ConocoPhillips uses low-code software to help it adapt to the times
Digital transformation – the catch-all term applied to organizations updating their systems and integrating new technologies into their daily workflow – was already evolving rapidly. And then COVID-19 hit. In the face of refuge in place, working from home and other related changes that may be part of a ‘new normal’, digital transformation has suddenly shifted from a high priority to an absolute necessity.
To this end, ConocoPhillips (NYSE: COP) and low-code software company Mendix – which is a division of Siemens‘ (OTC: SIEGY) global industrial operations – recently signed a new corporate contract. At a time like now when energy prices remain under pressure and economic uncertainty is pushing many companies to tighten their belts, why would ConocoPhillips spend more money on new technologies? For many tech equity investors, it’s all about growth. But for companies using the technology itself, it’s about cutting costs and transforming operations for a new digital age.
Wait, what is low-code?
As defined by Mendix, low-code software Development is a visual approach to building apps. Rather than needing to develop and work with the software code itself, a user on a low-code platform can click, drag, and drop components onto a canvas to create software. Thus, even a person with little knowledge of language and software coding can be part of the creation process, and the development of new software tools can be greatly accelerated.
This is important for non-tech companies. Hiring a large IT team may be out of the question, and time-consuming creation of new applications can hamper the progress of a project. ConocoPhillips said it has been using Mendix for the past year and a half and during that time has been able to produce 20 new enterprise-level applications. It has thus signed a new license with Mendix as the centerpiece of a new “center of excellence” in which new software will be deployed to help create value and increase the efficiency of exploration for the oil major.
ConocoPhillips also said it plans to include even non-software developer employees in the process and will be able to complete new software five times faster with Mendix’s low-code platform than before. .
Technology to the rescue
To be clear, I’m not saying this is a reason to go out and buy ConocoPhillips stock. It is also not an endorsement for Siemens, although Mendix is part of the company’s notable focus on its “Digital industry” and “smart infrastructure” segments. Searcher Gartner names Mendix as the visionary leader in their assessment of low-code vendors, but it’s a crowded area with Salesforce.com‘s Lightning, the fast growing private start-up Outsystems, and Appian, to name a few.
But the low-code is worth putting on your radar as an investor. In times of crisis, organizations must make monumental changes to ensure their survival and viability once the dust settles. ConocoPhillips, cash-strapped like the rest of the oil and energy sector for the moment, has found it necessary to update its systems to generate efficiency and cost savings. I expect more deals like this to make headlines in the year ahead.
And although the pure low-code Appian game indicated a slowdown in one’s own business due to the pandemic and the resulting economic problems for its customers, postponement of technology projects can only last as long if a business is interested in long-term viability. Once the coast begins to clear, tech spending on things like low-code could come back in full force as organizations seek to stay current and prepare for disruption in the future.
Simply put, low-code actions require some attention. As the economy tries to emerge from this turmoil, a growing number of non-tech companies will need a digital transformation, and getting software in place as soon as possible will be a top priority.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.