Return on Digital Technologies: Insights for OFES Companies

DIGITAL
TECHNOLOGIES
Insights for oilfield and equipment
and services (OFES) companies
GETTING A RETURN ON

THE NEW OIL AND GAS MARKET REALITY
Copyright © 2018 Accenture. All rights reserved. 2
• After 10 years of sustained high commodity prices, range-bound commodity prices have
pushed OFES companies to rethink their cost structures and business models.
• The price of data generation, storage, and analysis has dropped to an all-time low.
• An enormous amount of data is generated—but only a small fraction of companies use it
to develop new offerings and improve operations.
UPSTREAM IS NO LONGER ABOUT EXPLORATION
Exploration & Property
Acquisitions
Development
Source: Rystad Energy, Accenture analysis
More than 75% of all upstream capital is now spent on development versus 75% on exploration and land purchases in 2000
2000 2010 2016
25%
35%
>75%

CHALLENGES OFES COMPANIES
ARE FACING
Copyright © 2018 Accenture. All rights reserved.
The industry is hampered by:
3
Asset availability and utilization is inefficient, leading to significant
capital being tied up in assets and a low return on the capital employed.
This is compounded by poor practices and stunted capabilities:
A lack of real-time visibility into asset location/health.
• Silo’ed, disparate data.
• Slow, intuition-based decisions.
• Bespoke, customized design and a static development cycle.
No single, analytics-driven platform or approach.
A reactive maintenance and repair strategy.
Inefficient resource planning.
Ineffective maintenance performance management and controls.
Poor network optimization.
• Isolated teams.
• Reactive intervention.
• Isolated and disconnected materials, logistics and workforce.

Where will digital
technologies have
the largest impact
in helping OFES
companies address
these challenges?
Digital technologies can create significant
value for OFES companies in 4 key areas:
4
1
2
3
4
Tracking asset utilization
and performance
Optimizing business-to-business
(B2B) sales processes
Redesigning the supply chain
to lower costs for product
development and consumables
Shifting the back-office
cost structure and making
it more flexible

TRACKING ASSET UTILIZATION AND
PERFORMANCE
• In 2005, the major services companies had an asset to
revenue ratio of approximately 1-to-1 (i.e. for every dollar
spent, the company earned one dollar). In 2017, this
ratio had collapsed to under 1-to-0.4 (only $0.40 in
revenue per dollar invested)*.
• OFES companies have become asset companies
without realizing it—but their internal management
processes are still largely focused on personnel
management not asset management.
• Most collect significant amounts of data on their assets,
but rarely do they harness the power of this data.
• Digital technologies can connect data with decision
makers or enterprise systems in real-time—helping
improve condition-based maintenance scheduling and
capital planning.
• Predictive analytics can be used to improve asset uptime
and performance.
5
AREA 1
REVENUE / ASSETS

OPTIMIZING BUSINESS-TO-BUSINESS
(B2B) SALES PROCESSES
AREA 2
• The OFES environment remains one of the most complex sectors for B2B sales—with a variety of offerings (including products, services
and software) and customer types (such as SMs, NOCs and small independents) each with different buying and delivery requirements
around the world.
• This complexity results in an enormous amount of data being generated in the ecosystem, most of which is discarded. Collecting and
interpreting this data could reveal ways to improve forecasting accuracy and pricing, as well as shifting resources to higher margin areas.
• Digital technologies can be used to analyze individual transactions and generate new offerings for customers.
The biggest opportunity (an average return on sales of 2-4%)
lies in data-led decision making including:
• Advanced-analytics-enabled pricing systems.
• Growth opportunity identification.
• Combining digital channels with process digitization can improve the customer experience while lowering cost-to-serve.
• Churn prediction algorithms at the individual-customer level.
• Sales countermeasure identification.

REDESIGNING THE SUPPLY CHAIN
TO LOWER COSTS FOR PRODUCT
DEVELOPMENT AND CONSUMABLES
INTEGRATED DIGITAL SYSTEMS
7
AREA 3
Facilitate supply chains driven by end-to-end pull systems that
help eliminate waste and promote just-in-time order fulfillment.
ADVANCED ANALYTICS
Help generate more accurate forecasts and improvements
across the entire sales-and-operations-planning process,
including better scheduling of material supply.
“SMART” ORDERING AND
SCHEDULING SYSTEMS
Full integration with invoicing and payment functions helps
stabilize planning by ensuring spare parts and supplies are
on hand when needed.
AUTOMATED WORK SCHEDULING PROGRAMS
Analyze demand expectations and factor in product lead times to
predictively generate work orders and optimized logistics routing
that proactively helps meet just-in-time customer needs.
BLOCKCHAIN
Greater process efficiency with improved accuracy and a reduced need for
governance; clearer visibility leading to enhanced compliance, improved accuracy and
insight-based decision making; secure data exchange and fewer manual processes.
ADVANCED MANUFACTURING TECHNIQUES
Additive manufacturing and rapid prototyping, along with real-time performance
data analytics, are ripe for adoption in this space. These technologies can help
optimize products and respond more quickly to customer demands. With increased
scrutiny on costs, flexible manufacturing that allows for job-specific optimization,
provides a significant competitive advantage to manufacturers.
INDUSTRIAL INTERNET OF THINGS (IIoT)
AND DIGITAL TWIN SYSTEMS
Like those used to improve asset utilization in the field can also be applied to
manufacturing equipment, enabling better utilization rates and virtually eliminating
unplanned downtime through condition-based preventative maintenance.
VIRTUAL TRAINING ENVIRONMENTS AND
WEARABLE COMMUNICATIONS TECHNOLOGY
Help increase uptime in manufacturing environments by empowering employees
to cross-train and develop flexible skillsets.

SHIFTING THE BACK-OFFICE
COST STRUCTURE AND MAKING
IT MORE FLEXIBLE
• The core “towers” of HR, finance, IT and procurement have significant opportunities for cost savings
and modernization—especially in the OFES sector given the volatility of activity and revenue where
large fixed costs can place companies at risk.
• Digital technologies such as robotics process automation (RPA) and zero-based approaches can help
companies change their cost structure from fixed to variable, protecting them from market swings and
enabling them to respond effectively.
• Automation can bring savings by freeing up technical workers to focus on higher value-add activities.
8
AREA 4

ACHIEVING DIGITAL TRANSFORMATION
FOR OFES COMPANIES—WHAT IS
REQUIRED?
VISION
OPERATING MODEL
TALENT & CULTURE
TECHNOLOGY
ECOSYSTEM
BUSINESS CASE
What degree of transformation?
How will progress be measured?
What level of change is needed?
How will change be governed?
What’s are the new skills needed?
What behaviors do you want to change?
What are the capabilities needed?
Where would a partner help you accelerate?
Where’s the most value?
What’s the funding plan?

THRIVING IN THE NEW OIL
AND GAS MARKET
• Digital technologies can have a disruptive impact on the
landscape of how work is done in the oilfield, with the
potential to redraw the value chain, deliver a step change
in productivity and create new channels to market, but
services and machine & equipment manufacturing
companies need robust strategies to succeed.
• Companies can become enamored with technological
advancements, failing to consider how best to apply them
toward business goals—at times spending on ventures
and business models that do not deliver.
• Leaders should understand where and how disruptions will
impact them—accurately assessing maturity and gaps in
the existing digital culture—and then determining which
solutions are appropriate to further the overall digital vision
while delivering the highest return on investment.
10

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If you require advice or further details on any matters referred to, please contact your Accenture representative.
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Return on Digital Technologies: Insights for OFES Companies

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