In February 2021, Shell announced Powering Progress, its strategy to become a net-zero emissions energy company. Powering Progress details how the business will transition from an oil and gas producer to an environmentally sustainable power generator, which will require some major business model changes. Allan Cockriel, CIO of Global Functions and Group CISO, spoke to diginomics in The Hague, Netherlands, about the central role that technology has and will continue to play in the Powering Progress strategy.
The strategy will result in Shell completely refactoring its technology operating model and technology infrastructure to meet the needs of a completely new business model. Cockriel says:
The transformation of the energy ecosystem will be very difficult. For the last 120/130 years, the energy ecosystem has been built on molecules and we have to move to electrons. Changing an energy system, you won’t do it with pen and paper.
Shell says this must be done by considering three key issues, energy reliability, affordability and sustainability, often referred to as the energy trilemma. Cockriel adds:
Becoming a net-zero emissions producer while keeping people safe and delivering value to our shareholders is a balance we must manage as a company. Technology plays an important role in this.
Cockriel’s role indicates the depth of the structural and therefore technological change that Shell is undergoing. As CIO of Global Functions, Cockriel is responsible for technology across the horizontal lines of business, including human resources (HR), finance, legal, internal and external relations. He says of these:
They are the key enabling functions that support Shell to produce upstream assets, market our downstream services and operate our renewable energy businesses. There are digital transformation strategies for each of these functions. My role is to be a unifying technologist and refine each of these strategies with senior leaders in the function to ensure we are using the right technology and working at the right speed and scale.
Cockriel adds that this is leading to consistent delivery and use of the technology globally.
From vertical to volatile
One of the concerns and challenges of the transition from carbon-based fossil fuels to environmentally sustainable energy is the return to volatility of energy production. Debates about clean energy regularly feature fears about the impact of low winds or cloudy days. For energy companies, this must be taken into account in how they develop their sustainable energy services, how they manage energy distribution and the relationship with the customer. In a sustainable ecosystem, the energy company and the customer will have to get closer, a significant cultural and operational change, but also for society.
For Shell, and its peers, this means moving from being a vertically integrated manufacturer and seller of products and services to a business more akin to a utility company. However, as Cockriel points out, Shell’s vertically integrated heritage can be beneficial:
We are expanding a key capability of the company. Over the last 100 years, we’ve been great at vertically integrating around a molecule in terms of finding it, producing it, transporting it, and marketing it. This organizing force is being applied to the electron. How do you get the electron from a rotating turbine or photovoltaic cell, through an ecosystem at the right price for our customers? That’s leveraging that experience of vertical integration.
Getting it right, Cockriel says, is vital to ensuring that energy companies and society deal with the energy trilemma. He adds that the warning signs have already been seen and that the shortage of specialist heavy vehicle (HGV) drivers in the UK after Brexit made one of the issues in the trilemma very clear: energy reliability. Cockriel says of this incident:
A year and a half ago, the specter of fuel shortages led to abnormal behavior and you saw people hoarding and panic buying as they perceived energy to be insecure.
Shell has been active in changing what Cockriel describes as its energy footprint. There have been a number of renewable energy acquisitions, investments in energy parks (sites created for a combination of clean energy) and the construction of a hydrogen electrolyser in Rotterdam, just down the channel from me and cockriel meet. Shell also continues to invest in petroleum products.
This combination of new energy sources has led to the adoption of digital twin technology to measure and experiment with managing changes in energy demand and production methods. Cockriel says:
Our virtual power plant is a derivative of the digital twin and is our way of thinking about distributed renewable energy and local power generation. It also allows us to identify the opportunity to harvest energy and how and when we feed the grid.
Will this change the relationship with the customer, especially on the cutting edge? Cockriel says he will, but says this is a change that is already happening:
We have customers from a wide ecosystem, from an electric vehicle driver to industrial road transport, maritime transport or aviation. We sit down with each of these customers and work through their challenges, including decarbonization.
We will always have products and services, and in the case of the yard, Shell customers expect a clean, well-lit service with a choice of energy options and an app that knows who the customer is and offers personalized promotion. This is the fusion of the cutting edge with technology to incentivize the customer, so there will always be a link.
All of this will lead to a better role for technology at Shell, especially the changing relationship with the customer in a new energy landscape. Returning to the virtual powerhouse, Cockriel says:
This capability is incredibly important for demand management, so we can incentivize customers to change behavior and charge their electric vehicle at the right time of day.
Not surprisingly, Shell is embracing new technologies as part of this transformation. Cockriel says Shell is looking at how EV charging algorithms, combined with artificial intelligence (AI) will help the company generate power to meet demand peaks, and data is increasingly important; he says:
You need to collect data and leverage AI and machine learning, as well as computer vision. We are using AI to optimize existing supply chains and reduce waste in our lubricants business.
Blockchain is being used in a number of pilot projects to demonstrate proof of origin for Southeast Asian products and as part of Shell’s involvement in a consortium developing sustainable aviation fuel.
Global technological foundations
Shell has major shopping centers in Bangalore, Poland, Houston, London and the Netherlands. The Polish hub heads the business partnership, while Bangalore is the technology hub for Shell’s global business. Cockriel is among a growing number of CIOs deploying business partnership teams to increase the pace and success of digitization. He says:
Business interface roles work collaboratively with teams to define strategy and work with our partners, and this relationship is the secret sauce of a successful organization.
The demand for digital methods is putting pressure on the CIO and all key operational centers, he says:
We have the same talent challenges that many large companies have. This means that it is important to have an attractive employee value proposition to get great talent to join the company and want to stay. So we create a sense of community in the centers and tap into the talent pools there.
Cockriel says the global function role benefits him as a CIO and the organization to be able to address these common CIO challenges, but also connect those challenges to the needs of the business functions he works with. He says:
As a technologist and as a CISO I have the ability to stand in front of any company leader, boards and region teams and have a conversation about how we run a company of our size and scale. We can discuss this in terms of operating securely and at pace as the Functions transform digitally.
my take
Turning an oil tanker around is a common refrain in the CIO community when it comes to digital transformation. In the case of Cockriel’s role, it is literally so. Businesses are more focused on the climate emergency than at any other time I can remember. As Cockriel reveals, becoming a sustainable business affects every aspect of the organization.
Transforming a company’s legal and internal relationship functions may not immediately come to mind in the quest to be environmentally sustainable, but an organization is a sum of its parts. All functions must be part of the change, and technology is key to sustainability.
