How ready are your assets to perform in the digital world?

1. The better the question. The better the answer.
The better the world works.
How ready are your
assets to perform in the
digital world?
IIOT and the Future of Digital in
Oil & Gas

2. How ready are your assets to perform in the digital world?Page 2
Returns in Oil and Gas are low
10%
90%
100%
0%
80%
70%
60%
50%
40%
30%
20%
Oil & Gas Cable
and Satellite
HotelsAutomotive
manufacturing
Tech —
Semiconductor
Telecom ServiceAerospace
and defense
Diversified Mining
and metals
Companies in Quartiles by Asset Intensity
Source: public data and EY analysis
ROA calculated as: Net Income/Total Assets,
Asset Intensity calculated as: Operating Assets/Total Sales
1st 2nd 3rd 4th
Average Annual Return on Operational Assets by Industry 2010–2014
Airlines

3. How ready are your assets to perform in the digital world?Page 3
15%
Digital
10%
Digital
Lack of digital penetration is one driver of low returns
Rest of NOCs
and independents
40% of output
Top NOCs 16
companies
40% of output
IOCs
9 companies
20% of output
9 to 18
(MM BOE/day)
Digital
Historically, digital in Oil & Gas focused on improved time to first oil and improved effectiveness of hydrocarbon extraction:
► Engineering visualization and collaboration centers
► Real-time drilling
Total: 93 (MM BOE/day)
20%
Digital
► Intelligent wells
► Real-time operation centers
Source: EY Research and analysis

4. How ready are your assets to perform in the digital world?Page 4
Big data goes
mainstream
Cloud and
managed
services goes
mainstream
Myspace and
Linkedin
launch
BYOD goes
mainstream
US cell phone
adoption exceeds
50%
IPv6 Major
Adoption
Era 2:
Focus on Output, technology costs decline
Era 3:
Now is the time to accelerate investment in the Industrial IoT
TechCostIndex
($)WTIPrice
WTI Price Source: U.S. Energy Information Administration Independent Statistics & Analysis
Technology Cost Source: Publicly available data from leading technology researchers, the Federal Reserve Board, and U.S. Bureau of Labor Statistics
Era 1:
Efficiency Mattered, technology
Cost to High
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
20
40
60
80
100
120
140
160
Cushing, OK WTI Spot Price FOB (Dollars per Barrel) Technology Costs

5. How ready are your assets to perform in the digital world?Page 5
IIOT can integrate the O&G value chain
Quickly reducing the cost of operations
Digital in
Oil and Gas
7.5%
Average Return on O&G
Operating Assets
2–3%
Improvement in production
volumes
Driven through OEE improvements and
overall productive capacity
$5 — $10
Cost of Computing Power and
Bandwidth
Today’s cost to make a mechanical and/or
electrical device “smart.”
10–20%
World’s Oil Fields that are
Digitally Enabled
5–10%
Variable cost reductions
Parking-up over-capitalised fleet and
improving labour productivity
45
Average number of outside
service providers it takes to run
an O&G business
60%
% of oil consumed outside the
country of origin
15–25%
Reduction in primary
preventative maintenance costs
by driving from calendar to
condition-based maintenance
Immediate Benefits

6. How ready are your assets to perform in the digital world?Page 6
Harnessing the value from the IIoT requires more than
adding sensors to machines and assets
By 2020
50
<3%
Billion assets will
connect and Send
data through the
Internet1
?
101101010101
001010101010100
01101010
00101010
Today
Of data Is
tagged or used
in meaningful
way2
Optimized Processes Smart Assets Coordinated Resources
1. IDC report: December 2012 — THE DIGITAL UNIVERSE IN 2020: Big Data, Bigger Digital Shadows, and Biggest Growth in the Far East — https://www.emc. com/collateral/analyst-reports/idc-the-digital-universe-in-2020.pdf
2. Cisco report: The Internet of Things. How the Next Evolution of the Internet Is Changing Everything — http://www.cisco.com/web/about/ac79/docs/innov/ IoT_IBSG_0411FINAL.pdf
Process orchestration &
process choreography for
faster, integrated decisions.
Mobility to synchronize
internal and external
resources through a single
business process.
Internet of Things to make
devices & assets smart and
connected.

