3 Cost-Effective Ways to Improve Field Customer Service

Navigate

Oilfield Services Companies who survived the downturn did so by cutting costs and lowering the price of services to retain customers. With oil prices on the rise and stability returning to the industry, oilfield service companies must remain competitive to regain the lost revenue during the downturn.

Producers are demanding more from service providers. The increased producer demands include improved information, consistency and responsiveness.

  1. Information

Capturing and measuring customer feedback is key to continuing to provide the highest level of service. The following steps can be taken to collect and measure customer reviews:

  • Define key satisfaction metrics, such as overall service experience and likelihood of returning for repeat business.
  • Determine how to consistently capture the established metrics. Consider presenting measures to the customer upon service completion.
  • Drive home the notion that feedback should be captured by field personnel for every customer, every time.

Once quality metrics are established, service organizations should set clear guidelines and assign responsibility for documenting customer feedback. Any deviation from standard processes will cause the data collected to be unclear. Perform regular analysis on customer feedback. Analyzing the data is arguably the most important step to identifying trends, areas for improvement and new service opportunities.

The final step is to set expectations for acting on the feedback received. Regional and niche service providers have the clear advantage here – they tend to be more flexible and work harder to improve service provided to compete with industry giants. Allowing the business to see how customers view the services they were provided, encourages all levels within the business, from Management to field hands, to take ownership in remediating negative feedback.

  1. Consistency

Service organizations should have a single point of contact as the face of the company throughout the customer experience. Lacking a single source of contact leads to heightened customer frustration. Multiple rounds of relaying the same information before connecting with the appropriate individual does not earn a positive customer service rating. Providing a designated account manager helps to create a hassle-free customer experience.

Many field service companies experience customer dissatisfaction after receiving an invoice with surprise or incorrect charges. A field services organization found the clear majority of disputed invoices were attributed to pricing inaccuracies. The company underwent a standardization initiative to set contract terms, pricing agreements, and customer guarantees up front, before work is performed. This initiative resulted in a significant decrease in the number of disputed invoices received and improved collections. This standardization also improved the SOX controls environment and reduced external auditor fees.

Another method to boost customer ratings is striving to deliver the highest quality service. Producers who have a negative service experience are likely to spread the word resulting in a bad reputation in the market. Incentivize employees with direct customer interaction to maintain service quality. Include these employees in feedback review sessions to help enforce accountability for service delivery.

  1. Responsiveness

Producer complaints often times point to inadequate or late communications. Get ahead of the curve and train your organization to communicate all updates – big and small – to the customer. Updates may include service delays, crew and equipment changes, or additional service needs. In this arena, over-communication is always the best solution.

Consider employing a platform business model to keep producers connected to critical data, such as contact information, quotes, field tickets and invoices. A west Texas drilling company utilizes a platform of this nature, which serves as a customer self-service portal enabling both parties access to shared data. With a self-service option, customers can login to retrieve real-time job and billing information, which limits the time service providers spend addressing basic customer inquiries. Being transparent and sharing information improves producer confidence in the service provider.

Don’t settle for the status quo – differentiate as an oilfield service provider. Act on customer feedback, reduce the number of dissatisfied customers, and maintain connectivity with existing customers.

 

Trenegy is a non-traditional consulting firm proven to help companies manage changes in processes, systems, and controls – no matter the economic environment. Find out more at info@trenegy.com.

 

The Gig Economy: Gigster Impact on Corporations

Navigate

On Mondays and Fridays, Beth drives for Uber, picking up and dropping off traveling professionals at the airport. On Tuesdays and Wednesdays, she meets with some professionals (whom she met through Sortfolio) at a coffee shop to discuss her design recommendations for their new websites. If she feels like it, she can do someone a Favor by picking up a coffee and delivering it down the street. On Thursdays and Saturdays, she hangs picture frames and assembles IKEA furniture through TaskRabbit (now, IKEA) – or she just hangs out with her kids. Beth does not have a full-time job. Is Beth lazy? Is she uneducated? Maybe, or maybe she has just chosen a different lifestyle – a more flexible approach to work.

What is it?

