Martin Richards

Martin Richards
Martin Richards is a Senior Director for Energy Industry Solutions at OpenText. For over twenty years, he has worked with ECM technology, delivering professional services and solutions for the energy and engineering industry.

Stuck in the “Now” can Hold Back the Future of Oil and Gas

Oil & Gas

Several Oil & Gas capital project leaders I met with in Amsterdam recently have had me thinking – are we forward-looking enough in our industry? I’ve blogged before about what I believe is an opportune moment, amidst the changing price of a barrel of oil, as a chance to reinvent. On the technology side, ideas we dreamed about just a few short years ago have already taken off. When I say taken off, I mean literally. Drones are having a big impact in solving accessibility issues. On a current major offshore build, for example, I know a construction team using drones to access difficult locations and photograph construction work, enabling engineers to remotely verify construction quality and completion. In the past, this would have would have required a team of engineers on the rig, could have been dangerous to accomplish, time consuming and expensive. Bu, on the business side, there seems to be less creativity in introducing changes. Very few companies I know have a plan to transform to lighter weight, faster-moving types of companies. In the automotive industry, for example, we can see a significant shift to using hired expertise for various car components. The network of suppliers is well understood, and it is routine business to combine different talents together until the car is cost-effectively delivered. Technology companies do this as well, such as Cisco and their “liquid” workforce. It gives them flexibility, or in cloud language, elasticity, to contract and expand more rapidly. In the Oil & Gas industry, we may be focused too much on today. While it’s understandable that to ensure survival, cost cutting and personnel reduction may be needed, where is the strategic thinking to rebuild once the market rebounds? How will each level of the industry, from upstream to downstream, create a new future? The only reason we have drones checking remote pipelines now is because visionaries dreamed up better ways of doing things yesterday. I have heard from executives in our industry that there is a willingness to restart, including interest in contracted engineers to perform more work across the value chain. Certainly, there are technologies already in place to support a more dispersed, virtual team, from WhatsApp to telepresence. Our challenge now is to envision that new energy entity, and the innovative forms and operating models it may use to pull apart from the pack. What are your ideas for changing how our businesses are run? Comment below.

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European Energy CIOs Reap Benefit of Digital Transformation – and That’s Just the Start

