W Energy Software’s Chief Revenue Officer, Mark Hill, authored a featured article in The American Oil & Gas Reporter’s January 2021 digital publication. Titled ‘ERP Systems Designed for Upstream Improve Efficiency, Flexibility‘, Hill discusses how the choice of accounting software could be holding companies back from significant cost savings and efficiency.
TULSA–Let’s talk about the elephant in the room, or more appropriately, the elephant in the datacenter. When it comes to enterprise resource planning, the energy sector is stuck in a rut with companies falling into one of two categories: Those that still manage their business on old, broken technology and spreadsheets; and those with the resources to adhere to an ERP approach that offers broad capability, but strands them in a high-cost structure that puts their business agility in chains.
ERP software is one of the most important technology choices an oil and gas operating 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.
For a decade, operators in the oil and gas industry have pinned their hopes largely on “big box” ERP initially developed for non-oil and gas applications, but traditional ERP software ultimately leaves energy companies with a million-piece LEGO® set and the joy of assembling it. And with every piece assembled, yet another link is forged in a chain that ties down the organization with unrestrained costs, making it impossible to move quickly. It’s not what the oil and gas business needs in today’s evolving world, and it’s also not what investors are looking for.
Enterprise resource planning is a concept that grew out of large-scale manufacturing and high-volume transaction industries such as building passenger jets or selling a smart phone worldwide, where complex supply chains and multinational 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) really are not that complicated in comparison. Their complexity is more in the physical nature of the industry’s 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 capital and operating expenses. 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, it also can require 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 and being disconnected from the most important physical commodity capabilities that address the industry’s challenges.
To read more, click here to visit the featured article in The American Oil & Gas Reporter’s January 2021 digital publication.