Driving upstream efficiencies in the changing world of oil and gas

Since the fall in oil prices in 2014, there’s been massive disruption and an industry-wide reduction in activity and capital projects. Now more than ever, organizations must leverage IT solutions and digitalization. This eBook provides expert insight and real-life examples of how to best leverage technology to increase efficiency.

IFS
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DRIVING UPSTREAM EFFICIENCIES IN THE CHANGING WORLD OF OIL AND GAS TABLE OF CONTENTS OVERCOMING THE CHALLENGES OF EFFICIENCY AND COST FOR OIL AND GAS 3 THE COMPELLING METRICS YOU CANNOT IGNORE 4 LATEST INSIGHTS FROM IFS RESEARCH 5 RESPONDING TO THE CHALLENGE 6 LOOK FOR THE OBVIOUS – AND WORK WITH EXPERTS 7 HOW SONGA OFFSHORE OPTIMIZED OPERATIONS AND DIGITALIZATION 8 SONGA OFFSHORE LEVERAGES IOT TO TRANSFORM ASSET MAINTENANCE 9 WHAT’S NEXT FOR YOUR BUSINESS? 10 HOW CAN IFS EXPERTISE HELP? 11 IFS SOFTWARE FOR THE OIL & GAS INDUSTRY 12 MEET OUR INDUSTRY EXPERTS 13 Global industry views on the importance and relevance of digitization vary between industries around the globe. As oil and gas tend to lag behind other sectors, it’s worth asking yourself what sort of impact you think it might have for your business. IFS DIGITAL TRANSFORMATION SURVEY 2016 THANK YOU TO ALL WHO PARTICIPATED! NEARLY 500 SENIOR BUSINESS DECISION MAKERS FROM 20+ COUNTRIES GIVE THEIR VIEWS ON DIGITAL TRANSFORMATION DIGITAL TRANSFORMATION REGIONAL SPLIT ON WHAT ROLES ARE CONSIDERED TO BE RESPONSIBLE FOR DIGITAL TRANSFORMATION IN VARIOUS COUNTRIES WHO IS RESPONSIBLE? The nearly 500 decision makers consider these roles to be responsible for digital transformation CEO 39% CIO 40% CTO 20% CFO 35% CMO 6% OTHER C-LEVEL OTHER NON C-LEVEL DON’T KNOW18% 9%24% DIGITAL TRANSFORMATION: WHO IS RESPONSIBLE? ME 56% CIO 22% CTO 22% CFO 56% CMO 0% THE CIO’S VIEW THE CFO’S VIEWTHE CEO’S VIEW ME 63% CEO 38% CTO 19% CFO 25% CMO 16% ME 69% CEO 44% CIO 38% CTO 3% CMO 9% DIGITAL TRANSFORMATION RATING OF HOW IMPORTANT THESE TECHNOLOGIES ARE IN DRIVING DIGITAL TRANSFORMATION 59 42 48 45 37 53 55 59 IoT 3D Printing Wearable tech AR/VR Drones Machine learning Cognitive computing Cloud DIGITAL TRANSFORMATION HOW IMPORTANT IS IT? Digital transformation is just a buzz word Digital transformation will play a key role in my market in the coming five years I need to know more about digital transformation My company has a clear strategy for digital transformation Strongly agree Somewhat agree Somewhat disagree Strongly disagree 30% 76% 59% 86% Agree GLOBAL ASEAN AUSTRALIA BENELUX BRAZIL CHINA FINLAND POLAND SCANDINAVIA USA CEO 39% 38% 31% 37% 51% 47% 37% 41% 38% 30% CIO 40% 21% 31% 22% 42% 53% 52% 57% 45% 29% CTO 20% 0% 9% 15% 57% 19% 19% 7% 13% 16% CFO 35% 17% 56% 56% 27% 38% 26% 36% 32% 42% CMO 6% 0% 0% 11% 4% 6% 15% 2% 7% 6% OTHER C-LEVEL 24% 13% 22% 11% 42% 16% 19% 34% 15% 27% OTHER NON-C-LEVEL 18% 8% 25% 41% 8% 6% 7% 20% 12% 39% DON’T KNOW 9% 29% 9% 7% 0% 6% 15% 2% 15% 8% Source: IFS Digital Transformation Survey 2016 DIGITAL TRANSFORMATION HOW IMPORTANT IS IT? 2 That means oil and gas companies will need to leverage IT solutions and digitalization to be able to plan better, work smarter and do more with less. Enterprise resource planning (ERP) solutions have already been widely adopted by the industry. Furthermore, in an industry where production can be somewhat distanced from day-to-day human intervention, the industry was among the first to embrace the sensor technologies that generated machine-to-machine data, making it one of the earliest examples of driving insight through the Internet of Things (IoT). Since 2014, the fall in oil prices has caused massive disruption in the oil and gas industry and an industry-wide reduction in activity and capital projects on an unprecedented scale. As such, oil and gas companies are now drilling multiple wells on one well pad and using just-in-time and assembly-line manufacturing practices to streamline coordination and delivery of equipment and supplies. OVERCOMING THE CHALLENGES OF EFFICIENCY AND COST FOR OIL AND GAS 50% of oil and gas companies will be applying proven assembly-line and just-in-time manufacturing methodologies to well development and production by 2018. 