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Digital Transformation in The Energy Industry

Digital Transformation Strategy
Digital Transformation Strategy
Digital transformation implemented in the energy sector has the ability to revolutionize the way we power our homes and our businesses, the way we spend our money and can help us mitigate human impact on the environment. The energy industry touches every aspect of our lives, from turning on our household lights or driving a car to power up a production facility. And yet, as digital transformation zooms ahead at lightning speed, the sector has to fight to keep up with what emerging technology can offer. Fortunately, some great strides have already been made, and big companies in these industries are proving that increased digitization is the key to business vitality.

The energy and utility sector is extremely capital intensive and has been projected to spend no less than 40 trillion dollars over the next twenty years. While many industries may have seen “digital transformation” as just a buzzword a few years ago, disruptive business models implemented in the energy and utility industry are decreasing operating costs, increasing operating profits, and spreading energy resources further throughout the world. From impoverished populations being connected to the electricity for the first time to major oil companies discovering offshore deposits, digital transformation trends are acting as the propeller behind these groundbreaking energy advancements.

Analyst firm Gartner projected that there will be over 26 billion connected devices by 2020. That’s a huge market for the utility industry. Digitization of the utility industry alone is projected to increase operating profits by more than 23 percent, according to McKinsey. The new age of digital is shifting the way electricity is distributed through the use of emerging technologies like the internet of things (IoT), block chains, and cognitive systems. Within the utility sector, this transformation can be seen in the implementation of smart metering, smart grids, and data analytics, all tools which increase efficiency and stabilize prices.

The implementation of digital technologies in the oil & gas sector are equally promising, with projections to reduce capital expenditures by up to 20 percent, and cut downstream costs in half. Energy companies will be able to automatically track inventories of fuel sources, preempt system breakdowns, and generate increased efficiency by minimizing fuel waste. Both the utility and energy sectors are all multi-billion dollar industries which have the potential to revamp their cost to profit ratios with the implementation of emerging technologies.

Creating energy sustainability will depend upon how well these industries harness the power of digital transformation strategy. Despite the progress already made, only 2% of all energy data is captured, most of which is done without automation. Millions of energy assets will need to be retrofitted and digitized to increase optimization and reduce greenhouse gas emissions.

Implementing these emerging technologies would lead to large profits for major players in these markets, and for the investors behind them. However, the transition will not be without its challenges, and timing is key. Given the crucial nature of our society and economy’s dependence on energy resources, these industries cannot afford to sit back as technology moves ahead at an ever-increasing speed. An up to date knowledge of breakthrough technologies, backed by a team of innovative and flexible leaders, will make for a cleaner, more efficient, digitized energy sector that will continue powering our world for years to come.

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