Digital transformation in oil and gas companies

Does the digital strategy align with business strategy across functions and business units? To what extent does the organization reassess and reprioritize digital projects to achieve continuous value?

Based on our cross-industry assessment, we’ve found that leading oil and gas companies:

• Have clear alignment between digital and business leaders. The most successful companies ensured a strong partnership between the digital and business leaders from strategy to execution. Most rely on a digital roadmap to direct where they need to focus digital efforts that ensure alignment to business needs and deliver tangible results.
• Possess a centralized team, formed by key business leaders and digital leaders, that focuses exclusively on digital initiatives. Companies that are leading digital transformation in the oil and gas industry have a formal chief digital officer (CDO) or similar digital lead role.
• Have a clear understanding of digital and its vision across the organization.
• Create an agile mindset in the ways of working inside the organization by executing initiatives through agile digital teams with a “fail fast” approach.
• Communicate efficiently the value of digital in their organization, along with a value governance framework with consistent metrics for digital initiatives, that allows for transparency and identification of top value opportunities—with visibility into the progress made, so they can easily stop or change direction as needed.
• Know how to make a strategic trade-off decision of when to buy versus build, considering goals, resources needed, and solutions available.
• Form a centralized innovation committee with a structured framework to enable decision-making and encourage innovative ideas in the organization to transform the oil and gas industry.

To what extent has the organization fostered a digital mindset—empowering innovation and experimentation for transformation in the oil and gas industry? How does it incorporate and embed digital talent and skill sets?

Leading oil and gas companies:

• Create consistent digital fluency in their workforce, not only for IT employees but for the entire organization to have a basic understanding of digital.
• Empower individuals through training and culture to foster organic innovation.
• Have shifted recruiting focus to individuals with core digital skills as oil and gas companies see the importance of technical skills in advancing their digital transformation.
• Embrace key leaders, who understand digital and can advocate its value to the rest of the organization, to have strong leader-led change.
• Have successful case for change messaging that persuades employees in the digital transformation, creating higher level of engagement.
• Take in digital as a key piece of their operation, rather than looking at digital in a siloed approach.
• Have a strong collaborative culture between the business and digital team, with both functions understanding and sharing ownership in their oil and gas digital transformation journey.

How does the organization integrate digital tools into planning and operations of key processes—leading to operational function optimization, improved safety, and efficiencies across the business?

Leading oil and gas companies:

• Embrace the importance of IT/OT convergence, which is the merging of data management systems (IT) and industrial operation systems (OT). This convergence aids industries in enhancing their decision-making and operational procedures, based on precise and up-to-date data.
• Acknowledge the transformative potential of digital technology in streamlining their operational efficiency and value chain management and have initiated the development of suitable digital tools to augment these endeavors.
• Recognize the importance of various digital tools including AI for predictive maintenance, safety software, data analytics for insights, the Internet of Things (IoT) for operational control, and digital platforms for real-time coordination—all improving operational efficiency and safety.
• Are eager to integrate digital technologies into forecasting models. These tools—including AI, machine learning, and data analytics—enhance prediction accuracy and detail, improve decision-making and operations, and allow quick adjustments to forecasts as new data arises.
• With a service arm understand the value their products offer to their clients. They continually innovate, keeping up with new trends and technologies, to satisfy clients’ needs and remain competitive.
• Have effectively monetized their digital initiatives for clients by identifying their unique needs and offering tailored digital solutions.
• Incorporate their value chain in their strategies to identify maximum value-generating areas. This involves understanding each chain link, pinpointing inefficiencies, optimizing processes, and making strategic decisions—leading to operational efficiency, customer satisfaction, and increased profitability.

How connected and advanced is the digital infrastructure, and to what extent are data and analytical tools used to make better business decisions?

Leading oil and gas companies:

• Take a careful approach, considering the best tools aligned with their business goals before investing time and resources.
• Are exploring AI/GenAI tools as a facilitator to enhance efficiency in various support value chain functions, including supply chain, finance, human resources, and more.
• Have successfully implemented and evaluated the value of digital twins within their organizations. These digital solutions have demonstrated significant value, including improved operations, reduced defects, faster time to market, and the creation of new business models to drive revenue.
• Have mitigated data governance and cybersecurity risks by investing in platforms, enhancing security, and preventing potential threats.
• Recognize the significance of their robust datasets and have accordingly cleaned, prepared, and established proper governance around the data to extract optimal value. These companies, having a clear strategy on the best use of their data, can derive considerable value from their datasets.
• Have deployed digital in the field, increasing fluency in employees and automation in processes without losing talent and expertise.