It seems that all software initiatives in the energy and chemical industries are now tagged with the name "digitalization." A few years ago, similar initiatives were called Six Sigma or lean manufacturing projects. All are focused on operational excellence, but digitalization has risen to the top of the C-suite agenda due to the rapid penetration of new technologies that are disrupting the way consumers are buying and using everyday products and services.
Music and movies are provided as services that learn about your preferences and those of your peers; they used to be sold as a hardware product that you bought and owned. Increasingly, products of all kinds are bought from unknown vendors in far-off locations through trusted online marketplaces and delivered to your doorstep--you no longer must find and visit a local vendor and hope they have stock on hand. Newspapers are failing as we consume news and entertainment in real-time through our phones, and often for free. Our cars are mobile information centers with the intelligence to save us from our own bad driving habits, and we can control our homes and maintain their security remotely. The process industries saw this and feared they would be left behind.
In the consumer world, entrepreneurship caused the digital revolution and consumers benefited from improved efficiency and convenience, greater social connectivity and personal security, and even elevated status. Minor improvements in a consumer's experience have massively and forever changed their suppliers' business models--newcomers have entered from nowhere and some household names that failed to respond are gone forever (e.g., Blockbuster, Sears, Toys-R-Us). Some of our children are growing up knowing nothing different.
Digitalization is the energy and chemical industries' response. Here, the potential gains are much more valuable: greater profitability, improved asset performance and better competitiveness; but we can also expect much more drastic consequences. Hundreds of millions of dollars are at stake, and those who embrace digitalization will prosper while those who do not respond will indeed be left behind, either consumed by those who do or fatally destroyed in the marketplace.
Digitalization is more than just another Six Sigma or lean manufacturing project; it is an imperative that is not going away. Digitalization is the scalable application of digital technologies, and the alignment of organizational capabilities that we believe an energy or chemical process operation should have and master with digital information at the core to achieve excellence. All the emphasized words matter.
Applied correctly, digitalization allows a...