June 26 by Jason Smith
It’s been said that the best way to predict the future is to invent it. The digital revolution is helping companies not only see into the future, but it’s giving them the ability to actually shape it. And it’s not just industries known for modernization and innovation, the Oil and Gas industry is experiencing a sea of change because of data and technology.
The Revolution Will Be Digitized
In an industry often built on aging infrastructure and focused on the exploration, capture and refinement of material from the Jurassic Period, the term “digital disruption” doesn’t get highly used at company cocktail parties. But with decades of poor cost management, lack of standardization, aging infrastructure and a natural aversion to risk, the industry has been long ripe for innovation. Operational inefficiencies account for 30% of the industry’s cost structure which creates massive incentive for an industry whose market is measured in trillions.
Three fundamental problems being addressed are maintaining aging assets, managing vendors and complying with the myriad of regulations in various jurisdictions around the globe.
CYA – Covering Your Assets
There are over a million oil and gas wells, compressors and processors in North America. The equipment is essential, but expensive and time-consuming to maintain. Moreover, there has historically been no way to predict downtime, which can be extremely costly. Without data, it’s also impossible to improve operations. Compounding the issue, most of this equipment is in remote areas of the world and highly regulated by governments. The cost, risks and rise of new technologies have created a perfect storm for new and creative ways to address these historical problems.
In the way that the cloud has introduced software as a service, oil and gas vendors are now entertaining concepts like compression-as-a-service to solve issues around maintaining equipment and delivering intelligence to streamline operations. But in order to deliver this, there must be underlying technology in place to support it. Until recently, such technology did not exist.
But now there are IoT (Internet of Things) solutions and microapps for real-time machine event analytics that allow remote monitoring of machine performance and emissions for compliance, and failure prediction to allow proactive incident response before there’s actually an incident. This can save time, money, and sometimes even lives.
Streamlining operations, creating efficiencies, and reducing the overall cost of operations can have huge impacts on the company’s bottom line. Just a one-percent downtime of one compressor package can lead to hundreds of thousands of dollars lost over a traditional 3-year contract.
Supply Chain as an Asset
Another issue facing oil and gas companies, whether upstream, midstream or downstream, is the ability to properly manage the vast network of service companies involved in the supply chain. It’s often costly and complicated to track all of the contractors and sub-contractors to ensure compliance, verify billing rates and hours, and process payments.
But leveraging solutions like Apttus, some companies have managed to modernize these tasks and save millions of dollars annually. Having a contract lifecycle management (CLM) system built on the same infrastructure as the contact relationship management (CRM) system enables easy access to vendor and customer details and seamless flow of accurate information through the life of contract negotiations, and even into the post-execution management of the deal. Adding mobile accessibility simplifies the process by providing all of the necessary information to the right people in the right place at the right time, regardless of whether they’re in a big city office, in the middle of the ocean on a platform or deep in a jungle at an exploration site.
Improving vendor management can significantly reduce costs while simultaneously improving accuracy of invoices. Providing a self-serve portal also gives the vendor the feeling of being in control of the process while enforcing compliance like automatic rate verification (against the rate in the CRM), real-time onboarding status and payment tracking for the company. Having accurate invoices and payments also reduces costly, time-consuming audits that can add strain to the business relationship. One Apttus client found savings of $1.77 million annually as a result.
Inventing the Future
Are you collecting data in such a way that you can utilize it? Are your relationships with vendors and partners uniform and are you leveraging them in an appropriate manner? While many companies are leveraging IoT and Artificial Intelligence (AI) to monitor and predict asset performance and maintenance needs to reduce down-time, it is equally important to leverage these innovations to the commercial relationship and processes as well. Beyond asset maintenance, AI can also be used to identify and guide users regarding the best price to charge to win the business, forecast the amount of time it will take to get a given contract executed, identify key fields in a document and extract the data therein, etc. to drive improvement in the Middle Office commercial processes. Using AI in these areas can drive top-line revenue growth as well as bottom line profitability.
In a world dominated by geopolitical uncertainty, natural disasters and innovation, Apttus and Hitachi can deliver a full set of solutions that leverage AI to bring these capabilities to your business on a single platform to help move your organization to an AI-driven digital business, protecting your assets, your supply chain relationships and your bottom line. Let us help you invent your future.
In Houston on July 10, 2018? Join Energy Transfer Partners, Apttus and Hitachi Solutions for a meet and greet, then stay to watch the Houston Astros take on the Oakland Athletics. For details and to register to attend, click here.