Topic: Implementing a Digital Operations Strategy
The main purpose of the present report is to implement digital operations strategy in the ADNOC company. The full name of the ADNOC company is Abu Dhabi National Oil Company. It is an oil company based in United Arab Emirates and state owned too. The UAE is found to be the 7th largest reservoir of oil in the entire world. Abu Dhabi is the center of the oil reservoir and holds up to 97.8 billion barrels oi crude oil (ADNOC Distribution 2019). As far as production is concerned, it is the 12th largest oil company and responsible for producing 3.1 million of oil per day. The organization began in the year 1971 and Ahmed Al Jaber is the CEO of the company. The important subsidiaries of the company produce crude oil, sour gas, natural gas, LPG, refined crude oil, granulated sulfur and many others. The company owns two big oil refineries which are named as Ruwais and Umm Al Nar.
The company further exports the natural gas in the form of LPG with the electricity supplies to the domestic industries such as the petrochemical plants and many others. The biggest capability of the company is the ability to produce millions of oil barrels with raw gas too. The company utilizes the well-established fields and the new constructed artificial lands too for the condensation. The company also has a good number if oil and gas assets which starts with Lower Zakum, Satah , Upper Zakum , Umm Ai Dalkh fields and Umm Shaif. There are four of the super complexes too off the shore (Adnoc.ae 2019). The extracted crude oil is transferred to the Zirku Island and the Das Island for the storage process and future exportation. Another competency of the company is its contribution to the gender diversity and women empowerment. The current aim of the company is to produce extra 1.6 million barrels of oil each day.
As recommended in assignment 1, having assessed the resource and competencies of the company, it should aim at maximizing the financial performance and gaining the competitive advantage in the market. It should further focus on encompassing and integrating the similar enterprise along with the various stages in the process. The company must reach the global consumers and enhance the over –all production and revenues. The product diversification should also be in the list to satiate the diverse needs of different consumers. The company should also accentuate the supply and distribution chain to enhance the distribution of the products. Hence, the broad focus areas of the company should be revenue enhancement, product diversification, global reach and establishment of strong customer base. The present report will map out the implementation of the digital operation strategies to obtain the goals. The report will also delineate the capabilities needed for those digital strategy implementation.The report will conclude by confirming the viability of the proposed strategies and reconnect them to the overall digital transformation maturity roadmap.
In the highly competitive industry, companies need to match the steps with the contemporary world in order to stay sustainable. The contemporary world is a world of digitalization. The digitalization of a particular business refers to the implementation of certain digital strategies which helps to achieve the goals in the best possible way. The digitalization comprises of some right digital initiatives put in the strategy, planning and execution of few business activities (Ahmad, De Brito and Tavasszy 2015). It helps to develop the business as a value- producing enterprise. However, digitalization is a vast topic which is composed of various new processes, customer experiences, technologies and models in the current business strategy. It can be rather said to be a new way of doing business both with the customers as well as with the trading partners.
The digital operation strategies are the right digital initiatives taken up by a particular company. Notably, the process can be expensive and the organization might face a range of choices as well as challenges. Organizations might be swayed away by expensive digital solutions which might not result out as fruitful. It has to be kept in mind that the right digital operation strategy can be revealed by concentrating not only on the products but on a comprehensive strategy which is followed by the implementation of suitable technologies that serve the strategy.
There are instances of companies facing unprecedented challenges regarding the digital disruptions, customer-centric advances, competitive innovations and many others. Hence, digitalization of operational strategies should not be merely a defensive measure against the disruptors. It should be utilized as a strategy for the profitable growth of the company in the long run (Anderson and Sun 2017). The use of smart digital operation strategies in the supply chains can be helpful in developing fast, efficient, agile, customer-centric and sustainable supply chains.
The methodology of implementing the digital operation strategies start with the assessment of the current state of the company in the three levels such as the operational levels, business levels and functional level. Next the future state design of the company needs to be examines in order to determine whether there are gaps, and how the company should design the vision and define the strategies. This particular step is highly important because in this phase the essential components of digital operations need to be determined (Yang, Kitchen and Bacouel-Jentjens 2017). The final stage is road-mapping the and management of the change in the organization. It consists of what the organization does now, what will it do next and how will it execute the change management process.
