When any business looks to take advantage of the advantages offered by new technologies, some of the first business cases they are told to examine are companies like Facebook and Uber. Companies like these are examples of businesses that own none of the assets they sell, yet have grown to become dominant players in their respective marketplaces.
Looking at companies like Facebook and Uber as examples is “strange for asset-heavy industries like oil and gas,” said Ashild Hanne Larsen, CIO of Statoil—a global oil and gas company headquartered in Norway. “But it does help to understand how business value is shifting away from physical assets and toward data and algorithms and how quickly a market can face disruption.”
Speaking at ONS 2016 in Stavanger, Norway, Larsen said that she is leading Statoil’s investigation of how digitalization can help improve its safety and operations, as well as present new business opportunities for the company. She noted that, in addition to reviewing market disrupting businesses like Facebook and Uber, she is also looking for insights from other asset-heavy industries, such as agriculture and mining.
Larsen pointed to the business benefits of digitalization that companies like John Deere and Rio Tinto are setting. In John Deere’s case, she pointed to the company’s ability to charge a premium based on its ability to optimize crop size and yields through use of various digital technologies John Deere has adopted for use on its products and services offerings.
“The oil and gas industry needs to better understand how its long-held pricing models could change with greater adoption of digital technologies,” Larsen said.
At Rio Tinto, Larsen is looking at how the company has integrated and automated much of its mining operations, resulting in significant transportation cost reductions for the company as well as greater operations efficiencies and a 70 percent reduction in risk for its employees.
To position digital as part of Statoil’s IT and business agenda, Larsen said she is focusing on how IT can create value via digitalization of operations to increase security and improve operations. She plans to do this by providing IT tools that enable greater efficiencies and creating an IT platform that can be used for sharing data as well as extracting value from that data.
“IT needs to step up in building a broader digital competence across our organization, “ Larsen said. “The interface between business and technology is crucial. If we can successfully merge technology and business we can move IT beyond being seen as just a cost center. But to do that we need to adapt to new ways of working and focus on more agile IT projects that can be delivered faster than the IT projects of the past.”
To bring about this greater integration of business and technology at Statoil, Larsen said she has engaged Statoil’s IT department with the company’s strategy division to identify specific business opportunities in which IT could play a greater role.
She also cited the need for technology champions at all levels of organization—not just the people who are working on various technology-oriented projects day to day. To deliver on this, she is working with Statoil’s human resources department to engage various executives for multi-month projects that immerse them in digital technologies by having them work on specific issues. “This will accelerate the acceptance of digital technologies across the company and create more digital ambassadors to help shape the dialogue around digitalization of the industry,” Larsen said.
As for the relationship between IT and operations technology professionals at Statoil, Larsen said collaboration between the two groups has gotten much better over the past few years. She said that work between the groups to focus on standardization of technologies used across the company has helped to alleviate many of the issues that formerly created problems between the two.