Upstream oil & gas industry warned to open its eyes to the benefits of strategic IT

Published:  29 January, 2014

The majority of companies in the upstream oil & gas industry are lagging behind in their use of IT for strategic advantage, according to Ovum’s ICT Enterprise Insights. Although they are investing more in IT, most companies involved in oil and gas exploration and production (E&P) are sticking with current practices and not exploiting the potential of areas such as cloud computing and analytics.

In the largest survey of senior IT executives ever conducted – Ovum’s ICT Enterprise Insights, the global analyst firm reveals that the share of E&P respondents planning to invest most aggressively in IT (increasing spending by 6 % or more) has more than doubled since last year. In addition, 40% or more of the respondents plan to replace or overhaul systems in the critical category of information management in the next 18 months, including enterprise performance management (47%), data management and integration (43%), and data warehousing systems (40%). However, across all eight information management technologies in its survey, a majority plan only minor enhancements or simply to maintain their existing tools.

“In an increasingly data-driven industry, this is not a recipe for long-term success”, says Warren Wilson, lead analyst, oil & gas technology at Ovum. “Digitisation and analytics are changing the E&P industry at least as profoundly as technologies such as wire-line well logging or directional drilling. E&P companies need to re-examine their partnership strategies, prepare for strategic IT, and put analytics centre stage, while vendors can support this by understanding that they are playing to a mixed audience and tailor their products and value propositions accordingly.”

According to Ovum, most E&P companies adopted their IT architectures long before the advent of SaaS or any form of cloud computing. IT directors should recognise that competitors are taking advantage of IT innovation and that they risk falling behind if they ignore it.

Warren warns: “E&P companies must put their houses in order to prepare the way for ‘strategic IT’ – IT that does not merely support existing processes but enables entirely new ones. This means eliminating paper records, modernising IT platforms, and consolidating disparate application and data silos. Also they must recognise that the biggest innovations – in-memory analytics, for example – are coming from IT companies with large budgets for R&D. Producers will not reach the leading edge by partnering only within their industry or disregarding new delivery options.”

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