The importance of technology, processes and people in meeting future energy demands

Wednesday February 04, 2015
Written by Pradeep Amladi, SAP
Feb. 4, 2015 - You know that desperate feeling when the battery in your phone dies? How the minutes seem to drag on forever while you wait for the charger to re-connect you to the world?  Imagine living in a time where the availability of energy is erratic and unpredictable. When, for example, flipping the switch doesn’t always turn on the light. In the developed world, this may be a worst case scenario, but the reality is that an energy crisis resulting from a widening gap between demand and supply is entirely possible.

The world’s population is becoming increasingly “middle class.” According to the Organisation for Economic Cooperation and Development (OECD), the size of the global middle class will increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030. This emerging middle class will consume their fair share of resources including clean water, reliable energy, fossil fuels, modern electronics, and a variety of healthy food.

While demand is increasing, discovering and extracting resources is becoming more expensive and challenging. A report by the McKinsey Global Institute concludes only 20 per cent of the resource supply is readily achievable and 40 per cent will be hard to capture, forcing companies to look at new or less explored channels such as drilling for oil in the deep sea or extracting water from deeper ground reserves. In addition, increased environmental and health concerns are also adding to the cost of extracting energy and natural resources. Certainly, there’s the possibility that new sources may be discovered, such as the recent discovery of abundant natural gas in the U.S. However, these will do little to off-set the global supply and demand imbalance.

Meeting future energy needs
With every challenge comes the opportunity for innovation. To solve the world’s potential energy deficit, companies must find ways to harness the power of people, processes and technology. In doing so, they can benefit from an important increase in productivity. For manufacturers, in particular, these three elements combine to create significant competitive advantages. Below are three examples of how energy-related organizations can leverage data-based solutions to improve operations:

• Predictive maintenance
Energy manufacturers are using data transmitted from sensors embedded in to improve platform and equipment up-time. The constant stream of communication is captured and analyzed to identify trends, which are then used to predict performance of particular pieces of equipment. Armed with this insightful knowledge, technicians can conduct proactive maintenance and avoid expensive downtime.

• Improve operational processes
Companies are using data-based technological and process innovations to improve operations including more efficient discovery and extraction of resources. For example, collecting data and analyzing it in real-time allows rig operators to detect and then react to downhole pressure changes while drilling, which improves the safety and efficiency of water drilling operations.

• Behavioural insights
Trends in consumer energy consumption and behaviours are being analyzed and used to modify behaviours. For example, companies are using insights gleaned from data to develop energy-efficient products and services. Also, using data-based insights, campaigns and initiatives are created with the goal of incenting consumers to reduce their overall energy use.

These are just a few examples of countless ways technology is being used to radically improve the energy industry. Yet, whether it is focusing on operational excellence or resource conservation, anticipating and taking advantage of changes is only possible if you have a knowledgeable, motivated workforce. Talent acquisition and development, as well as lifelong learning to bridge the technology gap, is essential.

Attracting new workers
Unfortunately, energy and natural resource companies are facing the prospect of a large scale shortage of skilled workforce as experienced baby boomers begin to retire at a faster rate than new workers can be hired. This exodus of older workers not only leaves companies with less manpower, but they are faced with the prospect of losing significant institutional knowledge.

Oxford Economics reported that while companies have a growing need for skills like analytics and cloud computing, less than half of employees expect to be proficient with these key technologies in three years. Additionally, in a global survey, SAP found that 80 per cent of energy and natural resource companies view Big Data as critical to meeting their strategic objectives, yet only 20 per cent consider themselves mature in this area. Faced with a smaller pool of qualified talent and increased competition, one answer to successfully attracting, hiring and retaining a skilled workforce is to leverage new technology solutions.

Millennials are a tech-savvy, digital native generation. By 2025, they’ll make up about 75 per cent of the American workforce, according to this Oncore article. Millennials grew up on modern technology and are comfortable using it how, when and where they want. Therefore, it is logical that they are most attracted to a similar type of work environment – one that features state-of-the-art technology, training in multiple formats and collaboration capabilities. Unfortunately, a disconnect exists between the technology Millennials want and the technology used by many organizations. In fact, less than one-third of employees say their companies make the latest technology available to them, said this article.

Energy and natural resources companies are racing to capture knowledge held by older workers, racing to retain an existing workforce, and racing to attract younger talent from a limited pool of resources. Missteps in any one of these areas could mean the difference between successfully meeting the world’s future energy needs or not.

Pradeep Amladi is the vice-president marketing, energy and natural resources, and discrete manufacturing industries at SAP.

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