The State of the Oil and Gas Industry

ASUG Research The State of the Oil and Gas Industry 1

Executive Summary

SAP customers in the oil and gas industry are straddling two worlds when it comes to technology—one where they’re required to do more with their existing investments and another where they’re considering next-generation technologies.

A Focus on General Tech NeedsMost respondents—63 percent—indicated that industry-agnostic concerns like cybersecurity and emerging technology play a large role in their technology decisions. Industry-specific concerns like the hydrocarbon supply chain or exploration and discovery technologies are not as top of mind as the agnostic concerns among this group.

Where They’re Investing NowSAP oil and gas customers prioritize optimizing their current products (40 percent of respondents). These same customers, however, are open to learning about new products (31 percent) and implementations (29 percent).

What’s Coming NextAlmost half of respondents (46 percent) believe emerging technologies like artificial intelligence (AI), the Internet of Things (IoT), or chatbots will change their businesses in the next 12 months (Figure 1). If these changes are coming, then more companies in the oil and gas industry need to start allocating time to innovation and future planning. The challenge of preparing the workforce for rapid changes in technology could be holding these companies back.

Figure 1: Technologies Expected to Affect the Oil and Gas Industry in 2019

analytics/dashboards emerging technologies (e.g., AI, Internet of Things)

46%71%

Source: ASUG research, December 2018

Trends

Pressures

Keeping up with changes in technology

Change management for technology adoption

Using data to drive business decisions

Processes that need streamlining or automation

Taking technology from the office into the field

Data that works harder for the business

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Key Technology Topics

Keeping up with Changes in Technology Rapid technology changes are a major concern for an industry facing pressures from growing competition and the transition to alternative energy sources. One respondent worried that the oil and gas industry is behind other industries in terms of technology. “Technology changes faster than most companies can implement,” another respondent said. Even for a technology as common as IoT, which is used for everything from equipment monitoring to supply chain tracking, there are obstacles to its implementation. Obsolete instrumentation, a lack of monitoring equipment, and limitations with wireless technology are putting the brakes on IoT projects, according to some companies.

This lack of readiness for new technology could be linked to the “need to do more with what I have” approach. But it also could mean that the oil and gas industry is ready for key industry players to take charge and leap ahead of the pack to become technology leaders. In both cases, customers will benefit from understanding SAP’s road maps for its products, as these are an important component of their digital transformation strategies.

One of the changes in technology that respondents have on their minds is the move to the cloud. They called it out as a key topic, but were light on the details of how, what, or why they would make the move. Responses were hazy: “cloud and subscription-based software” and “migration to software as a service offerings.” It’s likely that SAP oil and gas customers need more information and help understanding the pros and cons of moving to the cloud.

“ Technology changes faster than most companies can implement.”

SAP oil and gas customer

87%of developers believe it would take 12 or more

months to clear their backlog of custom SAP projects

ASUG Research The State of the Oil and Gas Industry 3

Using Data to Drive Business DecisionsAligning with the predicted impact of data analytics and dashboards, respondents expressed concern over standardization of data in the industry, as well as master data governance and management. Standardization could imply a need for change management or a new way of holistic thinking, industrywide. This is another example of the industry’s desire to do more with existing resources. The data exists in today’s ERP systems, but companies might not know how to extract it, what to do with it, or how to benefit from it.

Meanwhile, the majority of respondents (71 percent) believe that data analytics and dashboards will have a significant impact on their businesses within the next 12 months. Data analytics and dashboards provide visibility into current processes, offering the potential to guide business decisions and potential process optimizations.

Taking Technology from the Office into the FieldThe third most prominent concern among SAP oil and gas customers is how to bring the technology that historically has been locked inside offices into the field. As an industry with so many field-related needs, mobility could be a powerful game changer for many companies. “Mobility is the clear front-runner—effectively devolving day-to-day decision-making from the office to the field,” one respondent wrote, indicating that the technology would be used by higher-level decision-makers overseeing field operations. Respondents want to use mobility tools and incorporate GPS data. They need their technology systems, including those from SAP, to provide new ways to keep them connected.

of IT professionals believe they are adequately staffed to support newly adopted

technologies

“ Mobility is the clear front-runner—effectively devolving day-to-day decision-making from the office to the field.”

SAP oil and gas customer 35%ONLY

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43+57

61+39

Major Pressures

Change Management for Technology AdoptionAs in every industry, change management is a struggle. Getting executive buy-in for implementations is hard enough, let alone encouraging users to adopt new technologies. These hurdles slow down the potential for technology to deliver competitive advantages. “We are spending lots of time and money implementing new modules, and we are concerned the managers may not want to use them,” one respondent said.

Processes that Need Streamlining or AutomatingDetermining the best approaches to automation and applying these approaches across an enterprise can help oil and gas companies achieve better results. For example, robotic process automation (RPA) could help them save time and money. This will require a shift in mindset among employees. This concern also relates directly to change management—it is just as hard to optimize processes as it is to adopt new technologies, due in part to the fear of being automated out of a job.

Data that Works Harder for the BusinessRespondents want insights into how to improve their efficiency and become more competitive. They want to use data to drive faster decisions, yet many indicated that they are not using data effectively due to head count restraints. This could point to a need for more in-house data expertise.

Respondents are on to something, as doing the right things with data can make a difference. According to ASUG research conducted in March 2018, SAP customers called business intelligence a top source of competitive advantage, as shown in Figure 2.

