Change is here. According to Thomas M. Siebel’s new book, “Digital Transformation: Survive and Thrive in an Era of Mass Extinction”, the confluence of four 21st century technology vectors—elastic cloud computing, big data, artificial intelligence (AI), and the Internet of Things (IoT)—are fundamentally changing how business and government will operate in the 21st Century. For a world in the midst of an energy transition and in an environment of continued cost pressures, the energy industry in particular is relying on digital technology to unlock greater insights from data. Baker Hughes, an energy technology company, is delivering digital technologies to take energy forward, making it safer, cleaner and more efficient for people and for the planet.
While many companies across the energy sector are implementing digital technology in a piecemeal fashion, material progress can only be made by scaling digital transformation across the entire enterprise. Getting there however represents a number of challenges.
AI for Energy
The energy industry is an equipment and asset-intensive sector. To meet business outcomes, operators face the ongoing challenges of increasing yields, decreasing costs, and minimising downtime. Advances in AI and machine learning, as well as increased availability of data, allow operators to extract insights about mission-critical, high-value assets, as well as the harder to assess, non-critical assets that can similarly cause costly downtime. AI can deliver predictive intelligence to radically improve business outcomes by predicting and reducing equipment failures and process disturbances across the full stream energy sector, including upstream offshore and onshore operations, midstream pipelines and distribution, downstream refineries, and petrochemicals.
Unlocking $1.6 Trillion in Value
According to a study by the World Economic Forum, it’s estimated that Digital Transformation across the Oil & Gas sector could unlock approximately $1.6 trillion of value for the industry, its customers, and wider society. AI is the key to unlocking this value, and the sector is catching on. According to a 2019 study conducted by Forrester Consulting, 90 percent of respondents are looking to implement AI-based Equipment & Process Performance Management (E&PPM) solutions, with 49 percent of them planning to deploy within the year. While this demonstrates the desire for AI adoption, the same companies voiced what they saw as their greatest challenges in adopting new technologies. The convergence of IT and OT systems is important in this respect, and the ability to integrate with other systems was viewed as an obstacle for 44 percent of respondents and 42 percent were concerned about the technical skills of their work force. When asked how they would implement AI-based E&PPM, 33 percent of respondents said that they would outsource to a systems integrator, 15 percent would purchase packaged AI software, and 12 percent would buy an analytics platform then develop applications, internally. When asked if they would be interested in outsourcing their AI operations, including monitoring, maintaining, or optimising their equipment and processes, over half (52 percent) said yes.
A New Approach to Ecosystem Partnerships
Respondents also stated that they are looking to partner in their digital journey. We are undoubtedly seeing more organisations looking at forming more innovative and valuecreating partnerships in their respective ecosystems. We, at Baker Hughes, are taking the same approach to help our customers move faster to capture the value of AI, forming BakerHughesC3.ai, our own joint venture agreement together with C3.ai in June 2019.
"Scaling digital is not only about technology, it’s also about embedding necessary behavioural, cultural, and operational changes as well as developing new ways of working to drive business value"
More recently, in November 2019, Baker Hughes and C3.ai announced an alliance to work with Microsoft, bringing BakerHughesC3.ai enterprise AI solutions to the energy industry on Microsoft Azure, the industry-leading cloud computing platform. With a singular offering that can accelerate digital transformation across the sector, energy businesses can now draw on the power of Microsoft’s cloud, C3.ai’s leading AI capabilities and Baker Hughes’s expertise in the energy industry.
As energy businesses find ways to leverage expertise and deploy the right technologies, security, scale and a focus on outcomes is the key, whether the target is inventory optimisation, predictive maintenance, equipment reliability, or other bespoke use cases.
Transforming More than the Technology
Scaling digital is not only about technology, it’s also about embedding necessary behavioural, cultural, and operational changes as well as developing new ways of working to drive business value. Although there are many considerations for being successful at scaling digital, some key guidelines to follow when implementing a digital transformation initiative include:
• Partnering with companies who are familiar with your industry, understand your business objectives and know how to measure project success.
• Identifying high-value use cases that will reap results within weeks and months, not years.
• Using off-the-shelf SaaS solutions whenever possible—focus on the business case, not the foundations.
• If building custom solutions, take a model-driven approach to accelerate speed to value and allow data scientists to immediately focus on functional performance.
Scaling digital can be challenging but offers significant value for those who can rise to the challenges and seize the opportunities. For the companies that hit that mark, these opportunities are absolutely unprecedented.