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Multi-cloud on the horizon - the opportunity for the Oil & Gas industry

17th June 2019

Elena Mariotti, Associate Partner at IBM Global Business Services, and Subject Matter Expert in Digital Transformation and Cloud Services for Industrial Clients talks about the transformational benefits multi-cloud will bring to the Oil & Gas (O&G) sector

Elena Mariotti, Associate Partner at IBM Global Business Services, and Subject Matter Expert in Digital Transformation and Cloud Services for Industrial Clients talks about the transformational benefits multi-cloud will bring to the Oil & Gas (O&G) sector

Elena Mariotti, Associate Partner at IBM Global Business Services

Multi-Cloud computing has been described as transformational development in the O&G industry but is the sector ready and willing to embrace it?

The O&G industry currently faces multiple challenges. Foremost among these are declining revenues, volatile oil prices, safety requirements and asset downtime, geopolitical competition, discovery of new reserves and state-of- the-art technologies.

Within this tumultuous industry landscape, multi-cloud has the power to improve all the value levers of companies operating in the sector, helping organisations achieve 20-30% reduction in total cost of ownership (including capital expenses, operating expenses, indirect costs of cloud solutions and assets), and up to 50% faster time-to-value than traditional methods such as staff augmentation to low cost locations. Results of this include increased revenues, up to 25% acceleration of migration and modernisation to multi-cloud platforms and process simplification resulting in increased enterprise efficiency and risk reduction. This in turn can help increase company reputation and shareholders value.

Today, 85% of companies are already operating in a multi-cloud environment and 98% of organisations forecast they will be using multiple hybrid clouds within three years, according to the IBM Institute for Business Value 2018 multi-cloud management survey. While 98% of companies plan to move all their applications to cloud in the next three years, O&G companies have moved only 20% of their applications to cloud so far.

This shows that O&G companies are ready and will act fast over the next few years to exploit the full benefits of multi-cloud to be competitive, particularly in the current industry landscape where savings and efficiency are imperative. Many O&G players have already started the migration of their applications to multi-cloud; therefore, the rest of the O&G industry need to act fast to avoid being left behind in terms of both revenue generation and cost reduction.

The World Economic Forum predicts that digital transformation, commonly called the Fourth Industrial Revolution, is projected to generate $100 trillion in value over the next decade and change the workforce skills required. Multi-cloud is at the heart of O&G digital transformation and one of its key enablers, therefore O&G companies which want to take advantage of the big value creation offered by digital transformation are better of at starting their journey to multi-cloud sooner rather than later, and several have already started it.

 

Where do you think the biggest benefits of multi-cloud will lie?

Over the past decade, cloud has become integral to nearly every digital transformation strategy in the O&G sector. Cloud allows enterprises to access the latest technologies such as Internet of Things (IoT), high-performance computing, and blockchain from virtually any vendor.

Taking advantage of multi-cloud’s potential to transform O&G challenges into opportunities is imperative. Multi-cloud not only enhances decision making, production, enterprise efficiency, safety and regulatory compliance but it also reduces costs, time to market, E&P risks and asset downtime.

Benefits can be grouped in three core areas which enable O&G companies to develop competitive differentiators to attract both new top talents and customers:

  • Operational innovation – Simpler and faster processes drive internal efficiency; reduced costs and complexity; enables better governance and expanded access to more and broader data to manage risk; and IT and digital functions are better aligned to business needs.
  • Revenue model innovation – Customer relationships, data and other assets are monetised more readily; time-to-market is enhanced; and relevant partner services are incorporated more easily. This enables business users to design and prototype applications quickly.
  • Business model innovation – Third-party services extend into the O&G ecosystem; open collaboration and sharing are expanded; new types of business can be pursued; and innovation is introduced systematically.

But these benefits can be realised only if organisations determine the best and most flexible multi-cloud strategy and business models, and combine these with the overall business strategy, to drive material and sustained benefits to the enterprise bottom line.

A strong multi-cloud strategy is what enables O&G companies to take advantage of all the benefits of multi-cloud, to easily and quickly move from one cloud to another with no additional costs or long processes which can compromise operations uptime and safety, and without compromising on security and efficiency of applications.

 

Will we see a shift in the balance of onshore/offshore jobs with a completely different set of skills requirements?

With the multi-cloud era, jobs may become much more AI (Artificial Intelligence) enabled, and this will likely also increase onshore working vs offshore working. As the requirements on workforce shift, business leaders have a very important role to ensure the O&G workforce develops the required skills and that diversity in the workplace is fostered. IBM CEO Ginni Rometty has said business leaders have today, as never before, the responsibility to help students develop skills for what she called “new collar” jobs, which are those jobs at the intersection of business and technology, and some of which do not yet exist today.

IBM has been heavily involved in the Pathways in Technology Programme, or P-TECH, designed in partnership by IBM and business institutions from 200 schools.

P-TECH focuses on STEM education covering the fields of science, technology, engineering and mathematics.  Companies providing and/or implementing new technologies, not least cloud services, need a technology-skilled workforce along with a society and workforce that recognises that new technology is the new way of life.