Benefits of a Unified Platform Built in the Cloud

Series Part 2: 7 Reasons to Replace Your Legacy Midstream Accounting Software

In the age of working from home, streaming services, and social media, we run our digital lives in the cloud.  In recent memory, cloud computing was new, and something companies were debating whether to embrace. Today, leveraging the benefits of the cloud is commonplace so it’s shocking to see oil and gas applications still housed on servers in the office, administrators whose job is to maintain databases and old software, and software that can’t be accessed on your device of choice from outside the office. Unfortunately, legacy plant accounting software users experience those same pains. This gap doesn’t just affect plant accounting software, but solutions throughout the oil and gas industry. Being unable to leverage software in the cloud creates dozens of point solutions that don’t work well together, while creating enormous costs for companies and making energy professionals work harder. 

7 Reasons to Replace Your Legacy Plant Accounting Software is a series of blog posts aimed at helping energy professionals understand the limitations and risks of legacy solutions.  Part 1 began with a backstory of why midstream is ready for change and so far we’ve covered enhancing data transparency and accessibility and improving user experience.  In this post, we are looking into the many benefits of a unified software platform built on the cloud, and how you can skip your spreadsheet workarounds.

The problem with Multiple Software Solutions

Energy companies often rely on different software systems to run their business, several of which are built on twenty to thirty-year-old technology, predating cloud computing. A midstream company will often have one software package for plant accounting and other separate systems for division orders and disbursement, contract management, gathering, and financial accounting, just to name a few. In nearly every situation, these pieces of software were built with different technologies at different times by different development teams with different ways of coding, even if they come from the same vendor! Each of those differences translates to poor or nonexistent integration between disparate systems, restricted flow of business data, and inability to answer questions through reporting solutions. If you use these kinds of systems, you know just how much effort it takes to get your job done since many midstream workflows require multiple types of software. You spend time shuffling data between systems, working with drastically different user interfaces, and generally trying to avoid a plethora of technical pitfalls with manual workarounds. Why would someone need to create the same data object in three different modules or software solutions?

In an attempt to modernize, legacy solution providers have had to either extend their products with outdated code, or bolt on newer pieces of functionality. Most software vendors try to buy their way out of the problem by acquiring other software companies. As a result, their fundamental business model prioritizes acquisition over innovation, creating a sprawl of loosely coupled tools and data silos. Ultimately, users of legacy software suffer from inability to support the business, technical issues between software systems, and more time spent in monthly processes. Without a modernization roadmap, such solutions merely compile new features incrementally which creates gaps, slows performance, and renders a poor user experience.

W Energy started with a roadmap for building a unified platform on the cloud for the energy industry.  By pulling core workflows together in one place, applications share a common and consistent dataset, eliminating the problems posed by data silos. This means that applications are inherently integrated with each other, and share a common user interface and master data list. For plant accounting and ancillary modules, this means that you can access everything you need in one system without logging in to different applications and shuffling data between division order, disbursement, and contract management systems. For gathering customers, W Energy Software’s unified approach means that they can securely manage nominations and track inventory from any computer. It’s all seamless and fully integrated. For companies looking to dramatically reduce software, administration, and hardware costs while accelerating business performance, W Energy is the clear choice.

Eliminating the Need for Excel Workarounds

Midstream companies are realizing how critical a software solution is to support their employees and customers.  Whether accountants need to handle new ASC 606 revenue recognition standards, quickly answer how results were calculated, or ensure accurate NGL shrink calculations, the last thing you want is to perform those calculations in Excel.  After all, you purchased plant accounting software — right?  Companies invest money in accounting software, but their users are forced to rely on Excel because of system limitations, a lack of transparency, or no trust in their software.

Why users are forced to use Excel

In our years of experience assisting clients implement our software, we have seen several instances where clients provide us with spreadsheets of things their software couldn’t do accurately. For example, during a discovery call with an oil and gas company in Denver, we were told they wanted to convert from a common legacy plant accounting solution. However, when we kicked off the project, we quickly learned this client was settling their plants in Excel because they didn’t trust their legacy software!

Sure, it can be tempting to turn to Excel when faced with uncertainty about whether the accounting solution is performing calculations correctly, or if there are software limitations. However, manually validating calculations and creating spreadsheet-based workarounds are costly and create nightmares for internal/external auditors. In addition to the potential for human error that exists in manually verifying high-volume transactions, companies that work with financial data outside their ERP put compliance at risk. Standalone Excel workarounds also carry a high cost in terms of maintaining what can be hundreds of different spreadsheets, not to mention overhead costs.

To put the uncertainty and functionality gabs into perspective, the following list includes some of the reasons why legacy plant accounting software forces customers to adopt Excel as a method for verifying calculations and filling functionality gaps:

• Calculating inflation rates
• Verifying escalation schedules
• Calculating fixed recoveries and changing from ethane recovery to rejection
• Tracking minimum volume commitments
• Creating deficiency invoices
• Handling cumulative imbalances
• Handling prior period adjustments
• Calculating tier-based fees/POP percentages
• Tracking contract management terms, provisions, and dedications
• Applying revenue recognition requirements for ASC 606 journaling.

Ditch the spreadsheet, drop more revenue to your bottom line

There’s a real and high cost of relying on Excel because you don’t trust the calculations, financial results, and the ability of legacy plant accounting software to consistently perform tasks.  In fact, one of our recent clients (a large Permian midstream company) previously relied on nearly 100 spreadsheets. These spreadsheets included several of the workflows listed above, and many more, with the underlying premise being their legacy plant accounting solution wasn’t matching expectations. This client is now saving thousands of dollars between time saved, audit costs, less knowledge transfer, and a better total cost of ownership. It’s not your fault if legacy plant accounting software requires you to rely on Excel for daily or monthly tasks. 

At W Energy, we believe midstream companies deserve better than the status quo.  We’ve designed our product differently from the ground-up.  We’ve listened to the pains our clients have had and designed effective solutions so they can quickly replace those spreadsheets.  We continue investing in our product to ensure it continues to exceed expectations.  Now, we’re not promising you’ll never use another spreadsheet. What we are suggesting is that you don’t pay for software that cannot handle your business or work with companies who don’t listen to your needs and develop solutions for you.

So, if you’re frustrated with being forced to use dozens of spreadsheet workarounds to close out your month, be sure to reach out to W Energy to learn how you can close your assets faster, and with confidence.

Ready to learn more? Let’s talk.