Cisco conducted a survey that uncovers the urgency for the oil and gas industry to adopt digital technologies powered by the Internet of Everything (IoE) in order to stay competitive. The survey identified intelligence from data as the key area needed to improve operational efficiency, and data analytics as the top IoE driver for faster, better decision-making.
To calculate this number, Oxford Economics began by incorporating into its global economic model Cisco’s US$600 billion IoE value at stake estimate for the oil and gas industry over the next decade, including productivity gains, reduced OpEx and CapEx, and IoE adoption cost of $180 billion.
This estimate is based on both increased supply and greater demand, resulting in a “positive supply shock” for the global economy. Lower oil prices stimulate more spending on goods and services, with most of the gains being realized through the consumer sector. Oxford also projects that global consumer spending could be up to 1.5% higher than the base-case forecast by 2025. This aggregate increase includes a “second round impact” of higher economic activity, raising overall employment around the globe.
Cisco estimates that this IoE-driven value will come from improvements in asset utilization, process or supply chain efficiency, employee productivity, CapEx savings, and market innovations. For a midsize oil and gas company with $50 billion in annual revenue, IoE can generate a $538 million annual profit increase and an 11% bottom-line improvement. 72% of these benefits are derived from cost reduction, while the remaining 28% are from increased revenues.
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