Breaking Silos, Building Connections: The Energy Industry Value Chain

The Critical Role of Value Chain Modernization in the Energy Sector’s Digital and Decarbonization Journey

The energy industry stands at a pivotal crossroads. The sector faces unprecedented volatility—driven by extreme weather events, geopolitical shifts, regulatory pressure, and the urgent need to decarbonize. Navigating this landscape while maintaining profitability and meeting stakeholder expectations is a formidable challenge. For energy companies, the ability to adapt and thrive hinges on one foundational imperative: value chain modernization (VCM).

Why Value Chain Modernization Matters

Decarbonization and digital transformation are reshaping the energy sector. Ambitious government policies, such as the U.S. Inflation Reduction Act and the EU’s Renewable Energy Directive, are accelerating the shift to renewables and low-carbon solutions. Yet, while these changes create new opportunities, they also introduce complexity and risk. Energy companies must balance long-term sustainability goals with short-term profitability, requiring a holistic view of their entire value chain—from production to consumption.

VCM is the process of adopting new business practices and digital technologies to improve the efficiency, profitability, and sustainability of value-creating processes that span organizations and corporate divisions. It is not just a technology upgrade; it is a fundamental rethinking of how value is created, measured, and monetized across the enterprise.

The Silo Challenge: Barriers to Value Chain Transformation

Despite the clear need for transformation, many energy companies remain hampered by internal silos:

Data Silos: Information is often trapped within departments, making it difficult to gain a unified view of operations, supply, and demand. This fragmentation limits the ability to forecast, optimize, and respond to market changes.
Organizational Silos: Divisions operate with their own incentives and KPIs, leading to misaligned priorities and suboptimal decision-making. Teams are often incentivized to maximize their own performance, not the value of the entire chain.
Process Silos: Legacy work processes are information-constrained, slow to adapt, and unable to support the agility required for today’s market dynamics.

These silos not only impede operational efficiency but also obscure the hidden value that exists in the connections between business units and external partners. As one industry leader noted, “The inability to perceive the value chain that spans internal divisions—and external partners—blinds companies to the value that resides in the gaps between them.”

Breaking Down Barriers: Practical Steps to VCM

Break Down Data Silos
- Invest in digital platforms that unify data across the organization, enabling real-time analytics and a single source of truth for decision-making.
- Foster seamless information flows between business units, empowering teams to act in the interest of the wider organization.
- Prioritize data quality and security, as trustworthy data is essential for both operational reliability and regulatory compliance.
Create Incentives for Collaboration
- Align metrics, rewards, and learning programs to encourage cross-functional collaboration and value chain thinking.
- Ensure that leadership sets the tone, making it clear that decisions should benefit the whole organization, not just individual silos.
- Move beyond reliance on individual champions by embedding collaboration into the organizational fabric through digital tools and shared objectives.
Clarify and Track Commercial Benefits
- Use digital strategies to identify and capture new revenue streams, such as carbon credits, renewable integration, and customer-centric services like EV charging and retail media networks.
- Implement performance indicators and predictors that measure both current value and future opportunities across the value chain.
- Build agility into the value chain, enabling rapid pivots to seize emerging opportunities in the energy transition.

The Role of Digital Platforms and AI

Digital platforms are the backbone of successful VCM. They enable:

Centralized Decision Frameworks: A common language and set of metrics for value chain performance.
Real-Time Analytics: Immediate insights into operations, risk, and market opportunities.
Integrated Risk Management: Proactive identification and mitigation of supply, demand, and compliance risks.
Blockchain and Smart Contracts: Automated, transparent, and secure transactions across the value chain.

Artificial intelligence (AI) further amplifies these capabilities. AI-driven forecasting can anticipate demand, price fluctuations, and supply disruptions—critical in a sector where renewables introduce new variability. AI also supports predictive maintenance, outage management, and optimization of distributed energy resources, driving both reliability and profitability.

Case Examples: Digital Value Chain Transformation in Action

Integrated Renewable Operations: One leading energy company invested heavily in wind and solar, integrating these assets into its core business. By breaking down silos and leveraging digital platforms, renewables now account for 80% of its profits.
Blockchain for Trading: A consortium of major oil companies and traders implemented a blockchain-based platform to automate post-trade processes. This reduced errors and cut costs by up to 40%, demonstrating the power of digital collaboration across traditional competitors.
Customer-Centric Retail: Companies are reimagining the retail experience for EV drivers, combining fast charging with convenience services and leveraging data to upsell and cross-sell new offerings.

The Path Forward: Building a Resilient, Connected Value Chain

The energy transition is not just about new technologies or greener products—it is about reimagining the entire value chain. Companies that break down silos and build digital connections across their operations will be best positioned to:

Optimize operations and reduce costs
Improve customer experience and loyalty
Unlock new commercial opportunities in decarbonization, digital services, and beyond

While VCM is not solely a digital initiative, it is nearly impossible to achieve without a robust digital foundation. The winners in the energy sector will be those who embrace data-driven, collaborative, and agile approaches—turning the value chain from a series of disconnected parts into a source of sustainable competitive advantage.

Connect with Publicis Sapient

Publicis Sapient partners with energy organizations worldwide to design and deliver the next generation of digital value chain solutions. To learn more about how we can help your business break silos and build connections for the future, visit publicissapient.com/energy-commodities.