Capability Mapping for Oil and Gas Manufacturers

1. Capability Mapping for Operational Excellence in Oil & Gas www.capstera.com 1

2. Map Your Enterprise, Maximize Your Energy. In today's volatile energy landscape, oil and gas companies ▪ face unprecedented challenges—fluctuating commodity prices, heightened regulatory scrutiny, sustainability imperatives, and digital disruption. These pressures demand a fundamental rethinking of how operations and technology are organized and optimized. Business Capability Maps provide oil and gas enterprises with ▪ a powerful lens to visualize, assess, and transform their business and IT landscapes. By creating a comprehensive inventory of what the business does—distinct from how it operates—executives gain the strategic clarity needed to eliminate redundancies, optimize operations, and align technology investments with business outcomes. www.capstera.com 2 2

3. The Operational Challenge in Energy 1 Oil and gas companies operate in a complex, asset-intensive environment with high operational costs and significant safety and environmental considerations. This complexity creates numerous optimization challenges that capability mapping can address. ▪ Operational Silos: Upstream, midstream, and downstream operations often function as distinct businesses with limited visibility across value chain stages. ▪ System Proliferation: Years of mergers, acquisitions, and point solutions have created a tangled web of applications with overlapping functionality. ▪ Process Fragmentation: Similar operational activities are performed differently across business units, creating inconsistency and inefficiency. ▪ Technology Misalignment: IT investments often target symptoms rather than root causes due to inadequate understanding of core business needs. ▪ Change Resistance: Without a clear view of business capabilities, transformation initiatives meet resistance and struggle to demonstrate value. www.capstera.com 3

4. Business Capability Maps Defined 2 A Business Capability Map provides a structured visualization of what an organization does, independent of how it operates or who performs the work. It creates a stable reference architecture that transcends organizational changes. ▪ Enterprise DNA: Business capabilities represent the fundamental building blocks of the enterprise, capturing the essence of what the business does. ▪ Hierarchical Structure: Capabilities are typically organized in 3-4 levels of increasing granularity, from major business domains to specific business functions. ▪ Organizational Neutrality: Unlike process models or org charts, capability maps remain stable through reorganizations and leadership changes. ▪ Common Language: The capability map establishes a shared vocabulary for business and technology stakeholders to discuss needs and priorities. ▪ Strategic Lens: The map provides a stable framework for assessing performance, maturity, and strategic importance across the enterprise. www.capstera.com 4

5. Operational Optimization Through Capability Analysis 3 Capability mapping reveals redundancies, inconsistencies, and improvement opportunities across oil and gas operations from exploration to retail. ▪ Process Standardization: Identifying similar capabilities performed across different business units highlights opportunities for process harmonization. ▪ Operational Gaps: Capability assessment reveals areas where critical functions lack sufficient maturity or performance. ▪ Workforce Optimization: The map provides clarity on skill requirements and optimal organizational structures to support key capabilities. ▪ Performance Benchmarking: Capability-based KPIs enable apples-to-apples performance comparisons across diverse business units. ▪ Resource Allocation: Capability assessment guides the optimal distribution of people, assets, and investment across operational areas. www.capstera.com 5

6. Technology Portfolio Rationalization 4 Mapping applications and systems to business capabilities reveals redundancies, gaps, and optimization opportunities across the technology landscape. ▪ Application Redundancy Identification: The capability-to- system map reveals multiple applications supporting the same capabilities, highlighting consolidation opportunities. ▪ Coverage Analysis: Capability mapping exposes critical business functions with inadequate technology support requiring investment. ▪ Legacy System Assessment: The map facilitates evaluation of aging systems based on the strategic importance of the capabilities they support. ▪ Integration Prioritization: Capability dependencies highlight critical integration points that require attention in the technology architecture. ▪ Technology Investment Planning: Capital expenditure decisions can be prioritized based on the strategic importance and performance gaps of supported capabilities. www.capstera.com 6

7. Did You Know According to a 2023 McKinsey study, oil and gas companies ▪ that implemented comprehensive capability-based optimization achieved cost reductions of 15-20% in operational expenses while simultaneously improving asset performance by 8-12%. www.capstera.com 7

8. Upstream Operations Optimization 5 In exploration and production, capability mapping provides particular value in optimizing capital-intensive operations and enhancing asset performance. ▪ Exploration Efficiency: Mapping exploration capabilities reveals opportunities to standardize geological assessment approaches and technologies. ▪ Drilling Operations Consistency: Capability analysis identifies opportunities to apply best practices in drilling operations across geographic regions. ▪ Production Optimization: The map highlights fragmented production management capabilities that can benefit from standardized approaches and systems. ▪ Asset Integrity Management: Capability assessment reveals maintenance approach inconsistencies across different asset types and locations. ▪ Field Operations Coordination: The capability view exposes coordination gaps between reservoir management, production, and maintenance activities. www.capstera.com 8