Energy

According to new research from IDG and OpenText, over 90% of Energy companies in the UK and Nordic region have Digital Transformation programs in place. These companies are beginning to realize significant benefits from their digitization effort. But, Energy CIOs say, there’s much more to come. Pricing instability places focus on operational efficiency Our research showed that pricing affects energy businesses in two ways. First, the volatility in oil prices makes it difficult to properly manage supply and demand. As one UK Energy CIO put it: “Much of the sector’s focus has been on the oil price dynamics of supply and demand, and the implications for capital efficiency.” A Finnish CIO explained the flip side of pricing: “To thrive in the market amid increasing competition, we are forced to decrease our prices regularly … To add to our worries about pricing, as we are a customer-centric company we need to invest heavily on customer satisfaction measures. We also have to provide a fair price to customers along with transparent customer services.” The results of pricing pressures were neatly summed up by another UK Energy CIO: “Profit maximization is the top business concern of energy producers as they work to change the cost and process efficiency of their operations.” Digitization advanced in operations The responses to our survey from Energy CIOs suggest that early Digital Transformation efforts have focused on operations and customer experience. Managing supply and demand is a huge issue for the Energy companies surveyed, with them placing load balancing as both one of the largest industry challenges and the second biggest opportunity for digitization. It appears that many companies have made good progress in this direction. One Nordic CIO expressed a feeling common to many of the CIOs questioned: “With the help of digitization, we have connected our physical assets with the virtual environment, which helps to provide efficient output and can be monitored from different locations. Demand and supply can easily be handled, and all operations can be controlled from one location with the help of centralization of data.” The results of these efforts can be impressive. One CIO reported: “Digitization has helped us to improve operations and increase flexibility available throughout the value chain. Digital Transformation has boosted profitability by 20 to 30 percent.” Big Data ties operations to customer experience Without a doubt, one of the main benefits of Digital Transformation lies in the ability to effectively exploit Big Data. It was seen as the largest opportunity for digitization and a staggered 98% of companies surveyed said they already drew on data analytics and predictive data to make decisions. One Swedish CIO said: “We have noticed the positive outcomes of digitization through increases in productivity and can easily monitor the supply and demand processes of our organization. With the help of digitization, we can easily interact with our customers and understand their needs and receive feedback on a regular basis.” An UK CIO put a figure on this ability: “We are using advanced analytics to enhance service quality, lower costs, and preserve and deepen customer relationships. By digitizing a single core process, we can cut process costs by 20 percent in the first year while also improving customer satisfaction.” Analytics drives customer experience It’s clear from our research that all CIOs understand the power of data analytics and most are already applying the insight to improve customer services. The drive is towards delivering a highly personalized, highly individual service to boost customer loyalty and retention. “We have been adopting integrated customer services and this has helped us move from being ‘energy-centric’ to ‘customer-centric’. We have been using increasing volumes of customer data to better understand consumer behavior. A tremendous opportunity exists to develop innovative, digitally-enabled products and services, bundled to provide an integrated customer service,” said one UK CIO. Another spoke for most others when they commented: “We have been offering consumers the ability to view, monitor and purchase electricity online, on mobile and via social media. From this we have been able to offer a differentiated, modern service by providing convenient, cost-effective and personalized access to Energy packages at a range of price points.” In fact, personalized product and service development allied to personalized pricing was a common theme in this research. As a Swedish CIO stated: “In our organization we already provide various options for customers to choose from. These rates can be modified according to customers’ needs and usage. We continually work on launching new packages for customers’ requirements.” Smart Grids will make customers into partners Continually improving the experience delivered to customers will be a focus for investment for European CIOs, according to our research. A major part of this will be down to the effects of Smart Grid implementations. An UK CIO commented: “The electrical grid will underpin the future Energy network. It will enable bi-directional flows of electricity, transmit information and price signals, and ensure the optimal balance of supply and demand. This will enhance grid reliability, reduce losses, and integrate distributed resources that can help decarbonize the system. The digital grid will generate a continuous flow of data on consumption behaviors, load variations, revisions to price signals and supply response data that will help raise the efficiency of the entire system. Another CIO explained the benefits to customers and suppliers: “Power grid helps customers to make it possible to monitor and adjust their energy use through smart meters and home energy management systems that offer 24/7 usage readings. Power grid allows direct communication with end-user equipment to reduce consumption during these peak periods, lowering the need for costly standby power plants.” In effect, Energy CIOs expected that Smart Grids will help form a partnership-like relationship with customers where customers take more control of the demand side – encouraged by personalized incentive pricing – enabling the Energy company to more efficiently and cost-effectively manage supply. This may still be a few years away and the environment will be further complicated by the decentralization of power production and distributed energy resources but it seems like the direction of travel for the CIOs surveyed is already fixed. Want to find out more about how Digital Transformation is affecting UK and Nordic Energy companies? Attend the OpenText Innovation Tour taking place in London (March 21) and Stockholm (March 29). Book your place today.

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2017. The Year Distributed Becomes Mainstream for Utilities?