7. How ready are your assets to perform in the digital world?Page 7
Digital Oil & Gas Company of Future
IIOT enables integration and intelligent enterprise
Gas Production Processing
Oil Storage and
handling
Production
Contractors
The cloud integration layer can coordinate all these entities through a single business process to optimize the end-to-end value chain to drive a
specific financial result
Access
Control
Finance &
Accounting
Human
Resources
Engineering
Purchasing
Project
Management
CRM
Data
Services
Functions
of ERP
Cloud Integration & Process
Choreography
Connected Assets & Resources IT Environment
Capital
planning
Order to
cash
Business
strategy
Sourcing
Invoicing
Portfolio
planning
Logistics
Maintenance
Scenario
planning
Transportation
Gateway

8. 8
35,000 engines monitored via Predix
Fidelity  30%
Detection  25%
Accuracy  12 pts
100MM flight records per year

9. How ready are your assets to perform in the digital world?Page 9
Logistics is a
material
expense and
continues to
escalate
Turn cost
center into a
profit center
Vertical
integration can
transform the
customer
experience
Supplier
Production DistributionSupplier
Supplier
Customer
Customer
Customer
“Enable Delivery to a customers doorstep in 60 minutes or less”Amazon Integrated Value Chain
Global delivery network that controls the flow of
goods from factories in China and India to customer
doorsteps in Atlanta, New York and London.
High Growth
Revenue
22% CAGR
Amazon Web
Services (AWS)
31% Market Share
63% Year-on-Year
Growth
Amazon’s latest digital transformation
Integrated Value Chain
http://www.businessfinancenews.com/27258-amazon-plans-for-a-vertical-integration-to-take-on-rivals/
http://www.nurun.com/en/our-thinking/future-of-retail/moving-into-the-3rd-dimension-of-vertical-integration/

10. How ready are your assets to perform in the digital world?Page 10
Tesla Motors – Art of the Possible
Synchronized supply chain through digital
Tesla Motor’s Inc.
Best Selling US
Luxury Sedan,
2015
+50% Increase in
Year-on-Year
Sales to Date
Achieved Highest
NHTSA Safety
Rating Recorded
Tesla’s successful entry into a highly competitive car
market has been enabled by a technology driven
flexible platform.
Connected Car 50% reduction in 1st year repair costs
by Integrating sensors to reduce
maintenance and downtime.
Scalable Orders and
Purchasing
Capacity to handle 500k/year through
online ordering process connecting to
a real-time supply chain.
Vertical Integration of
Strategic Assets
+30% cost reduction in first full year of
production by building scalable
“Gigabit” battery factory.

11. How ready are your assets to perform in the digital world?Page 11
Digital Oil & Gas Company Of the Future
Roadmap to a Digitally Enabled Integrated Value Chain & Higher ROCE
% of Integrated Value Chain that is Digital
Today | 20% O&G is Digitized
Set up the
operating
platform for IIoT
Connect critical
assets and add
cyber security
coverage
Expand IIoT
enablement across
assets in an
operational platform
Enable Process
Automation |
Orchestration & Field
Mobility
Extend IIoT to
transportation,
terminal | depots,
warehouse assets
Add External
Market Data &
external resource
networks
Connect assets
across an
portfolio | enterprise
Industrial Internet of Things
Connected
Assets
Connected
Operations
Connected
Value Chain
Connected
Resources
Connected
Enterprise
PortfolioPerformance
ROA | ROCE
Today
7.5% Average
Return on
Operating Assets

12. How ready are your assets to perform in the digital world?Page 12
Organizations can take the first step on the IIoT journey by
organizing around three activities
Get connected
Start by connecting critical assets and machines.
Connecting operational data to each other and
the people who need it are crucial to begin your
journey.
Get insights
Use intuitive methods to analyze data to determine
true root cause and opportunities to improve or
resolve. You have enhanced ability to quickly
evaluate anomalies and take the correct action.
Get optimized
Leverage digital to optimize the total lifetime
performance of your assets to increase availability,
minimize costs, and reduce operational risks.

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