What Oil Prices May Mean for IT Spending

Repair of the oil rig in the shipyard.

There’s no doubt that the drop in oil prices this year has had a significant impact on the energy industry, forcing oil companies to cut spending and personnel. According to a recent report by IDC Energy Insights, however, IT spending cuts within the energy industry are lower than expected, which is good news for CIOs looking to technology to improve operational performance and efficiency.

The survey of CIOs at 20 non-OPEC oil and gas companies with revenues of $500 million and upwards, found that 85% of survey respondents planned to maintain, slightly increase, or reduce by less than 5 percent their spending on IT. The survey also indicated that internal IT staff focused on exploration and drilling workers are the ones most likely to be affected by IT spending cuts.

Despite a slowdown in drilling due to the decline in oil prices, some companies are continuing to drill to take advantage of lower drilling costs and to meet lease agreement requirements.  In order to support continuing operations, IT is being deployed more strategically in order to drive enterprise impact over the next few years.

According to Gartner, energy and utility companies are also continuing to feel the pressure to innovate while under scrutiny of environmental and sustainability issues. Digital technology is playing a key role in improving workforce effectiveness, supporting increased customer engagement, and addressing the growth of renewable energy initiatives.

As needs grow and personnel budgets shrink, one strategy energy companies are deploying is the use of managed services providers.

“Companies often require expertise in multiple technologies but don’t have the need or budget to hire multiple full-time employees to manage those projects and ongoing operations,” said Percento President & CEO Bobby Davidson. “With a managed services company like ours, they can take the budget for one full-time employee and get a whole team to support them with multiple types of expertise.”

To learn more about how Percento can help your company expand its breadth of technology options while maintaining reduced personnel costs, click here.

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