Utilties

There’s been a great deal written about the regulatory uncertainty surrounding the new President but one thing is certain: the influence of renewables and Distributed Energy Resources (DERs) will continue to grow. So, will 2017 be the year that Utility companies fully embrace DERs and what will this new business model look like? The growth of DERs The challenges of loss of revenue due to DERs and the justifiable concern of the utilities that the DER users are not paying their fair share of Grid maintenance costs will need to be taken into account by regulators when they are making the Rate Design policies. At the same time, the Utilities are also beginning to see the opportunities that DERs bring to an aging infrastructure, badly in need of modernization allied with increasingly stagnant demand. Regardless of the new administration’s attitude to the EPA, the Clean Air Act or the Clean Power Plan, it is clear that the US government is keen to legislate in a way that Utilities companies are rapidly adapting to DERs ties grid modernization to the integration of DERs. Indeed, we are beginning to see more and more evidence of Utility companies investing in DERs as a means to abandon or defer upgrades to existing bulk generation and transmission/distribution assets. There are at least two reasons for this: renewable energy – especially solar – is rapidly reaching price parity with traditional energy sources, even natural gas. In some cases, solar and wind are proving, on average, most cost-effective than natural gas. The second reason is that Utility companies understand they need to change from a ‘cost centric’ to a ‘customer centric’ model to survive. Utilities companies are rapidly adapting to DERs While Utility companies struggle with stagnant or declining demand which has meant them seeing any impingement from DERs as a serious competitive threat, customers have been faced with rising costs and declines in the quality of service including unexpected power outages and planned rolling black-outs. So, the growing customer demand for DERs is completely understandable. It is not seen by most as a money-making scheme but more as a way of improving energy provision services in a way that may lower the cost to them. It is that context that has seen Utility company executives quickly turn their attention to the opportunities – not the threats – of DERs. It is instructive that in the State of the Electric Utility Survey 2015, 56% of the utility sector respondents said they understood the opportunities of DERs but were unsure how to build a viable business model. A year later, they had begun work on those models – with the majority favoring partnership with third party providers as the best route. Seizing the DER opportunity Whether acting as an aggregator for DER providers and microgrids or developing completely new supply chains, the Utility companies can lower the cost of DER market entry while protecting existing revenue generation and beginning to explore entirely new service opportunities away from bulk generation into niche and targeted supply. For this to succeed, two things must happen. First, Utility companies that have traditionally provided an end-to-end service must learn how to work in what ABB has neatly termed the energy neighbourhood.  ABB states: “Adopting the energy neighborhood perspective can help bridge historic silos in the energy market, which have been hindering the evolution of more flexible, efficient, sustainable, and environmentally friendly energy systems. By working together more, or at least consulting each other more regularly and proactively, utilities, DER operators and customers can make mutually beneficial decisions about assets, business operations and resources.” Secondly, The ability to communicate and share data and information across this neighborhood becomes essential and proactively adopting digital is going to be a key requirement in Utilities. The DER market already requires sensors and meters to regulate quality and output, the type of ecosystems being built for Utilities to integrate DERs into the grid require complete transparency and visibility. The Utilities, DER companies and customers working together have to be able to make complete sense of the structured and unstructured data involved in service delivery. Coping with this level of digital disruption was recently covered in an interesting blog from OpenText CMO, Adam Howatson which you can read here. In practice, terms of service, SLAs and production and maintenance schedules will need to be combined with generation data and ratings engines to ensure that every party is sure that they and others are fully meeting their obligations. This is especially true with the trend towards Time of Use (ToU) and other demand-side rating design as a means to more effectively compensate DER providers. The challenge will be to implement new types of software – such as EIM – that can act as a central, integrated platform of communications, content sharing and data analytics both within the Utility company and beyond to connect and engage with customers, DER providers and, of course, the regulators. Successful integration of DERs with the existing grid is going to be critically important, as DERs are forecasted to have a big impact on the “Duck Curve” – Net Load forecast curve for the 24 hours of the day. California System operator, CAISO, has performed detailed analysis of net load forecasts till the year 2020 and has shown the need for steep ramping of resources and possibility of over-generation risks. CAISO is also working with the industry and policymakers on rules and new market mechanisms that support and encourage the development of flexible resources to ensure a reliable future grid. American Council for Energy Efficient Economy (ACEEE) has recently reported that Utilities can drive a 10% reduction in peak demand by using demand response capabilities and reduce the impact of the steepening Duck Curve.  New EIM software as an integrated platform for communications will be crucial for the Utilities. It is essential for the successful sharing of content and structured and unstructured data with all the stakeholders including DER providers, Customers and System Operators and for introducing new Demand Response technology initiatives. Read more on page 2 to find out about regulation, and regulators taking center stage.

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Oil & Gas – It’s Your Chance to Reinvent

Oil & Gas

Cost-cutting throughout the Oil & Gas sector has triggered some 350,000 US layoffs which could potentially have far-reaching implications for content management initiatives. Many don’t realize that there is an opportunity now to reinvent the business to be stronger when crude prices rebound. One sensible road forward is to look at the extended digital enterprise model, and how that vision can be inspirational in today’s cost-conscious market environment. Here are three areas to consider. Digitize for Knowledge Retention First let’s address a tactical item, knowledge retention. Veteran workers who are no longer employed cannot readily tell colleagues how to fix a valve or where gas line maps are filed. Short term, it’s important to move documents into a centralized archive, as well as rapidly capture and ingest at-risk content areas (such as a subsidiary’s maintenance documentation). As an example, although one Oil & Gas operator bought a set of North Sea offshore assets from a global major, it didn’t consider the crews maintaining the plant pumps. That maintenance knowledge was held by specialized contractors and outside the acquired entity’s documentation set. Whether you are planning to sell or hoping to buy, streamlining your documentation makes sense in improving your business. Long-term, it should become clear that purely paper-driven solutions for knowledge retention are not feasible. While it might take a bit of investment now, having critical documentation digital, accessible, and portable will be a basic requirement for the extended digital enterprise model. It will no longer be acceptable to misfile paper drawings or take months to onboard supporting help, as digital transformation expedites timeframes and shares content differently. Staff for the Extended Enterprise Second, and more strategically, is a rare chance to consider new business models and organizational approaches to restaffing your business later. Currently the industry is heavily dependent upon contractors, who share accountability and significant responsibilities to deliver new builds or manage aging assets. Moving forward, viewing the industry in light of an extended enterprise model means an opportunity to build smaller organizations and increase partnerships. While outsourcing might never reach the levels of the automotive industry, there is opportunity to reshape. For companies who identify core competencies, such as extraction, any auxiliary services could be structured as outsourced roles rather than as employee positions. This builds more flexibility into handling future downturns. For any manager who has had to personally let staff go, it could be priceless to avoid the pain of job cuts (not to mention the pain for loyal employees losing their jobs). Think Globally, Act Locally New hire staffing can also be considered differently if you approach the downturn as a chance to build out your future extended digital enterprise. Complex work, with significant health and safety considerations, will always still have to be completed. This raises several actionable areas. First, without veterans to learn from, the enterprise reliance upon content management will be all the more important. Beyond keeping equipment running safely, having your content available digitally will enable faster onboarding and time-to-productivity – at least for the humans you hire, if not the robots. Second, your new hires may expect mobile access to tools, modern applications, and a highly collaborative style of getting work done. For those of you still clinging to paper, it will be difficult to attract the best and the brightest. Consider as well where you can use automated tools that reduce excessive human overhead, and keep new hires in roles needing critical thinking or analysis. Third, and perhaps more important as you consider the industry’s place within local communities and the global stage, is your ability to improve environmental impact metrics. For many new hires, green causes are driving their interest in working for energy companies like solar or wind. Finding ways today to start reducing your company’s environmental impact (no more paper, for example), and better serve your local communities will help with recruiting. Time to Reinvent In summary, cost-cutting can only go so far, and now is the time to reinvent. Start with low hanging fruit like organizing and digitizing critical content. Then map plans for a digital extended enterprise that works more efficiently, perhaps with a smaller employee footprint, but a greater presence through modern connected tools and content.

