How Operational Digital Twins Improve Capital Discipline
Capital discipline is the practice of generating more profit from flat or reduced revenue. In today’s uncertain economy, companies are expected to practice capital discipline. According to Jeff Krimmel, two common ways to achieve capital discipline include (a) improved technology and (b) cost management (Krimmel, 2025).
In asset intensive industries, 30% or more of the operating costs could be due to equipment operations. Improving operational performance could result in an impactful reduction in operating costs, leading to a direct improvement in operating margin. This is also a low-hanging fruit because it is entirely within the control of the company, and results could be achieved quickly. Customers have demonstrated material reduction in CAPEX and OPEX within the first year (Precision Drilling, 2024).
Operational digital twins are real-time, history-accurate digital replicas of asset operations. By leveraging advanced analytics and AI, operational digital twins drive down maintenance costs, improve operational efficiency, and provide supply chain predictability. These drive down the cost of delivery and improve operating margin for the business.
Asset Health
As the industry pushes equipment harder and closer to their technical limits, asset health is critical to achieving uninterrupted operations and reducing maintenance costs. Operational digital twins monitor equipment operations in real-time to predict potential failures before they occur, reducing unplanned downtime by as much as 90%. Using advanced AI models, operational digital twins guide the ops team to replace components just-in-time. This reduces maintenance CAPEX, OPEX, and lost revenue from Non-Productive Time.
Operational Performance
Operational excellence from the ops team goes hand-in-hand with asset health. Many catastrophic failures occur due to procedural non-compliant actions (or non-actions). Maintaining operational excellence is increasingly difficult because of the challenge of hiring experienced field crews in today’s environment.
Operational digital twins serve as the maintenance knowledge base for the ops team. It turns data-driven insights into smart actionable instructions, automates maintenance tasks to save time and reduce mistakes, and enforces consistent, measurable performance. While the financial impact of this is harder to quantify, improvements in operational performance clearly lead to better equipment maintenance and less downtime.
Supply Chain Visibility
Supply chain has traditionally been challenged with low visibility into equipment operations. Why do some rigs incur more costs than other rigs? How to forecast equipment health as we push them closer to their technical limits? How to measure product quality among different vendors? These are questions few companies have answers to.
With the rise in cost and the increase in unpredictability in the post-COVID era, it has become imperative to improve supply chain visibility. The digital twin applies advanced data science to predict asset needs months in advance and to enable objective vendor product quality comparison. This improves visibility and predictability and helps the supply chain team to achieve effective cost management.
As companies are expected to practice capital discipline, reducing operational costs is a low-hanging fruit for quickly returning capital. Operational digital twins can impactfully improve operational performance in both the short and the long term, enabling companies to position themselves as the best-equipped to take advantage of a more disciplined business environment.