Digital Transformation-Where are we half a decade later?

Half a decade ago I stumbled into the center of digital transformation as I was assigned a program manager role for a massive new innovation program called ‘Digitalization, Big data and automation.’ It was a steep learning curve for the entire company. The deeper we dug, the more aware we became of the massive opportunity that lay ahead.

We learned very quickly that its not the technology itself but the business models we create around it. The technological advancement is unprecedented, yet not only do we need to keep up with the pace but we need to think strategically on how we leverage the new technology to create more value for our business. Disruptors are everywhere, technologies are becoming more and more accessible and the only advantage a big established company has is the capital it sits on.

The big tech in the B2C market showed us the value of data as well as the risks associated with it. In the oil and gas industry we have always valued data, but not necessarily in the same way and to the same extent. Reservoir engineering has been the most advanced in the usage of analytical tools with large amounts of data. But as we began establishing our digital strategy, it became clear, that the data in many parts of the O&G value chain is undervalued and underutilized. Technologies like Hadoop that allowed hyperscale computing and advancement in IOT devices allowing edge computing were just beginning to drive analytics to the next level. It was clear to us 5 years ago that the maritime and offshore industry had some catching up to do.

In typical design thinking style, we left the building and went to talk to our customers to understand what problems can we solve as part of the digital transformation. We learned that very few players in the industry were proactively managing data and only a few were thinking of investing in innovation and technology centers focusing on data analytics, sensor technology, control systems and other disruptive digital technologies. The understanding of what entails digitalization was also very limited, with many associating digitalization with primarily transitioning from analogue to digital and leaving the transition solely to their IT departments.

How far have we come after 5 years?

 Though we have seen some concrete steps towards the digital transformation by most industry players, real progress has been slow with little to show for the investments made over the five years (further substantiated by this Mckinsey report ). The examples presented across the industry are still very exploratory with limited business implications. We are yet to see real breakthroughs and disruptive business models that leverage the digital technologies, the data, the connectivity and advanced computing and storage capabilities in the offshore industry. Some will argue it’s just too early to start seeing business impact from the investments made in this domain.

However, it is the confusion and misconceptions that still persists around the digital transformation that is stifling progress.

As much as I thought it would be redundant to still be talking about what it means to go through a digital transformation, my own experience and the various studies recently published there is still a clear lack of knowledge and understanding on what the digital transformation really means.

How I would define it today is still very similar to how we defined it in the white paper I co-authored during my time in DNV GL. Digitalization is about transforming our business through the use of digital technologies and in particular through the use of data that is now readily available from our assets and operations.

To clarify how the transformation can actually take place in your business, here are four key areas to focus on:

■     Get smart about data. This is the hardest yet the most vital element of the digital transformation. Data is the feedstock for basic analytics, business intelligence and machine learning algorithms. When these are combined with our already advanced physical models that is when we can automate, make better and quick decisions on the field and onshore and provide valuable insight in the long run allowing us to radically change the design and delivery of our products and services. Most corporates today still have not established a data strategy on how they tackle data today and how they want to use it in the future. Getting smart about data will require very different expertise than most in the industry are used to and unless we define our ambitions and strategy in this domain we will not capture the value from the digital transformation.

■     Change the way we interact with our customers by leveraging the channels and platforms new technology makes available. Don’t forget to use new technology to change the way you receive and capture feedback from customers. Digital technologies allow for more frequent and candid dialogues that can ensure that new services are in line with market needs.

■     Improve internal efficiency through automation and rethinking the current paper-based work processes. This is often the easiest to identify but execution is more cumbersome. The old ways of doing things has massive inertia that has to be constantly challenged. Leadership from the top can ease the process significantly.

■     Build an innovative and agile culture that allows us to quickly adapt to changing market conditions and customer needs. A continuous improvement mindset is needed to keep up with the pace. Generational diversity is crucial for bringing in in fresh new ways of working and challenging the old and set ways. Give employees autonomy to be creative and empower them to make decisions.

BCG claims that digital success is 70% business transformation, 20% technology and IT and 10% algorithms. Technology and algorithms will get you only so far. Its how you leverage these technology to transform your business is what in the end will determine success of your digital strategy.

Nada Ahmed is Innovation Lead at Aker Solutions and has been leading digital strategy work in O&G and Maritime industry for the past 6 years.