The great oil crash of 2020 was felt around the world when WTI crude oil futures finished at negative $37. Airfreight and personal transportation fuel, jet and gasoline fell due to lack of demand. Companies were eager to see stay-at-home orders expire and see people on the roads. Despite these slumps, there were some energy bright spots in 2020 that will continue into 2021. Petroleum byproducts like naphtha and fuel oil have done well due to waterborne shipping and the need for plastics for PPE.
The impact on energy companies has been far reaching. The employment and operational impact on the global oil and gas industry is expected to see 21% in employment cuts, while the global shale oil/gas industry is expected to see 32% in employment cuts.[i] Staff cuts, WFH policies and restructuring for sustainability, and an expected increase in demand are forcing organizations to rethink their short-term and long-term business strategy.
According to Stanford researcher Nicholas Bloom, “We see an incredible 42% of the U.S. labor force now working from home full-time.” However, not everyone can work from home. For the foreseeable future, companies will have to manage a hybrid model while still focusing on corporate goals. Couple this with safety measures that involve capacity restrictions, social distancing and on-again-off-again quarantining, these challenges will test even the most tech-savvy firms.
Managers no longer have the luxury to walk through their departments, change assignments, lend support and solve problems on the spot. Companies will get left behind if they do not develop a strategy focused on resiliency to adapt to the new normal. The use of AI, Automation, and RPA are technologies that help companies do more with less. Research states that automation may reduce manual processes by up to 30% in some functions.[ii]
Four areas of focus present the greatest opportunities for energy companies.
#1 Automation of processing of paper forms
Zero Back Office (ZBO) is a concept of back-office automation. It involves identifying opportunities to maximize automation and eliminate manual processing wherever possible. Many back-office teams process paper documents for invoicing, process statements, imbalance statements, pipeline invoicing, inspection statements, bills of lading and other documents that need to be processed for further action prior to payments.
#2 Connecting workflows of distributed teams
The Future of Jobs Report 2020 released by the World Economic Forum (WEF) reports that “78% of business leaders expect some negative impact on worker productivity due to remote working.”[iii] Efficient execution of workflow in a remote environment is achieved with workflow automation tools that will ensure each step in the process is managed. Managers of remote workers have real-time visibility into productivity and quality metrics—enabling them to monitor department and individual productivity. By using a workflow platform, quality control can be monitored remotely in the new normal.
#3 Strategies based on resiliency
Gallup research from late March 2020 showed that only 38% of U.S. employees have confidence in the leadership of their organization "to successfully manage emerging challenges."[iv] It is just a matter of time before the next event. Leaders can bridge the confidence gap by focusing on resiliency in long-term strategies and organizational culture. Companies can lose agility and innovation when employees feel disconnected from the company culture. “Organizations with strong cultures, on the other hand, are built to withstand disruption.” [v] When an organization has a strong culture and a connected workforce, they are better able to face the next challenge.
#4 Co-Sourcing and outsourcing
As companies develop strategies to retain margins, co-sourcing and outsourcing have become popular strategies to keep costs down while keeping customer satisfaction high. These strategies are not new to the oil and gas industry, with commonly outsourced processes including fuel tax assessment, upstream lease management, transportation, bill of lading processing, technology hosting & managed services, software development and utility bill printing. As energy companies have worked diligently on digital transformation strategies and projects, the technology available in the banking and finance center has moved light years ahead. It is worth taking a look at what technology enablement tools and service offerings can fuel the energy sector. SS&C’s technologies stand out among service providers for both technology licensing and outsourcing. As energy companies look to pivot and develop new strategies in this new norm, they can take a cue from the fintech space. To learn more about our solutions that support energy-focused businesses, contact .
[ii] Morgan Stanley, “Rise of the Machines: Automating the Future,” (2017).
Written by Sheshieda Davis
Director, Business Development