Avoid Software Companies Who Leverage Inferior Technology as a Way to Add on a Consulting Engagement to Squeeze You Dry
I’m continuing my blog series that shares some of my most valuable learning experiences as an energy controller with 3 decades in the business. Lesson 1 was about throwing good money in after bad and the problems we had at Agave settling our month with the legacy plant accounting software. Lesson 2 illustrated the importance of challenging the status quo, giving others a chance, and embracing change. In today’s lesson, I’m going to dig right into the root of the problem with legacy software vendors and show you their true colors.
In our transition from the status quo plant accounting solution to a superior alternative, we had contracted an expert in that plant processing system to guide us along the way. He was eventually won over like the rest of us but one thing he admitted during the process was just how vested the legacy solution provider is in consulting dollars. In fact, he told me a story about how one large E&P spends $80,000 a quarter to close their books with its software provider. The fact that you have to spend big on top of expensive software that doesn’t work right, to begin with, is just adding insult to injury.
“Planned obsolescence” is a strategy some software companies use to intentionally build limitations into their product to force consumers to pony up for the next version or upgrade. Some of the biggest names in oil & gas software do this too. It is a function of their business model, which is entirely focused on acquiring technology, not building it. But upgrades are just a carrot on the end of a stick. They prefer you to take the path of least resistance, right into their services division where they make big banks on their own software’s limitations.
While at Agave we had a large asset with 5,000 wells that needed to be set up in the legacy plant accounting solution. To do this “by the book” the legacy provider recommended dividing into 27 assets each of which would require a dedicated accounting employee to manage. It was either hire 26 additional people, farm it out to the provider, or make do with what we had.
Steer clear of the disingenuous. Avoid consulting companies who only sprinkle on technology as a way to funnel business to their services. Look for technology partners who have the services you need, if and when you need them.
|Kevin Throneberry, Kevin Throneberry is a Certified Public Accountant with 30 years of accounting and information technology experience including auditing of various industries and 13 years accounting and management with a midstream oil and gas company. Co-leader of Section 355 Tax-Free Spin of the company reducing tax liability by 150 million dollars. He recently secured one of the top three multiples for mid-stream sales and mergers. Kevin has extensive knowledge and skillset in W Energy Software mid-stream products, TIPS Gas Processing, QCM Contract Management, PGAS Gas Measurement, and IBM Cognos.