IBM Scores Major Energy Win With Schlumberger

By Patrick Moorhead - September 30, 2020

IBM has been hard at work the last 9 months with many announcements pertaining to the advancement of the company’s innovative hybrid cloud strategy. It is apparent that new IBM CEO Arvind Krishna and President Jim Whitehurst are operating at a new level I have never seen at IBM. 

A few months ago, it was a handful of updates to IBM’s Power Systems Private Cloud solutions, including an expansion to “scale out” systems, as well as a new dynamic consumption model. Then, at the Hot Chips conference last month, the company unveiled the newest generation of its POWER processors, POWER10, the first to feature 7nm process technology (see my coverage here). Obviously, the underlying technology is very crucial to the success of IBM’s strategy. That noted, the proof is in the pudding, and the pudding is how many customers the company can woo with that technology. Last week, IBM and its subsidiary Red Hat announced a sizeable partnership with energy giant Schlumberger, including the migration of its DELFI solution to the hybrid cloud. 

Let’s take a closer look at how these companies are looking to accelerate these changes. 

Open data platform, hybrid deployment

DELFI is Schlumberger’s collaborative, cognitive environment for energy Exploration & Production (or E&P, as they call it in the biz). E&P includes everything from exploration, to development, to drilling, to production and on to midstream. User growth of DELFI has exceeded an impressive 300 percent in the past 12 months with companies leveraging it to unite their data, software applications, and personnel throughout the whole E&P lifecycle. And yet, half of the oil and gas companies of the world are unable to easily access the platform. This is due to limitations around data sovereignty, reach of public clouds and the specific architectural choices companies have employed. With the recent announcement, though, it looks as though DELFI will be accessible and available to all customers around the world. 

Together, IBM, Red Hat and Schlumberger will work to migrate DELFI to a hybrid cloud platform, leveraging Red Hat’s OpenShift container platform to deploy the environment on any infrastructure, on any oil and gas rig on the globe. Although DELFI already runs on Microsoft Azure and Google Cloud, this will open the environment up to all the other operators whose systems are not supported by those two major venders. Companies stand to benefit from DELFI’s ability to perform data analytics, automate tasks and improve collaboration within the business.

Why all this, and why now?

This deal is designed to jumpstart digital transformation in the oil and gas industry, a sector that has historically been resistant to change in technology and process and is, unsurprisingly, lagging behind others in digitization efforts. This is in spite of the fact that, according to the World Economic Forum, digital transformation is crucial for the industry’s future success and if done properly could generate $640 billion worth of benefits to society at large (customer savings, productivity improvements, reduction in water usage, preventing oil spills). 

Also, the transnational nature of the oil and gas industry presents a unique problem that holds many of these organizations back. These businesses are often spread out across different geographies, and even within a single organization, there are often many distinct segments performing different operations, in different places, based on their role in the E&P lifecycle. As a result, a single business can contain many different data platforms, and these tools are often not running on the same cloud. This creates what we in the industry call “data silos,” where data is stored in various locations, on different infrastructures, making it difficult to share, access and leverage data for insights within an organization. 

Data silos are, in effect, like sitting on top of a gold mine. If companies don’t free up this data and harness it to their benefit, they run the very real risk of being outpaced by the competition. 

With the new partnership, oil and gas operators should be able to liberate this segmented data and distill it into insights via cloud-based AI tools and intelligent workloads running on Red Hat OpenShift. While there are other cloud-based data analytics services out there for oil and gas companies, DELFI claims to be the first, due to it being an open source data architecture, that is capable of busting up these silos. In addition to providing powerful analytics tools, DELFI also promises to help these businesses automate more functions and facilitate and streamline intra-organizational collaboration.

In other news

A brief aside: the companies also announced a plan to develop and deliver new management and operations capabilities for the industry’s open data platform, OSDU (Open Subsurface Data Universe) for hybrid cloud deployments including on-premise, private or public cloud deployments. Though not many details were provided, the goal is to provide a fully packaged platform solution which oil and gas operators can utilize to build and securely deploy digital solutions on their preferred infrastructure.

Wrapping up

Schlumberger is a big deal for IBM and Red Hat, make no doubt about that. This partnership is an obvious fit with IBM’s stated mission of driving adoption of hybrid cloud and open architectures. By throwing its weight and technology behind the digital transformation of essential industries, like energy, IBM is executing on this vision. Rarely, if ever, before has it been so important for organizations to innovate, transform and flex with the economic punches. Kudos to IBM for its efforts to enable this in the ever-important energy sector. 

I like where Krishna and Whitehurst are taking the company and look forward to hearing about more vertically-oriented wins. New customer wins would be nice as well. I believe IBM leveraging its vertical expertise and leveraging its horizontal Red Hat capabilities increases the company’s chances to grow.   

Note: Moor Insights & Strategy writers and editors may have contributed to this article.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.