Azerbaijani State Oil Company's Digital Transformation | Free Essay Example

Azerbaijani State Oil Company’s Digital Transformation

Words: 2227
Topic: Business & Economics
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Executive Summary

SOCAR is an Azerbaijanian company that operates in the energy sector. It contributes to the exploration of oil fields in as well as the production, transportation, and the selling of oil and gas. The company is highly technological and works on the advancement of its operations each year. Its goal is to increase the technical, scientific, intellectual, and economic potential of Azerbaijan while also providing its gas station clients with top-notch services.

In the proposed digital transformation strategy, the focus will be placed on clients who buy SOCAR fuel for their cars as well as use services available on their stations. A gap in the connection between clients and the company has been identified, which is why the proposed digital transformation offered the introduction of a mobile application for gas stations. It is expected to enhance communication between customers and SOCAR as well as encourage the company to be technologically innovative. The main barriers and deadweights such as data security will be addressed through the hiring of a skilled team of IT professionals and the investment in anti-fraud technologies.

Company Background

The State Oil Company of the Azerbaijan Republic (SOCAR) works in the energy sector and is involved in the exploration of gas fields, as well producing, transporting, and processing oil, gas, and gas condensate. In addition, the company markets its products in both domestic and international markets and is notable for supplying the public of Azerbaijan with natural gas. Apart from local operations, SOCAR does business in such countries as Romania, Switzerland, Georgia, Ukraine, Germany, and Turkey and is involved in trading activities in Nigeria, Switzerland, and Singapore (“About SOCAR,” 2018). SOCAR is continuously expanding the number of gas station locations in several countries and is setting their locations apart by providing an abundance of additional services ranging from dry cleaning to free WIFI.

Industry

In Azerbaijan, the oil and gas industry plays an integral role in sustaining the country’s economy. Ever since the 1990’s, the country has been successful in engaging valuable foreign investors from various global companies to increase the rates of production of oil and gas. Azerbaijan represents the beginning of the Baku-Tbilisi-Ceyhan oil pipeline, which is among the most important energy corridors that continue their expansion (“Azerbaijan – Oil and gas,” 2016). Because of the territorial value, Azerbaijan has vast opportunities to expand its oil and gas industry and attract international investment. In the long term, the region presents a particular interest for U.S. companies that may find Caspian gas fields potentially profitable.

Value Proposition

Being a state-owned company, SOCAR targets the issue of the Republic of Azerbaijan’s energy security while also engaging operations in other countries for financial gain. The mission of the organization is increasing the technical, scientific, intellectual, and economic potential of Azerbaijan through the application of ecologically-friendly technologies. SOCAR aims to maintain its crucial role in contributing to the success of local and international energy projects as well as maximizing profits from the sales of oil and gas products in domestic and global markets.

The close collaboration with customers when it comes to standalone operations in different countries lies in the basis of SOCAR’s philosophy. When providing services to clients, the company always puts culture and respect at the forefront of fostering trusting relationships that contribute to the maturity of the economy and society in general. Today, the company employs more than 53,000 workers and continues expanding, and with the expected developments in the oil and gas industry, has immense potential.

For the purpose of narrowing down the focus of the digital transformation strategy, it necessary to choose an operational aspect that requires the most attention. Since SOCAR is also a popular gas station company, this sphere of the company’s operations will be targeted for digital transformation. At the moment, gas stations offer a variety of services ranging from currency exchange to shoe cleaning, but the way in which clients get to know about these services could be better.

Formulating a Strategy for Digital Transformation

Vision

SOCAR’s vision is to become “a vertically integrated international energy company resting upon advanced experience on operations efficiency, social and environmental responsibility” (“About SOCAR,” 2018, para. 2). Thus, a digital transformation strategy should align with the overall vision of the company and enhance the current value of the company. In terms of the gas stations located in several countries, SOCAR is working toward the goal of providing high-quality services of the same level as well as expanding the range of these services to set the company apart from competitors.

Engaging Stakeholders

When it comes to working with stakeholders that can contribute to the success of a digital transformation strategy, SOCAR already has some key partners and is recommended to seek out more. As one of the latest developments, SOCAR announced the development of a joint venture with IBM. The collaborative effort will be targeted at creating and an “operative analytics and delivery center to provide IT, business transformation, and business consulting services in Azerbaijan, the Caspian Region and other countries” (“SOCAR and IBM announce joint venture,” 2018, para. 1).

Similarly, in order to transform the business in a digital way, SOCAR is recommended to engage stakeholders such as IBM and Axens into changing the way the company perceives the value of technologies – not only for making competitive analytics work but also for enhancing the quality of service provided to customers.

The engagement of stakeholders for SOCAR should imply the communication of the value of digital transformation and the benefits it would yield long-term. To achieve success in digital transformation, SOCAR should select stakeholders that have experience in the field of IT as well as e-commerce. Internally, the company’s president will be responsible for the overall management and the hiring of specialists to facilitate the new strategy. The head office in Baku, Azerbaijan, will hire new personnel, manage the integration of new processes in different locations, and analyze the overall progress of the program.

Core Competencies

Core competencies that set SOCAR apart from its competitors in the market include the quality of products, services, and innovation. Sustaining all of these three components is hard, especially given the fact that SOCAR petrol stations are located in several countries around the world but have very different expectations of quality. However, the company operates at a consistently high level and is not in a rush when it comes to gaining profit. By incorporating innovation and continuous quality improvement, it targets gaps in existing services and makes them better.

