No regrets IT investment in the Oil & Gas industry

4 March 2016

Mark Fidler

Mark Fidler

Former Interim Head of Energy & Natural Resources

The current crisis in the oil and gas industry is well publicised and well documented. The extreme drop in oil prices is having a huge impact on the performance of major O&G companies and I am seeing the impact first hand when talking with our clients. There is a huge focus on cost reduction and major curtailment of capital investments even for companies that were ‘geared’ to perform at lower barrel prices of $50 or $60.

Mark-Fidler-no-regrett-investment-cropped.jpgIn reality these conditions mean that people are losing their jobs by the thousands across all areas and functions within the industry. Knowing this and seeing the impact on a day to day basis makes it hard on a personal level to promote capital investment in the technology space. However, in my mind, the digital revolution is providing an increasingly bigger share of the answer to helping the industry be more compact, efficient and fitter for the future. 

There’s a mass of speculation regarding the recovery of the oil price and I’m not even going to begin to make any predictions on that front (if I could do that with any certainty I surely wouldn’t be writing this post). Regardless of when and how much the oil price recovers, in my view,  companies that are smart about their IT investment decisions now will come out of the current climate all the stronger and more competitive.

It’s clearly difficult to get business cases for technology investment through at the moment but conversely there is still a huge appetite for projects that can help control capital and/or reduce or avoid costs in the short to medium term. Decisions for investment are having to meet a ‘no regrets’ criteria when it comes to approval but there are still many opportunities to do that with SAP enabling technologies.  In order to harvest the opportunities we have to be more innovative in developing solutions and certainly more agile and cost creative in delivering value to our clients.

Decisions need to be made this week not next

Agility is a reoccurring theme in the Oil & Gas vernacular. Ben van Beurden, Shell’s Chief Executive recently outlined the need for Shell to be ‘swift to understand the activities and support needed for their new assets and businesses’.  But how easy is it to make the right decisions quickly?  Organisations which have become fossilised in layers of process over the years need to utilise the expertise of advisors who can respectfully challenge the status quo.

Every penny counts

It’s an age old adage, but so true: look after the pennies and the pounds will look after themselves.  There has never been a more critical time to know where and what monies are being spent on.  From spend on billion dollar projects, to managing and charging out works that are part of Joint Ventures, to ensuring that finance teams have the information to inform and help drive strategic financial awareness.  All these areas are dependent on one source of truth that is easily and readily available.

Look up from the oil well

Most industries have a tendency to be inward looking, however in times of adversity it’s key to take a wider view and look to other industries for inspiration. We’re looking at how other industries are using technology to drive efficiencies and find sustainable cost reductions.

Striking oil with SAP digital technology

Striking oil is a notoriously complex and risky exercise. Many of the technical constraints in SAP technology have been removed due to the advent of HANA, Fiori and S4 so sweating your digital SAP assets is a comparatively simple and a lot less risky venture. There are tangible use cases with robust ROIs to be exploited by investing in the digital revolution.

There is no magic wand to wave to make the pain of low oil prices go away, but companies can look to create stability to weather this storm, so they can move full steam ahead when the markets have settled.

 

Connect with us

Bluefin will be exhibiting at the International SAP Conference for Oil and Gas in The Hague on 12th-14th April 2016. Our team will be on hand to discuss your business needs, and advise how we can help you utilise your SAP landscape to deliver efficiencies and cost savings across your operations. Click here to discover more.

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Bluefin and SAP S/4HANA - welcome to the one horse race