Data collection and analysis are business essentials. Every manager makes decisions based on performance metrics, financial results, and forecasts, but data alone isn’t enough to drive next-level results. Making agile, confident decisions in ever-shifting markets requires more — insights found at the intersection of timely and integrated data.
When data remains time-bound, downstream oil and gas businesses can miss significant opportunities by only looking backward at prior results and trying to use it to guide future projections. However, innovative technology can deliver vital data as close to real time as possible, helping organizations make decisions that can better manage risk and allow them to outpace their competitors.
What is Operational Intelligence?
Industry expertise, historical data, and intuition create a knowledge base, but the ability to quickly act on data in a dynamic industry transforms information into something more valuable: Operational Intelligence.
Operational Intelligence is the concept of a continuous, holistic picture of the business environment, supporting the right decisions in the exact moments they are needed. It can be the difference between guesswork and informed decisions, between losing money or making it.
The power of digitized data
Digitizing data is key to acquiring Operational Intelligence, and to unlock this knowledge, businesses must get comfortable and more assertive in incorporating readily available technology. Data done right adds value because it does a better and faster job of creating situational awareness in every aspect of refined fuels, from pricing and customer demand information to product temperature fluctuations that impact volumes and extreme weather hazards that hinder supply chains.
Operational Intelligence is the concept of a continuous, holistic picture of the business environment, supporting the right decisions in the exact moments they are needed.
For example, look at the way energy suppliers use wholesale demand data. Those numbers are typically sent on a fixed schedule, in a sense, making them historical data. However, companies can use technology to receive real-time updates based on timely terminal data listings — enabling action on the fly. For suppliers, this means they can see the market in motion and decide where to place more product and raise or lower prices based on demand — this is Operational Intelligence in action.
A slow industry transformation
While energy companies understand the decision-making benefits of digitized data, many need encouragement to move forward into Operational Intelligence. What’s holding them back? A hesitancy to pursue change.
According to research performed by Forrester Consulting on behalf of DTN, 72% of 350 industry companies agreed that digital modernization is a top priority for their business, and 66% said failing to move forward costs them profit margin. However, 43% hadn’t begun the process, and over half (53%) agreed digital modernization in the downstream industry is slow.
However, 43% hadn’t begun the process, and over half (53%) agreed digital modernization in the downstream industry is slow.
There is no shortage of explanations for the reluctance to invest in tech. In general, though, the culture of the downstream business hasn’t prioritized the use of digital data to pave the way for improved performance as it has in the financial services industry, for example, which counts on new technology to create new efficiencies.
The tasks of selling, purchasing, and delivering oil and gas have been more than enough for downstream companies. This view is slowly changing thanks to the increased availability and usefulness of data in nearly every aspect of modern life; think about today’s use of smartphones compared to Blackberries of the past.
Early adopters capture the advantage
“We’ve arrived at the place where everyone knows there is a better way for companies and decision-makers to act, but they struggle with where to start and what resources they need to support a technology process,” said Loretta Terranella, vice president of strategic sales at DTN. “I won’t say it’s a race, but it’s certainly to the advantage of early adopters — those who got rid of their Blackberries first. They’re already pursuing the question of ‘What can I be doing better?’”
The answer, according to Terranella, is that data analytics can improve most decision-making for downstream companies. DTN, for example, helps customers get the timing of transactions right — in real time, by providing integrated energy trading results, local daily demand numbers, pricing data from more than 1,900 terminals, and other information. That’s much more efficient than setting a price once a day and waiting to see who bites.
Companies can benefit from Operational Intelligence in other matters, such as knowing how weather changes impact product temperatures. By relying on DTN to receive up-to-the-minute temperature insights, suppliers can monitor differences in volume to make better decisions about when to lift product to protect their margins.
The role that guesswork has played historically in energy distribution is remarkable. When storms or other disruptions hit, companies relied on previous experiences to make decisions about moving trucks to safer destinations. Digital data on real-time weather and trucking movements based on terminal activities now enable companies to do a much better job — not just when moving trucks to safe locations but also helping refiners and distributors improve scheduling decisions.
Outwitting the weather and out-maneuvering competitor prices are just a few of the results downstream companies can achieve with help from Operational Intelligence as opposed to traditional approaches.
See how you can embrace digital data and achieve Operational Intelligence with DTN.