Assessment of Readiness

While SOCAR is a highly technological company that puts innovation at the top of its priorities, the integration of a digital transformation strategy may help it achieve new goals. In the sphere of gas station operations, there is a need for integrating technologies when it comes to connecting with clients and making their experiences more positive. In this section, the assessment of the readiness of clients, partners, and the company will be conducted.

Clients

When customers use SOCAR products and services, they expect to receive the best value for the price. When it comes to gas stations, customers are used to seeing cleanliness, quick service, high-quality fuel, and a range of other products and services for their convenience. When it comes to new technologies, they do not associate the company with them despite IT being an integral part of the oil and gas industry. For customers, creating a tech solution for enhancing engagement with the brand may be a beneficial service that they will use on a daily basis.

Company

SOCAR operates in multiple markets and has different websites and social media pages to appeal to each target audience of clients. Despite this method working, there is a lack of an integrated solution that it will offer customers worldwide, without the need for switching from one country to another. Also, for getting the most from analytics, technological solutions are necessary for the company for measuring customer satisfaction. Also, the company can offer additional services such as GPS application for travelers. With the engagement of such partners as Axens, such solutions are possible to implement (“SOCAR selects Axens AlphaButol technology for its GPC project in Azerbaijan,” 2017).

Partners

Companies and investors that work with SOCAR on both long- and short-term basis expect the integration of a digital transformation strategy that will enhance the collaboration. The collaboration between SOCAR and IBM showed that “digital business transformation has become an essential element of the successful management of industrial operations” (“SOCAR and IBM announce joint venture,” 2018, para. 4). Because of this, partners expect the company to be prepared to integrate technologies in its future operations.

Roadmap for Transformation

The strategy to digitally transform SOCAR will be based on Rogers’ (2016) framework developed in The Digital Transformation Playbook that includes such domains as “customers, competition, data, innovation, and value” (p. 1). The differentiation between the five domains is presented below:

Customers

The platform SOCAR will develop specifically target customers that use the company’s products and services at gas stations. The solution will be integrated into their phones or tablets, representing a bundle of service suggestions from the database. For instance, customers will be able to find the nearest gas station to their location, see what services are available there (e.g., dry cleaning, currency exchange, a business corner, luggage packaging for stations nearby airports, shoe cleaning services, free WIFI, showers, and so on).

The application will also have an integrated payment option so that clients could use it to pay for services. Bonus points will be given for each purchase thus allowing clients to collect them and then exchange for products and services. Also, clients will give feedback on the services they received as well as file complaints. The gaps between the company and its customers will reduce when there is an easy-to-use technological solution that has different purposes.

Competition

SOCAR’s competitors such as Shell, Lukoil, Esso, Statoil, and multiple others do provide similar applications to their customers. However, the main argument that customers make against them is that they can be inconvenient and do not provide accurate information. Thus, the goal of SOCAR is to develop an application that will offer as much detail as possible while being easy to use. An important issue that most gas station applications miss the accuracy of location. Since SOCAR is already working with Axens to optimize the location identification options and hire professionals in the sphere of IT to update the relevant information within the application continuously.

Data

The integration of the application to boost customer engagement and enhance the quality of services will require the storing, management, and analysis of data. Clients will insert their credit card information, name, age, and location into the app to access its main features as well as to be integrated. They will be asked to give permission to use this information for analysis purposes. The company will then analyze the data to make conclusions about the customer demographics as well as collect feedback from clients about SOCAR services.

Innovation

The introduction of the SOCAR application will be beneficial for allowing the company to experiment with how technology can help the services grow and expand. Customers will be able to get access to the company’s services quicker and more efficiently, especially with the help of an integrated GPS technology allowing to find the nearest gas station. This technology will also allow the company to see what locations of their gas stations are the most popular. The application will be continuously updated based on customer feedback, with new versions offering more options and features. The platform will be intuitive, easy-to-use, developed by the best IT professionals in the field, and completely free.

Value

The application will reduce the gap between the company and its clients, making the quality of services better. Many clients struggle with available apps because they show incorrect gas station locations and do not provide enough information about available services. The SOCAR app will bring the company and its customers together and improve the brand’ image and set the app apart from those available in the market. The sense of newness is expected to boost engagement among clients and create a unique value proposition.

Governance

Challenges of implementation

In the development of a digital transformation strategy for SOCAR, several challenges that could impact the success of the process were identified. First, customers may not receive the application well due to the lack of understanding of their benefits. Second, there may be some issues with the privacy and security of customers’ data because the application will need clients to share their information to personalize it. Third, failures to communicate with customers and get their feedback on the progress of the newly-integrated solution may limit the company’s ability to improve in the future.

Recommendation for implementation

To ensure that the digital transformation plan is successful, the company is recommended to implement some steps. For customers to receive the application well, the company will have to communicate a full list of benefits that they will get through appropriate marketing. Special attention should be paid to securing the information of customers who will use the application. Hiring a team of skilled professionals and investing in anti-cyber fraud solutions is recommended because SOCAR will be held accountable for any breaches that occur because of the app. It is also advised to get the feedback from customers.

References

About SOCAR. (2018). Web.

Azerbaijan – Oil and gas. (2016). Web.

Rogers, D. (2016). The digital transformation playbook: Rethink your business for the digital age. New York, NY: Columbia Business School Publishing.

SOCAR and IBM announce joint venture. (2018). Azertag. Web.

SOCAR selects Axens AlphaButol technology for its GPC project in Azerbaijan. (2017). Web.