2020 was a tumultuous year for the oil and gas industry. Commodity prices, already significantly depressed, were exacerbated by disagreements between Saudi Arabia and Russia over production levels. And then COVID-19 struck. The pandemic dramatically reduced demand as commercial and consumer transport modes effectively went into hibernation and manufacturing output dropped. Despite all this, for the foreseeable future the world will go on significantly relying on fossil fuels in the new reality.
From a technology perspective, everything must be geared around enabling efficiency and cost gains. Systems and data must be integrated across front, middle and back offices to deliver more precise forecasting, enabling shorter decision cycles that drive profitability and reduce waste.
- Top IT investment areas – Infrastructure/cloud, security and privacy, and technology development, management, and operations headed the list. Increasing automation across operations – including drilling, supply chain, and boiler diagnostics – is a strong priority for most (80 percent).
- Skills shortages are a challenge – Cyber security professionals are most in demand, followed by those skilled in intelligent automation, and organizational chance management. One positive for the sector is that 70 percent of oil and gas CIOs agree the COVID-19 crisis has permanently created a culture of inclusivity in the technology, significantly higher than the cross-sector average of 52 percent - and a sign, perhaps, that IT teams have pulled together and increased their sense of team spirit in challenging times.
- Scaling data analytics is a top priority – In the new reality, oil and gas enterprises will heavily invest in maturing modern data architectures to gain insights into and to shorten decision cycles. 71 percent of oil and gas organizations said that scaling data analytics skills is a priority, with expanding and integrating modern data repositories the next most important task on the agenda.
- Cyber security is an increasing focus – More than four in ten organizations have experienced an increase in cyber security incidents – with oil and gas businesses reporting a particularly large rise in spear phishing attacks (up 90 percent).
- Digital leaders in the sector are delivering value faster – Digital Leaders are further along the path than their counterparts, with 40 percent saying they are effective or very effective at pivoting and scaling digital channels, compared to just 14 percent of others. They also hold a significant edge in terms of other key metrics such as increasing revenues, improving customer satisfaction/experience, and collecting valuable data.
COVID-19 has changed the landscape. With technology more important than ever to organizations’ ability to survive and thrive, the opportunity has never been greater for CIOs to work as strategic partners with the business. Seven in ten IT leaders report increased collaboration between the business and technology teams – this relationship is something that CIOs must build on to ensure their organization’s digital transformation success.
For CIOs in oil and gas, digital transformation must now be accelerated. Being so based around physical products and processes, the sector has lagged somewhat compared to other industries in terms of IT enablement. Now, with cost optimization and operational efficiency gains so critical, the technology function has the opportunity to prove its strategic value and help the business leverage the power of IT to lift processes and performance across the organization.
How KPMG can help
KPMG firms are some of the largest providers of services to banking & capital markets organizations globally, we take a boutique approach to client issues with a focus on flexibility, adaptability, and innovation. We recognize that there are many on-ramps to supporting IT transformation and we’ve tailored our services accordingly: