Most refiners cite digital as having a
positive impact on production planning and execution but say that
resistance to digital adoption is a barrier to wider deployment
While oil refiners have yet to fully capitalize on digital
investments, as demonstrated by digital technologies delivering
lower margin improvements in refining operations this year, they
continue to increase investments in digital technologies, according
to a new report from Accenture (NYSE: ACN).
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“Digital Re-Definery,” Accenture’s third annual study on digital
technology in the refining industry, is based on a survey of 145
oil industry professionals, including C-suite executives,
functional leaders and engineers at refineries globally.
According to the report, over the past year the number of
refiners reporting that digital technologies delivered a margin
improvement of more than 10% in refining operations dropped from
11% to 3%; the number reporting that the technologies delivered
margin improvements of 7-10% dropped from 19% to 11%; and the
number reporting that digital delivered margin improvements of 2-6%
dropped from 46% to 38%.
When asked what technologies drove the greatest margin
improvements in their operations over the last three to five years,
advanced data analytics was cited in their top three selections by
more respondents (62%) than any other digital technology, followed
by platforms (46%) and internet of things sensors and edge
computing (43%).
Furthermore, only 3% of refiners — compared with 6% in 2018 —
reported seeing significant value from digital, defined as over
US$100 million , with the largest proportion (28%) estimating that
digital is driving around US$5 million or more in value for their
refining business. The report suggests that the challenges of
achieving scale for digital initiatives across an asset base is
stopping refiners from capturing the full value that digital can
offer.
Nevertheless, digital spending continues to increase at roughly
the same rate as previous years, with 56% of respondents reporting
that they’re investing more or significantly more in digital
technology than they were 12 months ago. When asked what areas in
their operations digital technologies are having the most positive
impact on, the greatest number (59%) cited production planning and
execution in their top three selections, followed by maintenance
and reliability (50%) and engineering and capital projects
(30%).
At the same time, refiners are becoming more realistic in
assessments of their digital capabilities. According to the report,
only 44% of respondents this year categorized their use of digital
technologies in refining operations as mature1 or semi-mature2
overall, down from 48% last year.
The report indicates that, as with most transformation programs,
people are the cornerstone of success. However, the number of
refiners citing resistance from their people and the culture in
their organization as a barrier to wider digital deployment rose
sharply this year, to 48%, from 33% last year. According to the
report, addressing the last mile of digital transformation by
ensuring greater adoption across the organization, while
challenging, is now fundamental to the success of digital in
refining operations.
“Refiners are still working out how to optimally deliver results
within site operations,” said Tracey Countryman, a managing
director and global lead for Industry X.0 in Accenture Resources.
“There is no one answer on how to best organize the integration of
your information technology and operational technology, as this
depends on company culture and leadership strategy. Having launched
many proofs of concept, refiners must now revisit the operational
processes to enable scale and pace.”
Accordingly, refiners appear to be addressing these issues. Five
in six (83%) are taking actions to address the convergence of
information technology (IT) and operational technology for their
refining operations, including changing the role of IT, creating
new organizational structures for digital, forming steering
committees, creating a new C-level position, or a combination of
the above.
Research Methodology
The online survey was conducted in January 2019 by OGJ (Oil
& Gas Journal) Research, supported by Accenture Research.
Respondents were subscribers to PennWell publications and comprised
145 refining industry professionals, including executive and
mid-level management, business unit heads, engineers and project
managers from a cross-segment of the industry, across 17 countries:
Brazil, Denmark, Ecuador, India, Iraq, Italy, Kuwait, Malaysia,
Mexico, Peru, Portugal, South Africa, South Korea, the United Arab
Emirates, the United Kingdom, the United States and Venezuela.
About Accenture
Accenture is a leading global professional services company,
providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining unmatched
experience and specialized skills across more than 40 industries
and all business functions — underpinned by the world’s largest
delivery network — Accenture works at the intersection of business
and technology to help clients improve their performance and create
sustainable value for their stakeholders. With 482,000 people
serving clients in more than 120 countries, Accenture drives
innovation to improve the way the world works and lives. Visit us
at www.accenture.com.
1 Mature - Digital Enterprise strategy including digital plant
is sponsored by the executive leadership / corporate and is driving
approach to the market
2 Semi-mature - Not yet embedded in strategic focus, but some
business processes are digitally advanced (e.g., procurement,
supply chain, planning, scheduling, etc.)
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Guy Cantwell Accenture + 1 281 900 9089
guy.cantwell@accenture.com
Matt Corser Accenture + 44 755 784 9009
matthew.corser@accenture.com
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