Tag Archives: process improvement

Why Connecting Silos With Better IM Architecture Is Important

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If you work in an oil and gas company, then you are familiar with the functional divides. We are all familiar with the jokes about geologists vs. engineers. We laugh and even create our own. But jokes aside, oil and gas companies operate in silos and with reason.

But while organizational silos may be necessary to excel and maintain standards of excellence, collaboration and connection across the silos are crucial for survival.

For an energy company to produce hydrocarbons from an asset, it needs all the departments to work together (geoscience, engineering, finance, land, supply chain …etc.). This requires sharing of detailed information and collaborating beyond meeting rooms and email attachments. But the reality in many oil and gas companies today is different, functional silos extend to information silos.

Connected Silos Are Good. Isolated Silos Are Bad

In an attempt to connect silos, “Asset Teams” or “Matrix” organizations are formed and incentive plans are carefully crafted to share goals between functions. These are great strides, but no matter the organizational structure, or the incentive provided, miscommunications, delays, and poor information hand-over are still common place. Until we solve the problem of seamless information sharing, the gap between functional departments will persist; because we are human and we rationalize our decisions differently.  This is where technology and automation (if architected correctly) can play a role in closing the gap between the silos.

Asset team members and supporting business staff have an obligation to share information not only through meetings and email attachments but through organizing and indexing asset files throughout the life of the asset. Fit-for-Purpose IM architecture has a stratigic role to play in closing the gap between the functional silos.  

Connecting Functional Silos With IM Takes Vision & Organizational Commitment 

Advancements in IM (Information Management) and BPMS (Business Process Management Systems) can easily close a big part of the remaining gap. But many companies have not been successful in doing so, despite significant investments in data and process projects. There can be many reasons for this, I share with you two of the most common pitfalls I come across:

  • Silo IM projects or systems –  Architecting and working on IM projects within one function without regard to impact on other departments. I have seen millions of dollars spent to solve isolated geoscience data needs, without accounting for impact on engineering and land departments. Or spent on Exploration IM projects without regard to Appraisal and Development phases of the asset. Quite often, organizations do not take the time to look at the end-to-end processes and its impact on company’s goals. As a result, millions of dollars are spent on IM projects without bringing the silos any closer.  Connecting silos through an IM architecture requires a global vision.
  • Lack of commitment to enterprise standards – If each department defines and collects information according to their own needs without regard of the company’s needs, it is up to other departments to translate and reformat. This often means rework and repetitive verification whenever information reaches a new departmental ‘checkpoint’.

The above pitfalls can be mitigated by recognizing the information dependencies and commonalities between departments then architecting global solutions based on accepted standards and strong technology. It takes a solid vision and commitment.

For a free consultation on how to connect silos effectively, please schedule your appointment with a Certis consultant. Email us at info@certisinc.com or call us on 281-377-5523.

Juicy Data Aligned

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juice

Around the corner from my house is a local shop selling an excellent assortment of fresh vegetable and fruit juices. Having tried their product, I was hooked, and thought it would be a good addition to my diet on a daily basis. But I knew with my schedule that unless I made a financial commitment, and paid ahead of time, I would simply forget to return on a regular basis.  For this reason, I broached the subject of a subscription with the vendor. If the juice was already paid for, and all I had to do was drop in and pick it up, I’d save time, and have incentive to stop by (or waste money).

However, the owner of the shop did not have a subscription model, and had no set process for handling one. But as any great business person does when dealing with a potential long term loyal customer, the owner accommodated my proposition, and simply wrote the subscription terms on a piece of paper (my name, total number of juices owed and date of first purchase), and communicated the arrangement with her staff. This piece of paper, was tacked to the wall behind the counter. I could now walk in at any time, and ask for my juice. Yess!

Of course, this wasn’t a perfect system, but it aligned with business needs (more repeat business), and worked without fail, until, of course, it eventually failed. On my second to last visit, the clerk behind the counter could not find the paper. Whether or not I got the juice owed to me that day is irrelevant to the topic at hand…the business response, however, is not.