As found from the analysis of assessment 1, the greatest competency of the company is to possess the capability to produce crude oil along with raw gas condensate from various locations. The key locations of the company include the new constructed fields as well as the already established fields. The ADNOC company holds many oil and gas assets such as Lower Zakum, Satah , Upper Zakum , Umm Ai Dalkh fields and Umm Shaif and others. It also operates beyond the Das Island, Zirku Island and Arzanah Island. The supply chain of the company starts with oil extraction from the fields and transfer of the oil to the Zirku Island for the storage purpose. The company also has strong CSR values as it highly contributes to the women empowerment and gender diversity (Ghasemi, Taimouri and Sayadi 2017). Among the strengths of the company the most significant factor is that, the company has strong brand portfolio established through the past years. It has both the resource and competency to enter new market. It also generates good returns on investment.
However, having analyzed the weaknesses and threats too, it has been discerned that the company needs to improve on certain areas and implement digital operation strategies for the expected outcomes. First of all, the company has an average workforce which needs proper training and development. There are product gaps too in the product range of the company. It is also less active in forecasting the demands of the products which can accentuate the revenues and help in gaining the competitive advantage (Sumitha and Padmaja 2017). The expansion of the company to different geographies is also limited and there is also lack of technologies in the operations. It has also been found that there is no such innovation in the production of the company. Therefore, after assessing the gaps in the operations of the company, it can be said that the company should prioritize revenue enhancement, product diversification, global reach , establishment of strong customer base along with being environmentally friendly.
After assessing the areas of focus from the gaps found from the SWOT analysis of the company in assessment 1, digital strategies will be implemented in three levels such as the corporate level, the business level and the functional level.
The corporate level is the highest level of a business strategy where a company should craft the strategy with the main purpose in the mind. It is the place where the company should set long-term and lofty goals. It is the place where the ADNOC company should design the mission and vision statements. The corporate objectives or priorities of the company should also be set over here and the targeted, high –level goals should also be set. The goals related to the financial, customer and internal goals must be set in this level (Teeratansirikool et al. 2013). Since the customer satisfaction is crucial in the industry, a measurable customer satisfaction, goal needs to be set.
The Focus
In this level the focus will be on the product diversification. Since the company lacks the product ranges which can satiate the market demands and customer expectations, the ADNOC company should implement the digital operation strategy that align with the innovation and diversification of the existing products.
The strategy
The use of digital technologies will free the ADNOC company from the traditional constraints. The company can find value in the new operational area through the innovative application of the digital transformers. The company can leverage technology in order to move beyond the fulfillment of the traditional demand at the lowest cost. The application of hyper-connectivity, cloud computing, supercomputing and cyber-security will drive innovation towards product diversification too (Huang et al. 2016). However, this change might disrupt the traditional vertically integrated business models. The ADNOC company is dependent on the assets and vast reserves which will be modified by the change. In the digital economy, it is not the access to resources but the access to the digital information. This digital transformation can lead the ADNOC company towards energy diversification, controlling the costs. The company can use the real –time data to transform the management to proactive model from the reactive model. The company can also use the laser technology to find gas and oil in the shale formations. The use of electromagnetism can help the company to search underground pockets.
Capabilities needed
It has been found from the assessment 1, that the ADNOC company has less trained workforce. Hence, the company should build an environment of learning and train the employees regarding the knowledge of the new technologies, their use and benefits. The employees of the organization need to have written communication skills because they need to prepare reports clearly and purposefully. They also need to have the verbal communication skills because they need to communicate verbally if there is any fault in the process. They also need to have the ability to collaborate with others as a team.
The management systems needed
The management system required for the implementation of the strategies are digital security management. It is required in order to secure the auditors and the vendors. The business analysis is also required to measure the evolving business demands and market trends. There has to be proper metrics for the measurement of the effectiveness of the strategies.
In this level, the ADNOC company should define the various strategies for the different industries it operates in. In this level, the business owner must decide which area to focus on the most that can be changed over time (Hill 2017). At the business level, a company can decide to improve on some particular business unit levels. In this level, the ADNOC company must decide on how it can differentiate itself from the market competition. The company has to identify its competencies and develop strategies based on them.
The Focus
In this level, the focus will be on the revenue enhancement via global reach. The company needs to expand beyond United Arab Emirates and enhance the competitive advantage with potential investors aligned with it.
The Strategy
The ADNOC company can invest on fully integrating the mobile devices in the operations of every-day. The major benefit of this technology is to have improvements on the work-flow , better group communication and heightened productivity in the workers along with better recording of the field data. The mobile technology also allows the real-time data monitoring through specialized software on the smartphones and also can have good impact on the environment, health and safety. The mobile GPS service can be used to locate the workers trapped in hazardous situations. The deployment of the mobile applications along with the radio –frequency recognition tags can help to make the assets smart and their movements appear (Mesu, Sanders and Riemsdijk 2015).