9. Midstream Excellence Through Capability Alignment 6 For transportation, storage, and preliminary processing operations, capability mapping uncovers optimization opportunities that enhance throughput and reduce costs. ▪ Pipeline Network Optimization: Capability assessment identifies opportunities to standardize monitoring, maintenance, and control across pipeline networks. ▪ Terminal Operations Standardization: The map reveals inconsistent approaches to terminal management that can benefit from unified processes and systems. ▪ Transportation Planning Integration: Capability mapping highlights fragmentation in transportation planning across different product types and regions. ▪ Storage Utilization Enhancement: Capability analysis exposes opportunities to optimize storage capacity utilization through standardized management approaches. ▪ Customer Interface Consolidation: The map reveals redundant customer-facing capabilities and systems for wholesale and B2B customers. www.capstera.com 9

10. Downstream Performance Improvement 7 In refining, distribution, and retail operations, capability mapping identifies optimization opportunities that enhance margins and customer experience. ▪ Refinery Process Standardization: Capability assessment reveals inconsistent approaches to similar refining processes across different facilities. ▪ Distribution Network Optimization: The map highlights opportunities to standardize and enhance distribution planning across products and regions. ▪ Retail Operations Alignment: Capability analysis exposes inconsistent approaches to site management, merchandising, and customer service. ▪ Product Management Harmonization: The map reveals fragmented product development and management capabilities across different product lines. ▪ Customer Experience Consolidation: Capability assessment identifies redundant and disconnected customer-facing capabilities and systems. www.capstera.com 10

11. Digital Transformation Enablement 8 Business capability maps provide the essential foundation for successful digital initiatives by connecting technology investments to business outcomes. ▪ Digital Investment Prioritization: Capability assessment reveals high-value areas where digital technologies can deliver the greatest operational impact. ▪ Digital Twin Foundations: The capability map provides the business context for implementing digital twins of physical assets and operations. ▪ IoT Implementation Planning: Capability analysis identifies sensor integration points and data utilization opportunities across operational capabilities. ▪ Analytics Use Case Development: The map reveals high- value decision points that can benefit from advanced analytics and AI-driven insights. ▪ Automation Opportunity Identification: Capability assessment highlights manual, repetitive activities that are candidates for robotic process automation or AI. www.capstera.com 11

12. Did You Know A recent Gartner survey found that oil and gas companies ▪ with mature business capability mapping practices reduced IT costs by an average of 18% while increasing operational efficiency by 22% compared to industry peers. www.capstera.com 12

13. Data Management Optimization 9 Capability mapping enhances data governance and utilization by connecting information assets to the business capabilities they support. ▪ Data Ownership Clarity: The capability map establishes clear ownership and stewardship for critical data based on capability responsibilities. ▪ Information Flow Optimization: Capability dependencies reveal the natural flow of information across the organization, highlighting integration needs. ▪ Data Quality Prioritization: The strategic importance of capabilities guides the prioritization of data quality initiatives across the enterprise. ▪ Master Data Rationalization: Capability mapping identifies redundant master data sources and management approaches that can be consolidated. ▪ Analytics Foundation: The capability map provides the business context for designing data warehouses, lakes, and analytics environments. 13 www.capstera.com 13

14. Merger and Acquisition Optimization 10 For an industry characterized by frequent consolidation, capability mapping provides the framework for optimizing integration and capturing synergies. ▪ Pre-Deal Assessment: Capability mapping enables rapid assessment of acquisition targets to identify overlaps, gaps, and synergy opportunities. ▪ Integration Roadmapping: The capability view provides a structured approach to sequencing integration activities based on value and complexity. ▪ Synergy Identification: Mapping the capabilities of merged entities reveals specific areas for consolidation, elimination, or enhancement. ▪ Best Practice Selection: Capability assessment guides decisions about which operational approaches and systems to retain from each organization. ▪ Cultural Integration: The capability view provides a neutral, fact-based foundation for making integration decisions that transcend organizational politics. www.capstera.com 14

