Consultant, IBM Center for Applied Insights
Welcome to another State of Smart industry deep dive. Today we’ll be taking a look at the Chemical and Petroleum industry. I’ve been looking forward to writing this post for a while now. We came across some data points when we looked at unstructured data that initially were surprising but actually make quite a bit of sense when you think about it.
Let’s take a look at the data, shall we? As you can see, 39% of C&P companies surveyed fell into the “Outperformers” category, having both high Listen and Anticipate capabilities. Very few companies reported to have high Anticipate and low Listen capabilities (which makes sense if you think about it).
Overall, C&P companies are very good at Listening, with 59% having a high Listen capability. Simultaneously only 42% have a high Anticipate capability.
So as you might expect, C&P outperformers are really good at capturing data. When we dig a little deeper into the data, we find that 70% of Outperformers capture data at every customer interaction. That a little less than 1.7x more than the Others.
When it came to unstructured data however we found something really interesting. Initially, I wasn’t expecting C&P companies to spend a lot of time and effort capturing unstructured data. However, we found that 55% of the Outperformers in fact did so. They were 2.1x more likely to capture unstructured data than the Others.
This was surprising in a couple of ways. First, we didn’t expect so many C&P outperformers to capture unstructured data (they were 4th out of 9 industry groups). Second, we didn’t expect to see such a large gap between the Outperformers and Others (this was the largest gap of any industry).
So what exactly are C&P companies doing with unstructured data? Well to begin with they’re looking beyond social media to things like weather/climate data, economic forecasts, and international political data. It makes sense. Many of these companies operate in volatile regions of the world, or rely on raw materials that come from those volatile regions.
In that context, being able for example to actively monitor or even predict civil unrest, or predict the path of a hurricane is vital to maintaining operations. So while at first glance, you might think that C&P companies don’t have much use for unstructured data, in fact successfully leveraging unstructured data can be quite critical to their business.
Our research also showed that 78% C&P Outperformers then empowered employees to take action based on analytics. They were 2.1x more likely to empower their employees than the Others (the largest gap of any industry). Again this makes a lot of sense. What good is developing insight if you don’t allow your employees to act on it?
We saw that 75% C&P Outperformers shared their insights with suppliers and business partners compared to 41% of the others. C&P companies often have complicated supply chains and sharing insights can help mitigate a number of risks.
Looking at where C&P Outperformers realize value from analytics, we found that 47% used analytics for risk management (1.7x more than the others – again this was the largest gap among the industries). Given the capital intensive nature of many C&P companies’ operations, this makes quite a bit of sense. It also seems logical from a health and safety perspective when you consider the impact (both environmental and political) and high level of visibility that incidents within this industry can have.
We’re not the first group to identify this linkage with risk management. In 2008, the IBM Institute for Business Value published a study linking risk management at C&P companies to improved financial performance. It’s good to see that the linkage is still valid.
That’s it for today’s discussion of the Chemical and Petroleum industry. As always, please feel free to send me an e-mail or leave a comment if you have any questions. In my next installment, we’ll take a closer look at the healthcare industry.