Throughout the high-tech industry, the buzz around Internet of Things (aka IoT and the Industrial Internet) is deafening – naturally enough, given IoT's potential to dramatically improve a wide range of business processes. But the hype obscures the fact that IoT is still relatively new and not yet widely adopted, which creates strategic opportunity for oil & gas producers that quickly embrace IoT.
Oil & gas producers can steal a march on competitors by quickly embracing IoT
Ovum Chief Research Officer Tim Jennings observed recently that while most enterprises are aware of basic IoT principles, there is relatively little momentum in applying IoT to business processes. This is partly because IoT technologies are still relatively new, and also because many enterprises do not yet appreciate IoT's ability to dramatically improve visibility and control over existing processes, and to enable entirely new ones. Whatever the reason, this lag in adoption creates a window of opportunity for oil & gas producers that move quickly to capitalize on IoT's potential.
In addition, a recent survey by Accenture and Microsoft of oil & gas executives indicates that the window will close quickly. Today, upstream firms are putting the highest priority on mobility, infrastructure, and collaboration technologies. But over the next three to five years, the survey found, big data, analytics, and IoT will emerge as the industry's top IT priorities. As this happens, laggards will catch up and erode the advantages that early IoT adopters can gain.
The question for enterprises is which applications and processes to start with in IoT. Needs and opportunities will vary widely among companies, of course. But as a rule, the opportunity will lie in connecting and extracting information from large numbers of small pieces of equipment that now can be instrumented at reasonable cost because sensors have become much cheaper. This creates opportunity in many different operational domains within upstream oil & gas, including drilling, completion, production, logistics, and more.
The Accenture–Microsoft survey contains additional positive news for IT vendors that target the oil & gas industry. Despite the severe downturn in crude oil prices that began a year ago, one-third of respondents say they plan to maintain current levels of investment in digital technologies, and 26% plan to invest significantly more in IT during the current downturn. These responses show that the IT industry's core message is getting through: IT investment yields such positive returns that it must be maintained even as costs are cut elsewhere.