English 
Spanish 
4 min read
Half of the high-performance companies in the oil and gas energy sector have been developing their applications in the cloud for more than three years, on the other hand, 90% of low-growth companies have not yet developed applications in this way. The clock is already ticking
By widely embracing cloud capabilities, companies in the oil and gas become smarter and more efficient. In an unprecedented analysis by Accenture, with Cloud the increase in Return on Capital Employed (ROCE) is around 300%. But as migrating is not enough to be successful, the urgency lies in how to extract all the potential that the cloud offers. It is essential to define a clear strategy that breaks down barriers to adoption and allows for new ways of organizing and working. To what extent these energy companies employ industrial automation solutions and make use of the internet of things, for example, once the migration has started?
Volatility and supply and demand challenges have been constant challenges for this sector, with a consequent reduction in the share of companies in the S&P 500 from 15% to 3%. The additional decline resulting from the Covid-19 pandemic made the situation even more challenging. And the cloud – and its well-crafted resources – can help reverse this situation. Tools to support supply/demand fluctuations and make companies more efficient reduce the impact of price drops on their balance sheets.
It does not mean to say that the companies of oil and gas are unfamiliar with the cloud: 80% of them have experimented with this type of migration. Among the companies in this sector with the highest growth in the last three years, evaluated in Accenture's “Future Systems” survey, 100% have already adopted the use of the Cloud, while of companies with low growth, only 37% have had the same success. What happens is that few have adopted it in a scalable way. Concerns about high performance computing (HPC), legislation and industrial automation solutions are typical barriers to adoption in this segment. The question is: how can the cloud make a difference in the industry?
- Oil exploration on the Equatorial Margin: 16 billion barrels and 326 thousand jobs that can transform Amapá and Brazil
- Billion-dollar offshore deal: PRIO invests US$1,92 billion and takes over 40% of giant offshore field in Brazil after Chinese companies leave
- New gas discovery in South America takes Venezuela to 300,9 BILLION barrels, surpasses Saudi Arabia, Canada and Iraq, and leaves the Middle East eating dust!
- Federal government approves and pre-salt oil will be auctioned! New Chinese dominance?
We can start by saying that the cloud makes smarter companies. It is possible to integrate data from the entire value chain and bring more advanced solutions to analytics. The very adoption of the cloud also allows more adaptability (in speed and costs) to face the natural volatility and cyclicality of the sector, since it provides competences on demand, such as the reduction of breakeven No. upstream up to US$ 10 per barrel of oil equivalent (BOE).
We emphasize that market analyzes also indicate that the cloud allows companies to increase efficiency by bringing more advanced tools with a reduction in IT expenses of around 30%. Our research shows that 80% of companies in this sector that have achieved accelerated revenue growth consider the cloud to have a high impact on their strategic planning and supply chain processes. Innovations are accelerated by shortening the development cycle (eg DevOps) and improving internal collaboration.
Many companies duplicate their difficulties by starting the journey without a strategy that includes typical industry barriers. You have to think that applications are fragmented and data is in silos. It is necessary to consider industry-specific solutions (industrial automation and IoT) and cybersecurity threats and legislation. Before thinking about the budget for this, companies should also look at their own past investments in IT infrastructure.
But there's a lot of risk in considering the journey to the cloud as an IT-only project, without driving new business possibilities. We see a market that often forgets to adopt a operating model new to enable enterprise-wide cloud working. In addition, the industry itself reports inefficiency when it comes to managing the execution of the journey to the cloud, not to mention the management of the financial return it can bring. That is, it is an issue applied to the company as a whole, not just technology.
To fully adopt the cloud, we highlight four strategies that can move technology processing to the cloud: 1) replace the current infrastructure with one in the cloud (lift & shift); 2) adopt solutions for corporate systems such as ERP or CRM “as a service”/SaaS; 3) adopt process solutions core (such as “as a service” asset management); and 4) create new native solutions (such as new algorithms for machine learning algorithm for upstream). It becomes critical not only to adopt a cloud architecture, but also to operate a model geared towards teams extracting maximum benefit.
Going beyond migration therefore requires a plan with clear business objectives, a cloud-specific strategy (from business imperatives to application migration), and a new operating model that enables full cloud adoption.
The time to accelerate cloud adoption is ripe: Half of top performers in the energy sector (oil and gas) have been developing their applications in the cloud for more than three years. On the other hand, 90% of low-growth companies have not yet developed applications in this way. The clock is ticking – and the most innovative companies are leading the charge.
By Ricardo Polisel Alves and Edson Bouer via Accenture