57%

39%

of those moving to SAP S/4HANA plan to use it to simplify their IT platform

have plans to streamline their information flow

ONLYFigure 2: Top Differentiators for SAP Customers

Source: ASUG research, March 2018

Enterprise resource planning (ERP)

48%Customer relationship management (CRM)

39%Business

intelligence/analytics

51%

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The Secrets Behind Satisfaction

Critical Factors for SatisfactionWe asked about the factors that are important to oil and gas customers and evaluated how strongly they correlate to satisfaction with SAP information that’s available. Respondents told us these critical factors are: managing operational costs and efficiency; predictive analytics and maintenance; and operational integrity and asset management. All of these are processes that help optimize the current technology environment.

Hidden Motivators Driving SatisfactionRespondents didn’t initially indicate these factors as critical, but they associated them with high satisfaction. They identified these as hidden motivators: using technology to explore and discover new oil sources; solutions to supply disruption challenges; and visibility of the hydrocarbon supply chain. The common theme is the supply chain. This didn’t appear in the top trends, yet the results indicate that it’s a significant issue in the oil and gas industry. Interestingly, these motivators are all industry-specific issues, unlike the top trends and major pressures.

Bare-Minimum ExpectationsSAP customers in the oil and gas industry also have minimum expectations for their investments: change management and user adoption; access to data and data management; ease of automating business processes; and post-acquisition management of technology and assets. Two of the four also surfaced as industry pressures, which could imply that respondents are stuck trying to meet their most basic needs.

Critical Factors

Hidden Motivators

IMPORTANCE SATISFACTION

IMPORTANCE SATISFACTION

Managing operational costs and e�ciency

Predictive analytics and maintenance

Operational integrity and asset management

Using technology to explore and discover new oil sources

Solutions to supply disruption challenges

Visibility of the hydrocarbon supply chain

ASUG Research The State of the Oil and Gas Industry 6

50+50Products of Interest

Underscoring the need to optimize existing technology investments, the most-used product is SAP ECC, at 74 percent of respondents. Next in line is SAP Ariba, which supports the industry’s desire for more help with the supply chain.

Some are already making the leap to the next-generation ERP system, as 34 percent have moved to SAP S/4HANA in some form. And those who are not currently using SAP S/4HANA or SAP Leonardo expressed strong interest in both. These results support the notion that respondents want to bring innovation to their businesses but may be held back by heavy investments in their legacy systems. Early adopters are cutting those ties now.

A Cloudy Mix

Use of other SAP products including cloud offerings is light, with no one product achieving more than 19 percent use (data not shown). Several products mentioned tie to workforce management (SAP SuccessFactors at 19 percent and SAP Fieldglass at 15 percent), as well as to the desire to drive decisions with data (SAP Master Data Governance at 19 percent and SAP Fiori at 12 percent).

74%SAP ECC

43%SAP Ariba

20%SAP S/4HANA

14%SAP S/4HANA

Cloud

6%SAP S/4HANA Central Finance

Source: ASUG research, December 2018

Figure 3: Key Products Used by SAP Customers in the Oil and Gas Industry

50%of nonusers expressed interest in SAP S/4HANA and SAP Leonardo

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Getting the Most from SAP’s Oil and Gas Solutions

Based on our research, it’s clear that SAP oil and gas customers are looking for ways to make their technology work harder for them. They’re looking for help keeping up with technology changes, including the move to the cloud, as well as making data work harder for the business and taking technology from the office into the field.

That’s what the Best Practices for Oil and Gas Conference is for. You can hear about innovative uses of your existing assets while connecting with others who have solved similar challenges at the lecture-style presentations that 43 percent of your industry peers value the most. You’ll hear presenters such as ExxonMobil, Valero, Chesapeake Energy, Andeavor, and Schlumberger discuss their own experiences with automation, transitions to SAP S/4HANA, the move to the cloud, and machine learning. We’ll address these industry trends through real-life customer case studies, interactive discussion sessions, demos, and SAP expert presentations. We connect you with the oil and gas customers who have the answers you’re looking for.

Join Us in Fall 2019

Sept. 16–18, 2019 The Woodlands, Texas

The trends that surfaced from this study will inform the agenda for the 2019 Best Practices for Oil and Gas conference, where thought leaders and industry experts will share their insights and experiences to help you get the most out of your SAP investments. Join Eventful Conferences, ASUG, and SAP Sept. 16–18, 2019, at The Woodlands Waterway Marriott Hotel and Convention Center in The Woodlands, Texas to connect with your peers and take new ideas back to your business.

Visit the Best Practices for Oil and Gas website to find updates on speakers, keynotes, training sessions, and more.

oilgas.bestpracticeconferences.com914.509.5354lindsay.wickham@eventfulconferences.com

upstream

63% downstream

37%midstream

31%oil field services

11%

Figure 4: Participants Represent These Sectors

Source: ASUG research, December 2018. Numbers exceed 100 percent because participants represent companies operating in multiple sectors.

About ASUG Research ASUG research captures a unique view of what SAP customers are doing, thinking, and planning for the future. We apply traditional quantitative and qualitative methodologies and research best practices to deliver insights on relevant technology topics. The information in this report came from a quantitative survey of SAP customers in the oil and gas industry conducted in December 2018.

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