Technology Disruption Already Underway In Service And Supply Sector: Survey

Technology disruption is well underway in the service and supply industry and creating a safe environment for innovation is the best strategy to deal with it, according to a comprehensive survey of the Canadian oil and gas industry to be released next week.

The 2017 Service & Supply Outlook Report, published by JWN Energy in partnership with Grant Thornton, will be available for download in April. Launch events are planned for Calgary, April 4, and Edmonton, April 6. Register here.

When asked how long it will be before technology will disrupt the industry, 34 per cent of respondents said it is currently happening, 11 per cent thought it would happen in the next year, and 22 per cent felt it would occur in the next two-five years.

Just eight per cent said technology disruption is six-10 years away. A relatively high number, 23 per cent, were unsure, indicating a considerable level of uncertainty around the penetration and impact of new technology remains among industry professionals.

“The takeaway here is no one within the industry will be immune from sweeping technology changes and organizations can no longer survive with a business-as-usual mentality by not investing in implementing new technologies, even in cash crunch markets,” the report states.

In order to best deal with technological change in the digital age, creating a safe environment for innovation was the most highly rated strategy, favoured by 23 per cent of the 372 industry professionals surveyed. Systems thinking and the learning organization was the second most favoured strategy (18 per cent) followed by the use of data-driven strategic innovation (13 per cent).

“Negative profitability and low cash flow might not promote a safe environment for innovation, but given the critical need for technological advancement in the industry, now is no time to disregard the need to develop a company culture for innovation,” states the outlook report.

With the industry still in the midst of a prolonged downturn, funding many innovation projects was favoured by just 10 per cent of respondents, while use of open-source innovation was slightly less popular at nine per cent.

Despite the imperative to deal with technological change, 15 per cent of respondents said their companies were “not prepared to deal with technology disruption.”

The report also notes there are a number of federal and provincial programs to encourage and support business-led R&D and technology adoption, including direct grant funding, tax credits, collaboration support and first-customer procurement contracts.

However, these programs are often not well-advertised and application rules and requirements can be quite complex. Many programs can have short eligibility windows and limited funds, and the suite of available offerings in any given sector is constantly changing.

Companies are advised to know their options, know their deadlines for applying and fulfilling ongoing requirements, have a plan and stick to the plan over the long term, document their work and supporting results, and to think ahead.

When it comes to the willingness of organizations to change, as may be required to deal with technological disruption as well as other issues facing the industry—such as relatively high costs, continuity planning and knowledge transfer, environmental impacts and a changing economy—there are indications companies are willing to be flexible in the year ahead.

About three-quarters of respondents identified that their company is willing to participate in making fundamental changes to how the oil and gas industry operates. And 69 per cent of respondents said their organizations are somewhat ready or ready to make a fundamental change in how their organization operates within the industry.

“A readiness to embrace change, likely in reaction to the drastic market pressures on the industry since 2014, is a good sign as adaptation to the new low oil price environment continues to be a priority,” the report found.