Video: Five Big Technology Transformation Ideas for Oil and Gas CEOs
Only 30% of oil and gas companies have successfully scaled digital manufacturing. In this video, McKinsey & Company presents a few digital transformation ideas that can help oil and gas CEOs achieve real impact on production key performance indicators.
What is the top challenge in deploying digital technologies at scale?
Thomas Hansmann: Our work with oil and gas clients shows that only 30% of companies have successfully scaled digital technologies to deliver meaningful improvement. Usually, technology isn’t the problem. Most tech transformations stall due to fundamental cultural and organizational barriers.
What can CEOs do to overcome these barriers?
Yi Zhou: To overcome these barriers, there are five big ideas that oil and gas CEOs can take action on. In successful tech-enabled transformations, value creation is always front and center. Oil and gas leaders should be clear about the business problems they wish to address and also be clear about the results they want to achieve.
We’ve identified at least eight value-creation themes across the oil and gas value chain. Take one downstream theme as an example. End-to-end hydrocarbon optimization that is centering on analytics-driven yield energy and throughput improvement can maximize profit per hour for an impact of 30 to 50 cents per barrel. The implication is oil and gas players can maximize potential value by thoughtfully combining use cases from these eight themes. Companies also need a mechanism, for example, a transformation office to track the progress and bottom-line impact of every project and initiative, and facilitate rapid, fact-based decision-making.
Ying Wan Loh: Advanced solutions often fail not because they produce erroneous results, but because the workforce doesn’t understand or trust the results. That’s why successful tech transformations often focus on people. For example, for an oil and gas company in Asia, in order to encourage employees to adopt digital tools, the top management worked very hard to communicate the importance of digital transformation and act as role models to adopt new ways of working.
In the first 3years, that digital transformation has delivered over $150 million in value for the business. In addition, if companies want these new ways of working to stick, they need to incentivize the employees to maintain them. Apart from monetary incentives, leading CEOs also understand that public recognition can be just as important.