Digital agility: From high hopes to higher value
August 22, 2018
August 22, 2018
Digital solutions offer oil and gas companies everything from integrated views of operations to new platforms that streamline processes, cost models and organizational structures. Yet, 82 percent of oil and gas players still rely on legacy systems to improve their business agility.
More than half (58 percent) of energy company leaders admit they don't know how to keep pace with technology innovations. As a result, they are failing to extract digital’s full potential. In fact, less than a quarter of companies that embark on a digital transformation achieve superior financial results versus their peers.
To get the most from their digital investments, oil and gas companies need to follow a defined cadence and three-step transformation process when introducing, sequencing and integrating their digital enablers.
When oil and gas companies rethink, redefine and then redesign their businesses, the true value of digital technologies—and the agile business models they enable—is revealed. A 30-35 percent EBITDA improvement is possible. This financial benefit stems from upstream and downstream improvements. Specifically, digital can unlock up to 10-25 percent EBITDA improvement and 10-15 percent Capex reductions in upstream activities. Downstream, companies can expect up to a 15 percent EBITDA improvement and a 5 percent CAPEX reduction.
30-35%
EBITDA improvement is possible
10%-25%
EBITDA improvement from unlocking digital
10%-15%
CAPEX reductions in upstream activities from digital investments
15%
EBITDA improvement in capital employed in downstream activities
To create agile business models that take advantage of digital’s full value, companies should keep four things in mind:
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