The Gig Economy, or the Sharing Economy, is an economy comprised of short-term, temporary work contracts or freelance work. The gig economy “gigsters” perform a specific task and leave. The gig economy is commonly misconstrued as a way for workers with a full-time job to make extra money, but that is not always the case. Uber, Postmates, Favor, and TaskRabbit are platform companies known for building the companies on the gig economy. Many of the contract workers on the platforms hold various contract-based jobs across various platforms. A recent study by Brookings Intuition shows the gig economy is growing faster than traditional payroll employment with freelancers currently make up 34% of the workforce. The gig workforce is made up of more than just pay-per-service workers; many technical professionals including lawyers, accountants, and engineers are participating in the gig economy.

Why is it growing?

The continued advancement of technology will drive the expansion of the gig economy, as companies and individual workers are able to easily connect over platforms. With the growth of technology-based education, individuals can easily access specialized training to become experts in various industries, business processes or subject matters. Platform businesses are leveraging technology to connect specialized white-collar professionals with large corporations. Companies are looking for people who have the targeted experience the company can use to solve specific problems. Designers, marketing staff, and IT specialists are common roles that can be filled on a freelance basis.

Millennials prefer flexible schedules to allow them to fully experience life, travel and family. Having seen the Baby Boomer parents trade family and life experience for a paycheck, most millennials are opting for seemingly less rigid opportunities. Traditional career advancement came in the form of a promotion which meant more responsibility and money. The gig economy offers advancement by leveraging online learning opportunities and turning knowledge into immediate cash. The more knowledge and “stars” a freelancer earns on the platform results in more money. Flexibility is winning, and the rigid career ladder is not worth the trouble.

How can it benefit my company?

Even large companies can benefit from leveraging the gig economy. Platforms give companies access to a larger talent pool to provide targeted expertise. For example, a talented tax professional is hired as a full-time employee. The tax professional may spend four hours per week focused on providing the high valued expertise for the company. To fill his work week, the remainder of the tax professional’s job includes more mundane paper work. The tax professional commands a high salary regardless of what other work he is assigned. The result: the company is paying more and the tax professional is bored with the mundane work. Fast forward to the gig economy… The company hires a less skilled administrator for half the salary to handle the mundane tax paperwork and crowdsources a freelance tax professional when needed. The freelance tax professional may charge double for his four hours per week, and he can leverage his experience across several companies increasing his flexibility and his return. Both the company and the tax professional win.

Is the gig economy a fad or a real trend?

By 2020 50% of workers will participate in the gig economy. With technology continuing to improve, companies who ignore the gig economy may not be as competitive in the fight for talent. Companies should understand the unique values the core workforce and the gigsters each bring to the organization. The core workforce sustains competitive leadership and culture to the company while freelancers bring specialized knowledge when it is needed. Balancing both forces of workers is important for companies capitalize on the opportunities provided by the gig economy.

 

Trenegy is a non-traditional consulting firm dedicated to helping industry professionals take advantage of the changes and trends in the economy. We translate business jargon into useful terms and solutions that actually benefit your company. Find out how more: info@trenegy.com and jargone.trenegy.com.

Energy: The Continued Race to IPO and the Hurdles to Clear

Navigate

Earlier this year, many Oil and Gas companies were racing to IPO in an effort to capitalize on the crude oil price rise. Companies were looking to raise cash to complete two major objectives:

  1. Eliminate debt caused by the downturn
  2. Expand assets to increase capacity for the upturn

These companies made a strong strategic move to grow and mitigate the growing debt and competition risk. However, with change comes new compliance risks which must be mitigated. Public companies require a new compliance burden around Internal Controls over Financial Reporting (ICFR). Most companies have a few years to prepare for these burdensome Audits, thanks mostly to SOX 404(c) and a PCAOB interpretive release 2007; however, management is still required to self-certify the effectiveness of their internal controls. SOX 404 is something many companies put off, forcing their CFO to certify ICFR are in place without any genuine confidence. With oil prices recent volatility, Oil and Gas companies need to be prepared for sudden price hikes that could push their public float, assets, and/or revenue over the SOX 404(c) threshold requiring an ICFR external audit. Companies can mitigate the SOX 404 burden by understanding their internal control risks and ensuring the new controls do not slow down efficiency.

