Refiners are gaining financial benefits from digital technologies but are missing out on the additional value that the most cutting-edge technologies could provide, according to new Accenture research.
Accenture’s second annual study on digital technology in the refining industry, is based on a survey of approximately 170 executives, functional leaders and engineers at refiners globally. In addition to addressing the financial benefits that digital technologies can provide, the research also suggests that refiners are not investing sufficiently to address the increasing number of cyberattacks resulting from the proliferation of digital technologies.
Forty-one percent of respondents reported that their company can now determine the financial value of using digital technologies, including 30 percent who reported that the technologies increased their refining margins by more than 7 percent in the last 12 months. One-fifth (20 percent) of respondents said digital technologies are adding USD 50 million to USD 100 million or more in value to their business, with another one-third (33 percent) of respondents citing between USD 5 and USD 50 million.
This tangible financial benefit may explain why more than half (59 percent) of companies surveyed — approximately the same proportion as in last year’s survey — are spending more or significantly more on digital technologies than they were 12 months ago. Additionally, three-quarters (75 percent) intend to increase spending in the next three to five years, up from just over 60 percent in last year’s survey, indicating that demand for digital technologies remains strong.
Likewise, almost half (48 percent) of refiners now rate the use of digital technologies within their company as mature or semi-mature (up from 44 percent in last year’s survey). At the same time, however, most refineries have yet to move beyond deploying well-established digital technologies, such as analytics.
Indeed, when asked to identify the digital technologies driving the greatest margin improvement in refining operations, respondents most often identified advanced process control and advanced data analytics, cited by 61 percent and 50 percent of respondents, respectively. These are also the technologies to which refiners expect to allocate the largest proportion of their digital budget over the next 12 months. Cutting-edge technologies that could unlock additional value — including internet of things sensors and edge computing, mixed reality, mobility and blockchain/smart contracts — are only seeing partial adoption or pilot programs and are likely to receive less investment than the other well-established technologies over the next year.
In light of this, there is a need for more effective management of refiners’ digital strategies, with one-quarter (24 percent) of executives saying there is currently no clear role within the organization driving the digital strategy. In fact, 43 percent reported that this lack of a clear digital strategy is a barrier preventing further adoption of digital technologies in their refineries.
However, change is afoot. While only 11 percent of respondents said their company currently has a chief digital officer driving the digital agenda, many refiners are making governance changes to drive greater digital transformation and address the convergence of information technology and operational systems. Specifically, one-third (34 percent) are creating new organizational structures, more than one quarter (28 percent) are launching a steering committee, and 15 percent are creating new C-level positions.
“Refiners are currently reaping just a fraction of the value that digital can yield,” said Tracey Countryman, managing director for Global Resources Industry X.0, Accenture. “The next step will be to combine and deploy multiple technologies at scale to totally reinvent business processes and drive plant-wide transformational change. Our recent Accenture Disruptability Index pinpointed the energy industry as the most susceptible to future disruption. Increased and tactical digital investment can better enable the efficiency and performance improvements to help refiners weather the storm. There are signs refiners have realized this and are taking action to capture these benefits.”
Rising number of cyberattacks requires greater investment to bolster cyber defenses
With a growing number of cyberattacks, there comes the associated need to constantly upgrade cybersecurity resilience and response. Indeed, 28 percent of respondents said they are seeing more or significantly more cyberattacks than last year. Most worryingly, at a time when operations are becoming increasingly connected and exposed to these kinds of threat, one-third (33 percent) of respondents said they don’t know how many attacks they are experiencing.
The need becomes more pressing considering that 38 percent of respondents said they see data security as a barrier to adopting digital technologies in their organization. Among the risks respondents most often associated with cybersecurity are operational impact (67 percent), impact on workforce health and safety (39 percent) and data breaches (39 percent).
However, only 28 percent of executives cited digital tools to improve cybersecurity in one of their top three priority areas for investment in digital technologies. Respondents were more concerned about how lack of digital investment will affect their competitiveness (cited by over 67 percent), how digital can support cost reduction and improve their margins (64 percent) and how weak digital investment might affect their operational reliability (58 percent).
“With the increased exposure and risk from ever-greater connectivity of digital technologies comes a need to invest to stay at least a step ahead of the growing threat,” said Jim Guinn, a managing director at Accenture who leads the cybersecurity practice within the company’s Resources operating group. “In order to do that investing now in fundamental security capabilities will be crucial to safeguard future operations.”