In the latest in our exclusive series of interviews with the 2017 Energy Digitalisation Summit Middle East speakers, Omar Saleh, Director Manufacturing & Resources, Microsoft Middle East & Africa shares his views on the digital transformation of the energy industry.
"Microsoft solutions enable a truly data-driven approach to operational excellence by collecting, storing, and analyzing huge volumes of operational data in real time and using it to drive positive outcomes and behaviors. Our solutions enable our customers to gain a deeper level of understanding of their global operations across the field, the plant, and the entire supply chain.
Specific to us in the Middle East, and as an elevated commitment from Microsoft to the Oil & Gas industry, we launched last year Microsoft’s Centre of Excellence for Oil & Gas in UAE as the largest such facility for Microsoft worldwide. The Centre of Excellence was built in partnership with leading industry players - Accenture, Aveva, Baker Hughes, Honeywell, OSIsoft, Schlumberger, and Schneider Electric. The Centre of Excellence features a host of solutions, co-developed with our partners, that address current industry priorities, and promote overall operational excellence. The facility serves as an executive briefing centre where we host our customers from around the region, and globally, and engage in workshops that help them envision and develop innovative solutions to support their digital transformation pursuits."
How do you see digital transformation reshaping the energy sector?
The disruptive changes of digital transformation are currently sweeping through the energy industry. Prices volatility, squeezed margins, increased use of renewables, reliability and sustainability concerns are just a few of the drivers behind the industry’s need to transform - and digitalization is a core enabler of this.
With Advanced Analytics and Artificial Intelligence we are able to drive actionable insights in near real time from the vast amounts of data that we collect from our assets and processes. We are able to empower our employees with new unprecedented levels of productivity and versatility. We are able to manage our plants and assets in a way that predicts and prevents downtime and eradicates the costly consequences of unplanned operations disruptions.
According to respondents to the 2017 Upstream Digital Trends Survey, digital technologies can help reduce costs, make faster and better decisions, and boost productivity. For the oil and gas industry, the focus needs to move from sheer cost reduction to boosting asset and workforce productivity to become more competitive versus peers. Digital can be leveraged to achieve more with less and to raise the competitiveness of companies in their global and complex markets of operations.
What is driving innovation in digital transformation – strategy, technologies or both?
In this rapidly changing era, digital transformation has become imperative for all businesses, small, medium large. Technologies are outpacing the business changes for the first time in decades with all the disruptive capabilities brought around by the Cloud, Advanced Analytics, Artificial Intelligence, Modern Productivity, …etc.
Equally important, companies who do not embrace Digital are at risk of losing their competitiveness in today’s fast paced and consumer influenced markets. Digital become as such a core component of every company’s business, so does their pursuit of latest technologies and innovations.
A Forrester Consulting research study by Accenture Interactive found that the key drivers of digital transformation are profitability, customer satisfaction, and increased speed-to-market. For a successful digital transformation in any business organization, digital maturity and a modern organization culture are also of paramount importance.
Microsoft’s approach to Digital Transformation is based on driving digital transformation in every organisation. We believe that every company is a software company and thus organisations need to start thinking in digital terms. The focus should not be on procuring one solution or deploying one, but visualizing your future as a digital company and enabling digital transformation in every aspect of your business - engaging employees, empowering customers, optimizing operations and transforming services.
How is Microsoft driving innovation in digital transformation?
Microsoft solutions enable a truly data-driven approach to operational excellence by collecting, storing, and analysing huge volumes of operational data in real time and using it to drive positive outcomes and behaviours. Our solutions enable our customers to gain a deeper level of understanding of their global operations across the field, the plant, and the entire supply chain.
We see that, technology is becoming much more entrenched in business processes and in the tools they need to run their business more efficiently. At Microsoft, we enjoy the most comprehensive and complete cloud vision, we empower businesses develop their solutions on premises, and in hybrid and public cloud setups. As the “productivity and platform” company, we provide the tools and practices, so organisations can leverage the cloud on their own terms, as and when it makes business sense. By shifting towards cloud-based environments, Energy companies can significantly reduce costs, achieve greater flexibility, and enhance functionality. A cloud-based platform shifts the task of maintaining data from the service companies to the cloud service provider and eliminates the expenses incurred and problems related to the hardware layer of IT infrastructure for companies.
How will the customer journey be impacted by Digital Transformation?
Today’s customers are more connected and empowered to define and decide the success of businesses. Our customers expect top quality services and products, they require speed, flexibility and responsiveness all the time. Additionally, customers require personalization. Businesses on the other hand are striving to transform their sales transactions into connected customer experiences; this helps open continuous sales channels with their customers, brings insights that map to product innovations, and ultimately presents an opportunity for new digital offerings and business models.
Microsoft provides a holistic set of solutions—from social listening, advanced analytics, and multichannel marketing to customer engagement—to help optimize brand awareness and sentiment, recruit new customers, provide new digital services and revenue streams, and increase marketing effectiveness. We help our customers effectively acquire solutions that foster user adoption, and guarantee interoperability and long-term viability. Microsoft provides an agile and capable platform that supports requirements of advanced solutions, and we embrace effective partnerships across the industry which offer our customers the choice and flexibility.
Are you able to give a use case study or an example of a company that has applied digital transformation in the energy sector and how this has tangibly improved its business?
