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Black Gold, Green IT

Oil companies use BI to increase profits. You can, too.

By Abbie Lundberg

June 11, 2008 — CIO — Four dollars a gallon. That price has loomed large for consumers and economists all year, representing an inflection point beyond which Americans (both corporate citizens and the regular kind) might actually begin to change their behavior when it comes to the consumption of gasoline.

In our cover story, "The Price of Gas," Senior Editor Kim S. Nash explores how oil companies arrive at that figure. It's not easy. Or simple. With so many variable factors going into the determination—not just the price of crude, taxes, refining costs, distribution, marketing...but also things like geopolitical unrest and natural disasters—oil men and women need powerful tools to figure out how to ensure the greatest profit.

"Data drives what we do," says Gary Lensing, VP and CIO for global exploration and production at Hess. There is no shortage of data points, writes Nash; but to get value, oil company execs need to interpret what all that data means. "It's about filtering rather than finding a piece of information," says David Knapp, a senior editor at the Energy Intelligence Group. "Understanding what this whole pile of stuff can do for you is the key." Increasingly, sophisticated business intelligence tools provide that filtering and interpretation.

Given the impact that the rising cost of fuel is having on just about everything that requires transport—or power or energy of any kind—we the citizens (corporate and otherwise) could use our own set of BI tools to start managing our expenses and pricing going forward.

Smart companies will certainly do so, and they'll use the insight to cut out excessive costs. Energy efficiency is of growing interest to all types of businesses, but as anyone who has looked at "green" technology solutions will tell you, you have to spend money to save money. In a technology priority survey we conducted earlier this year, green (or energy-efficient) IT stood out as the second least-invested-in technology set, with only 12 percent either implementing or upgrading. At the same time, however, a full 47 percent either had it on their radar (casual interest) or were actively researching. I guarantee, if energy prices keep going up, those companies are going to move quickly into investment mode in the years ahead.

And as we all get more energy efficient, that will be just one more factor for the oil companies to take into account.

 

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