Four Ways to Move from Reactive to Predictive Decision Making in Oil and Gas
Across the energy sector, organizations are under pressure to embrace digitalization, increase efficiencies, find new avenues for growth, ensure energy security, attract new talent, and satisfy heightened stakeholder scrutiny—while continuing to meet financial, safety, and reliability targets.
In a recent webinar, Lori Hernandez, Associate Director Industry X at Accenture, and I discussed how organizations are tackling today’s challenges and working to transform the future of the oil and gas sector together.
Navigating Disruptive Forces and Managing Challenges
Oil and gas companies today are facing the most volatile conditions the sector has ever experienced. Several interrelated challenges are forcing organizations to revisit business-as-usual (BAU) activities. These disruptive forces include:
- The rise in electric vehicles and the addition of renewable energy sources are creating supply chain complexities as organizations shift away from fossil fuels.
- The negative attention associated with environmental protests against oil and gas production and infrastructure expansion is making it harder than ever before to attract new talent. At the same time, retaining talent is becoming more challenging as subject matter experts retire.
- Digitalization promises new efficiencies across operations but introduces cybersecurity vulnerabilities which requires change management to ensure employees adopt and embrace new ways of working.
- Climate change continues to impact how organizations operate and prepare their assets to respond to major climate events.
While navigating these forces adds complexity, organizations cannot lose sight of their responsibility to operate safely, reliably, and profitably. However, managing BAU activities while pursuing strategies to navigate the changing business environment seems elusive for most oil and gas employees.
The combination of the energy transition and the rise of electric vehicles is having profound impacts on the industry, from changing the timing of asset obsolescence to reducing the demand for motor fuel.
Market Development Manager, Oil & Gas
Watch this video clip for a deeper dive on the disruptive forces challenging the oil and gas sector:
Four Steps to Move from Reactive to Predictive Planning
Moving from reactive to predictive investment planning requires a mature sector to embrace data-driven decision making and model what-if scenarios to prepare for the next disruption. During the webinar, I described a four-step capital planning process used by some of the world’s leading asset-intensive organizations:
- Align your people on value: Create a singular definition of what creates value within your organization, starting with a value framework that includes your measurement of financial and non-financial benefits, risks, KPIs, and corporate assumptions. This gives employees a transparent view into how well investment opportunities align with your company’s strategic goals.
- Enable a consistent process to assess value: Combine your asset sustainment needs with your business needs (or keep them siloed if appropriate) and evaluate them in a consistent manner aligned to the value framework defined for your organization. Use automated workflows that respect different levels of authority across the organization to expedite the approval process for planned sustainment projects as well as emergent needs.
- Leverage existing data to make better decisions: Combine new project proposals, projects approved for delivery, and executing projects in a single enterprise-wide system to manage your organization’s total portfolio of work. Bring in actuals from project management and financial systems, and integrate data from asset management systems. By leveraging existing data, companies can manage available budgets and predict future investment needs to prevent large waves of funding requests.
- Leverage technology to balance trade-offs across scenarios to deliver on your goals: Finally, use Artificial Intelligence (AI) to optimize business and asset needs to deliver the right projects at the right time, that will deliver the greatest value to the organization.
In this video clip, I explain how oil and gas companies can move from a reactive to a predictive approach to capital investment planning:
A Holistic Approach to Transformation
Copperleaf and Accenture have been working together for several years to help asset-intensive organizations improve their investment planning and project portfolio management (PPM) processes. We work holistically to understand an organization’s unique needs and configure a solution to maximize value from investment decisions in both the short and long term.
Through design-thinking workshops, Accenture helps organizations assess their level of maturity, and uncover pain points and gaps in current processes, and areas for improvement. From there, their team of industry experts identifies key minimum viable products that can deliver immediate benefits to the business in the short term, while not losing sight of the organization’s long-term strategy.
A transformation can sound daunting; we approach it from a ‘value-along-the-way’ angle, identifying short-term wins that deliver immediate relief to the business while focusing on the long-term strategy of transformation.
Associate Director, Industry X
With a value framework all investments are compared on a common economic scale, while taking into consideration the organization’s strategic objectives and maturity level. With Copperleaf’s AI-powered portfolio optimization and scenario analysis capabilities, energy companies can manage disruptive forces, drive strategic outcomes, and maintain BAU activities, while meeting funding, resource, timing, and other operational constraints.
Regardless of a company’s level of maturity, transforming from reactive to predictive investment planning is possible. Hear more in this clip with Lori Hernandez:
For more insights on how your organization can make the highest-value decisions that maximize capital efficiency, watch the full webinar.
Reach out to Copperleaf to learn more.