A new survey of 100 global oil and gas executives found the majority is preparing to accelerate investments in digital technologies, primarily to double down on cost-saving ambitions.

Eighty-nine percent of the executives surveyed by Ernst & Young (EY) said they expect to step up their digital investments over the next two years.

Operational efficiency “remains a top priority owing to a legacy of falling prices in recent years,” EY researchers noted. “Forty-two percent of survey respondents say their primary investment motivation in digital would be to improve efficiency, while 55% plan to focus on operational improvement. A smaller segment (23%) “are more ambitious,” indicating that expanding digital capabilities is the goal.

"A focus on operational efficiency has been the industry's mantra since the price of oil started to decline in 2014,” said EY’s Jeff Williams, global oil and gas advisory leader. “In response, companies are subjecting their investments to far more intensive scrutiny, and they are looking for solutions to slim down the cost/bbl, aid recovery rates and reduce nonproductive time.

“There is now broad recognition across the industry, however, that short-term cost-cutting is not the answer, and that digitization has the potential to significantly improve efficiency. If businesses can think holistically about technology, they can go further to unlock ambitious growth opportunities and emerge as industry leaders."

Robotic process automation (RPA) and advanced analytics are expected to have the most significant impact on the industry over the next five years, according to 25% of executives surveyed. Three-quarters already are implementing RPA, and 87% indicated that they are using advanced analytics to use data to boost productivity.

“Conversely, the Industrial Internet of Things, aka IIoT, is being implemented by only 19% of respondents. Around 70% said they planned to  adopt IIoT in the next 18 months, but 20% said it “carries the most risk” because of associated cybersecurity threats.”

Significant obstacles are faced by some in the industry to embed digital technologies and overcome silo mentalities, the survey found. Only 31% said they thought their digital investment vision was "highly aligned" with the views of other senior management colleagues. Another 41% said reaching agreement on a digital road map from executive teams and the boards is a key strategic problem.

Integrating new digital tools also was cited as a fundamental challenge.

On average, respondents allocated nearly half (48%) of their digital technology investments to outsourcing, while 36% said their biggest operational barrier was around integrating new tools with existing solutions and systems.

Respondents devoted an average of only 17% of their digital technology investments to building in-house capabilities, which they attributed to personnel issues, prohibitive timelines and costs. However, 39% thought  that developing internal resources could be a valuable opportunity to foster an internal culture of innovation.

"There still appears to be a lack of confidence among senior oil and gas executives about how to define and execute their digital vision, and the scope of many businesses' strategies is still too narrow,” Williams said. “While outsourcing can be beneficial at the outset, ultimately, we believe the winners will build integrated, in-house capabilities that embrace the transformative potential of new technologies.”

Businesses, he said, “must also be aware that the human factor remains crucial to digitization, and they need to address the organizational challenges that inevitably arise when adopting a more ambitious digital strategy."