Steadfast courage in the face of disruption

Woodside Energy speeds transformation, aims to cut costs by 30%
by Allison Leking
6-minute read

The best advice that Shelley Kalms has ever received is “Be brave, not perfect.”

After starting her career as a chemical engineer, Kalms is now the Chief Digital Officer at Woodside Energy, a leading Australian natural gas producer. The company’s operated assets are renowned for their safety, reliability, efficiency and environmental performance.

LNG is a natural gas that has been cooled to a condensed liquid form. Developments in production, cryogenic storage and transportation are allowing LNG to compete with other fuels in the global market.

However, the COVID-19 pandemic and the Organization of the Petroleum Exporting Countries +1 (OPEC +1) dispute caused volatility in oil prices, leading to the deferral of some of Woodside’s proposed LNG developments. Woodside had extensive experience in deploying technology to improve efficiencies and reduce costs, and in this changing environment, Kalms and the business doubled-down on this strategic initiative as a business imperative.

Oil freighter docking

Current initiatives could reduce operating expenses by an estimated

AUS 110M

per year

The Woodside Accelerator continues to scale, with more than

30

initiatives identified for progress

Woodside has set a goal to decrease operating expenditures by 30%, and the company has a plan to deliver this in a measured, strategic way. Woodside is seeking long-term, sustainable changes in the way it operates and creates value. To build the safest and most efficient energy pipeline, Woodside is exploring the notion of autonomous operations and looking at ways to optimize the human-machine relationship by augmenting roles with AI and automation. The company is investigating concepts such as automated contract management, material optimization, inventory management and predictive maintenance across its rigs, plants and network.

To do this though, you have to transform not only technology but also culture, and that’s where we’re looking at the IBM Garage to enable our people to make a difference, to create long-term sustainable value.
Shelley Kalms
Chief Digital Officer, Woodside Energy
Blueprint for oil rig

To deliver the magnitude and pace of transformation required, Kalms needed to scale the digital capacity and capability of the business, and thus Woodside partnered with IBM’s proven “transformation accelerator” — IBM Garage™.

Validate speed to value, then scale

Kalms was first intrigued by IBM Garage in 2019 because of its focus on people and user-centered design. She recognized that transformation is not simply about modernizing technology and tapping into data insights. It’s about people embracing new ways of working. “Digital transformation must not be something done to a company, it must be something done with a company.” Kalms continues, “Transformation must be embedded in the hearts and minds of people.”

IBM Garage — a proven transformation framework that integrates people, processes and technology — seemed to be a natural fit. However, before Woodside goes big, it proves small. So, the company collaborated with IBM Garage to simplify, centralize, digitize and automate Woodside’s HR onboarding processes. The joint Woodside and IBM team brought together hiring managers and recent hires, along with employees from legal, IT, security, procurement and emergency management.

Woodside tower
Woodside freighter at sea

After defining a product roadmap during an IBM Garage Enterprise Design Thinking™ Workshop and conducting user research, team members built an intelligent workflow across four systems and redesigned the onboarding experience. In only 10 weeks, the team launched the HR onboarding minimum viable product (MVP) into production. As a result, new employees are onboarded faster.

After witnessing IBM Garage’s speed to value with the HR onboarding initiative, Woodside was ready to scale its transformation and revamp business critical operations. To ensure a deliberate and thoughtful approach, the teams developed an innovative operating model — the Woodside Accelerator.

Evolution supports new initiatives

The company’s embedded IBM Garage practice — the Woodside Accelerator — includes a collaborative team of Woodside, IBM employees and the Woodside partner ecosystem who have embraced new ways of working and employ agile, DevOps and user-centered design. The Woodside Accelerator follows the IBM Garage Methodology of co-create, co-execute, co-operate.

Woodside operations’ executives participated in a three-day virtual IBM Garage workshop to look across business operations and see where the energy company could improve efficiencies and revenue. For each initiative, team members analyzed the problems from numerous angles, without trying to identify a solution early on. Based on the problem area, they determined which people, technology and resources could help solve the issue.

To calculate a particular initiative’s speed to value and rate of organizational transformation, the team uses the IBM Garage V.O.T.E (Velocity, Outcomes, Technology and administrative debt, Employee experience) framework. This is updated continuously for all initiatives in the pipeline and aggregated at the portfolio level to assess the investment potential of each initiative. The insights from V.O.T.E are used by the Woodside Accelerator Investment Board to make informed decisions about which initiatives to fund and in what sequence.

Oil rig at sea
Oil refinery

Initiatives need to prove to the investment board that their business case’s projected value is reasonable and that they can return business value back to the organization fast enough to warrant funding.

