Leveraging the Digital Economy

The process industries have been ahead of the curve on digitization, having high-value assets digitized and sending signals back for the past 30 years. Now, however, the ability to digitize and track so many more assets due to lower costs for sensor technology is allowing operators to push more and more processing out into the field. This, in turn, is creating new opportunities for better economies of scale and uncovering new ways to create stakeholder value.

The pressure brought on by low commodity prices is actually accelerating, not slowing down, the move to the connected enterprise. That may seem surprising, as many assume with low commodity prices comes severe IT budget cuts, and certainly many companies are tightening their belts across the board. But acceleration is coming as the digital economy is the only way companies can sustain the cuts they have already made and assure they can reduce their cost base when commodity prices rebound, which will eventually happen.

Integrating Data

Thanks to the emerging digital economy, nearly everything is transmitting data. Sensor-equipped tools and machinery are delivering continuous streams of information. Yet data by itself is meaningless. Having the ability to collect, store and analyze information in real time so it can be used for meaningful decision-making is where the real challenge lies. Fortunately, technology advancements now exist that make it possible for anyone to easily extract and gain insight from all types of information. 

Imagine if you were using predictive analytics to determine the optimal point in time to perform asset maintenance and maximize utilization. Now imagine if you also could integrate business data into this model to determine the revenue impact of such an activity on a given day. Operators could decide not only the optimum asset utilization, but also the least impact to the company’s bottom line from this action.

Real-time plant automation and software have been around for a long time to manage production operations with some level of efficiency and profitability. However, the digital economy is changing the game by making this real-time connectivity between business and operations a whole lot easier.

Better Decision-Making

Nearly every day, companies are uncovering new ways to make their processes more efficient thanks to data-based insights. Researchers are currently working on ways for companies to simultaneously analyze transactional data and real-time data simultaneously with predictive analytics tools, bringing in the business impact to operations decisions.

According to industry analyst Peter Reynolds at ARC Advisory Group, the convergence of operations and business data and use of predictive analytics already has the greatest impact on:

    + Asset health improvement and equipment up-time;
    + Operating and overall production performance;
    + Safety and risk management;
    + Logistics optimization;
    + Improvements to the employee experience;
    + Business process optimization.

According to a recent report by IDC Energy Insights, after safety, production management is a top priority for upstream oil and gas companies, with a focus on improving margins and reducing exposure associated with deferments. Today, solutions exist that help oil and gas companies improve and standardize processes, replace legacy tools and provide a single view of production across the organization to improve production operations.

Integrating operational data with business data also is proving to significantly improve maintenance operations. When a piece of equipment on a remote oil rig, such as blowout preventers, mud pumps or ship stabilizers, fails unexpectedly, drilling halts until the necessary repair parts can be delivered. This downtime can cost millions of dollars in lost production. Fortunately, it is now possible to analyze data in real time from multiple sources and predict when assets will fail, so it can be serviced just before causing costly problems. Taken a step further, the need for maintenance can be weighed against business data and market conditions, such as current or predicted oil prices, to determine the optimal point when the equipment could be taken offline in order for the necessary repairs to have the least revenue impact. 

Due to the transitory nature of employment on oil rigs, using data and technology for more efficient workforce management is saving companies significant time and money. With predictive analytics, companies now can consolidate all scheduled resources and field activity in order to assemble crews from anywhere, at a moment’s notice. Other advantages of using data to improve workforce management include real-time schedule updates, manage equipment disposition and track employees’ qualifications, certifications and availability. From a cost perspective, leveraging integrated data allows for mitigating risk in programs and compliance efforts by connecting procurement activities to the entire requisition and project lifecycle. It also could help control costs by monitoring full workflow, time entry, expense entry and budgetary controls. 

One of the biggest areas of cost leakage in the oil and gas industry is inventory management. This is because most organizations have limited visibility into global inventory, which can cause repeat or duplicate buys. By connecting inventory data with business data from the organization and suppliers, companies will only purchase what is needed. They’ll also benefit from insights during and after receipt of shipments with mobile, user-friendly, real-time analytics and easy-to-use planning tools. Tracking systems linked to enterprise planning software will be able to monitor equipment movement, fuel levels, consumption and all associated transactions. 

Proactively harnessing real-time data and analysis is giving companies the edge they need to survive and compete in this ever-changing market. Making operational decisions based on real-time business information helps deliver wider margins, improves financial performance and helps meet success goals. In an environment where every dollar counts, companies must continue to transform to uncover opportunities for greater efficiency and effectiveness. 

Brent Potts is director of industry marketing for oil and gas at SAP. For more information, visit www.sap.com.

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