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Software for oil industry real estate

Monday, January 10, 2011

Many oil and gas companies could benefit from a more structured approach to facilities and real estate management, writes Phil Wales, CEO of Houston-based eBusiness Strategies (www.ebiz-strategy.com)

philwales.jpgIt may be surprising to discover that management of the oil and gas industry’s collectively vast real estate and facilities (RE&F) is a breed apart from the rest of their companies technologically.

To an outside observer, this would seem almost incomprehensible when looking at the scale of  services offered and size of the Real Estate & Facilities Capital Expenditures (RE&F CAPEX) and/or Operational Expenditure (OPEX) budgets.

However, in comparison to operating units, this cost is relatively small and lacks the focus prevalent in other industries.

Most real estate services in oil and gas companies have originated as discrete functions within individual business units and evolved in silos. This not only applies to day-to-day operations of these groups, but also to their enabling technologies.

The impact? These disparate growth patterns have resulted in each organization supporting their real estate activities differently and rarely focused under an enterprise-wide approach.

Consequently, with no standard approach or centralized direction, oil and gas companies have often let individual sites implement solutions.

This had led to some companies having dozens or even hundreds of real estate software applications in use.  

In fairness, various business units have handled real property assets admirably, but the typical approach is a simple reactive service offering of fixing what breaks, for example.

Unfortunately, reactivity puts companies on a collision course with transformational change occurring throughout other areas in the industry. With no consistent way to measure asset performance, this old reactive management approach is awkward at best in today’s technology-driven world.


New technological trend

The upshot is that these companies have no consolidated way to roll up metrics region-to-region, building-to-building or activity-to-activity other than labor-intensively moving data
between spreadsheets.

Fortunately, these “walls” are coming down as more companies view their RE&F services in general - RE&F technology specifically - in a completely new light.

As stated before, business units have traditionally handled their own space by viewing it as only another asset required to conduct business. That thinking bred another typical reality; facilities taking a back seat to core operations when it comes to funding.

Thus, many of these business-managed facilities fall into disrepair, resulting in disconnects within operating standards, business processes and facilities management technology.

The good news is that the recent trend is increasingly toward consolidating all oil and gas real estate and facilities management under one corporate services umbrella.

Bringing these assets under a single operating model drives companies to standardized practices and literally creates the opportunity to implement uniform supporting technology.


Choosing IT packages

When selecting and managing software packages for service organizations such as Real Estate and Facilities (RE&F), it is critical to remember that technology is only an enabler. Said more memorably, “The tools are cool but the processes rule.”

This guiding principle drives companies to take a more structured approach towards selecting real estate/facilities management software.

In adopting this new approach, remember that technology and best practices go hand-in-hand.  

Good business processes (e.g., Best Practices) are designed to allow technology to offload the mundane data collection and repetitive administrative functions.

Essentially, good technology enables business processes to let skilled labour solve problems instead of babysitting a computer.

Taking that objective a step further, the concept of enabling technology focuses on software that can actually become an integral part of service delivery,  thus enabling facility personnel to work smarter.  

This differs from the too-common approach of buying technology first and then trying to figure out how to adapt to it or, in many cases, how to work around it, all of which rings hollow on the “Money well-spent” barometer.  

Secondarily, using aligned technology which is enabled to support a best practice business model actually forces a preferred behavior.

When selecting a service-oriented software solution the key issue is that the process must be a business-driven initiative, which is precisely where too many organizations make their most critical error.


Is ERP OK?

Heard the following scenario before? The RE&F staff, believing “It’s just software,” abdicates their responsibility to the company’s IT organization.

In turn, not understanding the functional requirements around managing real estate, IT will typically turn to what they know best: the ERP system they have deployed.

If that appears acceptable, the more successful companies think not. Though these software giants market real estate and facilities “solutions,” they rarely provide the depth of operational capabilities necessary to transform a RE&F organization, which should be the real point.

Therefore, RE&F professionals must step up to the plate when selecting an enabling software solution while maintaining a laser focus on a key point.  

That is, IT’s role is to help ensure that any potential selection will work within the corporate infrastructure, but only facilities management personnel know what the technology must do.


Technology strategies

A fact which still surprises many is that the most successful technology projects have little to do with technology. To the contrary, successful RE&F technology implementations begin with a vision for how work should be performed, a willingness to change current practices and enforce standards, a clear definition of business processes for work in the future and management’s unwavering support for guiding the organization through the change.

As a practical matter, the more structured approach to selecting software revolves around a push among majors to move away from the rigid “This is how we do it” mindset to adopting best practices, then getting them documented, agreed to and communicated. In turn, the technology solutions being implemented are a catalyst to bring online both technological and policies/procedures improvements.  

In this way, RE&F management optimizes the services offered by the organization while adding technology that lets them actually measure performance in a consistent way. In an even bolder move, instead of tweaking their own processes, some companies are saying, “Tell us the industry’s best practices and we’ll adopt them.” This includes both the business methods and the aligned supporting technology.

See a pattern? This approach allows organizations to have traceability from their strategic vision all the way down to their tactical delivery. In buying and implementing technology tools, traceability shows how each tool supports the functional requirements, which support the processes, which support the metrics and performance criteria, which support the strategy. The more tactical that companies get, the more critical that traceability must be aligned all the way to the top of the organization.


Conclusion

In a well-defined and implemented best practice, the technology tool greatly enables oil and gas real estate organizations to do their job better. The tool is where they store decisions, access information, and perform analyses and comparative assessments.

Further, when working with good systems, they are allied with systems that “talk and think” real estate, which is why large ERP systems are not as effective; the latter talk and think finance, procurement and Human Resources (HR).

Properly selected and implemented technology is a strategic support system that eliminates rote daily work by doing it all “behind the scenes” so users can more productively focus on making well-informed decisions.

In the Digital Oilfield, real estate/facility management technology tools have moved from being just a repository of actions to becoming a strategic analytic tool that can trend for the best decisions. While this development has only come about recently, it is remarkably changing oil and gas real estate and facilities management globally.


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