When I went in today, they had a bigger piece of paper, with a fluorescent tag on it and large fonts. More importantly, they had also added another data point, labeled ‘REMAINING DRINKS’. This simple addition to their data and slight change to the process made it easier and faster for the business to serve a client. Previously, the salesperson would have to count the number of drinks I had had to date, add the current order, then deduct from the total subscription. But now, at a glance a salesperson can tell if I have remaining drinks or not, and as you can imagine deducting the 2 juices I picked up today from the twelve remaining is far simpler. Not to mention the data and process adjustment, helped them avoid liability, and improved their margins (more time to serve other customers). To me, this is a perfect example of aligning data solutions to business needs.

There are several parallels in the above analogy to our business, the oil and gas industry, albeit with a great deal more complexity. The data needs of our petro professionals, land, geoscience and engineering have been proven to translate directly into financial gains, but are we doing enough listening to what the real needs of the business are? Reference our blog on Better Capital Allocation With A Rear-View Mirror – Look Back for an example on what it takes to align data to corporate needs.

There is real value to harvest inside an individual organization when data strategies are elevated to higher standards. Like the juice shop, oil and gas can reap benefits from improved data handling in terms of response time, reduction in overhead, and client (stakeholder) satisfaction, but on a far larger scale.  If the juice shop had not adapted their methodology in response to their failure of process (even if it wasn’t hugely likely to reoccur) the customer perception might be that they didn’t care to provide better service. Instead, they might just get unofficial advertising from readers asking where I get my juice. I’d suggest that the oil and gas industry could benefit from similar data-handling improvements. Most companies today align their data management strategies to departmental and functional needs.  Unless the data is also aligned to the corporate goals many companies will continue to leave money on the table.

Capture The Retiring Knowledge

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The massive knowledge that is retiring and about to retire in the next five years will bring some companies to a new low in productivity. The U.S. Bureau of Labor Statistics reported that 60% of job openings from 2010 to 2020 across all industries will result from retirees leaving the workforce, and it’s estimated that up to half of the current oil & gas workforce could retire in the next five to ten years.

For companies that do not have their processes defined and weaved into their everyday culture and systems — relying on their engineers and geoscientists knowledge instead — retirement of these professionals will cause a ‘brain drain,’ potentially costing these companies real down time and real money.

One way to minimize the impact of “Brain Drain” is by documenting a company’s unique technical processes and weaving them into training programs and, where possible, into automating technology. Why are process flows important to document? Process flow maps and documents are the geographical maps that give new employees the direction and the transparency they need, not only to ramp up a learning curve faster, but also to repeat the success that experienced resources deliver with their eyes closed.

For example, if a reservoir engineer decides to commission a transient test, equipment must be transported to location, the well is shut down and penetrated, pressure buildup is measured, data is interpreted, and BHP is extrapolated and Kh is calculated.
The above transient test process, if well mapped, would consist of: 1) Decisions 2) Tasks/ Activities 3) A Sequence Flow 4) Responsible and Accountable Parties 5) Clear Input and Output 6) and Possible Reference Materials and Safety Rules. These process components, when well documented and defined, allow a relatively new engineer to easily run the operation from start to end without downtime.

When documenting this knowledge, some of the rules will make its way in contracts and sometimes in technology enablers, such as software and workflow applications. The retiring knowledge can easily be weaved into the rules, reference materials, the sequence flow, and in information systems.

Documenting technical processes is one of the tools to minimize the impact of a retiring workforce. Another equally important way to capture and preserve knowledge is to ensure that data in personal network drives is accumulated, merged with mainstream information, and put in context early enough for the retiring workforce to verify its accuracy before they leave.

Processes and data  for a company make the foundation of a competitive edge, cuts back on rework and errors, and helps for quickly identifying new opportunities.

To learn more about our services on Processes or Data contact us at info@certisinc.com

Better Capital Allocation With A Rear-View Mirror – Look Back

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In front of you are two choices: Tie up $100 million with low return or over spend by $50 million with no reliable return. Which option do you choose? Neither is acceptable.

“It seemed we were either tying up cash and missing on other opportunities, or overspending where we should not have in the first place,” said a former officer of a US independent. “We heard great stories at presentations from engineers and geoscientists as they were painting the picture to executives to fund their programs. But at the end of the year, the growth was never where we had expected it to be.”

Passing by poor investments through better allocation of capital greatly enhances company performance. To achieve this, executives needed a system to look back and evaluate what each asset team had predicted compared to the actual performance of the asset. They needed a look-back system where hindsight is always 20/20.