Using a Best Person for the Job (BPFJ) process, product owners select a cross-functional squad and determine which roles to involve based on the problem being solved. Roles include researchers, designers, intelligent workflow engineers, data scientists and developers. Additionally, an IBM Garage Interface group works alongside the squad to drive governance and remove impediments, enabling squad members to optimize their productivity and deliver value as quickly as possible. The Woodside Accelerator currently has ten inflight squads that are transforming, automating and simplifying intelligent workflows across Woodside’s value and supply chains.

The Digital Ecosystem Blueprint is a visionary initiative that is designing Woodside’s future technology landscape. All other initiatives are in various stages of development:

Co-create:

  • Digital Maintenance Strategies digitises and brings together the required data to enable fast verification of equipment maintenance strategies. This will identify and remove low-value, reoccurring scope from the maintenance execution program.
  • Co-execute:

  • Applied Risk Thinking (ART) aims to better screen and prioritise Woodside’s risk management actions, ensure focus of limited resources on the highest value actions and stop overworking low value actions. The goal is to manage risk as a more efficient organisation striking a balance between reliance on process and procedures and reliance on competency.
  • Integrated Safe System of Work (ISSoW) develops an intelligent workflow that simplifies the permit process by matching the risk of the work with the appropriate level of control.
  • Materials Optimization automates back-office inefficiency in inventory management.
  • Maintenance Cost Management minimizes expenditures through greater transparency and control during key purchasing decisions.
  • Co-operate:

  • Risk-Based Maintenance optimizes maintenance frequency, using intelligent models leveraging industry best practices and historical data.
  • Condition-Based Monitoring shifts from reactive maintenance to preventive maintenance with an intelligent workflow, leveraging AI, Internet of Things (IoT) sensors and diagnostic models.
  • Maintenance Planning automates back-end inefficiency in scheduling and work order preparation by intelligently recommending the most efficient work to complete concurrently.
  • The Woodside Accelerator continues to scale and has already identified more than 30 initiatives to review and further refine. The dynamic program is constantly evolving and growing as new initiatives are introduced and existing initiatives launch and scale new products and services back to the business and beyond.

    Financial impact and culture change

    Two workers walking in the oil refinery

    The Woodside Accelerator team projects that the current initiatives could reduce operating expenses by approximately AUS 110 million per year if implemented. The team will continue to scale the Woodside Accelerator until it reaches its 30% goal.

    As hoped, the Woodside Accelerator has not only shown the potential for significant business and financial impact, but also cultural transformation. “The IBM Garage is as much about culture change as technology. Continuous improvement is now a mindset in the way that we work at Woodside,” says Kalms. Employees are being exposed to new ways of working, and those who have joined projects using accelerated agile delivery have wholeheartedly embraced it. Leon Burgin, Integrated Remote Operations Project Manager at Woodside, says: “You get to actually see change in a real-time basis. You don’t have to wait a year to see an outcome. You’re seeing outcomes every two, four, six, eight and twelve weeks.”

    As Woodside continues to focus on optimizing value, business processes are becoming more intelligent and data-driven. Technology and automation can enable employees to focus on their highest priorities, making their experience of work more engaging. Kalms talks about the future at Woodside, where humans supervise AI-powered digital workers. In one hypothetical example, a sensor at a plant might signal that a bearing is outside of its operating parameter. This would automatically generate a work order to replace that bearing. A database may indicate that there is not stock on hand, so the system orders the replacement bearing, schedules a work order and resources it with the employee who has the right skillset. The system would notify this employee that she needs to arrive at the plant at 10 AM the next day to replace the bearing. “That is all autonomous. That is what we’re building out to.”

    Kalms further explains: “To do this though, you have to transform not only technology but also culture — and that’s where we’re looking at the IBM Garage to help enable our people to make a difference, to create long-term sustainable value.”

    Ready to see what IBM Garage can do for your business? Talk to an IBM Garage expert.

    Woodside logo

    About Woodside Energy

    A leading Australian natural gas producer, WoodsideExternal Link is headquartered in Perth, Australia, and was incorporated in 1954. The company is a pioneer in the liquified natural gas (LNG) industry and is recognized for its capabilities as an integrated upstream energy supplier. In 2020, the company reported revenue of USD 3.6 billion and currently has more than 3,500 employees.

    Solution component
    Woodside logo

    About Woodside Energy

    A leading Australian natural gas producer, WoodsideExternal Link is headquartered in Perth, Australia, and was incorporated in 1954. The company is a pioneer in the liquified natural gas (LNG) industry and is recognized for its capabilities as an integrated upstream energy supplier. In 2020, the company reported revenue of USD 3.6 billion and currently has more than 3,500 employees.

    Solution component