Another View: People Strategies Need To Keep Up With Rapid Digitalization
Amazon. Uber. Airbnb. The world is digitalizing all around us. Within the energy sector, we are driving similar changes, and the lower-price environment since 2014 has increased the pace of change and the scope of digital integration that is being targeted.
But, are you bringing your people strategy along? Such profound changes in the way we are working—and, indeed, changes in our business models—will be enabled only if we also evolve how we develop our people and organize our activities.
During my time in the industry, we have seen major shifts in staff development. Many large operators and service companies had mandatory, masters-level training programs where completion was a prerequisite to starting any “real work,” with a schedule of subsequent training based on general needs in the company. Service companies emerged that worked with consortia to professionalize and standardize training offerings to the industry generally. As a result, a specialized set of distinct disciplines arose that were not recognized earlier in the industry, resulting in a better-shared understanding of technical competencies. Formalized competencies enabled a more-structured approach to discipline controls, as routine contributions from competent reviewers ensured better safety and business performance.
In the background, work was being automated and digitalized, such that activities formerly supporting entire careers were incorporated into software. Over a few years, pilot plants and scaled field trials disappeared. Empirical equations and graphical techniques were replaced by increasingly complex and realistic physical models. Engineers became users, and confidence in engineering outcomes soared, even as the technical complexity of the challenges dramatically increased. Production systems were increasingly built on the basis of models that were supported by a surprisingly small amount of data. Improvements were broadly seen within the industry because the software typically incorporated best practices along with efficiencies. Improved technical assurance also became affordable as analyses became more standard and assurance activities could be performed remotely.
Ever more specialization of skills drove similar specialization in software, and the number and diversity of applications in use in the industry expanded dramatically. In my company today, we use several hundred applications that are specific to wells, subsurface, and related data-management technical work flows. Even within a specialized engineering area, an engineer can struggle to be proficient and efficient with the software used by that area. Yet, many current opportunities challenge us to integrate quickly and iteratively across traditional discipline boundaries.
Digitalization promises to help, and, while there no doubt will be surprises, several trends are obvious:
Data Will Be Much Easier To Find. The challenges of lacking data have given way to the challenges of finding and using data. Once a primary inefficiency, data accessibility is now one of the more rapidly improving areas, thanks to improved discipline, standardization, and a great deal of effort in the past few years. Emerging services and technologies will accelerate availability as discovery of content and its relevance becomes automated. Applications and business systems are evolving to better use data from diverse enterprise and industry sources and to incorporate natural language and relevancy concepts that are well-established in consumer markets. By analogy, consider how Google takes a natural-language question and provides an answer with sources as links sorted by relevancy and with suggestions for related products.
Data Will Be More Prominent in Our Decision Making. Because applications and systems will consume data more effectively, users will be presented with much richer information to support their decisions. Consider by analogy the amount and diversity of data available to you to make decisions on your fantasy sports team.
Users will focus less on applications. Physics-based modeling applications will still have the essential role of reducing the uncertainty of decisions compared with that of decisions based on data alone. However, the prominence of applications will decrease, as modeling scope integration and data integration drive focus and innovation at the business and enterprise level. As an example, consider how Microsoft Azure has emerged as a convenient and diverse marketplace of open-source software, commercial data, and services for cloud computing, whereas Microsoft primarily marketed its own proprietary stack just a few years ago.
Automation Will Play a Much Larger Role. Automation’s role in assistance will grow, including in areas such as assurance and opportunity finding. In recent years, machine learning has emerged in our industry as a replacement for certain human activity (e.g., facies identification in static reservoir modeling) or to infer measurements (e.g., inferring well logs instead of performing them). These capabilities have proved valuable, but the larger prize is with a much broader target scope. Services are being developed that operate at the enterprise level, consume diverse and disparate data, and automate the running of applications. As more data and services become available in the cloud, look for these services to be increasingly available.
