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Energy & Commodities

How Energy Companies Can Transform From the Inside Out

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 organisation. The future workforce is attracted to environmentally responsible organisations that place technology at the centre of operations, meanwhile structural changes abound, and cost pressure is a real concern. The pace of change must accelerate if energy organisations want to respond to today’s challenges and capitalize on tomorrow’s financial opportunities. Here are four ways energy companies can successfully transform from the inside out.

Martin Davy
Martin Davy

Attract the Talent of the Future

The rise of digitalisation has created a pronounced skills gap in energy and commodity trading companies. Organisations are facing a talent squeeze with a lack of suitable new hires to fill the shoes of an aging workforce. According to a Greater Scranton Chamber of Commerce survey, 25%-35% of the utility workforce belongs to the 55-and-up age bracket and are on the brink of retirement.

Graphic 25-35 percent

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 centre of the company.

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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 problem and taking a toll on the environment, but the question is, are energy organisations showing that they are part of a solution? Energy companies pursuing renewables, mitigating pollution and tackling environmental concerns through technology are appealing to a future workforce.

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Start at Strategic Level

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 strategic level; it cannot be buried in small IT changes. The role of the CXO (chief experience officer) is starting to emerge at senior levels in the energy industry and is evolving into a more official role as organisations 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 organisation 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. Driving a single pane of glass experience is where the role of CXO executive fits in.

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Apply the principles of Lean, DevOps and Agile

Energy and commodity trading groups must think like digital natives to change and challenge established behaviours. An engineering mindset can be developed through a holistic program applying the principles of Lean, DevOps and Agile to fundamentally transform organisations.

Graphic 2 LEAN

Lean

The Lean principle, originally from manufacturing, embodies the primary goal to eliminate waste. Old school processes inevitably led to projects going through many hand-offs from one team to another. Information was lost and waste generated along the way – waste of raw materials, labour and overhead costs incurred for products at various stages of the production process. Lean looks at this process and asks, “how can we minimise work-in-progress (WIP)?” The acronym describes production and supply-chain management of partially finished goods awaiting completion. Lean as a concept seeks to minimise 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.

Graphic 3 DevOps

DevOps

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 the operational considerations and experiences and owns it end-to-end.

Graphic 4 Agile

Agile

The Agile principle is a mindset which asks, “how do we constantly deliver value to the customer, how do we always know what it is that we are trying to do, how do we do that quickly and how do we incorporate feedback to get better outcomes?” The process is outcome driven and speed driven. It’s 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 7 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’s needed of it.

Implement scale enabling technology

Energy groups are facing the questions 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 UK 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, data-driven insights or implementing AI for automated decision making.

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Part of scale enabling technology is the concept of Continuous Integration, Continuous Delivery (CI/CD). It’s 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 denotes types of applications that are easier to build and maintain when they are broken down into smaller, composable pieces which 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.

Graphic 5 CI CD

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 bottle necks and inadvertent dependencies. To navigate these challenges, organisations 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.

Martin Davy
Martin Davy
SVP Engineering