The energy industry needs to embrace the Internet and e-commerce strategies as a natural, competitive extension of doing business instead of seeing it as an expensive, over-hyped transformation, analysts say.
The message delivered to energy industry leaders at last week’s Ziff Energy and E-Business conference and trade show couldn’t be more clear — as the pace of change heats up, companies who ignore the e-commerce revolution do so at their peril.
“The energy sector has always embraced technology,” noted Greg Pardy, vice-president and securities analyst at Goldman Sachs, a global investment banking and securities firm. “The one thing we know about this industry is that it continues to adapt over time . . . e-commerce, as we see it, is just a simple and logical extension of (this).”
At a panel discussion on the impact of the Internet on the energy industry, Pardy joined other experts in assessing how e-business can help a company’s bottom line.
“E-commerce applied to the energy business really translates into new economy technology being applied to the ‘classic’ economy,” Pardy told an audience of about 200 last Wednesday.
Cost reductions are much more of a sustainable driver of earnings going forward than the old model of production growth, he added, and the benefit of e-commerce is strengthening a company’s ability to sustain much lower commodity prices while remaining profitable.
But Dave Collyer, general manager of e-business for Shell Canada, noted there is still uncertainty within the energy industry how the Internet and e-business will evolve.
While it’s increasingly evident that the Web and Web-enabled business models are an opportunity to significantly transform traditional ways of doing business, there’s often still too much hype, he said.
“All of that makes it difficult, particularly for those of us with established companies, to really sort out where the valuation opportunity is, and what the case is for investing in Web-based business models.”
The bottom line, Collyer said, is that e-business is still fundamentally business.
“You need sound strategy, good commercial judgement, efficient business processes, innovative thinking and effective decision-making,” he said. “Those are and will continue to be critically important, even in an e-business world.”
Companies also have to keep an eye on their internal cultures as their businesses are transformed by the Internet and instant electronic communication, said Karl Jessen, director of Energy and Internet Strategies for The Yankee Group.
One of the new buzzwords, he noted, was B2E — business to employees. Human Resources departments are changing to an e-business model in several areas, including handling expense reports, benefits, organizing training at multiple levels in the company, and online recruiting.
“The Internet is really full contact,” he noted. “It doesn’t come into the top and filter down . . . it hits every part of your organization full impact.”
Billed as a convergence between the energy industry and the IT world, the two-day Ziff conference at the Round-Up Centre attracted hundreds of senior oilpatch executives, as well as IT and software specialists from the oil, gas and electricity sectors in Canada and the U.S.
