You might think the energy sector has already embraced digital transformation, given the industry’s native savvy in innovation and technology. But, the reality is energy companies are well behind the curve when it comes to digitizing energy management and creating more opportunities for automation. Surprisingly, much of the energy sector’s processes remain manual with data being siloed instead of shared.
Digital transformation of the energy sector
Energy companies that have prioritized digital energy management and automation, have seen dramatic results. For example, energy service providers can now use artificial intelligence to predict equipment failures and keep services like electric power online. Meanwhile, energy companies are able to collect and analyze more data on customers’ energy usage through highly sophisticated meters and sensors.
A recent survey by Deloitte indicates 56% of energy industry executives see this kind of digital transformation of the energy sector as a critical priority for the next three to five years. So the big question is: how do more energy companies get there?
Benefits of energy digitalization
There are many benefits of energy digitization, especially transforming workflows for greater efficiency company-wide. On top of that, there are many other reasons to hop on the digital transformation bandwagon:
Technology has a major role to play in the digital transformation of the energy sector. However, it’s not just about making the delivery of fuel, electricity, or other sources of power easier and more streamlined, it’s also about increasing the productivity of knowledge workers in the energy industry. Tools that allow for easier collaboration and fewer administrative functions — from billing and contracts to sharing of engineering drawings — while also allowing more employees to work from anywhere in the world, increase the productivity of energy companies’ human capital.
Energy companies by their very nature have heavy capital infrastructure, from power plants to oil rigs. This makes reducing environmental footprints a bigger challenge for them when compared to other industries. However, digitization of processes can help energy companies build more sustainable practices. Did you know the average knowledge worker prints 10,000 sheets of paper every year and spends four hours every week on paper-based processes? Adopting tools to dramatically reduce (if not eliminate) paper can have dramatic long-term impacts not just on the environment but also on companies’ bottom lines.
ROI of going digital
According to the International Energy Agency, digital transformation in the electric power industry alone could result in savings of $80 billion in the next two decades by reducing operation and maintenance costs, improving power plant efficiency, and extending the lifetime of operational assets. Additionally, data from McKinsey shows a 10 to 30% reduction in costs for companies that have applied digitization to energy management and increased automation. If energy companies can reduce costs, they can also reduce prices for their end-users, making them not only more competitive but also more affordable.
Even transformation initiatives as seemingly simple as increasing a company’s collaboration capabilities, reducing administrative burdens (including the costs and time associated with printing), and making document sharing easier can have dramatic impacts on cost savings.
The reality is, digital transformation of the energy sector (or any sector) requires effort. If new technologies or processes are difficult to learn and implement, employees will resist full adoption. So, it’s critical that digital transformation of energy management and increased automation is accompanied by a solid plan for change management and digital solutions that are simple to navigate and use.