A Cisco study said a $50 billion oil and gas (O&G) firm can increase profit by 11 percent if they enhance IoE adoption.
For the entire O&G industry, increased focus on adopt digital technologies powered by the Internet of Everything (IoE) can generate $600 billion, said Cisco in a 14-country survey.
Oil and gas professionals believe operational efficiency of existing projects and maintenance of assets and infrastructure are their top two areas of increased investment over the next 24 months.
Investment in IoE is significant for O&G firms especially when oil prices have fallen by more than 50 percent since June 2014. Soft demand, increasing U.S. production and diminishing storage for crude oil will be big blocks for the oil industry.
The global survey identified intelligence from data as the key area needed to improve operational efficiency, and data analytics as the No. 1 IoE driver for faster, better decision-making.
Cisco said industry adoption of IoE could bolster global GDP by up to 0.8 percent or $816 billion. To calculate this number, Oxford Economics began by incorporating into its Global Economic Model Cisco’s $600 billion IoE Value at Stake estimate for the oil and gas industry over the next decade (including productivity gains, reduced Opex and Capex, and IoE adoption cost of $180 billion).
Oxford also projects that global consumer spending could be up to 1.5 percent higher than the base-case forecast by 2025.
Digital transformation will result into $538 million annual profit increase for a $50 billion O&G company. Cisco estimates that this IoE-driven value will come from improvements in asset utilization, process or supply chain efficiency, employee productivity, Capex savings, and market innovations.
For a midsize oil and gas company with $50 billion in annual revenue, IoE can generate a $538 million annual profit increase and an 11 percent bottom-line (EBIT) improvement. 72 percent of these benefits are derived from cost reduction, while the remaining 28 percent are from increased revenues.
48 percent of respondents named data as the area of IoE they need to improve most to make the most effective use of connected technologies (IoE).
Survey respondents ranked faster problem resolution as the No. 1 business benefit of connected technologies (IoE), while improved production efficiency was the top operational benefit.
Respondents believe IoE will boost operational efficiencies primarily in the upstream segment of the value chain, naming production as the No. 1 beneficiary.
More than half of respondents believe IoE has the potential to automate anywhere from 25 percent to nearly 50 percent of manual processes.
56 percent respondents identified production optimization as the process with most IoE-driven automation benefits, ahead of Maintenance and Business Operations.