ERP – fuelling growth in the uk’s oil and gas industry. By Gavin Oberholzer
A report for the industry body, Oil and Gas UK, last year estimated the oil and gas sector is worth about £35bn to the UK economy. The country still produces and meets the bulk of its own oil and gas needs and has sufficient resources for this to continue for the next 40 years.
Despite fluctuations in oil prices, business continues to expand robustly. According to the Office of National Statistics, the second quarter of 2015 saw a 7.8 per cent rise in oil & gas extraction and the largest increase in North Sea output since 1989. Moreover, the industry is widely viewed as a world-leading centre of excellence in engineering, manufacturing and applied technology.
All of that is, however, no reason for oil and gas businesses to rest on their laurels. In fact, the reverse is true. The success of the sector has bred growing levels of competition. Operators need to be able to address this, as well as dealing effectively with the complexity of new product and service offerings. They must also ensure they have a comprehensive insight into and control over their operations, to ensure they are delivering optimum value to customers.
Cutting through the complexity
Today, oil and gas companies have to deliver more for less. As a result, it is vital that businesses have full insight and control over their entire operating infrastructure, this is the only way they will be in a position to manage investments, company assets, and all of their resources with efficiency, and deliver value adding experiences in the supply chain.
Having the right products, equipment and people in place at the right time and in the right sequence is even more critical than it has ever been in order to maximise capital utilisation and reduce operational expenditure in oil and gas markets today. The need to streamline operational processes in order to cut overheads and maximise assets has become more acute. Yet there are also ever-increasing demands for greater regulatory compliance, pressure to reduce delivery times and a requirement for greater flexibility to meet changing fiscal and market conditions.
To overcome this complex mix of challenges requires a flexible, agile and scalable enterprise resource planning (ERP) infrastructure platform. ERP has come a long way from the days of the 1990s when estimates indicate the majority of projects failed. Solutions have evolved and their functionality developed significantly. Over the years, expertise surrounding these solutions has also grown, so there’s a greater understanding of, not only the technology, but also the business challenges that the oil and gas sector needs to engage with.
However, there are currently still too many organisations industry-wide that run separate and independent planning solutions that do not tie into their existing back-end ERP or accounting systems. A group of project managers probably get together, say, once a month to view the overall current position of the installation and/or related maintenance services and identify any programme deviations, but this doesn’t enable a fast response to a margin variation in order to remain competitive.
After all, today we live in a world where reactions need to be quick-fire. But often not only is information kept in departmental silos, it is also held in spreadsheets where a mistyped figure or missed formula can skew an entire message or KPI. Still, many organisations operating and supplying into the oil and gas sector today exist on a spider’s web of data from a collection of different solutions, from the supply chain to production to finance and beyond. Predictably they are unable to achieve a single homogenous view of all these inter-linking strands of the business.
On the other hand, if cross-organisational information is integrated and updated in real-time, with the help of a highquality ERP solution, giving a 360-degree perspective, reactions can be agile, accurate and proactive and assist organisations to perform better in all areas of the supply chain.
Why ERP is the missing link
ERP can bring far-reaching benefits to all business sectors but in oil and gas the advantages it confers are especially far-reaching. The industry’s asset-heavy nature places great emphasis on using ERP software to provide a working knowledge of the health of vital assets to ensure that they continue to deliver value to the business. This in turn allows organisations to understand and manage assets as part of their wider operations.
Moreover, having real-time reporting through ERP across multiple workloads provides advanced insight into business behaviour, crucial to an industry, which is subject to sudden shifts in market conditions. Downtime in the supply of oil and gas can have major ramifications upon the state of the industry, leading to changes in operational landscape, project timescales and budgets.
Facilitating the access of ERP software solutions through mobile devices on the move has further allowed the oil and gas industries to thrive. Added mobility is enabling oil and gas companies to have a clear picture of their operations from remote locations such as on site drilling and off shore oil platforms.
Blending talent and technology
Most ERP solutions today, especially the industry standards, are robust, rich and dynamic. However, in such a complex environment as the oil and gas sector, simply implementing the right solution will typically not be enough to guarantee the success of a project. Often, it will take a consulting and implementation partner with in-depth expertise of the technology, of business, and of the oil and gas supply chain to understand the exact needs of each individual company.
It could be that they need to go beyond the footprint of a standard solution to fill in the gaps and tailor the technology to fit, for example, a complex mix of contracts or assets. This will demand a broad understanding, experience and knowledge.
However, in the safe hands of a reliable partner, ERP can help reduce operational expenditure, maximise capital utilisations and generally ‘shake up’ processes to enable more insight, more control, more transparency and improved agility. In other words, it can provide everything that’s needed to survive, and even thrive in today’s ultracompetitive environment.
HSO ENTERPRISE SOLUTIONS
Gavin Oberholzer is strategic account manager at HSO Enterprise Solutions. HSO specialises in implementing, integrating, optimising and maintaining enterprise solutions based on Microsoft Dynamics AX, CRM and Office365.
For further information please visit: hso.com