What Will These Changes Mean to the Way We Work? How Will Leading Companies Adapt?
Recognize the Current Pace of Change. Given the recent reductions in staffing, the tendency to focus on daily business delivery is understandable. How can you invest in understanding innovative approaches and in managing the necessary changes when your staff is already struggling to deliver on current commitments? However, the inability to evolve quickly in the next years will compel revolution in your organization after others find the emerging paths.
Embed Your Processes in Your Culture and in Your Systems. A great athlete can play in an inspiring way without thinking through the details. In a similar way, experience has shown that delivering exceptional safety and environmental performance becomes much less expensive once the principles have been embedded in a company’s culture. Whether about design, operations, or investments, the bases for business decisions will become increasingly rich. Drive simplification and standardization to support efficiencies in most areas, freeing time for staff to get deeper insights as more data and better analytics approaches contribute. As your systems evolve to streamline your processes, they can also detect anomalies and opportunities that may otherwise have gone unnoticed. As humans train systems and vice versa, roles and responsibilities evolve, along with training and development.
Value Diversity. The days of a well-established technical career ladder are waning. In many companies, reaching pinnacle roles in a technical discipline requires work experience in many specified activities, and missing items “d” and “f” in your resume may preclude you from competing for the roles. Will these experiences become less necessary or less valuable? Not necessarily. However, with decreasing staff counts and increasingly diverse technical requirements, organizations will need a mixture of those with traditional discipline expertise and those who understand emerging technologies and can help drive the coming changes. Having such diversity at various levels in the organization will ensure that the right decisions are made and that success is driven and executed at the working level.
Enable Agility. Organizations with the most documented and standardized processes may be the best positioned to take advantage of digitalization. Ironically, however, these same organizations risk being left behind if, because of an over-reliance on what has worked in the past, they are unable to evolve their processes and increasingly use digital approaches. Consensus-driven organizations may have difficulty agreeing quickly on risks, benefits, and timing of proposed changes, while command-driven ones may rely too heavily on key leaders understanding and driving necessary changes. Taking cues from technology companies, energy companies may benefit from a broad and liberal portfolio investment mentality where the culture pushes for early indication of significant and systemwide performance benefits or quick failure. Though routine elsewhere, shifting product-realization or -failure times from several years to several months will be a challenge for most organizations in our industry.
Evolve Your Position. Rapid changes will challenge margins for traditional business approaches across the industry while bringing new opportunities for those able to lead or quickly follow. Beyond the need to be agile internally, leading companies will rethink which activities they perform internally and those that can be more-efficiently outsourced or delivered through partners, and, because these technologies have been applied more broadly in other industries and because they typically require little in terms of upfront capital and proprietary positions, preferred partners might be from outside the energy sector or might be smaller, niche players. Again, having a diverse set of internal skills that understands your company’s processes and the emerging marketplace will be an important part of your people strategy.
The widespread application of digitalization is moving from our phones, computers, and houses into the mainstream work activities of the energy sector, and most companies are realigning their strategies and operations to take advantage of the changes. How can you evolve your role or your company’s people strategy to sustain value delivery through the coming transitions?
John Hudson, SPE, has more than 25 years of experience in subsurface software, flow assurance, production-system design, and technology development. He has held technical and managerial positions with Shell at locations in Europe and North America, providing consultancy to a diverse set of assets globally. Hudson’s activities have included the development of a model-based, cloud-deployed, real-time operational support system for major gas-production systems. He is currently Americas regional support and development manager for subsurface and wells software. Hudson holds a PhD in chemical engineering from the University of Illinois. He serves on the JPT Editorial Committee and can be reached at www.linkedin.com/in/hudsonjohnd.
Another View: People Strategies Need To Keep Up With Rapid Digitalization
John Hudson, SPE, Americas Regional Support and Development Manager, Subsurface and Wells Software, Shell
11 April 2018
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09 July 2019