Prior to an IPO, Oil and Gas companies must understand what SOX 404 specifically means for them. An IPO is not the time to be blindly confident in ICFR, but rather a chance to uncover and address potential weaknesses. Here’s what companies need to know to help identify and mitigate their control risks:

No more auditor safety net – O&G Companies that still lean on their auditors to uncover deficiencies could get hit with an ICFR deficiency. Per COSO 2013, public companies are now responsible for their own internal control risk assessments and proactive monitoring of control effectiveness. More simply, companies are now responsible for their own asset cycle counts, inventory counts, account reconciliations, controls, etc. How can a company take control without their auditors? Perform a COSO 2013 Risk Assessment to map out their controls matrix and identify their areas of risk.

Covering more than the activity level controlsActivity level controls are often the controls that every CFO thinks he/she has covered. From a process standpoint, this is often true. However, the key difference between private and public processes is the required documentation needed to ensure controls are in place. Leverage the risk assessment to map out all the key controls in process flows. Each key control needs documentation to test and to confirm that it happens successfully. Examples of documentation include written approval, meeting minutes, system audit trail, email chains. Pick what makes the most sense for your company and begin documenting.

Insufficient roles and responsibilitiesMost private O&G companies run very lean on the compliance side and, therefore, have some omitted roles and responsibilities that need to be filled. Utilize the risk assessment to identify these areas early and to assign roles and responsibilities to experienced professionals. Making early steps towards ensuring a strong tone at the top and governance structure.

Overlooking IT – IT is typically not a popular department for most private O&G companies, and is often overlooked in risk assessments. Focus on securing your financial systems. This means confirming a strong infrastructure is in place to prevent unauthorized data changes and documenting a segregation of duties matrix to ensure users cannot make any unauthorized transactions.

Spending time on the above tasks will go a long way to confirming a company’s transition to the public sector is smooth and less burdensome.

Implementing COSO 2013 framework to support a proper ICFR can be a time-consuming process and can quickly get out of hand if the wrong approach is taken. Here are some best practices when rolling out ICFR for Sox 404:

Control Design

  1. Leverage the Risk Assessment’s key risks when deciding where to design internal controls.
  2. Each key risk should have controls that are both prevention and detection controls. Relying too heavily on one over the other can cause greater risks.
  3. Define the key processes and map out each key control so that the team will better understand the whole process, ensuring efficiently designed controls.
  4. Ensure that all controls are designed with an expected output or evidence that can be tested.
  5. Quality over Quantity is the most important factor when developing a controls framework.

Control Operation

  1. Training, Tone at the Top, procedural documents, process flows, and narratives all help to certify each control has strong operational effectiveness.
  2. Assign Control owners and have them confirm whether they performed their control each month.

The above best practices will ensure a properly developed controls framework that will not over-complicate or hinder process efficiencies. As oil prices continue to stabilize we should see more and more O&G companies IPO in effort to reduce debt accumulated over the last 2-3 years. The companies who IPO need to understand the ensuing compliance risks and mitigate those risks in the most efficient way.

Trenegy is a non-traditional consulting firm experienced in designing, implementing, and testing successful controls frameworks. Learn how Implementing Internal Controls can be smooth and straight-forward. Find out more: info@trenegy.com

The Cloud Demystified

Navigate

It sounds ethereal and intangible, but The Cloud is pretty down-to-earth. Simply put, The Cloud stores data and programs on servers which can be easily accessed via the internet. This frees up data from being stored locally on an individual’s computer or an organization’s on-site server. Fittingly, the Weather Channel (TWC) utilizes The Cloud to deliver fifteen billion forecasts each day. Such computing power allows weather.com to be available within one hundred milliseconds to anyone on earth — not an easy task. To transform from the cable TV company chasing tornados and baseball size hail, to a global weather data provider, TWC acquired various companies around the world, leading to a complicated IT infrastructure which contained over a dozen data centers. By moving to The Cloud, TWC cut the number of data centers in half, saving $1 million each year. TWC is not the only company leveraging The Cloud. According to Onyx, seventy-five percent of businesses are using cloud computing in some way with eighty-four percent of CIOs reporting savings by moving to The Cloud.

