The Trading team in this story exhibits much of the HFS OneOffice™ vision in Exhibit 1—our view of digital transformation in action—given new context by the forced shift during the COVID-19 pandemic. The Trading team’s ongoing journey also displays the fundamentals of reaching the OneOffice in Exhibit 2 for enterprise leaders in any industry that see themselves on the same path.
Source: HFS Research, 2022
The Trading team is an integrator between upstream and downstream parties, from oil acquisition to customer demand. It optimizes the balance between supply and demand throughout the energy firm’s endeavors and trades power, carbon, liquid natural gas (LNG), biofuels, and more.
In March 2020, a combination of the oil price war and the pandemic brought challenges and change. The energy firm’s focus, as you might expect, was maintaining safe and reliable operations combined with establishing the ability for employees to work from home—including for traders, while ensuring regulatory compliance. For example, the Trading team needed additional higher-power laptops; procuring and shipping to users became five times harder—but this became “a big one-team effort” given the lack of choice. They had to do it.
Agile and DevOps have become a key part of the Trading team’s capability in responding to change. To quickly make well-informed decisions in a dynamic market, the team must capture and analyze data quickly. Therefore, an agile development method involving a high frequency of smaller transformation projects versus a “traditional” multi-year waterfall approach is perfect. Historically, development cadences were monthly or quarterly, but now they are daily and weekly. This shift in process and culture is highly challenging in a heavily regulated business with an obligation to ensure system continuity; we’ll touch later on how the Trading team’s automation and IT testing helped ensure zero downtime.
In 2020, part of Infosys’ longstanding and expanding partnership with this oil major came via investment in digital design studios and “living labs,” designed to develop next-generation artificial intelligence (AI), blockchain, and more. The Infosys acquisition of WONGDOODY comes alongside co-investment between the energy firm and Infosys across designers, data scientists, and Agile practitioners. Energy execs we spoke with lamented a related aspect of remote working during the pandemic: Building new applications virtually, including the design and co-creation processes, has also been challenging:
[The development process] can be more efficient when we can bring people together work in rapid cycles in a design studio—bringing 20- to 30-person teams of designers, engineers, and experts together in focused day- or week-long sessions to produce MVPs.
– CIO, Trading team, global energy major in this report
Despite these challenges, there have been key success points during the pandemic and other energy industry disruptions. Testing applications and calculating market and credit risks with a looming negative oil price was possible at an accelerated pace in a scenario no one could have imagined, as the exec quoted above added: “With Infosys ingrained in the entire value chain as part of the team, within 24 hours of the oil price going negative, our systems were back up and trading.”
The coming sections of this report will detail more of the energy major and Infosys story and its success factors.
Our energy firm and Infosys have three focus areas: optimizing operations and cost (including intelligent automation), building mutual partnerships through Infosys’ ecosystem, and creating new digital incentives via the investments in digital studios to develop emerging technology capability. Infosys has completed about 85% of the planned cloud migration over the past four years with its energy client, and there’s an initiative to finish the rest. Several migrations and technical IT upgrades took place over the early pandemic. The Trading team finds itself with more cloud-native products, more options, more control, better performance, and more angles to expand.
The energy firm’s roadmap is turning to adopting more next-gen technology. It wants to look like a digital company (as well as an energy one, versus its historic oil and gas standing) despite its highly physical business. These trends are well underway, for example, in adopting blockchain trading platforms, applied AI, and more data-driven, analytics-based decision making.
The coming years won’t see Infosys’ journey finish with this energy major—and neither they nor any enterprise will likely ever reach an endpoint for whatever transformation means to them at any one point in time. Nevertheless, this Trading team’s story is ahead of the curve we see at HFS, including in more traditionally digitally savvy industries. We identified five fundamentals of moving toward the OneOffice vision for digital transformation as we start 2022. Exhibit 2 summarizes how the Trading team’s journey aligns with these fundamentals. The remainder of this report maps in more detail the lessons learned and examples of success.
