The following guest perspective was authored by Brent Potts, Senior Director of Global Marketing for Oil, Gas, and Energy at SAP, ahead of this fall's ASUG Best Practices: Oil, Gas, and Energy conference (Oct. 6-8, in Houston; register here).
The term “energy transition” has become commonplace in discussions about the future of energy. But a closer look at global trends reveals that what’s actually unfolding is less of a transition and more of a diversification.
As will come into focus for attendees at this fall’s ASUG Best Practices: Oil, Gas, and Energy conference (Oct. 6-8, in Houston; register here), this shift is fundamentally reshaping how energy companies operate, invest, and innovate.
Why “Diversification” Is a Better Fit Than “Transition”
While renewable energy sources are gaining ground—and are expected to reach 35% of global generation capacity this year, matching that of coal—fossil fuels remain dominant. Electric vehicles (EVs) are growing in popularity, especially in China, where over half of new cars are electric. In the U.S., EVs made up 9.2% of new vehicle sales last year. Yet, more than 90% of new vehicles still run on hydrocarbons, contributing to a fleet of 290 million vehicles, of which only 1.4% are battery electric.
Globally, coal demand rose by 1.4% last year, natural gas by 2.7%, and oil consumption increased by 0.8%. Even as oil’s share of global energy demand dipped below 30%, its use in aviation and chemical feedstocks continues to grow. These feedstocks are essential for producing plastics, pharmaceuticals, cosmetics, and synthetic rubber. Natural gas, too, plays a dual role—as fuel and as feedstock, particularly in nitrogen fertilizers that support agriculture for nearly half the global population.
The U.S. Energy Information Administration (EIA) projects that primary energy demand will rise between 16% and 57% by 2050. This growth will include increased consumption of oil and gas. In this context, “transition” implies leaving fossil fuels behind, which is clearly not happening. Instead, we’re witnessing a broadening of the energy mix.
The Complexity of Energy Diversification
Energy diversification introduces new layers of complexity. Companies are not just adding renewables—they’re expanding into carbon capture, hydrogen production, EV charging, and lithium development. These new ventures require different business models, technologies, and operational strategies.
To succeed, energy firms must prioritize efficiency, profitability, and environmental stewardship. This means embracing digital transformation, particularly cloud technologies and AI. The energy sector’s use of cloud services is expected to grow nearly 20% annually through 2033.
Technology as a Strategic Enabler
Managing this diversification demands robust technology solutions across the entire value chain—from exploration and production to distribution and retail. Key capabilities include:
- Real-time supply chain and demand planning to respond to market fluctuations.
- Human capital and field service management for optimized workforce deployment.
- Supply chain management for sourcing materials, equipment, and services.
- Sustainability tracking to meet regulatory requirements.
- Analytics and AI for performance optimization and executive decision-making.
These tools help companies maintain visibility, reduce costs, and adapt quickly to changing conditions.
Asset Management and Operational Efficiency
One of the most promising areas of innovation is holistic enterprise asset management. By integrating IoT and mobile technologies with predictive maintenance, companies can reduce maintenance costs by 20–30% and cut downtime by up to 50%. This is especially valuable in upstream operations, where logistics and asset reliability are critical.
For example, turning aging oil refineries into renewable fuel producers is becoming a viable business case. As the world shifts toward lower-carbon energy sources, repurposing existing infrastructure can accelerate sustainability goals while maintaining profitability.
New Revenue Streams and Market Opportunities
Energy diversification also opens doors to new revenue streams. The biofuel market, for instance, is expected to grow by 30% over the next five years. Companies that can efficiently integrate these new lines of business will be better positioned to compete.
End-to-end visibility of the commodity supply chain is another strategic advantage. It allows firms to anticipate price swings, manage inventory, and respond to disruptions with agility.
Balancing Today’s Realities with Tomorrow’s Priorities
Despite the push toward renewables, fossil fuels remain essential. The challenge for energy companies is to balance current demand with future sustainability goals. This requires a nuanced approach—one that recognizes the enduring role of hydrocarbons while investing in cleaner, more diverse energy sources.
The term “energy transition” may persist in public discourse, but “energy diversification” more accurately reflects the industry’s trajectory. It’s a shift toward a multi-source energy landscape, not a departure from traditional fuels.
Embracing Complexity with Confidence
Energy diversification is not just a trend—it’s a strategic imperative. It brings complexity, but also opportunity, to businesses in all industries. With the right technologies and mindset, energy companies can navigate this evolving landscape efficiently and profitably.
From cloud computing and AI to predictive analytics and sustainable asset management, the tools are available and more advanced than ever before. But the key to success, as ever, is to embrace innovation, stay agile, and align operations with both market demands and environmental responsibilities.
ASUG Best Practices for Oil, Gas, and Energy
Learn more about this and many other valuable topics at the upcoming ASUG Best Practices: Oil, Gas, and Energy conference in Houston, Texas, from October 6-8, where you can connect with peers, learn from industry experts, and discover how to drive transformative results in your organization.
Attendees can expect a packed agenda, with Kurt Aerts' opening keynote on "Accelerating Transformation at Scale - ExxonMobil's Cloud Journey with RISE with SAP" kicking things off on a high note.
Elsewhere, Oxy and CITGO will discuss the future of oil, gas, and energy, followed by ConocoPhillips discussing their experiences going live with SAP S/4HANA on RISE with SAP. Sempra will discuss driving supply chain excellence, while CITGO will present "Zero to Hero: Aligning Maintenance and Supply Chain in Oil, Gas, and Energy."
Precision Drilling will focus on transforming Asset Management, while Hilcorp will talk about their journey with RISE with SAP. Chevron is set to discuss their "clean core" evolution and growth beyond SAP BTP, while Southwest Gas and Chevron will team up[ to present customer-led strategies for SAP BTP, SAP Master Data Governance (MDG), and data transformation, while Merit Energy discusses real-world innovation with SAP BTP using SAP Build and SAP Datasphere. Oxy will also share lessons from the field, and Messer will discuss their SAP BTP-powered innovation story.
Still not enough for you? How about dozens of experts, from SAP and partners, discussing everything from product roadmaps to agentic AI to Databricks? This conference will have it all. Register here
today, and don't miss your opportunity to watch the future of oil, gas, and energy come into focus.
Brent Potts is Senior Director of Global Marketing for Oil, Gas, and Energy at SAP.