There are many examples of Microsoft’s customers that have embarked on the journey of digital transformation to engage, empower, optimize and transform - achieve more. These include:
BP recently selected Microsoft Azure as part of its global cloud computing strategy. move advanced workloads to Azure out of existing corporate data centres as part of the company’s modernisation and transformation agenda – an agenda which is designed to deliver a sustainable step change in the company’s long-term performance.
By moving its proprietary data lake to Microsoft’s cloud platform, and utilizing Azure services, with state-of the-art visualisation and predictive tools, BP will enable rapid data analysis, with faster insights and decision-making. https://news.microsoft.com/en-gb/2017/07/25/bp-selects-microsoft-azure-company-wide-platform-part-modernisation-programme-2/
EnBW lights up city streets with enhanced street lamps that incorporate digital service stations where sensors collect environmental data, drivers can charge their electric vehicles, Internet users can connect, and individuals can contact emergency dispatchers. The Microsoft Azure cloud facilitates the necessary data management and analytics, and Microsoft Services helps EnBW bring further innovation to smart streetlights and profit from it. http://customers.microsoft.com/en-us/story/innovative-utility-deploys-smart-streetlights-as-digital-service-stations-for-the-city-of-the-future
Chevron Corporation announced a seven-year partnership with Microsoft Corp. establishing the company as Chevron’s primary cloud provider, accelerating the application of advanced technologies including analytics and the Internet of Things (IoT) to drive performance and improve efficiencies. https://www.chevron.com/stories/chevron-partners-with-microsoft
What are some key indicators of better measuring/assessing customer’s satisfaction along this journey?
Everyone understands the importance of digitalization and recognizes the need to invest and go through the transformation journey. Digital transformation is complex, time consuming and expensive as it affects every aspect of the operator business. It entails the organization to embrace ROADS (Real time, On-demand, All-online, DIY, and Social) experience by reconstructing the ICT architecture, Network, Service and operations to make it a digital enterprise. The challenge faced by the industry is determining what transformation programs to invest in and how to measure the transformation progress to keep the confidence of the investors.
In order to increase the stakeholder value and net cash, organizations determine the investment strategies in consideration of the overall strategic goals and objectives. The investment strategies are primarily in the area of improving the customer excellence, new revenue potential, cost efficiency and capital efficiency. The organization culture, innovation and effective business management contribute to the success of the above investment strategies. It is imperative for the organizations to understand the metrics and performance indicators to measure the success of investments in digital transformation. Some of the key metrics for each gauging customer satisfaction are, firstly, looking at the Customer Lifetime Value – Assessing lifetime value of the customer in terms of sales and social influence. Measuring the customers' share of wallet and total spending on products and solutions is also a key indicator. Customer satisfaction and loyalty can also be measured by whether they would recommend a product or service and customer feedback.
What role does IoT play in the digital transformation journey in the energy sector?
The Internet of Things (IoT), which basically integrates sensing, communications, and analytics capabilities, not only helps oil and gas companies directly manage their existing assets, supply chains, or customer relationships—rather, IoT technology creates an entirely new asset: Insights about these elements of their businesses.
For example, in an industry as diverse as O&G, IoT solutions help in improving reliability, optimizing operations, and creating new value. Upstream companies (e.g., exploration and production) focused on optimization can gain new operational insights by analysing diverse sets of physics, non-physics, and cross-disciplinary data. Midstream companies (e.g., transportation, such as pipelines and storage) eyeing higher network integrity and new commercial opportunities will tend to find significant benefit by building a data-enabled infrastructure. Downstream players (e.g., petroleum products refiners and retailers) should see the most promising opportunities in revenue generation by expanding their visibility into the hydrocarbon supply chain and targeting digital consumers through new forms of connected marketing.
When you have IoT in the oilfield, for example, you have equipment connected providing data to a central place that can be analysed for predictive maintenance; so that an item can be fixed before it breaks. There are also applications with electricity and water meters, all of which have data that need to be collected and processed using a combination of Microsoft IoT, Microsoft Azure and the Microsoft BI (Business Intelligence) tools.
Similarly, looking at the Power Generation and Distribution business, IOT brings capabilities that underlie smart meters and smart grids, and help deliver reliable and predictable energy continuum.
In the presence of IoT and building on Industry 4.0 principles, business leaders are leveraging new opportunities to modernize their supply chains, drive efficiency across broader geographies, and achieve dramatic operational improvements by converging physical and digital systems. The integration of physical assets with people, data, and business systems is fuelling the digital transformation and serving as the catalyst for digital business.
Is Big Data really the new oil?
In a way. The difference is that the oil was always there, and Big Data is relatively new. However, oil needed new technologies and new skills to extract it, refine it, and distribute it. Those new technologies and skills were initially invented and adopted by a few successful companies who went on to change the commercial face of the planet. Early successful adopters of digitalisation have the potential to do the same. It should also be noted that vast fortunes were lost in the early days of the oil industry by those who had blind faith in prospects and claims that were unsubstantiated. The corollary word of warning is that adopters of digitalisation need to ensure that the technologies that they are adopting can really deliver the benefits that are claimed. Machines cannot, yet, survey a vast sea of data and find meaningful correlations that will help you to run your business. Big Data on its own has no value - it is only when applications and analytics distil it into Better Data that it enables prediction of a future state that allows a company to improve reliability, safety, energy usage or profitability. Those applications will likely take a very clearly-defined subset of the data and require some data management. Big Data is not a universal elixir, and nor was having pools of rock oil in your backyard in the mid-1800's in Pennsylvania! On their own, neither will make you rich. But with carefully selected technologies, applied using new skills, and through changing the way you run your business, the sky is the limit.