Digitalization is the engine fueling the growing adoption of operational excellence (OE) in hazardous industries. As part one of Petrotechnics’ Operational Excellence Index (OEI) survey evidenced, technology is at the heart of a rapidly accelerating effort to deliver unparalleled transparency, efficiency and intelligence into operational decision-making.
Part two of the OEI examined the evolution of digitalization in OE. To provide a window into the applications, attitudes and benefits, Petrotechnics has captured the insights of oil, gas and petrochemical industry professionals. While being at various stages of their digital transformation journey, the experiences of the respondents reflect a firm belief in digitalization to enable and transform organizations’ OE frameworks.
The momentum toward OE adoption in hazardous industries is building, and digitalization is playing a vital role. More than 73% of companies surveyed noted that digitalization is helping accelerate their ability to deliver sustainable OE.
Rate of digitalization
Many companies have made great strides integrating dispersed operational data, business processes and, importantly, people’s roles to create the foundations of an enterprisewide OE framework. Companies are looking to digitalization to manage OE in a proactive, strategic manner. According to the survey, enhanced key performance indicators and metrics (51%) and improved prioritization and planning (49%) are the two areas where digitalization is creating the biggest impact within organizations.
However, viewing digitalization as a silver bullet is a mistake. It is dangerous to point analytics at disparate data and apply machine learning with the expectation that actionable insight will be the result. As the nature and use of technology accelerate, obstacles to progress arise.
The rate of digitalization in hazardous industries has some observers worried if people can keep pace. According to respondents, steep learning curves (19%) and data overloads (18%) are the top challenges that digitalization poses for operators. Adding in the potential for disengaged workforces (14%), 51% of respondents recognized significant challenges in embracing digitalization. This comes as no surprise as workplace culture was ranked as the single biggest barrier to advancing OE in part one of the 2017 OEI survey.
Beyond these concerns, newer applications, predictive analytics, machine learning and others, have the potential to disrupt long-standing models of operation. Naturally, this breeds a sense of uncertainty among individuals, ranging from job security to fears of Big Brother monitoring through mobile device GPS location tagging helping to increase resistance.
In reality, digitalization is meant to enhance, not replace, the human element of decision-making. It is the smart combination of human and sensor-derived inputs to provide the right information at the right time to make better, more informed decisions.
Data are a prime example. The reality is there is too much data and not enough context and insight. So, how can the data work to deliver meaningful and actionable insights?
It requires unlocking meaningful relationships between previously disparate data sources. Technology is a tool. It is not the answer. Analytics is key, but it is only as good as the data input. Expecting analytics to provide insight magically and then connect the dots is a first-class ticket to the trough of disillusionment. A “common currency” such as the risk that connects data to operational reality is fundamental. In this way, organizations can understand what is happening, when it is happening and where it is happening on the asset.
Operators can forecast with great accuracy when equipment will need maintenance. It provides real-time insights into what is happening on the plant, even predicting risk. This intelligence enables informed decisions and elevates operational performance, safety and efficiency enterprisewide.
Part one of the 2017 OEI survey revealed a gulf between organizations whose senior leaders champion OE and those who do not. However, for digitalization to become embedded in organizations, senior leaders must lead from the front and effectively communicate the benefits across their businesses. More importantly, they must be proactive in demonstrating how digitalization is part of a wider strategy to ultimately enhance the way individuals and teams operate—dispelling people’s fear of change.
Adoption of digital OE
Given that companies are in different stages of digital OE adoption, it is no surprise that the majority of organizations rank the use of more mature point applications. Enterprise asset management (84%), asset performance management (69%) and operational risk software (61%) are at the top of the list of technologies currently used or planning to be used. The emphasis on these technologies signifies many organizations are just establishing their OE foundation.
At the same time, early OE adopters are ramping up their use of more cutting-edge technologies to build on initial successes. Deriving insight from data is a key focus, with 65% of respondents either deploying or planning to deploy predictive analytics. The use of mobile workforce applications (35%) and smart sensors (37%) is expected to rise, as real-time visibility and frontline productivity remain high on the list of operational priorities.
Cutting-edge digital technologies such as the Industrial Internet of Things (IIoT) platforms (53%), artificial intelligence (AI) (39%) and machine learning (49%) are not just on the OE horizon but are already seeing modest adoption by respondents. However, the usage of IIoT platforms and AI will increase nearly three times (280%) with machine learning (200%) close behind. The future of digitalization lies in creating even deeper levels of intelligence to enable a more predictive and prescriptive approach to operational decision-making, which is at the heart of OE.
More than 83% of organizations agree digitalization is enabling a single, shared view of operational reality. By bringing together disparate data and creating an integrated view of all operational activities and risk, companies realize greater levels of transparency, efficiency and performance.
Likewise, 81% highlight real-time visibility of asset risk as a significant benefit of digitalization. The connection between risk control systems and frontline operations is enabling proactive risk management, loss prevention and enhanced safety.
Companies also are feeling the benefits of digitalization of strategic management and the deployment of operational resources. Prioritization and planning and the establishment of more impactful metrics are the areas where technology is having the greatest impact on OE.
The shift from real time to the predictive management of OE reveals the areas where the future potential of digitalization is greatest. Organizations anticipate a 209% growth rate in the use of advanced analytics to better understand where and how to improve operational processes. Respondents expect a vast uptick in the use of digital twin technology (222%) to create virtual replicas of operations to run more detailed operations simulations to improve maintenance strategies, uptime and reduce risk.
With strong leadership, silos can be broken down and operational models can evolve. This empowers individuals with actionable insights they can use to enhance decision-making and ultimately generate stronger business outcomes.
As the impacts and business benefits continue to stack up, the momentum toward widespread OE adoption only increases. The only choice left for companies in hazardous industries is whether they are willing to pay the price for waiting any longer.