Future Ready Organizations – Transformation into Intelligent Enterprise within Energy Industry

In 2020, Accenture Research together with Oxford Economics research by surveying more than 1,100 C-suite and VP-level executives across 11 countries and 13 industries to better understand the connection between business operations maturity and performance.

Accenture finds that only 7% of organizations surveyed[1] are achieving future-ready performance. The future-ready state is characterized by transformational value. It primes future-ready organizations to perform better in efficiency and profitability and to deliver excellent customer and employee experiences. In terms of financial metrics, those organizations, on average, is 7.6% more efficient (lower operating expenses per dollar of revenue) and 2.3 percentage points more profitable (EBITDA as a percentage of revenues).[1] 

These businesses were also more likely to report improvements in their employee talent mix and reskilling efforts, employee engagement and retention, and ecosystem partnerships.
There are benefits beyond financial measures as the maturity level increases. Organizations that advanced a level in the past three years improved their speed of product and services innovation, time to market, market share, and customer experiences. They also strengthened their ecosystem partnerships.

Figure 1 below shows the average profitability and efficiency gains—5.8 percentage points and 18.8%, respectively— achievable because of moving up from the predictive to the future-ready level. And our experience working with more than 400 leading organizations across 20 countries and 18 industries attests to productivity and efficiency gains up to 50%.

Figure 1: Where transformational value intersects with intelligent operations.

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Source: Accenture Research and Oxford Economics Intelligent Operations Survey, 2020.

Accenture experience shows that additional productivity and efficiency gains up to 50% can be seen in organizations displaying future-ready characteristics.

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The metrics comparison between the companies in all stages are significant, as we can see in figure 2 below.

Figure 2: Performance benefit improvements by operational maturity level over the last three years

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Source: Accenture Research and Oxford Economics Intelligent Operations Survey, 2020

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Accenture found that to achieve the future-ready, organizations should know the goal, know the steps, and know how to leapfrog maturity levels. Part of being future-ready means seeing what intelligent operations (driven by new and advancing technologies) will be able to do in the coming years.

To move to Intelligent Operations, organizations should:

1. 1. Think big and go beyond incremental change
   2. Enhance intuition with the highest-quality, diverse data
   3. Scale automation and analytics, AI and integrated solutions with leading practices
   4. Foster a human machine, specialized workforce
   5. Put a cloud infrastructure at the heart
   6. Build complementary third-party and ecosystem relationships

The result is aligned with the other research that has been conducted in the Energy Industry. [2]  The research is based on the one of hypothesis, that shared services organizations are in a unique position to transform cost structure and how services are delivered across the enterprise. Accenture’s research examines the emergence of Intelligent Enterprise Services (IES) and the transformational role it plays in enabling enterprise-wide change.

Energy companies are using shared services organization to:

1. 1. Continue to reduce costs
   2. Accelerate the digital transformation of processes
   3. Centralize and utilize data and analytics
   4. Improve quality and control
   5. Enable growth, especially through M&A but also divestitures
   6. Engage third parties to support strategic initiatives

The majority are transforming their traditional shared services models in some aspect to help them better navigate the consistent volatility and demands of their markets.

The analysis of data collection and interviews from 120 shared services senior executives in the oil and gas, utilities, chemicals, mining and metals, and forest products industries are:

1. 1. IES is being asked to integrate more breadth and depth into new scope—92 percent of respondents overall have plans to add scope
   2. Cost reduction is no longer the number one expected benefit of leveraging this model; 37 percent considered quality and accuracy as the highest value drivers
   3. The IES model is a catalyst for digital transformation—97 percent cite it as the best place to drive digitalization after centralization and standardization
   4. A new breed of shared services practitioner is emerging—one with functional, industry and technical expertise, with more than 60 percent listing technology as a required new skill
   5. Business leaders are rethinking how to use this model more strategically to maximize value for the enterprise—75 percent use a partner through outsourcing or blended hybrid in their delivery models

IES is an emerging model being used to drive more value across the enterprise through technology, innovation, and analytics. The opportunities to drive these tangible business and enterprise outcomes are limited only by enterprises’ willingness to seize on the opportunities.

IES provides many opportunities for companies, such as:

1. 1. Accelerating digitalization can free up capacity to support additional scope and new services; this will also create the need for new skills and expand career path opportunities for the workforce
   2. The business will look to IES for advisory support and innovation, automation, and analytics
   3. As the role of the IES organization expands, changes in the operating model are needed to maximize value for the enterprise
   4. Global process owners’ decision rights will increase and focus more on achieving business outcomes and partnerships with third parties. These will continue to expand to accelerate the pace of transformation and cultivate new capabilities in providing improvements in data, insights, and business performance

In Indonesia, several energy companies are in the process of moving into Intelligent Operation or Enterprise. The journeys and approaches might be slightly different between organizations, but there are a couple of principles remain the same:

1. 1. Commit to data-driven decision making:
      1. One of energy company in Indonesia would like to leverage and make use of big data that has been started to be compiled, after their initiative in the shared services. Their shared services organization started with centralization and standardization of business process. They have started automating several processes and created big data for various sources. They are now looking for the use cases to leverage their data for business benefits. They would like to start with enterprise back-office business operations such as finance and human capital.
      2. The other energy company has started to strategically compile the data as a single source of truth, as they have various data sources from various applications and data bases. They would like to improve their core system, while also integrating all the data into single big data, and in parallel standardizing and improving their business processes.
   2. Accelerate digital transformation, digital is anywhere:
      1. Most companies have started to embark digital transformation, whether they have just started or realized some of the result from the initiatives. Both energy companies above have started digital transformation, executed several initiatives, and continued to roll and scale them out throughout their value chain.
      2. With the spirit of transformation and accelerate to realize value, those companies are using its enterprise data, people, organization, and processes to accelerate their digital journey.
         One of the energy companies are leveraging their shared service organization to scale up and continue the digital transformation initiatives. Several cases from Finance are being explored to be implemented quickly.
      3. The other energy company has started a centralized process. It has been targeted for pilot unit first, and yet it definitely tries to move out as soon as possible. It has been started by Finance, to standardize and improve the processes.
   3. Open to collaborate with ecosystem:   
      1. Companies realize that they are not able to do all the activities in the initiatives by themselves. They have worked together with ecosystem partners, from hardware, software, cloud, system integration and process improvement parties as well. Although they would like to confirm and get more clarity with Cloud technology and its related policy and governance, they both started to consider cloud as an option to scale up the transformation.

There is no other right time for organizations to start their journey and transformation into future-ready organization by applying intelligent enterprise and operations beside now.

We believe if organizations fast-track the journey, its operations can become a true catalyst for competitive advantage. And, along the way, organizations can elevate their business decisions to realize tangible, sustainable, transformational value, and growth.

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[1] FAST-TRACK TO FUTURE-READY PERFORMANCE - Elevate every decision with intelligent operations

[2] Accenture’s Intelligence Enterprise Services Survey