Build vs. Buy: Why Midstream Companies Are Replacing Homegrown Solutions with Technology Partnerships
By Michael Ferrante
UPDATED: September 6, 2023
| 3 min read
When it comes to the software used to manage liquids transportation, there are two schools of thought. On the one hand, buying commercial software has inherent advantages, including lower total cost of ownership (TCO) compared to building custom solutions. For decades, however, midstream transportation providers have opted to build versus buy. Given the competitive nature of the business and unique requirements of each facility, organizations often felt more comfortable developing liquids transportation solutions in-house to custom fit the system to their specific business needs.
Comfort, unfortunately, can’t be the way to make critical business decisions. Today, midstream service providers need a technology partner that can support the always-evolving needs of liquids transportation and ensure efficiency, profitability, and competitive advantage.
Liquids transportation service providers have long relied on computing power to manage their high transaction business. Service providers in this space are motivated to efficiently move hydrocarbons along complex transportation systems, automate accounting, and reduce overhead as much as possible. These system-gained efficiencies allow companies to attract and retain producer contracts in a highly competitive market.
In the past, liquids management software solutions that service providers built themselves largely worked. Some solutions even provided a competitive edge, especially given the limited software products available. Now, that landscape has changed.
Home-grown solutions served their purpose in a fairly static market environment. With incremental production growth in US basins, it was easier to catch up and build out physical and digital infrastructure incrementally. However, the Shale Revolution and production momentum of the last decade have propelled midstream into high gear, and the record level of transactions along pipelines is stressing digital systems to the breaking point.
Internally developed solutions are typically owned and maintained by information technology (IT) departments. IT has never been busier, as they are asked to prioritize cost reduction, standardization, and infrastructure security. Enhancing a legacy system for new business scenarios is necessarily given lower priority in an overworked department. That means systems struggle to keep up with the rapidly evolving needs of the industry.
Companies that have built their own liquids transportation solutions are realizing that their home-grown tools can no longer cut it. To remain profitable and competitive, they need to get out of the software business and trust software vendors – the true experts in the space – to power their operations.
Moving away from homegrown liquids transportation solutions isn’t as easy as choosing a piece of software off the shelf. The midstream service providers who have successfully transitioned away from internal tools have done so by selecting technology partners that can support their unique needs, not just another software vendor.
At W Energy, we truly partner with our customers. In fact, our dedication to serving our customers and developing software based on industry needs is what sets us apart from other vendors. As part of a full midstream ERP solution, our Liquids Transportation module is just one part of the W Energy platform that can grow with our customers’ businesses.
W Energy offers a new way forward for midstream companies, in which you know that your business will always be running on the latest technology and accounting standards. Our team’s commitment to customer success and our product’s continuous development and improvement as a SAAS solution make this possible. W Energy is completely focused on powering midstream operations and providing the agility and cost efficiency you need to succeed in a dynamic business environment. With our portfolio of solutions, W Energy can be there to grow with you as your company expands its footprint.
Flexibility is especially critical as companies find new ways to move hydrocarbons along pipelines, in trucks, and on barges. As business complexity increases, with more contracts and ongoing changes to fees and escalations along with expanding infrastructure, more midstream companies are making the switch to a technology partner they can trust: W Energy.
Author: Michael Ferrante, VP of Transportation
Michael earned a B.S. in business administration from Oklahoma State University. Since joining our team, he has helped build various modules within our software, ranging from marketing to gas balancing to land administration. Michael has lead implementation projects in many business areas of the industry and is currently focused on expanding the Transportation practice area with new pipeline and terminal clients.