BrazilExecutives in oil & gas are gearing up tech and talent investments
Under siege from all directions, the global oil & gas industry is turning to technology for answers. A new EY report presents the state of tech in the industry.
EY’s report is based on surveys among the oil & gas workforce around the world, spanning IT, human resources, strategy and digital experts. Nearly a fifth of respondents were C-suite executives, with the study taking place at the end of the summer when most businesses worldwide were planning how to emerge from the thick of lockdown.
No doubt, the pandemic impact was mixed across sectors, although oil & gas has certainly been among the heavily affected. The start of lockdown put an end to travel within cities, between cities and around the world. In April, oil prices plunged as a result – what has been described by the International Energy Agency (IEA) as the worst oil crisis in history. All this when the sector had just recovered from a severe crisis in 2014.
Tasked with damage control, most oil & gas professionals appear to have landed on a common solution: tech investments. Not a single respondent to EY’s survey reported an absence of a digital investment plan, while 80% are already investing a notable share of their total budget in technology.
Of course, the sector was already undergoing a digital transformation before the pandemic, crucial to competing in the fast-paced market of today. At the same time, a renewed sense of urgency has emerged from the sheer financial pressures of 2020. For nearly 60% in the oil & gas sector, total digital investments have increased since the Covid-19 pandemic.
According to EY’s Global People Advisory Services Energy Leader Cyntressa Dickey, it’s not just the quantity of tech investments that need a boost. “Organisations must do more than just capture the full value of their existing digital investments — future technology enhancements must truly underpin the company’s strategic vision.”
Highlighting the versatile value that technology can bring, Dickey added, “companies must turn to technology to meet market expectations, while continuing to secure value from investments, and drive efficiency through value chain integration.” The breadth of digital technologies currently in use across the sector signals an acknowledgment of this value.
Unsurprisingly under the circumstances, EY reports the number one use of tech in oil & gas companies are currently remote monitoring capabilities and mobile apps, with on-site work being put out of contention due to infection risks. More than 90% of companies are investing in this technology. Enabling this change is a focus on cloud computing – also drawing investments from more than 90% of respondents.
Common Industry 4.0 tools such as operational technology, advanced analytics and robotic process automation (RPA), artificial intelligence (AI) and Internet of Things (IoT) are all top of mind as well. Promisingly, most companies that have investments in these areas are also putting money into developing these applications further.
Challenges to technology adoption
That being said, digital transformation is far from smooth sailing, particularly in the present economic environment. As the sector strives to build resilience, several barriers exist to tech adoption. For one, the pace of digital advancement has meant that the latest in tech is not at all compatible with businesses’ legacy tech infrastructure. Integrating these is a huge challenge, as is coordinating these functions across the entire business.
For many, a major challenge is to integrate technology at the speed required to stay competitive. According to EY, a key consideration here is that people are the biggest enablers of digital transformation. Having the right culture, mindset and skillset across a business is crucial to building the organisational agility required to stay competitive.
“Market leaders in the adoption and application of digital technologies intentionally invest to address the organisational and cultural elements, which others often neglect. This includes flattening the organisation to accelerate decisions, realigning performance metrics and incentives to match the desired behaviours and enabling employees through integrated learning that advances skill development in real time,” explained Andy Brogan, Global Oil & Gas Sector Lead at EY.
Looming skill gap
Much of this lies in businesses’ own hands. Lurking in the background, however, is a digital skills gap among the workforce as a whole, which lies largely out of control. Many oil & gas professionals acknowledge the lack of Industry 4.0-focused talent out there at present. Well over half report inadequate availability of skills in fields such as AI and data science, will many also feel the gap in design thinking, analytics, digital engineering and digital literacy, among others.
At the same time, most expect this skills gap to have shrunk three years from now, as an increasing share of young professionals expand their skillset to meet the demands of today’s workplace. According to EY, this expectation might just be providing a false sense of security, particularly for the oil & gas sector.
Brogan elaborated: “While executives optimistically anticipate improved access to technical talent in the future, there are several trends pointing toward an ongoing skill gap problem. First, competition and demand for these workers are growing across every industry, all of which are facing shortfalls of their own. Second, traditional tech companies and many other sectors are more attractive than oil and gas to younger workers.”
“Further, there is a convergence in talent markets in many geographies that will also impact oil and gas. These factors will create challenges for oil and gas companies as they work to recruit new talent, making reskilling and upskilling even more critical to future success,” he concluded.
