Restarting Texas: Oil and Gas CEOs & CIOs Look to IT to Drive Change

 Restarting Texas: Oil and Gas CEOs & CIOs Look to IT to Drive Change

In Texas and around the globe, CEOs are realizing the importance of agility in sustaining and growing their business. More than half acknowledge agility as the new currency of business, and also acknowledge that growth relies on the ability to challenge business norms. Despite this realization, just under half of CIOs feel that their organizations are better than competitors at responding to changes in the business environment.

I see a similar perspective from CIOs regarding time-to-market for new products and services, indicating a lag in building agility into the fabric of IT and the broader enterprise. In Texas, there’s also a strong focus on integrating digital solutions to the overall IT strategy to help reduce cost by incorporating automation to various elements to the business.

As geopolitical activities drive uncertainty and volatility in commodity prices, oil and gas CIOs continue to be seen as critical to enabling the business to deliver at potentially depressed prices with ongoing reductions to IT cost. In their role as a strategic enabler to the business, CIOs are delivering those cost savings through operational efficiencies and automation. With increasing pressure to reduce carbon emissions and drive renewables, the critical role of technology in oil and gas is only getting bigger. The CIOs in the oil and gas sector who will emerge as digital leaders are those who can rapidly deploy new technology and capability into the enterprise, at a low operational cost.

The ability for enterprises to navigate disruption and manage agility is dependent on technology modernization and an enabling operating model. Oil and gas CIOs who are realigning technology delivery to business strategy with portfolios defined by the speed at which they need to deliver are emerging as the digital leaders in an agile world.

Here’s what needs to be done to move the needle in the right direction based on the results of the KPMG CEO Outlook 2019 Survey and Harvey Nash / KPMG CIO Survey 2019.

Delivering value at speed

While oil and gas companies continue to lead other industries in deploying new technologies, all industries currently see limited success in the speed and long-term product mindset brought to technology implementations. Across industries, more than half of companies surveyed have up to one-fourth of their IT spend controlled or managed outside the IT function, and three-fourths of companies do not encourage that IT spend by controlled or managed outside the IT function. There is much less tolerance for this within oil and gas.

Strategy & operating model

Oil and gas CIOs are leading technology strategy for their organizations, indicating a strong proliferation of technology across all aspects of the enterprise. Despite the increased focus on technology as strategic digital technologies to advance business strategy. I see this as a key opportunity for CIOs to pivot how IT leads, supports and integrates with the business.

Customer trust

The majority of respondents across all industries have not had a major IT security attack, but cyber risk remains a top priority. Similarly, nearly all CIOs think the way organizations manage and use customer data will become just as important as product/service quality when attracting customers. Oil and gas CIOs lag slightly behind other industries in building customer trust through services delivered, and improving that will be critical to increasing the value perception of IT.

People & culture

71 percent of CIOs say a skills shortage prevents the organization from keeping up with the pace of change. This is on par with other industries, but oil and gas sees a significantly larger shortage in business analysis skills. Additionally, while nearly all CIOs think AI could replace some of their workforce in five years, notably more oil and gas CIOs think the proportion of workforce being replaced is higher. Similar to other industries, confidence is high that new jobs will more than compensate for jobs lost to AI. The challenge for oil and gas is that the operating model likely isn’t ready for the impact of increased AI.

Analytics & insights

Forty percent of oil and gas CIOs think that delivering business intelligence/analytics is a key business issue the board is looking for IT to address, but less than a third of CIOs feel that their organizations are very or extremely effective at maintaining an enterprise-wide data-management strategy or maximizing value from their data. KPMG sees leaders in this space employing a Chief Data Officer with a “Data as an Asset” approach in their broader enterprise strategy.

Board priorities & investment

Oil and gas companies remain more focused on cost cutting and operational efficiency than other industries, and the data indicates a strong desire to improve business processes via, or in conjunction with, technology. I see increased interest in automation opportunities within the oil and gas sector, but similar to other industries, the degree to which automation has been implemented is still limited. And while agility and innovation lag slightly behind other industries, they are still recognized as important areas for growth and keys to success. In oil and gas, however, the extent to which management is looking for IT to develop innovative new products and services is less than other industries.

As oil and gas executives look to revitalize and recapture the momentum lost from COVID-19, technology coupled with digital solutions will need to be rapidly deployed at a low operational cost to get the industry back to where it needs to be.

Julie Luecht

Julie Luecht is the Houston Office Managing Principal for KPMG.

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