• September 21, 2020
Energizing RPA in the Oil & Gas Sector

In its infancy, RPA was identified by several verticals, notably financial services, as a natural fit for automation technology. Information-based businesses filled with manual back-office processes using their human capital inefficiently were a great proving ground for RPA. While the technology showed potential across a wide breadth of industries, some were (and still are) slower than others to adopt RPA. Government, insurance and healthcare (especially in recent weeks as the industry grapples with shortages and disruption caused by the coronavirus pandemic) have also begun to accelerate their adoption of RPA. One industry that might be lagging others, despite plenty of opportunities to automate, is the energy sector (mainly oil and natural gas).

Oil and gas companies have been leaders when applying technology and automation to their units in the field. Companies have automated parts of the drilling operation, diagnostics and inspections, pipeline monitoring and more. But, experts say they’re missing opportunities in the back office, among others. In fact, a recent survey from Protiviti found that 35 percent of energy companies can be characterized as “RPA beginners.”

Start at the Top

Companies in the sector are initiating RPA programs, however, and oil and gas companies typically start where everyone else does.

As is the case in many companies, the finance function is one of the first places oil and gas companies look to automate manual processes. Accounts payable, accounts receivable, customer billing, reconciliation, cash application and other functions in finance are some of the areas most in need of automation, according to Madhu Maganti, partner with ABIP Advisors.

“RPA can streamline repetitive processes in these areas and save countless hours of manual labor,” he says. “This software is able to process data with greater speed, consistency and scale than a traditional workforce. It can even be configured to flag potentially suspicious transactions, adding an additional layer of security.”

Additionally, with stay-at-home orders as a result of the global coronavirus pandemic still in effect in many places, organizations in the sector need the efficiencies found in RPA more than ever and must expand beyond the low-hanging fruit.

Automating a Complicated Supply Chain

While Maganti acknowledges the efficacy of RPA in these familiar processes, he thinks the technology’s real value for energy companies is in automating various areas of supply chain management. From identification and exploration through production, storage, and refinement, to the end user, oil and natural gas supply chains are long and complicated. Introducing RPA into mature supply chains, Maganti explains, will enable organizations to realize various gains.

Tasks within supply chain management he says can be automated include processes around vendor selection (e.g., preparation of RFPs, communications with vendors, credit checks and other due diligence), order processing and inventory management.

“RPA would enable companies to automatically order materials and inventory given how much they have on hand,” Maganti says. “Coupled with inventory trend analysis, items can be kept in stock to better reflect the current expected demand. This means overall lower inventory levels without the traditional compromises that come with a lean inventory.”

RPA Aids Energy Companies Facing Tough Times

When times get tough in the oil industry, typically new investment stops and people lose their jobs. And, with stay-at-home orders bringing global travel to a virtual halt, times are indeed tough. When the pandemic first hit and oil executives began to take stock of the situation, RPA was one of many investments on the chopping block, according to Lukeman Cole, founder and chief transformation officer at Houston-based business process transformation consultancy Transformious.

“The initial reaction of energy executives to the pandemic was to cancel or postpone RPA projects, in addition to staff reductions,” Cole says. “As they reprioritized cash spending, RPA spend was seen as ‘nice-to-have.’”

But Cole says now is actually the time to rethink how RPA can improve inefficient processes within your organizations. It is one technology for which continued investment may provide value.

“When they take a moment to reflect, I believe executives will be willing to take on RPA projects,” he predicts. “It has become apparent that automation is required to support critical day-to-day business processes; workload has not reduced with the shrunk workforce. Employees who survived the pandemic are required to do significantly more with less and a digital workforce is a must to bridge the gap. Without automation, employers run the risk of employee burnout.”

Maganti agrees, noting that nothing forces companies to become more efficient than a tough business environment. As energy companies navigate the rest of 2020 in a haze of uncertainty, the ability to reduce costs and maintain productivity will be vital and, he says, RPA projects will provide a tangible ROI in a relatively short period of time.


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