Across industries, CEOs are realizing the importance of agility in sustaining and growing their business. More than half acknowledge agility as the new currency of business and that growth relies on the ability to challenge and disrupt business norms. Despite this realization, just under half of global CIOs feel their organizations are better than competitors at responding to changes in the business environment. We see a similar perspective from CIOs regarding time to market for new products and services, indicating a lag in building agility into the fabric of the enterprise and IT.
As global geopolitical activities drive uncertainty and volatility in commodity prices, oil and gas CIOs continue to be seen as critical to enabling the business to deliver at potentially depressed prices with ongoing reductions to IT cost. In their role as a strategic enabler to the business, CIOs are delivering those cost savings through operational efficiencies and automation. With increasing pressure to reduce carbon emissions and drive renewables, the critical role of technology in Oil and Gas is only getting bigger. The CIOs in the oil and gas sector who will emerge as digital leaders are those who can rapidly deploy new technology and capability into the enterprise, at a low operational cost.
The ability for enterprises to navigate disruption and manage agility is dependent on technology modernization and an enabling operating model. Oil and gas CIOs who are realigning technology delivery to business strategy with full stack portfolios defined by the speed at which they need to deliver are emerging as the digital leaders in an agile world.
Oil and gas companies remain more focused on cost cutting and operational efficiency than other industries and the data indicates a strong desire to improve business processes via, or in conjunction with, technology. We see increased interest in automation opportunities within the oil and gas sector, but similar to other industries, the degree to which automation has been implemented is still limited. And while agility and innovation lag slightly behind other industries they are still recognized as important areas for growth and keys to success. In oil and gas, however, the extent to which management is looking for IT to develop innovative new products and services is less than other industries.
Oil & Gas CEOs are leading technology strategy for their organizations indicating a strong proliferation of technology across all aspects of the enterprise. Despite the increased focus on technology as strategic to the business, more than 1/3 of oil and gas CIOs see limited organizational effectiveness in using digital technologies to advance business strategy. We see this as a key opportunity area for industry CIOs to pivot how IT leads, supports and integrates with the business.
While oil and gas companies continue to lead other industries in deploying new technologies across functions and geographies, all industries are seeing limited to moderate success in bringing a long-term product mind set to technology implementations and increasing the overall speed of project delivery. Across industries, more than half of companies surveyed have up to ¼ of their IT spend controlled or managed outside the IT function and ¾ of companies do not encourage IT spend controlled or managed outside the IT function. There is much less tolerance for this within oil and gas.
71% of CIOs say a skills shortage prevents the organization from keeping up with the pace of change. This is on par with other industries but oil and gas sees a significantly larger shortage in business analysis skills. Additionally, while nearly all CIOs think AI could replace some of their workforce in 5 years, notably more Oil and Gas CIOs think the proportion of workforce being replaced is higher. Similar to other industries, confidence is high that new jobs will more than compensate for jobs lost to AI. The challenge for oil and gas is that the operating model likely isn’t ready for the impact of increased AI.
The majority of respondents across all industries have not had a major IT security attack but cyber risk remains a top priority. Similarly, nearly all CIOs think the way organizations manage and use customer data will become just as important as product/service quality when attracting customers. Oil and gas CIOs lag slightly behind other industries in building customer trust through services delivered, and improving that will be critical to increasing the value perception of IT.
40% of oil and gas CIOs think delivering business intelligence/analytics is a key business issue the board is looking for IT to address but less than 1/3 of CIOs feel their organizations are very or extremely effective at maintaining an enterprise wide data management strategy or maximizing value from their data. KPMG sees leaders in this space employing a Chief Data Officer with a “Data as an Asset” approach in their broader enterprise strategy.
KPMG member firms recognize that CIOs and IT leaders in the Oil & Gas industry face increasingly complex demands and challenges. Today, IT must advance the business, not just support it, with boards increasingly expecting returns on digital investments and the implementation of successful digital transformation strategies that will drive up agility, responsiveness and enhance the customer experience.
KPMG professionals can help Oil & Gas CIOs, technology leaders and business executives to harness new technology and improve the strategic value of their technology investments. If your business is seeking ways to leverage technology as a source of innovation and competitive growth, KPMG member firms can help.
For more information, download The future of IT: Oil & Gas industry insights (PDF 307 KB).