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Industrial analytics thought leadership-series.

How will industrial analytics, Industry 4.0, IIoT and digital transformation change businesses? And ultimately the world? We ask industry leaders to share their view on these technologies, how we use them, and where they will take us.

Eirik Rasmussen:

AI-hype serves as stretch target for innovation

The buzz around big data, ML and AI has fueled innovative thinking in the oil and gas industry. As such very positive and an inspiration for transformation and co-innovation. But according to PwC’s industry specialist Eirik Rasmussen you cannot innovate without deep industry skills and business understanding. Digital competency without strong oil and gas knowledge doesn’t stand a chance in a complex value chain driven energy sector.

“Five years ago companies in oil and gas had limited reference models in terms of digital innovation. Starting the digital transformation journey was like picking up a piece of soap with wet hands. Now the targets and objectives are much more tangible. There is more maturity, and management approaches innovation with greater confidence and more determination,” says PwC’s Eirik Rasmussen. He leads the PwC Energy Experience Center in Stavanger, Norway, engaging in innovation for energy corporations all over the world.

Technological development in data management, cloud solutions, data lakes and better analytical tools is an enabler for the digital shift. The push and learnings from other industries like retail, manufacturing and automotive is also an inspiration and set targets for the energy sector. PwC sees a huge potential in the transition of data into knowledge and insight, as the energy sector is very data centric.

Hype serves as stretch target

“We are bringing energy professionals and multiple companies together in our innovation hub, because we believe there is a huge potential in co-innovation. Not only within a company but also crossing organizational boundaries solving challenges with peers and competitors,” says Eirik Rasmussen.

“The focus around Big data, ML and AI has put data management on the agenda. It functions as stretch targets for the industry in terms of innovation, and I see this as very positive. Companies are really trying to find an innovative approach to utilize data to solve their business challenges.”

Maturity in data management

“It becomes a question of maturity in data management. You got to have the skills, technology and infrastructure in place to work intelligently with data, and this is much more important than specific software or technology. Furthermore, from my perspective it is very obvious that you cannot take the human out of the equation. It’s the knowledge of employees and the entire scientific foundation you will need to value add with data,” he says.

“I am a true believer in digital transformation. It can help companies to make better and faster decisions. Companies should focus to develop a standard process of getting data available by cleansing, contextualizing and then apply analytics to produce knowledge and insights. ML and AI are relevant and important aspects, but it is just one piece in the puzzle of data maturity that fuel digital transformation and innovation.”

Industry skills and challenges

Eirik Rasmussen has a profound respect for industry skills and knowledge in the energy sector. The very idea of an experience center for the energy sector reflects the special needs and the history of oil and gas companies. The sector is challenged by talent shortage and gaps in capacity and competence. Many managers and specialists are close to retirement, and only one employee enters when two retires from the industry. This is another driver for digital innovation and improvement.

“You cannot have innovation in processes and value chains without industry specific knowledge. A project staffed solely with digital and innovative competencies would have no way to succeed. You should never underestimate the need for industry skills when you want to innovate.”

Energy companies with a purpose

Development of potential new oil and gas field are all data-intensive and knowledge-heavy disciplines. Building a data driven innovative position could be extremely profitable, and Eirik Rasmussen encourages the energy sector to think “out of the box” with their partners and suppliers:

“I could easily imagine successful co-innovation between different companies with outcomes in form of software solutions that are scaled and rolled out. In my perspective the drivers for innovation should be wider than cost-cutting. If so it will attract young people to also innovate with a purpose of developing a more green and more safe energy sector.”

“The investment in data-driven innovation will have a much higher and faster return, if the innovation standardized with the purpose of bringing a service to the market. By industrialization the benefits would spread faster in the global industry. It could mean that the “inventor” would loose a competitive advantage faster, but on the other hand they would have a successful spin-off, learnings and be prepared for more and faster innovation,” says Eirik Rasmussen.

Getting started

According to PwC companies can get frustrated in the innovation process. When the outcome of a digital innovation project hits the assets. The challenge of scaling and deployment appears. Again, this is why you need to align the business side with the digital and innovation teams early, according to Eirik Rasmussen:

“You may see a digital task force work through a case with customer journey mapping, design thinking, personas and prototyping, but the transition to “real life” may cause frustration. In our Experience Centre we are developing best practices and methodologies in the area of getting innovative ideas scaled and rolled-out as products,” says Eirik Rasmussen.

As an example on co-innovation PwC and Camo are offering an agile service to estimate the quality and robustness of a client datasets. If a company in two weeks will know, if they can or cannot build and develop products on their data, it may save a lot of frustration in the next phases.

“The high value and ROI is not generated in the sprint project. The value and ROI will be harvested at the roll-out and adaption of products, and based on our experience most companies will need faster and better feedback mechanisms between innovation, assets and operations,” he says.

Organizational challenge

One of the key aspects of innovation is to allow failure and to fail as fast as possible. Some oil and gas companies are caught in a dilemma in this respect because the planning, budget and portfolio view still work the “old” way.

“You may see top management give a general marching order in the direction of innovation, but at the same time you have middle management working on the same set of KPI’s, one-year budgets and with limited training of themselves and their teams. It brings innovation to a stand still very fast, if you place the responsibility in an organization measured on efficiency, on throughput and with a lack of training and competence development.”

“There is broad consensus of the potential in digital innovation, and all the technology to do it is getting better and cheaper very fast. We will see a range of innovations in the years to come, as the companies eventually ‘crack the organizational and cultural nut’, and see the need to collaborate and co-innovate,” says Eirik Rasmussen.

Eirik Rasmussen:

Innovating with heavyweighters in oil and gas

Eirik Rasmussen, partner at PwC and leader of the PwC Energy Experience Center in Norway, has 25 years of national and international management consulting experience with focus on Oil & Gas and IT. He holds an Executive MBA degree in management and strategy from Norway and a Strategic Management Program from University of Singapore.

Eirik manages large strategic transformation programs composed with multinational teams. Often with a strategic intent in support of top management and often change programs delivering value in the intersection between strategy, processes and digital technologies.

Follow Eirik here:

“Five years ago companies in oil and gas had no reference model in terms of digital innovation. It was like picking up a piece of soap with wet hands. Now it is much more tangible. We bring energy professionals and multiple companies together in our innovation hub, because we believe there is a huge potential in co-innovation. Not only within a company but also crossing organizational boundaries solving challenges with peers and competitors.”

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