NEW YORK – (BUSINESS WIRE) – May 18, 2021 –
The oil and gas companies most committed to reinventing themselves over the next three years in the wake of the COVID-19 pandemic expect to grow revenues and margins twice as fast as companies least committed to reinventing themselves , according to a new report from Accenture (NYSE: ACN) that outlines the best practices companies should adopt to thrive in the energy transition.
Accenture Oil and Gas Reinvention Index (Photo: Business Wire)
The report, titled “Necessity is the Mother of (Re) Invention,” presents the results of a global survey of more than 200 oil and gas executives and presents Accenture’s “Index of Reinvention”, who analyzed companies through key factors related to reinvention. Accenture ranked the top 10% of companies with the highest scores on the index – which set the pace for reinvention through bold and decisive action – as reinvention “leaders”, the bottom 25% being labeled “latecomers”.
In response to the COVID-19 pandemic, all executives anticipate at least some level of significant change in their business, with half (50%) intending to radically reinvent themselves, compared to just 9% of laggards. Almost seven in 10 executives (69%) see enterprise-wide transformation as key to this reinvention and 77% of executives see the cloud as a critical part of their plans to reinvent the business over the years. next three years.
And the reinvention could generate substantial rewards. For example, executives expect minimum margin growth of 7%, on average, over the next three years, more than double that of laggards (3%), and forecast revenue growth of at least 7%. minus 11% over the same period, compared to just 6% for latecomers.
“Competition from new sources of energy, environmental responsibility, talent shortages, investor apathy and the COVID-19 pandemic have led most oil and gas companies to realize the need to transform to ensure profitability, embrace sustainability and maintain relevance, ”said Muqsit Ashraf, a senior general manager at Accenture who heads his energy industry group. “What is needed is not just a piecemeal transformation, but a reinvention of wholesale, which is anchored in a new approach that we call our ‘5C’ model.”
The “ 5C ” reinvention model includes:
- Competitiveness – Design a resilient portfolio and operating model, including working methods, that achieve accretive returns across cycles; and
- Connectivity – Enabling a smart and secure business with end-to-end connectivity, optimization and autonomous capabilities, facilitated by the capabilities of the cloud;
- Carbon – Achieve carbon neutrality by transforming or shifting investments, operations and products;
- Customer – Provide a superior customer experience through services, solutions, formats / channels and personalization; and
- Culture – Build a distinct, goal-oriented employee culture and experience, with an emphasis on collaboration, innovation and agility.
The report notes that achieving carbon neutrality, in particular, is a key facet of the reinvention needed to thrive in the current era of accelerated energy transition. In fact, more than a third (37%) of respondents, including all executives, expect a 20% or more margin improvement from their low-carbon companies over the next three years. Refocusing investments, operations and products will be essential, with 97% of all respondents citing environmental performance as a priority and one-third (33%) designating it as their top priority.
Leaders are already making progress in this area; almost all (96%) have set ambitious environmental, social and corporate governance (ESG) goals, and the same number have committed to reporting frequently on their progress in reducing emissions. In contrast, only 56% of latecomers have set goals, of which less than half (47%) regularly publish their results. In addition, all executives expect ESG performance to have, at a minimum, a strong impact on their competitiveness over the next three years.
Hydrogen and renewables have been identified as the two low-carbon companies with the greatest growth potential. In fact, more than half of executives expect hydrogen (cited by 62%) and renewable energy (54%) to account for more than 7% of their revenues over the decade.
“This decade will be a watershed time for the oil and gas industry, which remains battered in a low-cost environment, but the opportunities presented in the report provide a blueprint for reinvention for continued success,” said Ashraf. “All oil and gas companies should aim to emulate the leaders of reinvention to maintain their relevance during and after the energy transition. Otherwise, the transition will shift from an opportunity to build a sustainable and profitable future to an existential risk.
The full report is available here.
In early 2021, Accenture conducted research on the Oil and Gas Reinvention Index to understand the actions oil and gas companies are taking to address the challenges of the energy transition, their progress toward reinvention, and the results they are achieving. hope to achieve. The research included a survey of 214 C-suite executives from 179 oil and gas companies across five continents. Over four-fifths (83%) of the companies were international or independent oil companies, with the remainder being national oil companies and oilfield and equipment service companies. More than a third (36%) of businesses have revenues over US $ 10 billion and 48% have annual revenues between US $ 1 billion and US $ 10 billion. Accenture also created a Reinvention Index score, based on selected survey results and composed of equally weighted scores for each of the five identified facets of reinvention (competitiveness, carbon, connectivity, customers and culture). Responses were grouped (n = 214) into companies (n = 179) to determine an aggregate score for each, then the companies were defined and grouped. The richest 10% of companies were identified as “leaders” in reinvention, with the bottom 25% being “laggards”.
Accenture is a global professional services company with industry-leading digital, cloud and security capabilities. Combining unparalleled experience and specialized skills in more than 40 industries, we offer strategy and consulting, interactivity, technology and operations services, all powered by the world’s largest network of advanced technology centers. and smart operations. Our 537,000 employees deliver on the promise of technology and human ingenuity every day, serving customers in more than 120 countries. We embrace the power of change to create value and shared success for our customers, employees, shareholders, partners and communities. Visit us at www.accenture.com.
Accenture helps oil and gas companies build innovation-driven capabilities to drive end-to-end transformation and make energy more available, affordable and sustainable. To learn more, visit the Accenture Oil and Gas Industry Portal.
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