The capabilities needed
The company needs to spread technical skills throughout the workforce. The data scientist re required in the organization. However, they have limited expertise in the mobile engagements. The knowledge of the industry is essential. The people with e-commerce experience are required too. Even after having everything, there are instances that the organizations are needing the help of strong alliance and partnerships. The digital joint ventures are found to be most useful
The management system needed
In order to gain the expected outcome, the digital asset life cycle management is highly required. It is the combination of the new digital technologies with the data driven insights which can transform, boost the agility, enable the strategic decision making and result in new modes of operations (Patel et al. 2014). The digital operation strategies are expected to have a significant impact on the value chain of the industry, the adjacent industries and the workforce too. The initiatives should be taken in a way which can change the business models of the company.
In the functional level, the organization is connected with the smooth conduction of the internal operations. It consists of the way the departments interact and operate and how do they support the corporate level strategy of the organization. In this level, the most essential step can be taken to fulfil the objectives. It is the phase where the organizational is required to execute actually after setting goal and projects. There should be an alignment of the goals with the strategies and all the members should focus on that (Imran and Tanveer 2015).
The Focus
In this level, the focus of the ADNOC company should be on creating strong customer base by being more eco –friendly, harming less to the society and environment and leaving less carbon –footprints on the way. Since people are being more environmentally conscious, the avoidance of CO2 emissions can help the company to create better public image to the customers and ultimately gain their preference.
The strategy
The digital technologies have huge potential for the oil and gas companies to accentuate the growth rates and deliver exceptional shareholders and provide environmental value too. It can easily form a cohesive response to the industry of oil and gas (Baines and W. Lightfoot 2013). The ADNOC company can energize new energies in order to promote the environment friendliness. It can digitalize the energy systems and support the innovative models too in order to optimize and market the energy. For the purpose of staying relevant to the customers, the ADNOC company must understand the full impact of the broader energy systems and the changes too (Ghaffari et al. 2017). The strategy of consumer energy choices is possibly the best way to benefit the society. It suggests to shift to the renewables after increasing the capacity factors along with the emergency need of the electric cars can profit the company to the broader ecosystems. This broad shift can benefit the environment up to greater extent. This eco-system can be conducted with the digital strategy of real-time supply /demand balancing.
The capabilities needed
It requires the ability to collect necessary data and its interpretation in order to take necessary action having reduced the risks of the employees and the environment. The knowledge of the technology use, physical infrastructure, automation in the upstream, downstream and midstream is required too (Khatri and Srivastava 2016). These capabilities can make this approach possible.
The management system needed
In order to implement this strategy properly in the ADNOC company, a specific management approach needs to be considered. It should involve the entre life cycle starting with the design to the operation, the gathering and analysis of data at every step, the understanding of how it can affect the next actions and many others.
The implementation of the digital transformation faces rare challenges related to the availability of technology. Most of the challenges come from the internal factors. These are as follows:
Conclusion
Therefore, from the above discussion it can be concluded that the digitalization comprises of some right digital initiatives put in the strategy, planning and execution of few business activities. It helps to develop the business as a value- producing enterprise. Organizations might be swayed away by expensive digital solutions which might not result out as fruitful. It has to be kept in mind that the right digital operation strategy can be revealed by concentrating not only on the products but on a comprehensive strategy which is followed by the implementation of suitable technologies that serve the strategy. The report displayed the digital strategies implementation in three levels such as the corporate level, the business level and the functional level of the ADNOC company.
At the corporate level, it suggested the use of cloud computing and cybersecurity. It has to be noted that the cloud computing offers the best business benefits and provides the flexibility to connect anywhere. It helps to access the data easily having reduced the IT costs up to greater extent. The efficiency level of collaboration is also increased along with providing flexible work practices. It is also helpful in gaining access to the automatic updates. Hence, it can be considered to be an effective strategy for achieving product diversification. The cybersecurity on the other hand keeps the security of data strong. The next digital strategy is the integration of the mobile devices in the operations connecting globally with the customers and expand the business. Through this strategy it can gain better insight into the happenings of the world beyond local area and plan for their future operations. The third strategy is the use of real –time supply/demand balancing. It will help the company form a shared outlook on the dynamics of the market, to plan the procurement, inventory and capacity in order to match the predicted demand. However, a strong supply chain management is required too. In a nutshell, it can be said that the strategies are viable to the most for being adopted by the ADNOC company.
References
ADNOC Distribution (2019). ADNOC Distribution. [online] ADNOC Distribution. Available at: https://www.adnocdistribution.ae/ [Accessed 1 Jan. 2019].
Adnoc.ae (2019). Marketing & Distribution. [online] Adnoc.ae. Available at: https://www.adnoc.ae/en/our-business/marketing-and-distribution [Accessed 1 Jan. 2019].
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