2. CONTENT
• MARKET CONTEXT AND BUSINESS CASE
• OPERATIONAL EXCELLENCE + DIGITAL: TRENDS & LEADERSHIP
COMPETENCY
• CHALLENGES
• HOW TO MAKE DIGITAL WORK
• NATHAN ASSOCIATES OPERATIONAL EXCELLENCE + DIGITAL SERVICES
• DIGITAL EXPERIENCES – GOOD & NOT SO GOOD
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3. MARKET CONTEXT – PERFECT STORM…
3
It’s all about:
1. Pressure on margins,
cost cutting &
productivity
2. Capex reduction
3. Commodity market
volatility
About 90% of costs are in
feedstock and operations
Increase asset lifetime and
improve asset availability
Improve trading and
integrate with logistic,
production and B2B
4. DIGITAL FOR BUSINESS PROCESSES
Commercial Optimization
Commercial Development
Planning and Scheduling
Commercial Performance
Management
Energy & Utility
Management
Operations
Supply Chain Optimization
Work Controls
Operations Execution
Asset Management
Blending Operations
Oil Movement
Production Performance
Management
CD
P&S
CPM
EUM
SCM
WC
OE
BO
OM
PPM
EHS & Operations Support
HSSE Strategy and
Reporting
HSSE Management
Process Safety
Management
Compliance Management
Laboratory & QA
Management
S&R
M
PSM
CM
LQA
Technology & Engineering
Research & Development
Engineering Management
Process Engineering
Process Automation
Technical Knowledge
Management
Manage Licensing & IP
R&D
EM
PE
PA
TKM
LIP
Maintenance Execution
Develop Equipment
Strategies
Manage Shutdowns and
Turnarounds
Define Maintenance
Strategy
Monitor Work and Asset
Performance
Maintenance Planning and
Scheduling
Sourcing Strategy and
Contractor Management
MS
SCM
DES
ME
MST
MWP
MPS
Asset Strategy &
Performance
ASP
Manage
Maintenance
Hydrocarbon SC
Trading & Risk
Management
Envelope Optimization
Crude Supply Management
Refined Product Supply
Management
TRM
EO
CSM
PSM
High
Medium
Medium High
Business Value
Digital
Transformation
Potential
Non-Hydrocarbon Supply Chain
Supply Chain Strategy
Requirements Planning
Warehousing & Logistics
Sourcing and Procurement
Requisition to Pay
W&L
RP
SCS
RtP
SP
MST
ME
ASP
SCM
PSM
TRM EO CSM
MS
DES
MWP
MPS
R&D
EM
PE
PA
TKM
LIP
W&L
RP
SCS
RtP
SP
CD
P&S
CPM
EUM
SOP
WC
OE
BO
OM
PPM
S&R
M
PSM
CM
LQA
High Potential Items
Sales and Operations
Planning
SOP
Capital Projects
Portfolio & Risk
Management
Project Management &
Assurance
Engineering & Project Data
Project Support
PRM
PM
EPD
PS
SCM
PRM
PM
EPD
PS
Which
processes are
most relevant
as primary
candidates for
digital?
5. VALUE CREATION FROM OPERATIONAL
EXCELLENCE + DIGITAL
5
VALUE DRIVERS VALUE LEVERS FOCUS AREAS BENEFITS
$2B
Facility
EBIT
Improvement
$165M
~
33%
Improvement
Revenue
$120M
Increase Uptime Asset Strategy Production Throughput (3-10%)
Asset utilization (3%-5%)
Opex
$15M
Reduce Materials
& Services
Preventive
maintenance
Maintenance Productivity (5-10%)
Maintenance Service Costs (10-20%)
Procurement Costs (15-25%)
Reduce
Labour
Integrated
planning
Capital
Deployment
$10M
Investment
postponing
Long Term Asset
Planning
Reduce Raw Material Inventory (2-5%)
Reduce MRO Inventory (5-10%)
Asset Lifecycle / Age (15-20%)
Capital Efficiency Working Capital
Reduction
Optimized
Operational Risk
Reduce Asset
Risk
Mechanical
Integrity
Reduce risk for corporate liability
Reduce insurance cost
Brand Image / License to operate
People Safety HSE Work
Control
Which Value Levers are most relevant?