Though The Cloud is one of the tech industry’s most popular technologies, it actually preceded the World Wide Web. In fact, the concepts that led to The Cloud began when computers were still the size of rooms. Too costly to purchase and maintain for use by a single company, users would access these computers/mainframes through time-sharing, similar to the pay as you go plans that many cloud companies currently utilize. A brief history…

  • In 1969, J.C.R Licklider developed ARPANET (Advanced Research Projects Agency Network) the basis for what we know as the internet today.
  • In the 1970s, IBM improved on time-sharing by creating Virtual Machines, which allowed multiple virtual systems on one computer.
  • In the 1990s, telecommunication companies developed Virtual Private Networks (VPN), providing more control over networks and bandwidth.
  • In the 2000s, the term The Cloud was coined to refer to any shared pool of computer resources accessed over the internet.

To help clear the air on The Cloud, The National Institute of Standards and Technology has coined five essential characteristics defining cloud technologies:

  1. On-demand self-service — Providing computing resources on an as-needed basis, without human interaction. Example: Signing up for a new app is immediate.
  2. Broad network access — Access to data and programs over the internet on multiple devices, from desktop to mobile. Example: Accessing home cameras from smartphone and desktop.
  3. Resource pooling — Combining computing resources to serve multiple users, often from different locations. Example: Amazon’s web services providing infrastructure.
  4. Rapid elasticity — Scaling to size and power of the user, no more and no less. Example: Adding more space for iCloud pictures.
  5. Measured service — Monitoring and controlling usage, similar to utilities. Example: Netflix measuring what is watched.

Today, not all clouds are the same. With the availability of multiple cloud deployment models, there is a good fit for consumers of all shapes and sizes. What about cybersecurity? It is an outdated, uninformed fear that data on The Cloud is not secure. In fact, data stored on-site or in proprietary servers is actually less secure and more susceptible to cybersecurity attacks than most Cloud services today. Storing data on The Cloud can easily be part of an organization’s airtight controls environment and proactive risk management. The virtual cloud has four different deployment models to meet different consumers’ needs:

  • Public Cloud: a cloud open to use by the general public owned by a business, educational, or government institution. There is not much of a difference between a public and private cloud other than access. Even a company’s use of a public cloud can be SoX compliant and part of a successful internal controls environment. Common examples of public clouds include Dropbox or Google Drive.
  • Private Cloud: a cloud dedicated to a single organization with similar advantages to the public cloud, but with increased security and regulations. Private clouds can be owned and operated by the company, a third party, or both. Cloud servers can be located on or off site with computing resources protected by the organization’s firewall.
  • Community Cloud: a private cloud shared with multiple organizations. Organizations in healthcare or government can benefit from such a model.
  • Hybrid Cloud: a cloud model with any combination of the other cloud models. Large corporations may use this model to protect trade secrets while also benefiting from the scalability of a public cloud provider.

Next time someone speaks of The Cloud in an ominous tone, ask if they have checked the weather for this weekend or if they have seen House of Cards on Netflix. The Cloud has freed computing power from the limitations of a single device and has revolutionized when and where companies conduct business. Utilizing the service and deployment models mentioned above will open all kinds of possibilities for individuals and organizations, including cost savings, risk mitigation, and enhanced controls. The sky’s the limit.

 

Trenegy is a non-traditional consulting firm, breaking down today’s business jargon into useful terms and solutions that actually benefit your company. Find out for yourself: info@trenegy.com

Rapid Fire ERP Selection & Implementation for E&P

Navigate

A large number of assets are trading hands, as companies in the E&P industry adjust to the new price of oil. Such sales include a due diligence period, typically followed by a transition period between the two parties. During this time, the purchasing party is responsible for identifying and implementing an ERP system as their long-term solution.

Although this article is directed towards heavy E&P activity currently taking place, the same approach can be applied to other ERP selections and implementations. Particularly for E&P industry, an ERP selection process should be straightforward and catered to the unique aspects of the business. Many companies spend too much time and money analyzing detailed requirements before choosing a new ERP system, rather than identifying the unique aspects of their operation and industry. The critical business requirements for E&P, though unique to E&P companies, are known and predictable. The point of a rapid selection is not to rush the process, but to simplify and streamline the planning and implementation processes. Knowing the industry drastically speeds up the selection and implementation.

