how ready are your assets to perform in the digital world? · how ready are your assets to perform...
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How ready are your assets to perform in the digital world?IIOT and the Future of Digital in Oil & Gas
How ready are your assets to perform in the digital world?Page 2
Returns in Oil and Gas are low
10%
90%
100%
0%
80%
70%
60%
50%
40%
30%
20%
Oil & Gas Cableand Satellite
HotelsAutomotivemanufacturing
Tech —Semiconductor
Telecom ServiceAerospaceand defense
Diversified Mining and metals
Companies in Quartiles by Asset Intensity
Source: public data and EY analysis ROA calculated as: Net Income/Total Assets, Asset Intensity calculated as: Operating Assets/Total Sales
1st 2nd 3rd 4th
Average Annual Return on Operational Assets by Industry 2010–2014
Airlines
How ready are your assets to perform in the digital world?Page 3
15%Digital
10%Digital
Lack of digital penetration is one driver of low returns
Rest of NOCs and independents
40% of output
Top NOCs 16 companies
40% of output
IOCs9 companies20% of output
9 to 18 (MM BOE/day)
Digital
Historically, digital in Oil & Gas focused on improved time to first oil and improved effectiveness of hydrocarbon extraction:► Engineering visualization and collaboration centers► Real-time drilling
Total: 93 (MM BOE/day)
20%Digital
► Intelligent wells► Real-time operation centers
Source: EY Research and analysis
How ready are your assets to perform in the digital world?Page 4
Big data goes mainstream
Cloud and managed
services goes mainstream
Myspace and Linkedin launch
BYOD goes mainstream
US cell phone adoption exceeds
50%
IPv6 Major Adoption
Era 2:Focus on Output, technology costs decline
Era 3:
Now is the time to accelerate investment in the Industrial IoTTe
ch C
ost I
ndex
($) W
TI P
rice
WTI Price Source: U.S. Energy Information Administration Independent Statistics & AnalysisTechnology Cost Source: Publicly available data from leading technology researchers, the Federal Reserve Board, and U.S. Bureau of Labor Statistics
Era 1:Efficiency Mattered, technology Cost to High
0
200
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600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160
20
40
60
80
100
120
140
160
Cushing, OK WTI Spot Price FOB (Dollars per Barrel) Technology Costs
How ready are your assets to perform in the digital world?Page 5
IIOT can integrate the O&G value chain Quickly reducing the cost of operations
Digital inOil and Gas
7.5%Average Return on O&G Operating Assets
2–3%Improvement in production volumesDriven through OEE improvements and overall productive capacity
$5 — $10Cost of Computing Power and BandwidthToday’s cost to make a mechanical and/or electrical device “smart.”
10–20%World’s Oil Fields that are Digitally Enabled
5–10%Variable cost reductions Parking-up over-capitalised fleet and improving labour productivity
45 Average number of outside service providers it takes to run an O&G business
60%% of oil consumed outside the country of origin
15–25%Reduction in primary preventative maintenance costs by driving from calendar to condition-based maintenance
Immediate Benefits
How ready are your assets to perform in the digital world?Page 6
Harnessing the value from the IIoT requires more than adding sensors to machines and assets
By 2020
50
<3%
Billion assets will connect and Send data through the Internet1
?101101010101
0010101010101000110101000101010
Today
Of data Is tagged or used in meaningful way2
Optimized Processes Smart Assets Coordinated Resources
1. IDC report: December 2012 — THE DIGITAL UNIVERSE IN 2020: Big Data, Bigger Digital Shadows, and Biggest Growth in the Far East — https://www.emc. com/collateral/analyst-reports/idc-the-digital-universe-in-2020.pdf 2. Cisco report: The Internet of Things. How the Next Evolution of the Internet Is Changing Everything — http://www.cisco.com/web/about/ac79/docs/innov/ IoT_IBSG_0411FINAL.pdf
Process orchestration & process choreography for
faster, integrated decisions.