6. TYPICAL VALUE REALIZATION TIMING FOR DIGITAL
Process Changes
Variable Tables
Using MS Excel
Technology
Digital implementation cycle is getting shorter (in many cases less than ½ of time of that used to
take 5-6 years ago) driven by:
• Urgency of the business to achieve sustainable and competitive benefits (un-tangible and tangible)
• Front line need to communicate with experts located at remote locations
• New generation of crafts and engineers are more inclined to utilize technology for their work
• New way of working is driving digital to become part of the work processes
The value realization Timing post
implementation ~ 25% by 6 months
(work processes), ~ 60% by end of first
year (variable tables) and 100% by year 3
(full deployment with embedding of
processes and tools).
Are such value realization times look realistic? Too Short? Or Too Long?
7. DIGITAL TRANSFORMATION IS PUTTING
ORGANIZATIONS’ ADAPTABILITY TO THE TEST
The digital dialog is redefining the context but it raises
the same basic questions around,
People – Process – Technology
Organizations have chosen a different language to answer
them, alienating digital pathways from the rest of the
organization
Leading to suboptimal outcomes…
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8. THE DIGITAL MATURITY MODEL*
*Source - IDC MaturityScape model
Business is
aggressively
disruptive in the
use of Digital
technologies and
business models to
affect markets.
Ecosystem
awareness and
feedback is a
constant input to
continued business
innovation.
Leadership Willing
to reward the risk
takers within their
organization
within the Digital
space
Disrupters
Integrated,
synergistic
business-Digital
management
disciplines deliver
digitally enabled
product/service
experiences on a
continuous basis.
Leaders
themselves are
willing to take risk
on Digital!
Transformers
Business-Digital
goals are aligned at
enterprise level
around the
creation of digital
products and
experiences, but
not yet focused on
the disruptive
potential of digital
initiatives.
Leaders not only
initiate but
actively encourage
the digital dialog
Players
Business has
identified a need
to develop a
digitally enhanced,
customer-driven
business strategy,
but execution is on
a project basis.
Success is not
predictable or
repeatable.
Leader initiate
Digital dialog in
business settings
Explorers
Business and
Digital initiatives
are disconnected
and poorly aligned
with enterprise
strategy. There is
no focus on
customer
experiences.
Passive,
indifferent to
Digital Leadership
Resistors
Many – Many……….Many,……Deere……………………Disney…………….. Square… Amazon………….AirBnB, Square, Uber, Netflix
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9. DIGITAL CHALLENGES*
*Source – Altimeter Group Report 2016
THE “HI-TECH” WORLD
• Has clear winners & losers over long
periods of time (“sustainable competitive
advantage”)
• Winners don’t follow “low-cost producer”,
1st to market or other conventional
strategies
• Winners are those that have developed the
capabilities to adapt quickly and well
DYNAMIC CAPABILITIES IS WHAT “WINS” IN
HIGH-TECH
SHALE 2.0 REQUIRED THESE SAME
CAPABILITIES IN COMBINATION WITH
OPERATIONAL EXCELLENCE!
DIGITAL SUCCESS TRAITS
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10. SHALE 2.0 WITH DYNAMIC CAPABILITIES +
OPERATIONAL EXCELLENCE
Dynamic Capabilities Require that Operational Excellence is in Place and Operating Efficiently and Effectively
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11. REDUCING SURPRISES FROM DIGITAL
TRANSFORMATION
Industry has struggled to leverage Digital but solutions are surprisingly simple!
PEOPLE
• What’s in it for me?
• Why should I care?