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Surprise! No More Solution Customizations

customizations

Things are not always what they seem, as the earliest of Roman writers pointed out, and the same is true today in our content management-driven world. As every enterprise seeks its own digital transformation strategy, ironically, there is a tendency to revert back to accepted truths or how things have always been done. One of the first comments I hear from customers in solution discussions goes something along the lines of this: “Our company works in unique ways and we have an accumulation of different technologies, so we will have to heavily customize any content management solution.” What I notice, however, is what else the ancients knew: “The first appearance deceives many; the intelligence of a few perceives what has been carefully hidden.” (Source: Phaedrus, c. 15 BC – c. 50 AD). While customers start out thinking they want to customize a solution, they sometimes take a surprisingly different approach in the end. Here are three considerations for anyone assuming content management solution customization is the only way to succeed. 1 – Technology has caught up More rapid software development approaches have shortened product update cycles throughout the technology industry. More capabilities are delivered more often through existing solutions. It used to be acceptable to evaluate content management solutions once every 18 months. Today, a solution you reviewed just 6 months ago may have already packed in far more capabilities. In Documentum Capital Projects Express, for example, common user requirements (like the ability to provide graphical annotations during a review task, or to automate workflow recipients from a pre-defined distribution matrix) are already built in. It’s highly possible these types of ongoing updates can save you custom development work, while still meeting your business or technical requirements — and overcoming user concerns. 2 – Work is Work, and Humans are Humans Certainly every company culture is different. But there is simply no getting away from project milestones, deadlines, and approvals. If anything, project collaboration has become more rapid and commonplace amidst mobile and social technology uptake. As vendors like OpenText accumulate decades of refinements into their solutions, it becomes far more unusual to uncover process phases that the world has never seen before. This is evident in a very common reaction I hear from customers: “I thought we were the only ones who did that.” They are often quite relieved to know an existing solution can, for example, readily handle five different plant design reviewers working on a document globally – including employees and three different contractors with varied security requirements. Another common myth is that their organization is the most unorthodox because different teams don’t talk to each other. For better or worse, humans are humans, and this is why automation and standardized tools are so valuable. Transparency and accountability through a content management system helps documents moving forward, despite potentially segregated roles like Field Inspection Engineer and Project Manager. Similarly for companies amidst M&A or reorganizing, requirements gathering across the newly added teams can uncover “hidden” project commonalities that can be addressed without heavy customization. In Toshiba’s case, for example, embracing standardization across newly organized divisions helped them meet requirements for faster project roll-outs. 3 – Disruption is the perfect time to let go of bad habits If you are still facing monumental customization requirements and complex integrations, consider if you want that to be the case for the foreseeable future. Most executive leadership teams now understand the urgency around digital transformation. The ability to automate, standardize, and digitize workflows might be more important than the reasons your company is holding on to so many customizations. Most importantly, the strategic agility and speed you gain while meeting the bulk of your technical requirements could outweigh the expense and time involved in custom development work. A recent case in point: A Fortune 500 power generator and distributor in the US implemented a Documentum Asset Operations solution, primarily to manage their controlled documents in the Nuclear Power division. They now have a series of new capital projects to start this year. As their experience is typically to build custom solutions, they originally overlooked the cloud-based Documentum Capital Projects Express solution as an option for their project document control system. However, while they were evaluating Supplier Exchange, based on another customer’s recommendation, they also reviewed the Documentum Capital Projects Express (SaaS) solution and realized it was the perfect force factor to break their company’s excessive customization habit. Long custom development times had slowed their application roll-outs and impacted projects repeatedly. Rather than allowing inefficiencies to flourish, this customer is instead looking at the latest, cloud based content management solutions for a sound reason to simplify requirements. This is a significant culture change for the company, and I think it represents a challenge most larger organizations have when looking at SaaS based solutions rather than traditional enterprise software. The balance of lower cost and more price flexibility (due to subscription pricing) from cloud is only possible if companies accept that they cannot customize solutions. They can still gain additional functionality, but will need to wait for it from the cloud solution ‘roadmap’ rather than trying to build it at their own pace and schedule. Are these considerations for your organization?