Mobility to synchronize internal and external
resources through a single business process.
Internet of Things to make devices & assets smart and
connected.
How ready are your assets to perform in the digital world?Page 7
Digital Oil & Gas Company of FutureIIOT enables integration and intelligent enterprise
Gas Production Processing
Oil Storage and handling
Production
Contractors
The cloud integration layer can coordinate all these entities through a single business process to optimize the end-to-end value chain to drive a specific financial result
Access Control
Finance & Accounting
Human Resources
Engineering
Purchasing
Project Management
CRM
Data Services
Functions of ERP
Cloud Integration & Process ChoreographyConnected Assets & Resources IT Environment
Capital planning
Order to cash
Business strategy
Sourcing
Invoicing
Portfolio planning
Logistics
Maintenance
Scenario planning
TransportationGateway
8
35,000 engines monitored via Predix
Fidelity 30% Detection 25%Accuracy 12 pts
100MM flight records per year
How ready are your assets to perform in the digital world?Page 9
Logistics is a material
expense and continues to
escalate
Turn cost center into a profit center
Vertical integration can transform the
customer experience
Supplier
Production DistributionSupplier
Supplier
Customer
Customer
Customer
“Enable Delivery to a customers doorstep in 60 minutes or less” Amazon Integrated Value Chain
Global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London.
High Growth Revenue
22% CAGR
Amazon WebServices (AWS)
31% Market Share
63% Year-on-Year Growth
Amazon’s latest digital transformation Integrated Value Chain
http://www.businessfinancenews.com/27258-amazon-plans-for-a-vertical-integration-to-take-on-rivals/http://www.nurun.com/en/our-thinking/future-of-retail/moving-into-the-3rd-dimension-of-vertical-integration/
How ready are your assets to perform in the digital world?Page 10
Tesla Motors – Art of the Possible Synchronized supply chain through digital
Tesla Motor’s Inc.
Best Selling US Luxury Sedan,
2015
+50% Increase in Year-on-Year Sales to Date
Achieved Highest NHTSA Safety
Rating Recorded
Tesla’s successful entry into a highly competitive car market has been enabled by a technology driven flexible platform.
Connected Car 50% reduction in 1st year repair costs by Integrating sensors to reduce maintenance and downtime.
Scalable Orders and Purchasing
Capacity to handle 500k/year through online ordering process connecting to a real-time supply chain.
Vertical Integration of Strategic Assets
+30% cost reduction in first full year of production by building scalable “Gigabit” battery factory.
How ready are your assets to perform in the digital world?Page 11
Digital Oil & Gas Company Of the FutureRoadmap to a Digitally Enabled Integrated Value Chain & Higher ROCE
% of Integrated Value Chain that is DigitalToday | 20% O&G is Digitized
Set up the operating
platform for IIoT
Connect critical assets and add cyber security
coverage
Expand IIoTenablement across
assets in an operational platform
Enable Process Automation |
Orchestration & Field Mobility
Extend IIoT to transportation,
terminal | depots, warehouse assets
Add External Market Data &
external resource networks
Connect assets across an
portfolio | enterprise
Industrial Internet of Things
Connected Assets
ConnectedOperations
ConnectedValue Chain
ConnectedResources
ConnectedEnterprise
Port
folio
Per
form
ance
ROA | ROCE
Today 7.5% Average Return on Operating Assets
How ready are your assets to perform in the digital world?Page 12
Organizations can take the first step on the IIoT journey by organizing around three activities
Get connectedStart by connecting critical assets and machines. Connecting operational data to each other and the people who need it are crucial to begin your journey.
Get insightsUse intuitive methods to analyze data to determine true root cause and opportunities to improve or resolve. You have enhanced ability to quickly evaluate anomalies and take the correct action.
Get optimizedLeverage digital to optimize the total lifetime performance of your assets to increase availability, minimize costs, and reduce operational risks.
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