aligned and focused on enabling continuous learning, digital adoption and change? Do you have a Chief Digital Officer or are you embedding the responsibility and measurement in to the Business Unit lines? At the business unit or process level, the focus should be on tracking the improved levels of performance and associated financial benefits arising from the digital transformation initiatives as applied to those specific areas. For customer satisfaction, does the company have appropriate measures in place such as Net Promoter Score or similar assessment techniques to gauge satisfaction and loyalty? Are you tracking and responding to direct feedback from your customers across your digital and social channels? These are just some of the indicators and measures required to assess progress along the digital transformation journey.
What role does IoT play in the digital transformation journey in the energy sector?
Businesses are harnessing the power of IoT to leverage data in real time that connects the moving parts throughout their enterprise to boost efficiency and performance. Companies are extending expertise and knowledge by integrating data and insights across processes, assets, instrumented products, transport systems and employees, and are leveraging advanced analytics and cognitive capability. Those companies advanced in their digital transformation journeys are partnering with technology and industry process partners to build IoT integration frameworks in to their business architecture or leverage industry IoT platforms. These frameworks or platforms are set up to enable data and insights to be gathered and integrated from multiple sources across functional silos and in different formats into a homogenous business and technology view that helps increase performance in many areas such as operations, supply chain, logistics and worker safety.
Is Big Data really the new oil?
Big data has been around in the Oil, Gas and Chemicals industry for a long time. The opportunity space and growth in Big data – or Bigger Data, is the ability to consume and derive insight from both the structured as well as the unstructured data that exists in many reports and text based formats that depict and describe our collective experience about reservoirs and formations around the world. For example there are over 150,000 SPE reports written about experiences in upstream. The ability to garner insight from that resource can accelerate our understanding of formation and field learnings. With the changing energy dynamic, we will still need to be more innovative in the way hydrocarbons are found and extracted from both current and new reserves and how it is then optimally converted into the most appropriate and highest value products. From our research, improvements in uplift and productivity of 5-15% can be achieved through the effective use of big data, so in this context, data is fundamental and can clearly be considered to be a source of new oil in this digital age.