OILMAN Article: ERP Innovation Imperative: Why Legacy Tech is Holding Back the Energy Back Office

Enterprise resource planning (ERP) software is one of the most important technology choices an energy company can make. It impacts all facets of corporate health and wellbeing, including general and administrative, operational expenses, employee satisfaction, vendor relations and competitive advantage. It is also central to an organization’s ability to pivot and adapt to our industry’s ever-changing market conditions. When it comes to ERP, though, many upstream energy companies are stuck in a rut.

Amid an exponentially expanding digital oil field, energy professionals must be equipped with ERP technology that is optimized to manage an increasingly complex and data-driven business while providing scalability and cost containment. The oil and gas industry has entered the digital age where continuous innovation is the only winning strategy and those who rely on 20 to 30-year old ERP software are effectively wielding Stone Age tools.

The World Economic Forum estimates that upwards of $1.6 trillion of value are associated with digital transformation in the energy sector; however, capturing that value across upstream organizations has not been uniform. Only 16 percent of energy companies feel they are responding to digital transformation with an aggressive strategy at scale.

There is a large gap between what many energy companies can achieve with their current ERP systems, and what is now possible through the Cloud – automation, AI, analytics and a technology capability chasm between laggards and digital innovators that is only widening with time. To cross that chasm requires a giant leap forward, not just small, incremental steps.

Energy companies large and small must have an ERP digital transformation strategy to thrive. For those who successfully execute and sustain digital transformation, the payoff is big, including increased business performance, agility and millions in annual cost savings. Digital innovators like Laredo Petroleum and Riverbend Energy Group have embarked on their digital oil field transformation journey, positioning them for success with ERP technology that scales as they grow.

Figure 1: The widening technology capability chasm separating digital innovators from laggards.
Figure 1: The widening technology capability chasm separating digital innovators from laggards.

What Exactly is ERP in Oil and Gas?

Whether teams refer to their core business systems as ERP or not, every upstream organization relies on enterprise resource planning technology to manage leases, accounting, production operations, revenue disbursement, taxes and regulatory compliance. In most cases “ERP” is a mish mash of “point solutions,” highly specialized commercial or homegrown software. Upstream companies typically have one piece of software for managing financials (general ledger) and others for revenue accounting, allocations, lease administration, division order and interest owner payments.

Such point solutions are by nature disconnected from each other with little or no integration, creating data silos, multiple versions of the truth and data delays across multidisciplinary teams. Typical land management, accounting, production and regulatory solutions are also built with old, legacy technology and require heavy reliance on spreadsheets to plug functionality gaps. The result is fragmented ERP solutions that don’t play well together, information sprawl, and systems that are brittle and can’t scale as upstream companies grow.

Instead of dozens of point solutions, larger energy companies have gravitated to ERP software developed decades ago as an on-premise suite of applications. While the technology undeniably has created robust and reliable capabilities to manage the digital and physical oil field under a steady-state market, “big box” ERP requires an army of consultants to deploy and comes with a bloated box of building blocks, providing cost and complexity overkill while still leaving the industry with underwhelming capability.

 

To read more, click here to visit the featured article in The Oilman Magazine’s Sept. 2021 digital publication.

 


 

About W Energy Software

Headquartered in Tulsa, Oklahoma, W Energy Software offers the oil & gas industry’s only unified ERP solution built for the cloud that is relied on by more than 130 upstream and midstream companies to accelerate business performance, improve operational efficiency, and drive costs down.  W Energy Software combines precision-built software in one extendable cloud-based workspace with an intimate understanding of the oil & gas business to deliver solutions that offer flexibility, affordability, and continuous upgrades.  Unlike other ERP software that loosely ties together a mix of legacy solutions and fragmented technologies, W Energy Software designed a unified upstream and midstream ERP platform to seamlessly track oil, gas, and NGL from the wellhead through transportation and marketing, eliminating data silos as well as the burden and costs of maintaining multiple systems.  With W Energy Software, oil & gas companies stay lean and agile with the tools they need to adapt to market changes and meet evolving customer needs head-on, all while gaining the confidence that their business is running on the latest technology. For more information, please visit www.wenergysoftware.com.

 


 

Pete Waldroop, CEO and President of W Energy Software 

With over 27 years of experience in software consulting and the energy business, Pete has helped clients, such as ExxonMobil, Shell Oil, Anadarko Petroleum, Targa Resources, and many others, design and implement better software solutions. Prior to joining our team in 2010, he served as a partner at Capitalize Consulting, was a founder and EVP at Quorum Business Solutions, and was the original developer for TIPS in 1992 while at Andersen Consulting — now Accenture. Pete holds a degree in electrical engineering from Oklahoma

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