15. Regulatory Compliance Streamlining 11 In the highly regulated oil and gas sector, capability mapping enhances compliance efficiency and effectiveness. ▪ Control Framework Alignment: Mapping regulatory controls to business capabilities ensures comprehensive coverage without redundancy. ▪ Compliance Rationalization: The capability view reveals duplicate or overlapping compliance activities that can be consolidated. ▪ Regulatory Change Impact Assessment: Capability mapping provides the framework for assessing the impact of new regulations across the enterprise. ▪ Documentation Standardization: The capability structure provides a consistent framework for organizing compliance documentation. ▪ Audit Efficiency: Capability-based compliance mapping streamlines audit processes by providing clear traceability from requirements to controls. www.capstera.com 15

16. Technology Investment Optimization 12 Capability mapping transforms technology investment planning from a technical exercise to a business-driven process that delivers measurable value. ▪ Investment Alignment: Capability-based planning ensures technology investments directly support strategic business priorities. ▪ Value Realization: Connecting investments to capability improvements enables clear measurement of business outcomes and benefits. ▪ Portfolio Balancing: The capability view ensures appropriate distribution of investments across strategic, operational, and compliance needs. ▪ Technical Debt Prioritization: Capability assessment guides decisions about which legacy systems to modernize based on business importance. ▪ Innovation Focus: Capability mapping identifies areas where innovative technologies can create competitive differentiation versus operational improvements. www.capstera.com 16

17. Workforce Optimization 13 The capability view provides insights for optimizing organizational structure, roles, and skills to enhance operational performance. ▪ Organizational Design: Capability assessment informs decisions about optimal organizational structures to support key business functions. ▪ Role Definition: The capability map provides the foundation for designing roles that align with business needs and minimize fragmentation. ▪ Skill Requirements: Capability analysis identifies critical competencies required to perform key business functions effectively. ▪ Resource Allocation: The capability view guides decisions about where to add, reduce, or reallocate human resources based on strategic priorities. ▪ Training Prioritization: Capability assessment highlights skill gaps that require development to improve operational performance. www.capstera.com 17

18. Implementation Methodology 14 Implementing a capability-based approach to optimization requires a structured methodology that delivers incremental value while building toward comprehensive transformation. ▪ Current State Mapping: Begin by documenting existing capabilities, assessing their performance, and mapping supporting technologies. ▪ Heat Map Development: Create visual overlays that highlight performance issues, technology fragmentation, and strategic importance. ▪ Opportunity Identification: Use the capability assessment to identify high-value improvement opportunities across operations and technology. ▪ Roadmap Creation: Develop a sequenced plan for addressing optimization opportunities based on value, dependency, and complexity. ▪ Governance Establishment: Implement capability-based governance to ensure sustained optimization rather than point solutions. www.capstera.com 18

19. Measuring Optimization Value 15 Demonstrating the value of capability-based optimization requires a structured approach to measurement that connects activities to business outcomes. ▪ Operational Efficiency Metrics: Track improvements in key performance indicators for optimized capabilities, such as cycle time, throughput, and quality. ▪ Cost Reduction Tracking: Measure operational and technology cost reductions achieved through standardization, consolidation, and elimination of redundancy. ▪ Asset Performance Improvement: Quantify enhancements in asset utilization, uptime, and maintenance costs resulting from capability optimization. ▪ Technology Complexity Reduction: Track decreases in application count, interfaces, and technology diversity achieved through rationalization. ▪ Business Agility Enhancement: Measure improvements in the organization's ability to adapt to market changes and implement new initiatives. www.capstera.com 19

20. Takeaway Business Capability Maps provide oil and gas companies with a powerful framework for optimizing operations and technology by creating visibility into what the business does, how well it performs, and how technologies support business needs. By mapping capabilities across the hydrocarbon value chain, organizations can identify redundancies, standardize operations, rationalize systems, and prioritize investments to maximize efficiency and performance. Whether addressing upstream asset optimization, midstream logistics enhancement, or downstream customer experience, the capability-based approach creates a common language and analytical framework that bridges business and technology to drive sustainable improvement. 20 www.capstera.com 20

21. Next Steps 1. Assess Your Current State: Conduct a rapid inventory of existing business architecture artifacts and technology rationalization initiatives to identify building blocks for capability-based optimization. 2. Start With High-Value Areas: Identify specific operational domains with known inefficiencies or technology challenges as initial focus areas for capability mapping. 3. Build Your Capability Map: Develop a comprehensive view of your organization's capabilities using workshops, stakeholder interviews, and existing documentation. 4. Create Insightful Heat Maps: Overlay performance data, technology support, and strategic importance to identify priority optimization opportunities. 5. Develop Your Optimization Roadmap: Create a sequenced plan for addressing identified opportunities based on business value, complexity, and dependencies. 21 www.capstera.com 21

22. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 22 www.capstera.com 22

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