Source: HFS Research, 2022
Fundamental 1—The Principle: Connect front to back offices to empower the OneOffice organization
Infosys is plugged in throughout the energy value chain and across the front, middle, and back offices of this energy major’s Trading team. Infosys’ presence, deep 20-year relationship, and wider industry expertise allow it to align problem solving, data, and solutions. This story moves away from the traditional piecemeal technology projects in trading and piecemeal relationships between providers and clients.
A focus on user experience (UX) design surrounds the traders who bring value to the Trading team. In the future, Infosys’ WONGDOODY acquisition and a new space leveraged for its energy client relationships will amplify the UX focus. To date, this UX focus has, in large part, come through a culture of top-down and bottom-up innovation (more to come).
A “one-team approach” within the energy major and between it and Infosys focuses on the trader UX. It has ingrained a speak-up culture through the years; boundaries have faded under a realization that top-down-only transformations won’t work. It must be bottom-up in combination with a top-down drive from the leadership of Infosys and the energy firm. However, as an end-to-end partner with this client, Infosys faces challenges in managing more stakeholders and personalities—there’s always culture, politics, and people.
Fundamental 2—The Talent: Align employees to customers with experience and right-brained skills
The Infosys-energy major relationship embodies Agile and DevOps (including fail-fast and speak-up cultures) and emphasizes culture alignment between partners. The focus is on the “customer” of the Trading team story—the traders. This “one team culture” allows boundaries between the firms to disappear somewhat, and Infosys’ design thinking-based acquisitions and internal team-building bring in sought-after right-brained skills in a broader “war for talent” in both the energy and services industries:
We need to invest more in developing and training our people, including role-based training. There’s a war for digital talent in every industry, and it’s the same for and Infosys. We need to be more forward thinking, creating curriculums and role-based training, as well as certifications across cloud, data science, Microsoft tools, etc. We can see the trend happening, but we wish we’d seen it faster.
– CIO, Trading team, global energy major in this report
Grass-roots innovation at the energy major, which had previously led to many scaled-up developments, slowed during COVID. The energy major sets aside budget for POCs building on ideas sourced throughout the company. Pre-pandemic, 200 to 300 ideas would lead to 20 to 30 funded projects and eventually three scaled implementations. Now the implementation rate is about a third of that. Crucially, the budget set-aside and POCs started a culture change; people feel their ideas will be investigated and developed. Trading is a highly technical function; naturally, you’ll want your subject matter experts (SMEs, in this case, the traders) involved in the innovation process. Simple measures like recognition and prizes for innovation got digital and IT teams onto the benches alongside traders; now, the proverbial “business and IT collaboration” is viewed as best practice within the whole energy organization. Digital and IT teams can better understand traders’ UX, challenges, and needs, creating a top-down and bottom-up approach to transformation.
Automation has also been critically important in boosting the Trading team members’ job satisfaction, allowing them to perform more enjoyable value-adding work. It has also facilitated “citizen developer” uptake; traders can, within safety and compliance frameworks, build automations while improving their general coding and analytics skills—necessary for a more rounded workforce that can bridge the gap between IT and business. A “push and pull” system is developing, where ideas and development flow between IT teams and the traders. It has also freed up IT teams’ time to focus on more complex problem-solving and transformational engineering work and deployments.
Fundamental 3—The Architecture: Go “straight-to-digital” with an integrated technology platform
Infosys has, in multiple conversations with us, laid out a clear vision for the transformation process—turning “blue ocean” problems into “red ocean” ones by breaking them down and defining each aspect. This approach is encapsulated in the energy major’s “redesigning, re-platforming, and reimagining” efforts. Infosys and the energy major are also looking to “take Agile and DevOps to the next level.”
The energy major in our story has seen the largest ever migration of a database/warehouse onto the cloud to unlock value; Infosys has leveraged its platforms for automation for IT and business automations. Cloud transformation is not just about cost—it’s about a digital foundation for the new “reimagined” organization. Five years ago, 50% of Infosys’ team at this energy major was working on operations; now, it’s less than 15%. Operations have been transformed with as much automation as possible—from RPA through to AI—and the energy firm has continuously reinvested savings in transformation. Containerization also gives it more control, scale, and the ability to adapt to the continuous changes in the trading industry and market.
