02 Oct How Big Oil Towns Might Attract Big Digital
A big digital outfit (and you know who) is looking for a host city for their second HQ. A couple of oil towns claim to be in the running. How might a Big Oil town persuade Big Digital to give them a look?
Subtle pitch messages
The exam question is pretty clear, and so will be the likely responses. But aside from all the braggadocio about transportation links, vibrant culture and cheap housing, what could a Big Oil town offer a Digital Giant that it’s unlikely to get anywhere else?
A new computing market
Big Oil companies like their data centers. Office towers in oil towns all have data centers, usually located on some pretty pricey real estate. At one time there was a good reason for this investment – telecom networks and third party computer bureaus were simply not built to handle the volume of data and computer cycles required. However, a large European integrated oil company recently carried out a meaningful cloud computing trial on its most demanding data (the geological and geophysical data) and concluded that cloud computing is now ready for the job.
Once Big Digital sets up shop, and the recruiting of displaced oil people starts, and the relationships begin to form, Big Oil will gain confidence in the technology and the migration to the cloud can pick up pace.
This is a big untapped industrial market – assume 0.5% of oil company costs per barrel are in IT, of which 30% are in computer infrastructure. On a $15/bbl cost basis, the global IT compute budget for oil is a juicy $780m.
No guarantees, of course, but Big Oil just needs a nudge and a first mover, and the rest will all follow. They always do. And boards of Big Oil companies are already wondering if they should move to the cloud.
A new data market
The origins of what everyone else calls “big data” are in the upstream oil and gas industry.
Oil and gas has had the money, the motivation and the need to use data to derisk oil and gas exploration. Moonshot-scale budgets have that impact. In fact, the industry has been strapping sensors to kit to capture data for decades. The internet of things is not a new concept to oil and gas – that’s just the way it’s been. No other industry, to my knowledge, had this potent blend of ingredients to stimulate investment in big data capture and analysis.
Recently, the high value of hydrocarbons, the constant growth in demand, and, for a while at least, alarms about scarcity, led oil companies to chase deposits to the ends of the earth. This pursuit has supported the ongoing need for data to fuel the search as the frontiers for oil were deeper underground, beneath deeper oceans, in colder climates like the Arctic, and in ever remote settings.
Big Oil is quite simply the very best at data collection, interpretation, visualization and analysis of a special class of data – messy, unstructured and twisty subsurface information. Big Digital can learn from some of the wealthiest businesses on the planet how to do this at industrial scale, for an unforgiving industry. That know how can be parlayed into the manufacturing sector, another great global industry that offers growth for Big Digital.
For Big Digital, the opportunity to house all this data as a service is substantial, not just for Big Oil but for all the other sectors that are moving into the internet of things world. I can’t begin to estimate what this market is worth, but squillions probably captures it.
Industrial grade know how
A software developer recently told me that Big Oil towns make exceptional settings for technology businesses.
The reason is that Big Oil technologies have to be built to a higher standard than consumer grade technology. A glitch in Angry Birds is not the same as an app failure on an off shore rig during some incident. The technology simply must work. The people in the coding, science, technology and math fields that find their homes in Big Oil towns excel at building bullet proof stuff.
For this reason, my software developer contact moved his development shop from the West Coast of Canada to a Big Oil town. Not only were coders less costly, but they built and tested to a far higher standard of quality.
And quality should matter to Big Digital, particularly as the evolving package delivery services get more personal and intimate (such as access to the home for grocery delivery).
The university ecosystems around Big Oil towns tend to attract researchers in the edgier bits of computing in future areas like robots, machine learning and artificial intelligence. These kinds of skills are going to be in greater supply in Big Oil towns because of the presently depressed state of the oil and gas industry.
Making the pitch
I’ve read a couple of media stories about the advantages of one city over another, comparing the relative merits of financial centers, manufacturing bases, logistics hubs and entertainment venues. When Big Digital gets down to reviewing the pitches, they’ll conclude that it will be very hard to discriminate between bids based solely on the evaluation criteria. The finalist cities will all be roughly equivalent – they all have airports and highways, housing and restaurants, art and cinema, to one degree or another.
Some think that the differentiator will be the degree by which cities buy favour through tax breaks and incentives. Perhaps.
But what about the actual pitch? How do you top one city’s investment to dispatch a large shrubbery to Seattle?
At one time in my career I pitched to a women’s clothing chain called Esprit. The company actually published its design philosophy in a large coffee table sized book. Working with their self image, we based our pitch entirely around how they expressed their brand through imagery, emotional connection, and visual expression, even down to the paper choice, font selection, binding and cover. We built custom packaging for delivery of the pitch. So cool, so much fun.
In the end, a losing bid, but I kept the pitch document with me for years.
A little creativity could make all the difference in this race. My advice to bid teams:
- Design like them. Create a purely on-line proposal. Nothing signals that you don’t get digital by submitting the pitch on 6 slides of dead tree.
- Analyze like them. Incorporate a self-assessment analytics model that allows your bid to be compared to others. Big Digital is going to have to do the analysis anyway, so why not make it easier for them?
- Create like them. Use a 3D printer to create a lasting memento of your city offer. How about a 3D layout of your city showing the rivers, routes, bridges, buildings (all the stuff that makes the case for your town). Embed little QR codes in the 3D printed model that link to an online version of your pitch.
- Visualize like them. Provide an augmented reality version of the 3D model that works on a third party headset. Nothing sells like being able to walk through your city without leaving the comfort of Seattle.
- Work like them. Package your proposal in Big Digital’s own shipping boxes. Make sure you incorporate a like button, and several recommendations from their friends. Throw in a few other choices in your offer, in case they wants to shop around. Offer free return shipping in case they are not satisfied.
- Deliver like them. Submit your proposal via one of the new shipping technologies. How about a drone drop?
- Share like them. Your pitch could be a Netflix film, out there for everyone to see, published on deadline day. Amazon published their RFP for all to see. That’s what open means.
- Sell like them. Offer up on their website a gift basket of the best stuff your city makes by way of cultural goodies, foods and art. Send a coupon code to anyone from Big Digital that expresses interest, and then send them the basket, with links to all the other virtual items.
And for heaven’s sake, keep your submission to 6 pages. Nothing signals that you flat out did not do your homework by ignoring all the stories about their management philosophy.