50% MAJOR MAINTENANCE PROGRAMS NEED TO BE CAREFULLY PRIORITIZED BASED ON NEED with companies looking to learn from owned asset data without relying on equipment from OEMs. 3 THE COMPELLING METRICS YOU CANNOT IGNORE It is essential to analyze and assess the global landscape continually to retain a competitive edge in the future. The speed and degree of change are significant and the number of competitors embracing change is substantial. Various industry experts report: >57% of IT spend by oil and gas companies was directed towards compliance, maintenance and running activities in 2016 More than 25% of European oil and gas companies plan to start using big data analytics-based technologies (BDA) within the next 12 months, specifically for maintenance management, natural resource exploration and sensor-based pipeline optimization 76% of oil and gas companies will increase their use of smart devices or embedded intelligence in processes in the next two years >50% of oil and gas companies worldwide will update software to reduce costs, build a stable IT environment, automate workflows, fill functionality gaps and align processes by 2018 76% >50%>25% >57% Overall, 45% of companies are re-inventing their business model to be based on asset availability rather than day rates 45% ASSET AVAILABILITY DAY RATES 4 Headline insight from new research, commissioned by IFS from Raconteur Custom Publishing, into the attitudes towards Digital Transformation in the oil and gas industry indicates: LATEST INSIGHTS FROM IFS RESEARCH Globally, 33% of oil and gas businesses are still at the exploratory or nascent stage with leveraging digital technologies – with smaller companies this rises to 73% 65% of businesses rated the importance of BDA and IoT as four out of five, or five out of five in terms of being transformative for positive disruption Mid-sized companies report they are conspicuously affected by siloed working due to lack of system integration Generally, there is a talent deficit in areas such as business intelligence, cyber security and IoT – companies are dependent on upskilling existing staff 0% 10% 20% 30% 40% 50% Operational efficiency Operational risk Operational safety AREAS WHERE ADVANCED, INTEGRATED DATA VISUALIZATION AND ANALYTICS WILL HAVE THE MOST POSITIVE IMPACT 33% 65% Full details of the Raconteur Custom Publishing oil & gas research into digital transformation are available from ifs.world/dcs-og 5 Oil and gas companies are facing the reality that they need to transform, but to do that, they need to create a solid IT environment that will provide immediate, accurate data to generate meaningful analytics on an enterprise level. Upstream companies realize that their underlying asset management systems, if agile and flexible, can be transformed by the integration and analysis of data to enable ‘smarter’ services. Companies that add innovative service and asset management capabilities to their business model are likely to benefit from being able to offer new and innovative business models, resulting in additional income streams. RESPONDING TO THE CHALLENGE SM AR TE R SE RV IC ES IN NO VA TI VE B US IN ES S M OD EL S Sustainable business growth Enhanced revenue Improved margins Higher levels of customer satisfaction Reduce operational risk Cut unplanned downtime Improve safety Increase production flexibility and yield IDENTIFYING THE OPPORTUNITY    Data Collection & Analytics IN THE FIELD ON SITE ON THE MOVE 6 LOOK FOR THE OBVIOUS – AND WORK WITH EXPERTS Software development and ERP need to be more actively leveraged in the oil and gas industry. Globally, the industry is seeking to outsource for best-practice advice but, against a landscape of ever-shifting opinions, it is increasingly difficult to identify and isolate true and sustainable expertise that understands both the industry and the individual challenges of a digitally-enabled world. At the same time, senior management needs to deal with complexities and develop agile policies to take advantage of change as it happens. To be equipped for this, they need external experts to look at required change, the scale of change and the speed of change while the business goes about doing ‘the day job.’ There is almost a universal agreement across the oil and gas industry that third-party organizations and external experts have an important role to play in digital transformation, particularly in certain key areas. Where the greatest value can be offered by third-party vendors: DIGITAL ORGANIZATION AND OPERATIONS 41% PROJECT MANAGEMENT40% PERFORMANCE ANALYTICS AND REPORTING 39% IFS solutions and expertise extends further than just traditional enterprise asset management (EAM). IFS also offers ways to maximize investment in assets using asset performance management. For example, intelligently deferring former interval-based maintenance until the asset performance warrants it. Industry Director, Maritime, Oil & Gas 7 CONT... HOW SONGA OFFSHORE OPTIMIZED OPERATIONS AND DIGITALIZATION Songa Offshore is an international midwater drilling contractor with a strong presence in the North Atlantic basin. For drilling contractors, long-term asset management and maintenance are a top priority since downtime directly affects the overall result. In 2014, Songa Offshore chose IFS Applications to support onshore and offshore operations within maintenance, supply chain, document management and financials. Cato Sola Dirdal, IT/IS Director at Songa, recognized that the organization needed to be prepared for change, especially those key people who would drive future improvements. The overall benefits of the new, integrated ERP solution include more connected processes—stretching across departments and functions—consolidation of systems, easier integration with other systems, improved TCO monitoring and an improved data foundation with new analysis and reporting possibilities. The company now holds a common view of maintenance and logistics. I F S C U S T O M E R S T O R Y It was important to get a software platform that could help us standardize our business processes, to analyze our business activities for better efficiency and for future improvements, and at the same time help us improve decision- making through data analysis. Cato Sola Dirdal | IT/IS Director at Songa Offshore NOW, IFS APPLICATIONS HAS 150 users onshore 550 nearly users offshore 8 SONGA OFFSHORE LEVERAGES IoT TO TRANSFORM ASSET MAINTENANCE I F S C U S T O M E R S T O R Y Songa Offshore now focuses on further efficiency and improvements of the ERP solution, through simplification and automation. The process-driven approach will concentrate on a company-wide delivery model, which will optimize how Songa Offshore works internally and with its suppliers. The integrated ERP solution has provided Songa Offshore with a suitable foundation for digital innovation. One project stands out: the realization of high-performance condition-based and predictive maintenance with the help of IFS IoT Business Connector. The first phase of the project involves 600 assets on each rig, where maintenance will be triggered based on the number of hours in which an asset is in use. When you operate advanced, complex and fully integrated digital assets, it would be extremely workload-demanding to maintain these assets the conventional way. Instead, we want our intelligent equipment to tell us when it needs to be repaired. Cato Sola Dirdal | IT/IS Director at Songa Offshore A COMPREHENSIVE, STANDARD DRILLING INDUSTRY SOLUTION AN INTEGRATED ERP PLATFORM ENABLING DIGITAL INITIATIVES CONSOLIDATION OF CROSS-FUNCTIONAL PROCESSES IMPROVED OVERVIEW AND COMMON VIEW IMPROVED DATA QUALITY AND ANALYSIS CAPABILITIES REPLICATION FUNCTIONALITY THAT ENABLES NON-STOP OPERATIONS       Achieved benefits Download customer story PDF (0.2 MB) 9 Oil and gas asset owners need to transition their businesses to an agile footing and move towards an outcome-based performance culture. Organizations will need to adapt business processes, adopt new skills and change business systems to support digital strategies and technologies. WHAT’S NEXT FOR YOUR BUSINESS? >50% oil and gas companies will exploit new technology to innovate, minimize costs and help achieve a lower-emissions environment. Gartner suggests that as oil prices plunge, demand for digital oil field applications will grow by 2018. By 2020, the drive to use data to deliver service and asset management efficiencies will result in a global industry-wide IT spend of nearly $48.5 billion. >50% $48.5bn Businesses will need to extend their thinking beyond traditional enterprise asset management and look for ways to maximize investment in assets using asset performance management. 