Digitization – To Be or Not To Be?
Digitization is a byword for modern living and virtually a necessity in business life – the Internet of Things (IoT) as it is now described. Over the past decade or so, the challenge and growth in the digitized world has shifted from hardware to software. What was previously limited by digitized capability and capacity has migrated to the ability to innovate and harness the availability of the ever growing processing power and multiple zettabytes of data commonly referred to as big data. The combination of the relative affordable availability of big data and crunching ability through complex algorithms has ushered in a new dawn for artificial intelligence (AI). Big data on its own has the value of a raw material. AI unleashes its potential which has invaded our lives through everyday devices such as our smartphones to highly sophisticated industrial robots and medical applications which has taken efficiency, productivity and applications far beyond expectations.
As Babak Hodjat described it, “The AI industry to Big Data is as petrochemical industry was to crude oil. We have the promise of doing more with the Big-Data crude than to simply burn it.” Singapore and its industrial partners recognised this many years ago which led to the development of the Jurong Chemicals hub, upgrading oil refinery outputs further to higher value products. Whilst some press headlines prominently featured the oil refinery for Saudi Aramco’s entry into Malaysia’s RAPID project in Pengerang Johor, it is possible that the integrated downstream petrochemicals scope proved to be the “AI” to Big Data the investor was looking for. This is in line with Saudi Aramco’s domestic strategy of going downstream into chemicals exemplified by its Sadara Project claiming to be the world’s largest integrated chemical complex ever built in a single phase.
Not resting on its laurels, acknowledging the increasingly competitive market, Singapore has to innovate and it is. Digitization is already widespread in Jurong Chemicals hub, with pockets of AI applications but there are opportunities to escalate the adoption of creative AI innovations to increase availability and utilisation whilst reducing costs. Without the advantage of very low cost feedstock which other parts of the world are endowed with, the gap to close with cost leaders is very significant. “Plain-vanilla” AI offering conventional optimisation and waste minimisation may not be good enough for longer term sustainability. Merely survival does not differentiate Singapore sufficiently as thriving has always been the benchmark that has served it so well over the years.
Like most other installations, it is much easier and more cost effective to design in such AI in new investments than to add-on or adapt later. Just like driverless cars, it is easier – perhaps only viable – to design and equip it at the outset rather than to retrofit an existing conventional car. New ventures therefore should consider all the AI “bells and whistles” to stay ahead. Taking the self-driving car as an example of pushing the AI boundaries, is it conceivable to have unmanned remotely operated chemical facilities? There are already many examples of unmanned facilities including oil/gas/chemicals installations.
Unlike Japan’s geographically dispersed legacy oil refining and petrochemicals industry which is undergoing extensive restructuring considerations to keep up with competition, Singapore has the unique advantage of concentration in Jurong. Can innovative AI provide a virtual bridge to enable further integration across various corporate boundaries in order to grow the synergy pie that can deliver breakthrough cost reduction and optimise the use of resources? Most enterprises have focused their effort on optimisation within their fences but there could be much more on the table if the playing field is widened. An example in the LNG space is the integration of Qatargas and Rasgas, which despite being world class mega operating companies on their own right, have come together for even greater synergies. AI could play a key enabling role to deliver a heightened new level of win-win outcome for the multiple players and industrial community as a whole.
The question is not whether to be or not to be. Digitization is already ongoing. The pertinent question, however, is how much and whether it remains a raw material as big data or upgraded to high value product as AI that can be spun off to greater economic effect.