Digital Transformation in Oil Will Put Houston on the Map
Along with its biggest anchor, oil and gas, the city is also home to a deep bench of aerospace, health care and Fortune 500 companies. While 2020 wasn’t exactly what anyone expected, Houston’s emergent technology companies are primed to deliver solutions to advance imminent digital transformation in the $3.3 trillion global energy industry as a result of the oil price crash and COVID-19 pandemic of 2020.
COVID-19 is the villain of this story, gutting companies, inflicting unimaginable economic damage, forcing layoffs, mergers, budget cuts and changing the very nature of work itself. Even while egregious in impact, COVID-19 and the oil pricing crash can be seen as catalysts offering a clear path for Houston to make a name for itself as a serious tech hub, like a Phoenix rising from the ashes of Chapter 11.
As Beyoncé says: “If everything was perfect, you would never learn, you would never grow.”
Energy giants look to leap
The oil and gas sector has been notoriously averse to change for as long as anyone can remember, moreso than any other global industry. But it can no longer afford to remain stagnant. Among the downturned market, a pandemic and seismic industry shifts toward decarbonization, the current environment is forcing companies’ hands. Innovation and technology adoption is the new prerequisite for survival and the coming wave of change will alter Houston’s tech DNA for good.
Approximately 92 percent of oil and gas executives polled by Ernst & Young agree that their organizations will have to change the way they operate. Among those polled, 80 percent are investing at least a moderate amount in digital technology and 43 percent have identified big data analytics and insights as one of the top three trends that will positively impact their business growth within the next three years.
The same Ernst & Young survey reports that companies are evaluating which digital technologies—data analytics, cybersecurity, data science, design thinking, blockchain and artificial intelligence among others—are the most imperative to driving production efficiencies and transforming operations to function on razor-thin margins.
Deloitte also details that near and midterm impacts from technology implementation are being prioritized and that effective digital adoption will require behavior, mindset and skill shifts to embrace and extract maximum results.
With energy giants like Phillips 66, ConocoPhillips, Plains GP Holdings, Baker Hughes, Halliburton and more set up in Houston, the city is primed to witness a remarkable new era where traditional, slow-moving, entrenched oil and gas companies look for the fastest horse. Chances are that bet will come in the form of an agile startup.
Startups at bat
With a plethora of incubator and accelerator programs including The Cannon and Houston Exponential (a merger of the mayor’s Technology and Innovation Task Force, Houston Technology Center, and the Greater Houston Partnership‘s Innovation Roundtable) the support to advance startup offerings abounds.
Several notable startups poised to contribute to the billion-dollar digital transformation in oil and gas include Silicon Valley-founded Tachyus, a technology platform that optimizes energy production, which transferred most of it staff to Houston; M1neral, a mineral rights buying optimization platform; Voyager, the platform for a transparent marine supply chain in energy; and GoExpedi, a leading innovative supply chain procurement platform serving the energy sector. My company, Data Gumbo, is a provider of GumboNet, a massively interconnected industrial blockchain network that realizes transactional certainty.
Proof in the pudding: An influx of VC dollars
There were more dollars funneled to Houston’s tech companies in 2020 than in years prior. According to HTX Funding Review, startups raised $433.33 million between January and July 2020, spread across 46 deals.
Investments within energy—from venture arms of leading industry operators including Chevron and Shell, as well as international oil and gas companies like Norway’s Equinor Ventures, France’s Total Carbon Neutrality Ventures and Saudi Aramco Energy Ventures—are supporting younger ventures to generate viable business opportunities in a post-COVID world. Legacy industries yield opportunities for meaningful innovation and problem-solving technology. And, as always, money follows suit.
Tech on the bayou
“Digital innovation is one of the few means that can contend with these profound changes” brought about by recent circumstances, according to McKinsey & Co. It’s time that energy, as a multibillion-dollar industry, modernizes to survive the crisis at hand and set itself up for a digital future — a future where there’s plenty of money to be made by the companies that can spur oil and gas into its new era.
With a strong infrastructure (hello, Port of Houston), skilled workforce (evidenced by its robust universities) and a diverse cultural landscape, Houston is poised to offer plausible solutions to its biggest industry’s woes. Who knows, maybe the next Zuckerberg will be wearing cowboy boots and a Stetson with a hoodie? Maybe tech’s hot new home — including the likes of Hewlett Packard Enterprise — is the ‘Silicon Bayou.’ In the interim, we’ll work on the name.
This article was authored by Andrew Bruce, CEO and Founder of Data Gumbo, and originally published at Crunchbase News. Image credit: Crunchbase News.