Colloquy: Energy and innovation intersect in the cloud

February 1, 2013

Nina M. Rach

COLLOQUY: Editor's Column

"Innovation isn’t about new products, it’s about changing behavior,” explains Tom Koulopoulos, author of eight business books on the intersection of business and technology, including Cloud Surfing (2012) and The Innovation Zone (2011).

The cloud is more than a simple network of computers, he says. Its the beginning of an era that focuses on the innovation of “behavioral business models,” and Koulopoulos positions it as the “killer app” for doing business in real-time. Innovation will accelerate in the cloud, facilitated by cloud-based idea platforms. Cloud sourcing creates a “new type of elastic organization” that can handle volatility and uncertainty – cloud computing is on the rise because it enables mobility and networking. Public cloud offerings offer benefits (reduced costs, increased business agility), but being connected carries risks (security, outages, regulatory hurdles).

Innovation Summit

In early January, Royal Dutch Shell hosted a two-day Innovation Summit at its recently expanded Houston Technology Center, which brought together Shell technology leaders and experts from other sectors to explore how collaboration can generate innovative thinking.

Shell’s Matthias Bichsel, projects & technology director, said we need “competitive energy innovation . . . to deliver more affordable energy with less environmental stress.” Bichsel pointed out that Shell is the only international oil company in MIT Technology Review’s list of the world’s most innovative companies, and spends “over a billion dollars a year on researching and developing new technologies – more than any of our peers.”

Peter Diamandis, chairman and CEO of the X PRIZE Foundation, said that real innovation comes from absolute persistence, tied to passion, a sense of purpose, a mission in life to make things happen, and an inner belief that it’s do-able. X PRIZE looks at market failures, then partners with companies to launch incentive competitions. “You can incentivize non-traditional plays and come up with unexpected success.” He pointed out that BP’s oil spill cleanup rate, following the Deepwater Horizon disaster in the Gulf of Mexico in April 2010, was the same as Exxon’s rate after the Valdez ran aground in Prince William Sound, March 1989 (1100 gal/min). What it would take to increase our cleaning capability to 2500 gal/min? In an incentive competition, seven of 10 teams doubled the rate to 2200 gal/min, and the winning team showed a 600-fold increase.

Diamandis said the current rate of innovation growth is unfathomable – most of today’s technologies didn’t exist 10 years ago. He characterized a ‘magical partnership’ as having a cross-pollination of ideas, bringing together government, corporate, and philanthropic strengths.

Shell’s Gerald Schotman, executive vice president of innovation and research & development, and chief technology officer, said: “Differentiation is not the hardware, but how you process and use all this data. It’s how you filter it, to visualize better.” He used Shell’s GameChanger program as an example. The program turns creative ideas into innovations, and invests in novel, early stage ideas to get them to “proof of concept.”

Ubiquitous iPads facilitated audience responses to questions posed intermittently throughout the summit, taking the pulse of participants. When asked “In the next 30 years, where do you think the most meaningful solutions to societies’ greatest challenges will come from?,” 46% of attendees chose private sector; 38% chose entrepreneurs & others; 13% academia; and only 3% government.

Energy Forum

Microsoft Corp. hosted its 10th Global Energy Forum in late January, where oil & gas industry clients presented case studies of sophisticated, enterprise-wide technology solutions. More than 700 people attended GEF2013, from 134 companies – oil and gas majors, independents, drilling services, petrochemical, EPIC, and technology service providers.

The company is getting deeper into the energy industry, said Microsoft’s Ali Ferling, managing director, worldwide oil & gas and mining, citing remote access and mobility as key factors in developing “connected experiences.” Ferling projects US$40 trillion in oil and gas investments between now and 2035, with China driving 40% of the increase. He noted that cyber security is a large concern and refered to the company’s white paper (updated last month) that addresses alignment of interests, situation awareness, and the need to define “risk-based strategies and policies that range from the protection of the entire supply chain to a sustained investment in innovation.”

The shift to cloud-based services is underway, particularly at smaller companies, and the economics are overwhelming, Ferling said. Large companies are adjusting their business models, complimenting in-house services (storage, test environments) with web-based services. But smaller companies are able to make decisions faster and leap straight to the cloud, said Adam Hems, industry technology strategist in Microsoft’s worldwide oil & gas, whereas larger companies are using aspects of the cloud to run their operations more efficiently. Renting compute power capacity is cheaper and more efficient than growing internal data centers, for instance.

Chevron’s William Gilmore discussed development of the company’s new PetroTechnical Portal, being rolled out to its business units. The focus was to improve engineering team productivity by integrating data, automating information collection, and archiving. Engineering staff typically spend one-third to two thirds of their time working on data, Gilmore said. Streamlining data access frees them to work on analytics and modeling with inherently higher value. The industry’s quickly increasing staff of Gen-Y ‘Millennials’ represents a crew change that requires us to capture, store, and transfer knowledge more efficiently.

Shell’s Adrian Estala, asset & information risk architect lead, discussed how the company has developed a flexible system to provide real-time, secure information access for partners, clients, and customers. He stressed the importance of a positive end user experience and secure access through an authentication workflow and architecture design. Using Microsoft and Covisint solutions, Shell assigns specific roles to an individual and defines application access based on these roles. David Miller, Covisint’s chief security officer, discussed cloud engagement and collaboration, stressing that “when different organizations use common systems, stronger security is imperative.”

ExxonMobil’s Bret McKee, information and knowledge management (IM/KM) lead, talked about information management and collaboration for capital projects, saying that it’s important to share information in every direction, at all levels, throughout the upstream asset lifecycle. The company identifi ed a business need to move toward a matrix organization plan, and is developing a new campus in The Woodlands, Texas. He recognized that the company doesn’t “have a whole lot of collaboration with third parties,” but is working toward internal collaboration. He outlined new IM strategies “to connect people to the information,” which will be the foundation for the company’s next KM initiative to develop best practices, expertise location, and social networks.

Marathon Oil’s Thomas Sneed, vice president and chief information officer, delivered a closing keynote, reiterating that information technology is today’s business enabler and accelerator. Next-gen staffers bring an expectation of cutting-edge technology to the workplace and embrace the new digital oilfield. They demand mobility and convenient access to functionality. Cloud computing, social networks, and other emerging technologies are changing the dialog between IT and technology teams.

All these show that industry will power progress through collaboration. OE