In another example, the opening of a power trading office in South America with voice recognition and recording capability would have in the past required huge data center bandwidth capacity. But on the back of these cloud migrations, opening offices becomes a much quicker and more reliable process across various regions. Without software-as-a-service (SaaS) options available via the cloud, rolling out voice recognition and recording at this speed during COVID-19 wouldn’t have been possible.
Fundamental 4—The Competency: Expand “people, process, and technology” to include data and change management
Infosys implemented a framework for adopting Agile at scale and trained the energy client to adopt it. Requirements change quickly in the strictly regulated trading environment; Infosys played a key role in testing and change management to achieve zero-downtime releases for the last five years:
You’ve got to invest in automation to make it work—especially in testing automation and ensuring zero downtime. Cloud and containerization are drivers of change for us—it gives us more control over our estate and change management processes—and gives us scalability and adaptability in addition to the cost and optimization benefits.”
– CIO, Trading team, global energy major in this report
With the Trading team at the forefront of Agile and DevOps, more recent company-wide transformations are only boosting the Trading team’s risk management capability and speed-to-market—how fast it can get information and make decisions in that market.
Fundamental 5—The Strategy: Collaborate internally and externally to find new thresholds of value
The simultaneous top-down and bottom-up approach in balance hasn’t just meant that the energy major’s Trading team and Infosys are cracking the IT-business barriers. This partnership is built on not leaving anyone behind, with Infosys fully integrating itself into the trading business—unlike competitors that might operate at higher-management levels.
Infosys is involved throughout trading, from front-office data setup, analytics, and automation, through middle-office supply chain management to back-office contracts and broader admin. In reaching across the trading value chain, Infosys can bring its services together to generate more value than any individual siloed project might. In the process, we see alignment with our OneOffice vision for digital transformation on par with any that we’ve seen throughout industries that, on average, are more mature in their digital journeys.
Historically, the trading and logistics industry has involved a piecemeal mix of vendors, technologies, and projects. As the dominant service provider and partner across the trading industry, Infosys’ has capabilities with, for example, using analytics and automation to cut through the entire value chain to aid decision making or cost and process optimization. Infosys is also well-positioned to implement platforms and migrate the major’s energy operations onto the cloud to meet its broader transformation and strategic repositioning as a digital, integrated energy company.
The Trading team’s successes are triggering adoption throughout other business functions. Infosys’ cloud migration efforts with a combination of Azure and AWS will help processes, apps, and best practices from the Trading team scale across the energy major. The Trading team has been ahead of the curve within the energy firm, and now under the drive of its leadership team, it is making its way toward the HFS OneOffice vision.
Infosys started with this energy firm almost 20 years ago in a classic outsourced services model: offshoring, cost optimization, and a document management system (DMS) project. Infosys is now a strategic partner for the Trading team and the whole energy firm. Over the last five years, the companies have reinvigorated their relationship to leverage Infosys’ scale and deep knowledge of the client and its industry.
Infosys’ ability to embed a culture and concrete initiatives with Agile and DevOps means the Trading team can meet its transformation ambitions while ensuring it is adaptive to the inherent volatility of the industry and the market. Other best practices have emerged from the Trading team to become part of the energy major’s core; for example, Infosys and IT departments co-mingle with the traders and other SMEs to break down the barriers to business and IT collaboration, blurring the lines between service provider and client.
In going beyond cost reductions, by leveraging Infosys’ scale and successful cloud migrations, re-platforming, and automation, the energy major’s Trading team has modernized its business model and driven topline growth. Its success is proliferating throughout the whole energy major.
This partnership’s alignment with our OneOffice fundamentals is one of many templates for enterprise leaders and their partners to learn from. In addition to emerging technology initiatives, Infosys and this energy client are looking toward the wider ecosystem, just as HFS is looking toward our new OneEcosystemTM vision. The best practices moving through this energy major have the potential to move through the ecosystem—and HFS will be watching for the next OneOffice and OneEcosystem examples to give further context and life to what digital transformation really means.
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