Cybersecurity has emerged as the top focus of upstream oil and gas companies’ digital investments, according to a new report from consulting firm Accenture
The “Accenture Upstream Oil and Gas Digital Trends Survey 2019,” the seventh edition of Accenture’s report on digital technologies in the upstream oil and gas industry, is based on a global survey of 255 industry professionals, including C-suite executives, functional leaders and engineers.
When respondents were asked which digital technologies their organisations are investing in today, cybersecurity was cited more than any other, by 61 per cent of respondents – five times higher than the 12 per cent who made that claim in 2017. The report suggests that the focus on cyber resilience is increasing sharply as oil companies seek to protect their assets and reputations.
Cybersecurity was also cited by more respondents (16 per cent) than any other digital solutions when asked which were driving the greatest impact in terms of business performance, up from nine per cent in 2017.
With their increased investments in cybersecurity, only five per cent of respondents see increased vulnerability to cyberattacks as the biggest risk from a lack of investment in digital – less than one-third the number (18 per cent) who made this claim in 2017. This might explain why only 35 per cent of respondents plan to invest in cybersecurity over the next three to five years.
Rich Holsman, a managing director at Accenture who leads the digital practice in the company’s Resources operating group, said, “As oil companies’ operations come under increasing threat, cyber resilience becomes more important to stakeholders, consumers and government.
“Managing attacks isn’t just a matter of protecting reputation, share price and operations, but it is part of greater responsibility for national services and security. Upstream businesses must continue to invest thoughtfully and substantially in cybersecurity measures, as they often underestimate their exposure to such attacks, which are also increasing in technical complexity.”
The survey identified cloud technologies as the second-biggest focus for digital investment, cited by more than half (53 per cent) of companies. In fact, 15 per cent of respondents identified cloud technologies as digital solutions driving the greatest business performance impact. The report suggests that oil and gas companies are still investing heavily in cloud technologies because they are a foundation for their digital transformational journeys and for greater operational security.
Additionally, the percentage of respondents who cited artificial intelligence (AI) as driving the greatest business performance impact more than doubled from 2017, from four per cent to nine per cent.
As such, when asked what digital technologies they plan to invest in over the next three to five years, the greatest number (51 per cent) cited AI/machine learning — up from 30 per cent in 2017 — followed by big data/analytics (50 per cent), the Internet of Things (43 per cent) and mobile/wearable technologies (38 per cent). Almost half (47 per cent) of respondents cited a loss of competitive advantage as the biggest risk of a lack of investment in digital, with 42 per cent citing cost reduction as the most significant business challenge that digital can help address.
Broadly, however, the rate of digital investment by upstream companies has remained almost the same over the last few years. For instance, the number of executives who said their companies plan to invest more or significantly more in digital technologies over the next three to five years – 72 per cent – was relatively unchanged from the number of who responded similarly to the same question in the 2017 survey (71 per cent).
The report reveals that upstream oil and gas companies are finding it hard to scale digital initiatives. Only nine per cent of respondents reported that their department or division had been able to scale at least half of the digital proofs of concept (POCs) they’ve developed over the last two years. Further, only one in five respondents (20 per cent) said that they were able to scale more than 20 per cent of their POCs past this pilot stage.
The report also notes that while upstream companies need to scale digital technologies to release trapped value — i.e., to generate added value from their digital investments — significant barriers remain to do so.
For instance, one-third (34 per cent) of respondents said they see the lack of a clear strategy and business case as the biggest barrier, up from 26 per cent in 2017. Further, only one in seven respondents (15 per cent) said they are seeing more than US$50mn in additional value from their digital investments, and only one in 20 (five per cent) said that digital is adding at least US$100mn in value to their upstream business, a drop from 12 per cent only two years ago.
“Although upstream companies continue to increase their digital investments, they’re not translating those investments optimally into tangible value — in fact, their ability to generate value from digital seems to be declining,” Holsman said.
“These companies face organisational bottlenecks and are finding it hard to scale these technologies, impeding core business transformation and the release of capital. Realigning digital investments and building the right operating model and digital capabilities are needed for oil companies to become agile and able to scale to value. This will require not only more support from leadership but also a much broader ecosystem of partnerships as well,” he concluded.