Energy leaders set sights on horizontal value creation
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Energy leaders set sights on horizontal value creation – here’s how process intelligence is accelerating their progress

2022 marked a year of record profits for the Energy industry, with the top Western oil companies paying out a record $110 billion in dividends and share repurchases to investors.

But despite the windfall, leaders are well aware that commodity price surges have no bearing on future success — uncontrollable variables and unpredictable outcomes are just part and parcel of operating in this volatile sector.

As a result, and against a backdrop of acute geopolitical and macroeconomic fluctuations, leaders are increasingly investing in strategies that will secure longer-term value from the things they can control. The top candidates this year: mergers and acquisitions, plus focused initiatives to boost operational performance

Let’s take a closer look at the latter.

A shared goal among Energy leaders: horizontal value creation

In many ways, the COVID-19 pandemic was a double-edged sword for Energy companies: while it triggered an era of unparalleled disruption, it also gave businesses a significant push to liberate their front line and automate key processes. For example, many had to mitigate the impacts of reduction in force by learning to do more with less, leading to a steep rise in automation investments.

Now, with healthy investment budgets, and seeing the successes of peers who managed to navigate the pandemic and transform successfully, at least 60% of oil and gas CIOs and technology executives say they’re dialing up investments in solutions that can help accelerate progress in these areas, such as business intelligence (BI) and data analytics initiatives.

Leaders have also rebalanced insourcing and outsourcing, taking more non-core processes back in house so they can increase control while improving their process understanding and data-integration capabilities.

But what’s the ultimate vision, now that the pandemic has subsided and staying afloat is no longer the top priority? Well, according to our many customers in this space, for whom billions in value has already been generated through operational improvement alone: ‘frictionless’ integration between functions. A setup where operational insights are reliable, readily accessible, and actionable, so they can lead to immediate cash impact across departments, and reveal new ways to meet longer-standing Energy objectives, from delighting customers to reducing emissions.

This is what is meant by horizontal value – the kind of value that’s generated when previously siloed functions become connected by a common language — in this case, process data — revealing new ways to align and take action to improve the things that matter, like liquidity, productivity, and revenue.

This connective tissue between functions and departments is what Energy leaders believe will secure sustainable value for their businesses.

The problem: creating horizontal value is notoriously difficult

Although the push to increase investments in BI and data analytics has gained significant momentum this year with the price surge, the general push to transform digitally has been ongoing for almost a decade. In fact, many Energy companies are already several years into what would be considered more advanced digital transformation initiatives such as cloud-based ERP, and have seen minimal returns — even with the addition of new digital solutions (BI, RPA, BPM) that promise to increase ROI.

The problem is, it’s hard to identify exactly which operational initiatives will generate reliable returns. One half of the Energy solutions market is saturated with products and services that can help companies generate more process data, but can’t tell them what to do with it. The other half is saturated with solutions that can help organizations run automations, but can’t help them analyze or improve the processes underlying them.

In short, there’s no lack of process data in the Energy industry — but actionable insights that lead to fast value and continuous improvements are vanishingly scarce.

This scarcity is all the more acute in companies grappling with legacy systems, complex infrastructure, historical data, and organizational silos — and that’s leaving aside the renewed IT dissonance that comes with each new acquisition or merger…

So the question remains: how can Energy leaders hope to generate more value from their operations? Which strategies for creating horizontal value will actually bear fruit?

Process intelligence: the key to horizontal value creation

Earlier this year we ran an independent global survey of over twelve hundred leaders across industries. It revealed that 99% already know that optimizing their processes is key to meeting their objectives at an organizational level. This explains the rise of process mining over the last few years, as leaders seek out more advanced ways to optimize their processes compared to more traditional strategies like process mapping or BPM.

But even process mining solutions vary significantly in how much value they can deliver, especially when the business in question is a complex global Energy operation, with multiple departments and functions at play, each of which has different goals, languages, and underlying systems.

A process intelligence platform, on the other hand, can provide the best of both worlds: the rapid process analysis of a process mining solution, combined with the transformative powers of machine learning and automation to support optimizations at scale. This kind of platform unifies the end-to-end process data of an Energy enterprise in real time, from every source, by forming a system-agnostic, digital twin of processes that spans the entire value chain — from hydrocarbon logistics and asset management to materials management, accounting, and customer service.

Once the process digital twin is created, a process intelligence platform will automatically find and capture value in end-to-end operations, independent of the systems used (from ERP to CRM and beyond).

For example, a process intelligence platform can streamline warehousing and logistics by ensuring raw materials are high-quality, compliant with safety standards, and being routed effectively – whether on onshore platforms or subsurface locations, without the need for human intervention. The same platform can be used to reduce waste and unexpected maintenance costs by aligning master data, material planning, and labor estimates.

It’s this level of not only industry specificity but use-case specificity that will accelerate the path to horizontal value creation among Energy companies. As it has already done for BP, Neste, Chevron, and countless others in the sector.

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Vijay Desiraju author headshot
Vijay Desiraju
Global Energy Industry Lead

Vijay Desiraju is Celonis’ Global Energy Industry Lead. He is responsible for guiding clients to billions in cost reduction opportunities across the Celonis Energy vertical. He works closely with client teams to drive value across the oil and gas value chain. Prior to Celonis, Vijay spent 14 years as a partner at Accenture, where he advised energy and utilities clients on digital transformation programs across the enterprise.

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