Energy & Commodities
Part 2: Agility
Embrace Agile Digital Transformation to Grow from the Inside Out
Martin Davy
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Energy & Commodities
Part 2: Agility
Martin Davy
Executive summary:
Energy and commodity trading groups are facing a challenging environment. This makes it critical for them to attract new talent while operating as a lean and agile organization. The future workforce is attracted to environmentally responsible organizations that place technology at the center of operations. Meanwhile, structural changes abound, and cost pressure is a real concern.
The pace of change must accelerate if energy organizations want to respond to today’s challenges, capitalize on tomorrow’s financial opportunities and execute digital transformation objectives. Here are four ways energy companies can successfully transform from the inside out.
The rise of digitalization has created a pronounced skills gap in energy and commodity trading companies. Organizations are facing a talent squeeze with a lack of suitable new hires to fill the shoes of an aging workforce.
Much of the talent crisis has to do with brand perception. In the financial services industry, Capital One and Goldman Sachs have positioned themselves as technology companies that happen to be banks. In the energy and commodities space, running an active brand campaign that says, “We are a technology company and we use technology to run our business,” is a primary driver to attract talent of the future. Having this mindset is key. Tech talent must feel they are at the center of the company.
Tech talent must feel they are at the center of the company.
Renewables is another key consideration. Energy companies actively rebranding and demonstrating how they play a role in transforming energy, how it is used and how it is distributed in a cleaner way offer an attractive pitch. Fossil fuels are a significant problem and are taking a toll on the environment. The question that arises is whether energy organizations are demonstrating their commitment to being part of the solution. Energy companies pursuing renewables, mitigating pollution and tackling environmental concerns through technology are appealing to a future workforce.
Energy companies pursuing renewables, mitigating pollution and tackling environmental concerns through technology are appealing to a future workforce.
To save money and generate opportunities from data insights, energy companies need to think about what is possible and what is needed, then match these up. This process must happen at a strategic level; it cannot be buried in small IT changes. The role of the chief experience officer (CXO) is starting to emerge at senior levels in the energy industry and is evolving into a more official role as organizations start engaging with the idea of a single pane of glass. The experience of being able to use one system that is familiar to everyone in the organization represents the idea of creating one shared experience.
For most energy and commodity trading groups, the experience today is not like that. They run on systems made of pieces of technology cobbled together—systems built by different vendors and technologies at varying maturity levels. It is an experience full of friction. The role of the CXO executive is to drive a single pane of glass experience.
The role of the chief experience officer (CXO) is starting to emerge at senior levels in the energy industry and is evolving into a more official role as organizations start engaging with the idea of a single pane of glass.
Implementing digital transformation is about more than planning; it requires actionable shifts. Energy and commodity trading groups must think like digital natives to change and challenge established behaviors. An engineering mindset can be developed through a holistic program applying the principles of Lean, DevOps and Agile to fundamentally transform organizations.
The Lean principle, originally from manufacturing, embodies the primary goal of eliminating waste. Old-school processes inevitably led to projects going through many hand-offs from one team to another. Information was lost and waste was generated along the way—waste of raw materials, labor and overhead costs incurred for products at various stages of the production process. Lean looks at this process and asks, “How can we minimize work in progress (WIP)?” The acronym describes production and supply chain management of partially finished goods awaiting completion. Lean as a concept seeks to minimize WIP and eliminate wasteful context switching. Instead, it focuses on completing one task at a time. By keeping the amount of work in progress to a minimum, the work process becomes much more efficient. These concepts apply well to software teams and are at the core of Lean.
DevOps, the combination of development and operations, is a principle that combines software development and IT operations. A team incorporating DevOps operates with an automation mindset and is accountable for a seamless life cycle of its software from end to end. Software products are continually evolving, and the best ones nimbly incorporate and integrate new technologies. A digitally native team constantly evolves its software and brings new technologies into it, enhances it, deals with operational considerations and experiences and owns it end to end.
The "agile” principle is a mindset which asks:
The process is outcome-driven and speed-driven. It is about people focusing on how to better deliver a software project. Part of the agile principle is working in smaller teams. Research has shown that the best outcomes result from small teams of seven people or less. All the functions needed to produce a component of working software need to be represented in the team. The team needs to be autonomous in the sense that it can build everything that is needed of it.
The Lean principle, originally from manufacturing, embodies the primary goal of eliminating waste. Old-school processes inevitably led to projects going through many hand-offs from one team to another. Information was lost and waste was generated along the way—waste of raw materials, labor and overhead costs incurred for products at various stages of the production process. Lean looks at this process and asks, “How can we minimize work in progress (WIP)?” The acronym describes production and supply chain management of partially finished goods awaiting completion. Lean as a concept seeks to minimize WIP and eliminate wasteful context switching. Instead, it focuses on completing one task at a time. By keeping the amount of work in progress to a minimum, the work process becomes much more efficient. These concepts apply well to software teams and are at the core of Lean.
DevOps, the combination of development and operations, is a principle that combines software development and IT operations. A team incorporating DevOps operates with an automation mindset and is accountable for a seamless life cycle of its software from end to end. Software products are continually evolving, and the best ones nimbly incorporate and integrate new technologies. A digitally native team constantly evolves its software and brings new technologies into it, enhances it, deals with operational considerations and experiences and owns it end to end.
The "agile” principle is a mindset which asks:
The process is outcome-driven and speed-driven. It is about people focusing on how to better deliver a software project. Part of the agile principle is working in smaller teams. Research has shown that the best outcomes result from small teams of seven people or less. All the functions needed to produce a component of working software need to be represented in the team. The team needs to be autonomous in the sense that it can build everything that is needed of it.
Energy groups are facing the issues that many financial services businesses addressed several years ago: how to deal with monoliths, how to get to market faster and how to reduce dependencies on old technology. Lloyds Banking Group in the United Kingdom is an example of a financial services business that has taken a customer-centric approach and forged new collaborations in the era of open banking. Once energy companies think like digital natives and apply an engineering mindset, they can scale enterprise enablers such as cloud migration and data-driven insights or implement AI for automated decision-making.
Once energy companies think like digital natives and apply an engineering mindset, they can scale enterprise enablers such as cloud migration and data-driven insights or implement AI for automated decision-making.
Part of scale-enabling technology is the concept of continuous integration, continuous delivery (CI/CD), and the idea of building new pieces of software that are continually being integrated and delivered. A microservices style of working lends itself to this process. Microservices denote types of applications that are easier to build and maintain when they are broken down into smaller, composable pieces that work together. The application becomes the sum of its components, wherein each component is continuously developed and separately maintained. A microservices application contrasts with the old-style "monolithic" application which is developed in one piece without individual components.
Companies like Amazon, Google and Microsoft work on the premise of microservices. Their teams operate on frequent release cycles, where small teams release individual pieces of functionality independent of everything else. What slows down a release cycle is when everybody must come together with all their pieces in a big integration cycle that takes months of testing, manual interventions and “go-lives.” Old-style energy company systems, typically known as monoliths, have this problem when getting something to market is time-consuming and difficult.
Implementing scale-enabling technology is not without its challenges. Imposing new technology and work processes on multiple teams can lead to bottlenecks and inadvertent dependencies. To navigate these challenges, organizations must think of their software system as an ongoing, living, breathing system that works alongside its business, adapts to its needs, is in sync and takes advantage of new technology. A microservices style enables companies to cope with changing business needs and changing technology enablers.
Agility helps organizations develop the capabilities they need to adapt to ever-shifting environments. Publicis Sapient empowers organizations to become agile through intentional, outcome-driven transformation. Reach out today to discover how to use digital business transformation to enhance agility.
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