• How it is going to improve my life?
PROCESS
• Is the process going to be any
simpler?
• Can the processes be
standardized?
• How steep is the learning curve?
TECHNOLOGY
• Is technology a black-box?
• Why should I trust the technology?
• What is the business case?
CONTEXTUALIZE THE DIGITAL DIALOG
TODAY THE VALUE GAP TOMORROW
• Fight the winnable battles in the digital space; not all battles!
• Recognize the extent of change digital will bring!!
• Promote the right behaviors to succeed in digital!!!
REACTIVE SOLUTIONS
• Are customers experiencing a lower actual vs.
should’?
• Can Digital analytics and automation solutions
close the ‘actual vs. should’ gap?
• Does it make business sense?
PROACTIVE SOLUTIONS
• Can information and analytics tell us what could
go wrong?
• Can automation and controls prevent it from
going wrong?
• Is the cost of digital solution lower than the cost
of risking the operation?
FOCUS ON CUSTOMERS
12. NATHAN ASSOCIATES SERVICES FOR OPERATIONAL EXCELLENCE
+ DIGITAL ARE DELIVERED IN FOUR MAJOR WAYS
Deliver
Execute services
Nathan can leverage the Digital service
platform and its Operations to deliver end to
end capabilities in a efficient and effective way
Digitize
Implement
Integrated Digital
Solutions
Nathan’s Digital service platform incorporating pre-
build integrations and analytics can be implemented
on premise to support clients optimized execution
Assess Assess Capability and
Build Roadmap
Nathan’s Operational Excellence services provide
insight into the performance potential and helps
prioritize initiatives and develop the capability
roadmap
Pilot Rapid Pilot of Digital
Solutions
Nathan’s Digital Service platform provides an
accelerator for proving the value of digital solutions
with a low cost and fast approach
Nathan Associates helps clients build the digital roadmap, prove the vale and capture it through digital solutions and long term
service execution
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13. NATHAN ASSOCIATES’ DIGITAL OPERATIONAL EXCELLENCE
SOLUTIONS ENABLE US TO DIAGNOSE, TRACK, IMPROVE CORE
CAPABILITY AND NAVIGATE THE CHANGE
Performance
Change adoption and perception
Core Capabilities
Digital dashboard and analytics solutions
track and steer the financial benefits of
operational excellence improvements
Digital people and perception analytics
solutions target more precisely the change
management required during operational
improvement
Digital “Integrative Improvement”
solutions track Individual level
core capability, accelerating
operator and technician capability
improvement
Business Value Insight – rapidly
diagnose capability gaps,
prioritize and plan
improvements
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14. DIGITAL IMPLEMENTATION EXPERIENCES:
GOOD & NOT SO GOOD
THE SETTING
• Multi-year enterprise transformation program Operations, maintenance, supply chain,
finance, human resources, and information management
• Operating model redesign
• Process alignment
• Technology integration
APPROACH
x Performed at headquarters
x Stated with technology - On hold after completing design
• Had to perform people and process transformations
• Implemented technology across all sites
RESULTS
Benefits started to realize after 2 years and took additional 2.5 years to obtain full
benefits
Leading Global Refining and Chemical Company – Capital and
Asset Management
A Major Integrated Energy Company in North America – End to End
transformation
THE SETTING
• Need for a globally consistent operating model to leverage a shared service model
• Project included operating model definition, business process optimization, and pilot
activities across supply chain, product lifecycle management, engineering data
management, and maintenance
APPROACH
Performed with business involvement
Started with people and process transformations
Piloted at a site
• Developed and implemented technology and rolled to all sites
RESULTS
Full benefits were realized over 18 months
Digital implementation needs to start with people and process and must include business members in the development and
implementation
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15. WALTER PESENTI
Senior Vice President
wpesenti@nathaninc.com
Office: +1 424.888.3506
Mobile: +1 310.871.5345
CONTACTS