Chemicals, Oil and Gas

Oil and Gas

As oil and gas companies evolve, so do the requirements for associated services. Oil and gas companies today face strong headwinds: low commodity prices, consumer demand for transparency, changing regulations, increasingly burdensome documentation requirements and uncertainty about the role of renewable energy sources. To survive this challenging environment, oil and gas companies have to improve their efficiency and disrupt the status quo.

“ISG saw a 10 percent spike in outsourcing adoption by oil and gas companies in 2019.”
- ISG Research

The oil and gas industry has experienced numerous highs and lows cycles during the last ten years, rarely reacting in a consistent manner to either period.  In periods of economic boom and prosperity, organizations spend a lot of money for new assets, more dollars on R&D, hire new employees, and push for growth in new technological areas, often at the expense of current asset performance.  During downturns, organizations make drastic cuts to survive, cancel CAPEX projects, terminate employees and defer investments in order to minimize costs, again often at the long-term expense of asset performance.

ISG helps oil and gas companies embrace disruptive business strategies and leverage the tools and partnerships they need to grow, especially during times of uncertainties. We use our expertise and research to help oil and gas enterprises find the solutions that are right for them, including digital platforms, intelligent automation, engineering services, IoT technologies, data analytics, blockchain technologies, smart manufacturing initiatives, amongst others. Our work has helped more than 215 oil and gas clients over the last five years withstand the volatile market, improve operational efficiency and gain competitive advantage.

Innovative tools and technologies are changing field and back-office operations. Partner ecosystems can expand access to needed capabilities and skills.

Invest limited resources to maximize returns on digitization efforts.

ISG Inform™ gives decision-makers real-time insights for critical decisions.

Did you know Oil and Gas companies spend 3.7% of their revenue on IT?

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Managing oil and gas third-party suppliers can be complex. ISG GovernX® provides everything you need to maintain insight and oversight of your third-party portfolio. It is the first third-party management platform that allows you to proactively optimize the value of your supplier relationships, mitigate risks and manage the contract lifecycle with speed and agility. Automate the day-to-day activities of supplier and contract management and build more strategic relationships with your suppliers.

With fragmented sourcing, rapid growth in as-a-service solutions, and the increased exchange of digital information among a growing number of suppliers, third-party risk management has never been more important.

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Global change is sweeping the chemical industry, with increased competition, expectations by customers for direct contact, regulation, real-time transactions and supply chain changes. Chemical companies must embrace these changes to supply clients that operate in widely diverse sectors and locations.

Outsourcing in the Chemicals industry has been growing in recent years — despite ACV remaining relatively flat — and clients are focusing on implementing digital technologies on a large scale. ISG advised many deals in the Chemicals space in the past year and has done business in the areas like transaction support, strategy, robotic process automation (RPA) and governance.

Chemicals clients are focusing lately on ERP modernization, which has been their key strategy and received much attention in recent years. ISG observes that many Chemicals clients are implementing SAP S/4HANA and looking for service providers to integrate it and then provide managed services. Chemicals companies are embracing digital by moving from on-premises implementations to deploying SAP S4/HANA in the cloud. In addition to improving security, which has been the major cloud-related concern for clients in this vertical, they have been embracing the cloud in recent years mainly to accelerate data processing, reduce costs, improve efficiency, and facilitate plant integration.

ISG observes that clients in the Chemicals industry embrace RPA adoption, a trend which will continue to grow. Competition is high to win RPA deals in the Chemicals space as clients look for service providers that can demonstrate strong industry expertise and develop a proof of concept. Similar to the automobile industry, Chemicals clients are looking for ways to automate their operations through production robots to increase productivity and reduce costs.

Environmental health and safety are very big concerns in the Chemicals sector. Chemical manufacturing processes are prone to occupational hazards and there are government safety regulations in some markets. Manufacturers are looking for service providers to bring solutions to address health and safety challenges. ISG observes that some clients are implementing control-of-work solutions to automate worker safety through IoT sensors that enable frontline workers and supervisors to identify risks proactively and mitigate them.

Chemicals clients are increasingly adopting advanced analytics on the business side by leveraging the master data from their ERP platforms and connected IoT sensors. Clients often expect service providers to manage the master data to enable seamless integration across the manufacturing site to get meaningful data for analytics.

ISG delivers scalability through our engineering services practice which is responsive to demand swings. Our consultants help chemical companies create the digital chemical plant of the future, improving their flexibility to deal with uncertainty and respond to continued shifts in regulations, demands and costs.

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