Breaking Free From Big Box ERP Costs: Part 1 – The ERP Elephant in the Datacenter

ERP software – it’s one of the most important technology choices an E&P company can make that impacts all facets of corporate health and wellbeing including G&A, operational expenses, employee satisfaction, vendor relations, and competitive advantage. It’s also central to an organization’s ability to pivot and adapt to our industry’s ever-changing market conditions. For a decade, large E&Ps have pinned their hopes on the dominant ‘big-box’ player in ERP. This large technology player delivers to energy companies a million-piece Lego set and the hopes that they relish the joy of assembling it. And with every piece assembled, they are forging another link in a chain that ties down the organization with unconstrained costs and a weighty infrastructure, making it impossible to move quickly. It’s not what the oil & gas business needs in today’s evolving world, and it’s not what investors are looking for.

W Energy Software is empowering E&Ps to break free from big box ERP costs and the rush to our energy-focused SaaS ERP is on. In this blog series, I’m going to talk candidly about the elephant in the room, or more appropriately, the elephant in the datacenter. Over the next few posts, I’ll explain why ERP is vital to the future of our industry, why “big box” ERP is an albatross around the necks of large E&Ps, what best-in-class energy ERP looks like, and why W Energy Software is for everyone, large integrated energy companies, and smaller independents.

When it comes to enterprise resource planning (ERP), the energy sector is stuck in a rut with companies falling into two categories; those managing their business on old, broken technology and spreadsheets and those with the resources adhering to an ERP approach that offers broad capability but strands them in a high-cost structure that puts their business agility in chains.

ERP is a concept that grew out of large-scale manufacturing and high-volume transaction industries such as building passenger jets or selling a smartphone worldwide, where complex supply chains and multi-national accounting must be automated and optimized at every moment, spanning hundreds of business processes. Despite our industry’s unique complexity, the supply chain and accounting requirements for drilling and operating wells (which may span 30 discrete business processes) aren’t that complicated in comparison, finding their complexity more in the physical nature and movement of our products and the locations where they reside.

For larger energy companies, the ERP concept tends to be well known in the C-suite as a method to manage assets at scale, gain visibility into financials, and optimize CapEx and OpEx. Instead of dozens of point solutions, larger energy companies have gravitated to a single ERP vendor whose software requires an army of consultants to deploy. Despite the bloated box of building blocks that the vendor provides, the industry is still left with the underwhelming capability and is disconnected from the most important aspect that needs managing, the physical characteristics of the commodities and land holdings that fill the company’s portfolio.

Is the ERP technology that was designed for the scale and business of Walmart or Boeing the right fit for managing a producer’s commodity assets, logistics, and transactions? The answer is less about whether or not Big Red is purpose-built for oil & gas and more about complexity. In a cyclical industry where there’s nothing “super” about a super cycle, hundreds of millions of dollars hinge on a company’s ability to adapt and move. Now more than ever before in our industry’s history, agility is paramount to the survival and health of many energy enterprises, yet many continue to forfeit flexibility and bend under the weight of a solution that effectively adds significant cycles to business processes, chains a company to a boat anchor of infrastructure and leaves them hamstrung in decision making and action.

Stay tuned, in the next blog post in this series I’m taking a deep dive into the very real financial and opportunity costs that big box ERPs continue to inflict by handcuffing E&Ps to unwieldy technology.