Standards as Value Creators in Oil and Gas
I attended the PIDX International US Fall Conference last week in Houston where the theme was “How Standards Accelerate the Realization of Value in Oil & Gas.” A variety of speakers gave presentations around this topic by presenting real world examples, including Entrance’s President Nate Richards. I want to highlight some of the key messages that I saw coming out of this gathering of industry experts.
Be Proactive Not Reactive
In a joint session, Noble Energy presented with ADP on the ways they use standards to drive global efficiency in their e-invoicing handling. The message that stood out most to me was that they were being proactive, not reactive, thanks to e-invoicing. In other words, by leveraging PIDX standards, Noble is able to address issues before they become problems rather than constantly chasing down errors and answers to questions. It lets Noble ask the questions instead of being the recipient of questions. The ability to be proactive drives efficiency by reducing time spent on things such as follow-up and re-work.
The Time is Now
A common theme that presented itself across many presentations was the idea that “the time is now” for e-business automation. The standards are well-established and the technology is robust. There is a sense that critical mass is being reached as leaner businesses squeeze out inefficiencies in their back offices. Businesses that are not automating are quickly falling behind the curve as time marches on. Ultimately, businesses that ignore the momentum toward the automation of trading partner interactions will put themselves at a competitive disadvantage as electronic business transactions become “table stakes” for businesses across the entire oil and gas industry.
Common Business Challenges
As part of a panel discussion, Deloitte elaborated on the value of standards in the oil and gas industry. Deloitte’s presentation made an important point about the business challenges facing the oil and gas industry. Specifically, the Deloitte representative highlighted the following challenges:
- Mergers and Acquisitions
- Rapid Growth
- Lack of Integration
- Technology
The speed of business is constantly accelerating and nowhere is that true more than oil and gas right now. Data exchange standards provide a common language with which to drive process efficiency which ultimately facilitates M&A and enables rapid growth. Lack of integration is a historical challenge but this is a clearable hurdle now for those companies willing to make an investment in their future efficiency. Technology is constantly changing and larger organizations may struggle with their internal IT groups to get the right tools to meet their urgent business needs.
Not Just the Standard Schema
On the technical side, it all comes down to actually making everything work at the end of day. While standards like PIDX provide a standard schema to facilitate communication between businesses, there is still a significant challenge to be overcome around semantics. The PIDX standard provides a framework but ultimately each implementer uses the standard in a way that makes sense to it. There is still much more to be done around defining the meaning of terms. For example, there is consistently disagreement between organizations and individuals over the definition of what is a “well,” which is such a fundamental aspect of any oil and gas data discussion. (PPDM has done a lot of work on this particular example, but challenges still remain across the lexicon of oil and gas.)
What’s next?
For businesses in the oil and gas industry looking to drive efficiency in the back office, e-business automation is a proven tool. If you are interested in learning more how to reduce manual processes, eliminate paper, decrease days sales outstanding (DSO) and drive down costs, then it’s time to talk to Entrance consultants about creating a vision and road map for your company’s software strategy that leverages standards and the latest technology to enable an efficient back office.