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Catching a Breath, and Prepping for Energy’s Future

energy

I was driving into the office and swerving to avoid potholes and large cracks on a popular highway here in California. “Why can’t they fix this road,” I thought, and this in fact led me to think about our own customers’ dilemma. For as long as I can remember, oil companies and energy providers have been absorbed with large capital projects as they keep the world’s lights on and industries humming. How could they possibly stop to fix and improve archaic systems while running hydroelectric plants and LNG facilities? Just as our road transportation authorities can’t shut down a major thoroughfare during commuter hours to fix it, our customers can’t fully stop to build new plants while keeping existing ones running. That said, with oil prices still low relative to historical highs, the pace of capital projects in the energy industry has slowed down enough for companies to take stock of their situation and make strategic moves. We discussed the possibility for these changes to happen when oil was less than $50 a barrel last July, and now the waters have parted, presenting an opportunity to act. What we don’t know is how long the situation will last, and how quickly the window to do something impactful will remain open. If oil prices stay low another year, it will be a cumulative two years of this capital-light climate. That’s far too long for any energy company to sit still. Finally, with less massive capital projects stacked out for the next five years, there is a moment’s breath for energy leaders to find margin salvation and build up competitive advantage. Priorities can finally shift to running the business better (efficiencies) and rolling out leapfrog improvements (technological innovations). Sure enough, we are seeing related content management projects starting up in the energy sector. They represent smart use cases that will solve immediate needs while prepping for a future rebound. As a sampling of efforts our customers are undertaking: Changing paper-based plants to digitized content, and content management systems. This digitization will have the side effect benefits of maximizing asset lifespan and avoiding regulatory fines. It also helps companies capture specialized knowledge before crew shifts complete or HR restructuring kicks in. Shortening and digitizing workflows, to expedite regulatory administrative tasks. The same agility can eventually help enter new markets and leverage economies of scale across facilities and partners. Switching out piecemeal technical solutions with comprehensive platforms that digitize capture, archive, storage – everything. This readies the organization to work easily with more partners, as well as lower the costs of new acquisition integration (M&A may happen more often in these types of markets). If your organization has a rare moment to invest and improve your business for the long-term, there are several things you can do from a content management perspective: 1 – Identify Your Digital Transformation Strategy Where is the most pain in your organization, and where is the most value? Pain points might include a retiring crew change or a complicated process leading to a major milestone. Value areas might include collaboration among dozens of disparate partners and employees on high value documents, or the ability to spin up new plants on the same IT infrastructure. 2 – Assess Your Current Information Management Maturity Where is your organization today based on industry benchmarks and content management best practices? Do you still have file folders in the basement? Perhaps you have already captured content, but you have not yet rolled it out to mobile field workers. It could be you are early stage and need to put the fundamentals in place, or you are late stage and ready to integrate mobility and drones. 3 – Design Your Content Management Strategy to Achieve Operational Excellence Are your changes driving on-going improvements? Develop KPIs as you invest and implement technical improvements, to find operational efficiencies that might give you an edge. Measure how long and how many people it took for your last round of regulatory filing. Can you expedite it this time, with new capabilities for simultaneous editing and mobile-enabled approval cycles? Don’t be discouraged if your first few steps involve basic catch-up when it comes to content management infrastructure. With so many capital projects absorbing so much of your resources up to now, it sometimes happens that essential improvements get overlooked. At the same time, don’t assume you have much time to act on strategic improvements. Just like your environment has changed, so has that of your competitors, and whoever institutes the new changes first might win. Has your company made any improvements to operational efficiencies since oil prices dropped? Share your thoughts below.

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