The upstream oil and gas industry is undergoing a radical transformation as new technologies and digital solutions are coming together to trigger a new industrial revolution. Physical assets will be connected to the Internet, advanced analytics will deliver new insights into operations, and new and more efficient forms of cross-domain collaboration will become standard.
Technology is helping organizations across industries to transition from an analog past to a digital future. It is no different for the upstream oil and gas industry. New technology promise to cut costs, improve efficiencies, and streamline operations for E&P companies.
But how do you get there? What steps are needed to kickstart the digital transformation journey?
Process Automation as the Starting Point for Digitalization
Digitalization is defined in a myriad of ways. One robust definition is provided by Gartner, which describes digitalization as the process of transforming into a digital business through the use of digital technologies. This transformation aims to change business models and provide new revenue and value-producing opportunities.
For me, digitalization is first and foremost about improving existing business processes. Although an essential part of digitalization is to create new value, improving what is already being done is of equal importance.
Automation has risen to become the standard method for improving existing business processes. According to McKinsey, 45 percent of all work activities have the potential to be automated, and a Deloitte survey reveals that 53 percent of the surveyed respondents have embarked on a process automation journey. Implementing automation technologies promise to streamline business processes, increase efficiency and productivity, and act as a springboard for further digital transformation initiatives.
Process automation, then, can provide an excellent access point for your digitalization journey.
The Various Types of Process Automation
As in any other field related to digitalization and digital transformation, process automation is riddled with acronyms and, for many, unfamiliar terms. Some of the most important ones are the following:
- Business Process Automation (BPA): BPA is an umbrella term for the use of technology to automate business processes. It includes the routing of information from step to step and the automated processing of tasks.
- Robotic Process Automation (RPA): RPA is a type of BPA. RPA aims to automate business processes by using computer software to perform tedious, repetitive, and rules-based tasks. The technology is often described as “virtual employees” that can perform a range of different tasks, such as filling out forms, communicate with databases, automate the data flow between different systems, and collect and structure data from various documents. You could say that RPA takes the robot out of the human.
- Intelligent Automation (IA): IA is another form of BPA, although more advanced than RPA. RPA is mostly concerned with routine tasks, while IA focuses on non-routine tasks in more complex processes. IA involves the use of Artificial Intelligence (AI) and Machine Learning (ML).
1. Analyze Your Business Processes
Before implementing automation, you should get a thorough understanding of your existing processes. This includes determining which processes are suitable for automation and what you aim to achieve with your automation initiatives.
There are several methods you can use to determine what processes to focus on. Six Sigma, Lean, and Kaisen are some of the most common methodologies, all building upon the same foundation – to reduce waste and improve efficiency.
- Six Sigma is an organizational and management philosophy that is designed to ensure quality in products, services, and processes. The philosophy stems from the manufacturing industry but is today used in a wide variety of industries. It is a data-driven approach to eliminate defects and relies on structural methods and tools for problem-solving. Six Sigma might be your best option if your goal is to remove waste from a particular process.
- Lean is a philosophy that aims to increase the efficiency of operations by reducing waste and focusing on customer experience. Like Six Sigma, Lean also has its roots in the manufacturing industry but is now used across a wide variety of industries. Lean is suitable if you aim to increase the speed and quality of your processes.
- Kaizen is the Japanese word for “improvement.” It is a philosophy and a methodology created to improve various management, development, and production processes continuously. It helps organizations increase productivity and reduce waste as well as eliminating errors and enhancing compliance.
Using one of these methods will probably reveal several areas of improvement in your existing processes and help you identify which tasks that are suitable for automation.
2. Break Down Data and Application Silos
E&P companies often rely on legacy software applications designed for individual functions across the value chain. Often created by different vendors, these software solutions regularly struggle to communicate well with each other and make up a complex system architecture that is difficult to navigate. Consequently, applications become isolated and create a large number of information silos.
Information silos create inefficiencies and hamper growth; they should be torn down. To leverage the opportunities of digitalization and automation, they must be torn down.
Application Programming Interfaces (APIs) are a critical component for breaking down information silos and an integral part of automating processes relying on several systems and applications. APIs function as intermediaries between software and enable different systems and applications to communicate and exchange data with each other. Within process automation, specifically, APIs can provide access to the required data from any relevant application.
3. Automate Your Processes
Liberating data and information from application silos, allows you to automate processes spanning several different applications. A thorough understanding of your application suite makes it possible to create an automation repository or library of any current and future applications.
Often, organizations embark on large automation projects, aiming to optimize and automate processes spanning several departments, teams, or functions. However, as the complexity of the process increases, the chances that the automation project will fail increases with it. Instead, begin with one single process, preferably a simpler one. A more straightforward process is easier to automate and will likely provide quicker results.