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By Dr Nkosi Kumalo, Managing Executive of Sales for Mining at BCX

In a paper developed by the IBM’s Institute for Business Value on ‘Essential tactics to foster innovation in oil and gas’, industry leaders emphasised the importance of innovation within the sector. It is a space, according to Dr Nkosi Kumalo, Managing Executive of Sales for Mining at BCX, that’s facing numerous challenges around infrastructure, revenue, operations, budgets, regulations and shifting market dynamics.

“This sector is facing incredibly complex market demands, difficulties around infrastructure and access to raw materials, and new dynamics around power generation solutions,” he adds. “It’s an industry that expects companies to juggle everything from compliance to environment to skills to disruption within tight constraints and with increasingly limited budgets.”

“There are questions that the sector has to answer, today,” says Dr Kumalo. “Does it need to innovate around power? Does it need to invest into different types of gas, biofuels or hydrogen? How can it manage the disruption that’s taking place around traditional solutions within the sector? The answer to all these questions lies in innovation.”

Innovation is more than just investigating new technologies, fuels and alternatives to existing solutions. It’s also investment into skills that allow for the industry to reshape its approaches to resources and infrastructure. The sector must find ways of invigorating the industry and building a strong skills pipeline that will enable longevity around production. Within this lies the need to build the skills required to leverage technology so that it can change how companies within this industry manage systems and processes.

“Organisations can’t afford to ignore the impact that technology can make on key areas such as operations, cost efficiencies and revenue,” says Dr Kumalo. “Technology can use data and analytics to gain insights into consumption patterns and to provide forecasting that can transform investment and strategy. This is critical to any business, but particularly those in the petroleum sector.”

If a company can gain granular insight into user patterns it can potentially visualise how these will play out over the next six months and then it can use this data to change the way processes are optimised. It can align systems and spend with analytics to refine how it approaches different markets and how it manages cost efficiencies. And, perhaps even more importantly, it can help the legacy business become more agile and adaptable in the face of disruption.

“There’s a number of diverse start-ups entering this space, start-ups that are digitally native and capable of digging into customer needs and delivering very targeted results,” adds Dr Kumalo. “This is a difficult hurdle for many stalwarts in the industry to deal with. They’re dug in, their processes are rigid, and they struggle to embed the culture and agility required to pivot and innovate.”

On top of this, the industry is grappling with finding space for innovation. The IBM paper points out that there are four types of innovation that can fundamentally shift the balance within this sector: product innovation, service innovation, process innovation, and revenue innovation.

“These areas are key to the long-term, sustainable growth of the industry,” says Dr Kumalo. “Companies must look to the future in order to shape their product offerings, their service delivery, and how their strategies are aligned with visionaries like Elon Musk – leaders who are changing the shape of the industry as a whole.”

While this may seem a daunting list of challenges and hurdles that have to be vaulted by a beleaguered industry, the truth is that there is immense potential for the industry. It is one that sits on the cusp of change that can allow for innovative shifts in focus and solution and that can potentially change the dialogue around the future. What’s needed, to fully support the sector as it embraces technology and innovation, is partnerships that understand the landscape and the unique needs within it.

“Partnerships are key to the future of the industry,” concludes Dr Kumalo. “They can help organisations determine what type of innovation is relevant to them, what areas require investment, and how to leverage technology to create holistic ecosystems for sustainable results. Now is the time to collaborate and create solutions that will redefine the industry alongside the right partners. This is how the sector can innovate and recreate the narrative that currently limits its potential.”