Astin Thomas, Chief Information Officer of KBC Advanced Technologies plc., writes about the CIO’s role in improving profit margins by leveraging the internet of things.
As we all know, data is undoubtedly a valuable business asset. But data is of no use if it can’t be converted to information that educates, inspires and guides businesses. Without smart use of data, businesses would be relying on assumptions and opinions, rather than facts, to make decisions.
Global supply chains, for example, continually generate huge volumes of data. But the information is scattered across divisions, and often the insights derived from the data are incomplete. So, although data volumes are increasing, decisions are often still made on the basis of historical trends.
With the internet of things (IoT), it is possible to consolidate data across all divisions and levels. The IoT is the network of physical objects that are hooked up with electronics, software, sensors and network connectivity, which enables these objects to collect and exchange data. As it’s been around since 2012, the majority of companies that have adopted the IoT are already seeing some measurable benefits. And, consequently, this technology is especially useful in “data-rich industries” like oil and gas.
In today’s competitive downstream market, oil refiners have reduced budgets for capital investment and are focusing on operational excellence to improve their margins. Sensory data collected by refinery control systems is used to identify equipment that is consuming too much costly energy. In addition, reliability information at the unit level can be compared with historical data and with data from similar units at other facilities. This is not only important to maintain and achieve higher profitability, but it also helps to fine-tune maintenance schedules and plant turnarounds.
Also, during exploratory searches for oil and gas, sensory data is continually collected by downhole equipment, such as drill bits and seismic monitors. This data is then transmitted to onshore data centers via high bandwidth fiber optic cables for analytical purposes. Comparing this new data against data from existing operations, assets and economic models enable decision-makers to become more specific in their analysis, allowing for a quicker and more accurate determination of the size of the potential find. This is especially important in today’s world of low energy prices, where the costs of drilling exploratory wells are under high scrutiny.
Setting the pace for an empowered decision-making model
CIOs, having access to systems and data across all verticals, will be the right people to drive the implementation of the IoT, consolidating data strategy and leveraging trends that businesses didn’t know existed.
1. Put to rest companies’ fears about the IoT. Connecting your assets seems to create a great security concern. It will be up to CIOs to address business leaders’ fears about the IoT, recommend a cybersecurity strategy to protect data and also explain to them the importance of having an intelligent platform where data can be consolidated and analyzed.
2. Find the knowledge gaps that you’d want filled by consolidating data. CIOs need to identify the assumptions and trends on the basis of which they are currently making decisions. A comparison of the reality against the desired state will go a long way toward helping companies frame efficient analytics strategies and provide guidance on what information they truly need.
3. Identify and consolidate the data that is contained in multiple systems. This would involve consolidating data from various sources such as production machines, equipment and other individual components. To assess margins more accurately, it is important to combine data from the entire life cycle of the product – from presales to delivery.
4. Make data analysis a routine activity. This includes data extraction and consolidation, as well as analysis by the business. It helps companies arrive at matrices and analytics that are based on up-to-date market facts. Remember, analytics should show us the important and the not-so-obvious.
By using the IoT to help companies capture, consolidate and analyze data, CIOs will be able to provide companies with an accurate picture of the margins and also precisely identify the areas where cost reduction and improvements in efficiency are required. This will, in turn, empower internal stakeholders to make smart decisions, increase benefits to end customers, and make businesses more profitable and sustainable through increased efficiency and profit margins.