10 HOW CAN IFS EXPERTISE HELP? Senior management needs an expert to plot a business strategy for digital transformation, both operationally and culturally throughout the whole organization. In a world of uncertain futures, choosing the right industry experts to work with has never been so important. IFS has worked with the oil and gas industry since the late 1990s. IFS solutions extend beyond traditional enterprise asset management (EAM) to offer ways of maximizing investments through asset performance management (APM), giving a holistic overview of the asset lifecycle. More recently, IFS has been at the forefront of investing in IoT connectivity to align its position with existing capabilities. In doing so, it can help eliminate the uncertainties, mitigate the risk, help you embrace opportunism and change and keep you competitive. IFS DELIVERS: Transparency in planning across maintenance and drilling operations, through increased visibility of available resources by integrating all activities for each rig or vessel Improved metrics-capture of asset performance against compliance criteria using the IFS Dynamic Equipment structure and IFS IoT Business Connector Essential visibility of MRP and parts across a global offshore fleet by generating a single master catalog, shared inventory stock and actual quantity in-hand due to relocation A reduction in downtime aligned with improved asset reliability through integrated reliability- centered maintenance (RCM) Optimizing an asset’s lifecycle to share capital or leased equipment between rig/vessel, across a global fleet A stable IT environment delivered through a replication solution to ensure uninterrupted offshore processes during times of limited or no connectivity 11 Asset owners and operators are in need of greater efficiency to cut costs, without increasing risk or compromising uptime and compliance. With IFS’s software solutions, businesses can do just that. IFS SOFTWARE FOR THE OIL & GAS INDUSTRY IFS APPLICATIONS IFS Applications is single, integrated application suite for global and demanding business. With non-proprietary technology and a component-based service oriented architecture (SOA) built on open standards, it is a truly flexible and agile solution with a great user experience. IFS ENTERPRISE RESOURCE PLANNING IFS Enterprise Resource Planning is designed to rapidly adjust to changes in technology and business. With powerful embedded functionality that extends into other crucial areas of your oil and gas business, it includes everything you would expect from a tier one ERP software suite. IFS ENTERPRISE ASSET MANAGEMENT As perhaps the only enterprise asset management software to address the entire asset lifecycle, IFS Enterprise Asset Management facilitates asset lifecycle management and weathers times of disruptive change. You’ll be able to ensure asset availability and manage and protect your oil and gas assets. IFS IOT BUSINESS CONNECTOR Good strategies increase revenue, boost profits and enhance efficiency. Build your IoT strategy around the IFS IoT Business Connector and see how your oil and gas company’s operational data becomes business intelligence and how business processes become more efficient. 12 MEET OUR INDUSTRY EXPERTS Industry experts can play a significant role in helping senior management plot a business strategy for digital transformation, both operationally and culturally, throughout the entire organization. Leveraging the right industry experts to speed digital transformation and realize competitive benefits has never been so important. Our focus on the oil and gas industry is evidenced by both our deep industry expertise and a solid track record. IFS offers flexible, project, asset- and service-oriented solutions that manage the total contract, project, asset and service lifecycle. For example, our oil and gas industry experts are led by our Global Industry Director. Backed by a deeply experienced Center of Excellence team, they can help you get it right the first time with less risk, quicker time to solution and lower cost. FORMULATE & COMMUNICATE INSIGHTS INDUSTRY COLLATERAL INDUSTRY STRATEGY INDUSTRY SOLUTION DEVELOPMENT INDUSTRY ORGANIZATION ADVISORY COUNCILS CUSTOMER PARTNERING INDUSTRY RESEARCH Thought leadership Bu sin es s d eve lopm ent Solution influence INDUSTRY ACTIVITIES SCHEDULE A MEETING 13 14 IFS develops and delivers enterprise software for customers around the world who manufacture and distribute goods, maintain assets and manage service- focused operations. The industry expertise of our people and solutions, together with commitment to our customers, has made us a recognized leader and the most recommended supplier in our sector. Our team of 3,300 employees supports more than one million users worldwide from a network of local offices and through our growing ecosystem of partners. 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