Digital Transformation in Industrial – The real thing for Oil & Gas!
It has been a week since Minds + Machines in San Francisco and the team at GE Oil & Gas has been swamped with requests for deep dive information about the fundamental ingredients of a digital transformation journey. I am pleased to report that the movement to ‘digital industrial’ is no longer a question of ‘if’, rather the industry has moved on to ‘who will be first and most adopted’.
GE’s partners, like BP, Reliance, Technip, or Toyo Engineering have kicked off the most significant wave of productivity improvement of the modern industrial age. And, this is happening in an industry that continuously ranks behind other asset intense industries in performance. While the Oil & Gas industry achieved average returns on operating assets over the last 5 years of 6-8%, the rest of asset intense industries performed at twice (2x!) these levels, and in some cases returned even 3x these levels. Finally, we jointly can catch up and perhaps even outperform others. I applaud early adopters that are crossing the chasm and like Ahmed Hashmi, BP’s Global Head of Upstream Technology, stated so eloquently "If you don’t know what to do next, do something. That first step, it opens up the next three steps for you, and then it opens up the next few...it's like an exponential effect."
And, let me clarify, the value proposition of the industrial internet combined with leading edge software and hardware technology that enable big data analytics, work flow enablement that unleashes the potential of increased reliability, lower operating cost, and a safer and compliant work environment is new to our industry. While the industry has invested for decades in seismic technology, 2D and 3D modeling and is most likely one of the largest data collectors in the world, there one inconvenient truth to it: We are utilizing only (!) 5% of the data collected.
So why is that? The truth is that these large data pools are buried in standalone silos of outdated data warehouse technology, embodied by outdated monolithic spaghetti code and distasteful user interfaces, where only a selected few feel the urge to access and use the data to create insights.
Those point solutions, built over decades on client server technology and relational databases lack every bit of Scalability, Accessibility, and Extensibility.
While some in the industry are holding on to the past of Fortran, Cobol, .Net and large scale investments (“it took us so long to get it done”), we can learn from the consumer internet that cloud-based micro services, open source technologies like Cassandra, Kafka, Docker, Cloud Foundry, to name just a few, and best in class user interfaces, drive user acceptance and massive adoption, which in turn leads to the value creation we are all aspiring for.
With that, I applaud the early adopters that have the stomach to ‘try something’. You will disrupt an industry that is prime candidate for digital transformation – 2-4% improvement in operating efficiency will improve RoOA by 20-40%.
Read this post on LinkedIn.