A look-back system is beneficial not only for better capital allocation, but also to identify and understand the reasons for low or high performance of an investment.

Implementing a look-back system is data intensive. The data needed, however, typically has already been collected and stored as part of everyday operations. For example most companies have an AFE system that captures predicted economics of well projects. All companies keep system(s) to capture production volumes and accounting data for both revenue and costs.  Data for evaluating an investment after-the-fact is already available – for the most part.  The reason executives did not have a look-back system was buried in their processes. In how each asset’s economic returns are calculated and allocated.

Here are few tips to consider when implementing a look-back system for an oil and gas company:

  • Start with the end. Identify the performance indicators (KPI) required to measure assets’ performance.
  • Standardize how economics are prepared by each asset team. Only then will you be able to compare apples to apples.
  • Allocate costs and revenue back to each well. Granularity matters and is key. With granularity, mistakes of lumping costs under a wrong category can be avoided and easily rectified.
  • Missing information for the KPI’s? Introduce processes to capture and enter data in company’s systems (historically this information may be in presentation slides and personal spreadsheets).
  • If well information is scattered across systems, data integration will be needed. Well, AFE, Production, Reserves, and Accounting data will need to be correlated.
  • Automate the generation of information to executives. Engineers and geoscientist should not have to prepare reports at the end of each month or quarter to management. Their time is FAR better spent making money and assets work harder for their investors.
  • Know it is a change to the culture. Leadership support must be behind the initiative and well communicated throughout the stake holders.

“Once we implemented a look-back system, we funded successful teams more and reduced the budget from under performing assets, then we utilized the freed money to grow. We were a better company all around” – Former Officer of a Large Independent.

How an E & P Subsidiary took its Information Communications from Risky to Efficient

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It starts with chatter around the workplace. A company is growing. Procedures that were once “nice to have” are now serious money bleeds. That is exactly what Certis found when they revamped a major E&P subsidiary’s communication procedures.

When an oil and gas company plants itself in any nation to explore for business opportunities, its communications with the nation’s government and with its JV partners can be, understandably, informal for the early stages of the project. As the company moves from Exploration and Appraisal phases towards a full fledge Development and Operation, what once worked with lax communications becomes a risky endeavor.

While these risks can be underplayed next to health and safety hazards, we discovered they warranted immediate action if the company is to survive long term. Consider these two real situations, to name a few:

1)      Sensitive information leaks, for example, at early stages of exploration efforts, any discovery would have a large impact on a company’s stock price (if public) and serious implications on their competitor’s behavior.

2)      Growing companies’ watch millions of dollars become billions of dollars almost overnight. Those large dollar amounts require complete technical data and timely communications to appease the government and the JV partner. The flow of information becomes crucial.

Knowing something is broken isn’t the same as understanding how it is broken and how to fix it.

Most employees can feel the weak spots in their company. When you start to sense problems, the cost of fixing them seems outlandish. But overtime the scales tip. Often, when the scales tip, the problem has grown to overwhelming proportions for employees to handle alone.

The scale had long ago tipped for this client.  Our team’s role was to quickly identify causes of communication problems, and orchestrate a long-term plan and processes to mitigate risks.

Over a period of few weeks, we surveyed the office, field, and rigs in two different continents. We went through a full cycle of process improvement. At the end we were able to divide their information communications needs into four process categories: 1) Documents and Data Management 2) Decisions Documentation 3) Security and Access Management 4) Request Management.

Our plan started with ‘Quick Wins’ that changed the way the subsidiary did business in the first month. Imagine being able to institute relevant changes in your company in one month. Yes, it was that easy to solve. The rest of the implementation plan spanned over 4 months. Communication policies, standards and procedures were to be defined and complied to across the organization.

We all know that the cost of fixing is cheap compared to the cost of cleaning up a huge mess later.

The costs of missed opportunities, reduced stock prices, or the cost of million-dollar lawsuits make this kind of projects important, combine that with the relevant low fixing cost, makes this project a “high” priority.

I believe a company needs to do more than simply comply with government or JV partner contracts. To build strong relationships, you must be able to readily prove your compliance. That’s just good business.

Our client’s new transparent business practices allow the government to view them as a serious and trusted part of the country’s future. It is impossible to put a price on a valued relationship. But successful business people know that gaining trust means big business over time.

What about your company? Is it starting to feel the risks of outdated communication systems?