Guidelines for Implementing a Digital Transformation

Following on from my last post - The digital transformation potential for the Oil and Gas Industry - here are some of my thoughts on how to approach the implementation challenge. The context is Oil and Gas but I believe these guidelines are generally applicable in any industry. Let me know what you think!  

Implementing a digital transformation in any company is a big and challenging endeavour. Research has shown that company leaders will often say they have transformation on their agenda, but how many are finding a way to identify and achieve the required steps? It is I believe, often a case of where to start. The Oil and Gas industry has over the last few years struggled to really get going, with over a decade of conceptually understanding the value, we have delivered operating centres, ran pilots, but have we delivered or even started a true transformation yet?

One difficulty I have observed is that a digital transformation does need to be driven from the top and be led by company’s strategic intent and business priorities, but it also has to solve real operational problems. Value for individual initiatives has to be realised at the operating unit level or the needed change management effort will never gain traction. Digital transformation by any company in any industry will require the right technology environment, the right expertise and quite possibly a different organisation structure to manage, deliver and operationalise a set of identified technologies and outcomes. However it most certainly won’t succeed without getting the people element right.

So where to start? Here is the set of guidelines I came up with. What have I missed? What would you do differently?  

Understand your context

Most companies will have created some digital processes and workflows already, but these are likely to be disparate non-integrated solutions that may prove the concept but are not the same as a complete digital transformation. Companies at the beginning of their transformation effort will often struggle to adopt new ways of working or new technology; individuals and assets will believe the status quo is fine, and therefore there is no driving force behind any digital initiatives. More digitally mature organizations will have a company culture that revolves around constant change and optimization.

Most companies will fall somewhere between these extremes and while many will lack the optimal structure for a digital transformation, almost certainly most of your teams and departments will already be doing what they can to optimise their operations, but perhaps without the change mind set. So first get an understanding of your reality in the context of your company’s current situation and priorities, and identify the leaders and domain champions you will need to start and support a transformation. 

Develop partnerships and research

Learn from your peers. Look elsewhere for insight and inspiration. Research their experiences, the technology, organisation structure and culture that are enabling their transformation, look at the latest partnership announcements and other information sources to learn what they’re doing. Many people believe that more of a partnership approach will be needed in the future. What are the opportunities for your company?

Set your digital transformation goals

Start with the end in mind. What are the outcomes you want from your digital transformation? You will need a clear strategy and road map from the outset, which will be impossible to develop without an understanding of where you want to go. What are the process problems and challenges that you want to fix? Set objectives for your operational improvements, user experience, back-end operations, infrastructure and individual departments, and have a vision of what your company will look like once a transformation is well under way.

Architect your business

A company with an ambition to transform shouldn’t simply add new technology as it appears on the market or as there is a local need. Unfortunately this has been model applied in many industries as companies evolve and grow. So as well as a clear strategy you will need a deep understanding on how and why everything will integrate into your current infrastructure, the full deployment process and whether a new solution will indeed move you toward your strategic goals. Your organization must work together with your IT department and the other technical functions to find the right systems to reach digital transformation maturity.

Finalise technology solutions at the right time

Don’t get too deep into specify technology solutions before you are well on the way towards digital transformation. If you start too early with technology procurement, you can get caught up in the details, choosing the vendor, assessing widgets and understanding costs. It’s too easy to skip past the required leadership mind set shifts required to be successful; by waiting until the right time, you can be sure the business and the IT department have a better idea of how everything fits into your overall business strategy.

Data Strategy

Data in any organisation is growing; it is structured, unstructured, duplicated and used throughout an organisation. There are challenges around governance and quality on existing data already, to which we are continually adding new data from IoT devices and sensors and in addition we still want to realise the potential of analytics. Data is critical to any digital transformation, but where do we start? You need to develop a data strategy that is business driven, not technology driven, that starts with your identified end state, strategic business objectives and priorities and views them together with an analysis of your digital architecture workflows, data requirements, and technical capabilities to ensure that you are focused on what is critical to the transformation. The strategy needs to be developed together with the business, and should be practical and actionable. Data strategy development will be a subject of another post. 

Organizational Structure

Digital business transformation will often need to improve horizontal workflows and will require data from across the organisation. So your organisation structure should be somewhat a reflection of the greater need for collaboration and use of data. The traditional silos between corporate, business units, management, technical and functional teams, departments, and individuals have no place during this process. You may need new structures especially around driving a more focused governance and use of data.

Empower and challenge the IT Department

A digital transformation will need support and drive from every department, but IT will play a key role in getting your company where it needs to go. For a long time the industry has seen the IT department as a non-core technical function, often reporting to finance and with a cost reduction mandate. In any technical driven industry this can no longer be the case.  

Empower them with the tools and capabilities they need to support digital programmes with the technology deployment, maintenance, support and the other requirements associated with enabling a fully digital business. When every single process and user touch-point undergoes a digital transformation, IT gets a lot more to do.

But IT still needs to be challenged to deliver its base business of enterprise IT, to build the right team to support and work with the business to enable the digital transformation. To do this will require doing more with less, potentially a new organisation and strategy and singular focus on creating transparency around the IT spend, demonstrating efficient management of base business and the value being delivered through the spend on the transformation. The best way I recommend to do this is through the application of Technology Business Management (TBM). I consider TBM to be a required capability for any IT organisation and will be the subject of a future post. 

Manage the security challenge

Connectivity is a fundamental requirement for a digital transformation and this then requires a significant focus on cyber security especially around managing the risk of loss of integrity of the control systems supporting production. Security and connectivity requirements should be part of initial framing sessions for new projects and should forecast growth in the type of data traffic required over the projected life of the project and the resulting digital architectures need to have security designed in. A digital transformation will need IT and the operating technology (OT) worlds to work together, in many companies these have been historically managed by separate silos and a solution will need to be found. 

Change Management

We know that most individuals are comfortable with maintaining the status quo. A digital transformation disrupts the way that their work gets done. A comprehensive change management plan will be required to support individuals and teams get up to speed as quickly as possible and help everyone understand the benefits of the new processes. You will undoubtedly find a lot of roadblocks in your way when you start changing the traditional way of doing things in your industry. You will discover unexpected problems, so you must be ready to adapt your strategy and change management plan as it progresses. Figure out the reason behind each roadblock, and work with key stakeholders to get things resolved.

Conclusion

Digital transformation is not about a technology roll-out for the sake of it; it’s about identifying your strategic intent, your value drivers, understanding your specific challenges and opportunities. It’s also about seeing what is hidden in your data and doing more with less while leveraging technology effectively to systematise and automate your operations as much as is practically possible to get closer to the ideal model of a perfectly efficient automated digital oilfield.

To get there will be challenging and in my opinion needs a structured approach that takes into account some of the things that I have discussed. In the years to come, perhaps operational success will not just be primarily based on production, but also on how well you gather and analyse data and information in order to optimise what you have more efficiently.

Thank you for reading. Please let me know what you think! What have I missed?

Once again if you missed the previous article you can find it here - The digital transformation potential for the Oil and Gas Industry