Digital transformation is a buzzy business phrase that’s been tossed around in recent years. Broadly speaking, the concept is defined by the process of implementing technology to optimize, modernize, and digitize processes. When it’s done right, it should make otherwise manual processes more efficient and secure.
Demands for digital transformation have rippled across every industry — even more acutely in the wake of the pandemic. But for the energy sector, it’s proven trickier. When it comes to updating protocols, the global challenges and volatility endemic in the energy sector often leads to inertia.
The elusive and seemingly intangible benefits of digitization have mostly gone unrealized in the energy sector. It’s a huge missed opportunity. Digital transformation can help facilities with automated processes, enhance safety measures with digital monitoring, forecast market conditions, and trim costs with efficiencies at scale. For example, solar companies rely on notarizations for certain documents and permits. A traditionally in-person and manual process now has a digital replacement with online notarization, which saves companies (and their customers) time and money.
With a long-term view and a well thought out plan, the promise of digital can go from hype to pipe.
The need for digital transformation in the energy sector
The disruption of COVID-19 made two things very clear for energy and solar companies: first, it underscored that survival means leveling up on business agility; and second — in a serendipitous twist of fate — it lowered barriers to entry for digital transformation. When the world abandoned business as usual, excuses flew out the window. The rapid shift to remote work and digital ways of doing business proved that the status quo isn’t sacrosanct.
Oil and gas operations face price volatility. Utilities grapple with complex grids and high consumer expectations. Renewables developers are bracing for heightened competition.
It will be impossible to manage these problems without the power of digital. With climate change, complexity, competition, and less predictability, the energy sector needs to break out of its current state. Digital innovation can employ predictive analytics to anticipate changing demographic demands, delivers reliable data for decisions at scale, and can automate otherwise manual processes to respond to a world in flux.
Challenges the energy sector may have with digital transformation
Energy is a complex business with global stakeholders. Companies must mitigate health and safety risks for workers and the environment, comply with international law, and manage the flow of global operations. Unlike other sectors (such as tech) energy companies don’t innovate just for innovation’s sake. Once upon a time at Facebook, Mark Zuckerberg’s philosophy was to “move fast and break things.” It’s hard to imagine a worse motto for energy companies.
Energy companies sometimes overuse being different as a crutch to explain why innovations from other industries cannot apply to them. It’s true that the business of energy is not a non-physical entity like technology or financial services. (The laws of physics literally apply here.) But the sector should not let perfection be the enemy of the good. According to a McKinsey report, energy companies that apply digitization successfully have seen 2-10 percent improvements in production and 10-30 percent improvements in cost. It’s hard to understate the value these efficiencies could deliver at scale.
Perhaps the biggest challenge to digitization is culture. This business is an engineer-driven culture. Former engineers dominate leadership at oil and gas companies. Many executives have been at their company for 30 years, gradually climbing up on the basis of discipline, caution, and attention to detail in a high-risk business. In other words: you don’t rise the ranks of the energy business because you broke the mold. You rise because you kept it together. An engineering mindset is built for surviving business cycles, not for driving change. Engineers love large projects, finding the perfect solution from the get-go, drafting plans with military precision, and obsessing over process.
These behavioral hallmarks do not leave much room for fast judgment and flexible maneuvering. Breaking inertia means breaking with tradition.
How solar and energy companies can get started
None of this is to say that engineers can’t make bold moves! In fact, their ability to tackle heady projects in smaller steps is the perfect starting point. Here’s where leaders can start:
1. Communicate the vision: Digital transformation is not just a fun side–project for IT. Nor is it an initiative that can or should be siloed in any one department. Energy leaders must communicate this vision for the business and fund it across all business units. All departments need skin in the game. It’s important to dedicate personnel to manage (and imagine) new business processes — ideally standout players trusted by the old guard and the vanguard.
2. Take bite-size actions: Bite-size actions help transformation stay on target. Simply put: you cannot engineer perfection here. Transformation processes are rife with zigzags and ideas that sometimes fall flat. If you cling tightly to a sweeping plan, inertia can settle in quickly. Get digital solutions into users’ hands quickly — not just to generate value, but to generate excitement. (Internal support creates its own momentum.) Don’t obsess over scale upfront—a digital program can be re-geared to scale if it works. So take a bite.
Energy companies routinely try to plan every aspect of their digital efforts up front. Despite lip service to agility and modularity, they aim for engineered perfection. All of that planning and perfection leads to helplessness when momentum lags or unforeseen problems emerge during a transformation.
3. Transform workflows from end-to-end. In line with the first point above, digital transformation requires an assertive reimagining of how people work. Don’t confuse bite-size actions with one-off “point solutions.” One–off solutions are like red meat for inertia: they don’t change mindsets or behaviors, and often digitize bad processes rather than improve them. The way to avoid this is a wholesale transformation of end-to-end workflows. A deep rethinking of operations fosters creativity and rallies everyone around a shared goal.
The energy sector is facing unique challenges that require innovative solutions. Notarize can help companies across all industries digitize and streamline the notarization process.