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In refining and oil & gas, the ability to deliver targeted margins is being reshaped by three structural pressures: rising and volatile costs, particularly energy; increasingly demanding legislation; and constrained access to experienced, skilled resources. In this environment, operational underperformance is no longer survivable. Low-performing operators do not recover. They fail.
This is the economic cliff. Beneath it sits a less visible but more fundamental issue: the digital cliff.
The digital cliff is reached when legacy systems, fragmented data and established ways of working can no longer support the speed, quality and adaptability of decision-making the business now requires. For years, these limitations are masked by experience, manual workarounds and personal effort. Then costs rise, regulatory scrutiny increases or key people leave — and performance drops sharply.
Costs, regulation and access to skills are the pressures most leadership teams focus on. But they are external forces. The digital cliff increasingly determines whether an organization can respond to them at all. High cost operators fail not simply because costs rise, but because they cannot see, model and act on cost drivers quickly enough. Regulatory pressure becomes existential when compliance depends on spreadsheets and reconciliation rather than trusted systems. Skills shortages become fatal when knowledge sits with individuals rather than being embedded in models, data and repeatable ways of working.
Digital transformation is often treated as a technology programme. That framing misses the point. Digital transformation is about rethinking how value is delivered, from planning and operations through to compliance and customer outcomes, and then reshaping the organization to support faster, more confident decisions.
When done well, it improves the cost position, shortens response times and increases resilience. When done poorly, it produces dashboards, pilots and a false sense of progress.
The biggest constraint is rarely the technology. It is organizational. Internal resistance, functional silos and a preference for the familiar, ‘this is the way things are done around here’, slow progress in ways that are easy to rationalize, but hard to confront. Many leadership teams believe they are being prudent by avoiding disruption. In reality, they are accumulating risk.
Once an organization crosses the digital cliff, change becomes reactive and expensive. Investment is driven by urgency rather than intent, and strategic options narrow quickly.
The uncomfortable truth is simple. Digital capability is no longer a differentiator. It defines whether an organization has any meaningful room to manoeuvre at all.
At KBC, we see repeatedly that organizations avoid the economic cliff only when technology, processes and people are aligned around better decision making, when leaders are prepared to challenge how work is done, not how it is described, and when the front line is truly engaged and mobilized.
Comfort feels safe. It rarely is.
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KBC works with clients to integrate technology, including AI, into ways of working, from the boardroom to the control room, and beyond.