Note: It is unwise to assume you must implement a new system. If the current system is in the appropriate Tier, the new company can address the current functionality and include the current system in the selection process, to be compared to the other options. If the current system is identified as the best option, the conversion would be much simplified, and training and testing would be minimal. Word to the wise: do not choose the existing system without assessing all other options. Determine the best fit for the new company in terms of functionality and processing power. A system which was sufficient before may not meet the new company’s needs.

Pre-Planning (3-4 Weeks)

Pre-planning takes place during the due diligence phase of a sale – sometimes even beforehand – and is a time for the buyer to take a deeper dive into the details of the sale and to determine if it is the best fit for the buying company. It is during this stage where a Transition Service Agreement (TSA) is established, outlining the transition timeline, tasks each of the two parties are completing, and how to transition data and knowledge from the seller to the buyer. Many activities are performed in the back office or spent waiting for the lawyers to review and return documentation. Although the project team is not able to begin implementation or transition, the pre-TSA period should be spent gathering internal data and organizing the project resources and the budget. Determining the cost and timeline of a system selection and implementation will be assessed as part of the due diligence period.

During the early due diligence period, some companies do not have the approval required to bring on a project team or consultants to help. Fortunately, several sets of information must be identified and compiled in-house prior to bringing on help:

  1. First, the Finance & Accounting processes must be established to map system capabilities, which can be accomplished by compiling existing or creating new process documentation (e.g. Master data management for wells and decks and owners, chart of accounts, AFE processes, etc.). Then, the new company can use these documents to compile the master data specifications and critical reports most important to the business. When the critical processes have been documented, it is easy to identify which processes need to be automated and which can be performed manually. Listening to the Accounting group will help the leadership understand major pain points and identify the best qualities of the current ERP system. The process documentation should include which processes steps are automated versus manually executed.
  2. Secondly, an overall budget must be established. An Organization Chart can be quickly drafted based on the current organization and estimating how many new full-time employees will be required. Systems base their pricing on the number of user licenses required, and the budget can easily bust if the final number of licenses is higher than the number originally quoted. Other aspects to consider in the project budget include the cost for System and Conversion consultants. The cost for the consultants will vary, based on the complexity of the data, gaps in full-time employment, travel & expenses, and potentially temporary accounting staff.
  3. Then, the project team must select the best-fit management consultants. Dependent upon management approval and budget, bringing on a management consulting company as soon as possible is critical to perform overall PMO activities, to gather process and data requirements, and to establish the budget. It is important to select the management consultants based on proven project and industry success.

System Selection (3-4 Weeks)

Assuming the Pre-Planning phase was completed correctly, a consulting company should be engaged to execute a quick and concise ERP System Selection mini-project. The consultants should be able to clearly identify which Tier system the Company requires through overall company information (current size, services, long-term growth plan), brief interviews with the accounting staff, and the pre-planning phase documentation.

Tiers 1 through 3 are assigned to proven ERP systems by industry, with 1 being the most robust and expensive. For example, if the Company is very small yet has a complex deck and hierarchy setup, the Company may need a Tier 2 system like OGsys. On the other hand, a multi-billion-dollar Company, but owns and operates all domestic properties without other Working Interest Owners, the company may be able to run on the same Tier 2 system. On the other hand, if the company with a complex hierarchy and deck setup also intends to make several major acquisitions with various products and complex agreements in the coming years, a Tier 1 system such as P2’s EU system may be needed to account for growth.

The project team would then schedule the vendor demos. The new company can immediately eliminate all systems outside of the selected Tier and contact vendors within the Tier early on. Coordinating demos and receiving pricing as soon as possible is important, as scheduling and contract negotiation typically take time. As the checklist in the system demos, the project team should use the system and process requirements determined in the Pre-Planning Phase – and only this list of requirements. It is a waste of time to review basic ERP functionality such as General Ledger, Accounts Receivable, and Accounts Payable. Any credible tool in the marketplace has the basic ERP functionality.

Implementation & Post Go-Live (Minimum 12-16 Weeks)

Now the best, fit-for-purpose system is selected, the contracts are in place with vendors, and the project team is ready to begin the implementation. The following four steps are foolproof for the implementation and post go-live phases:

  1. Immediately, the software should be installed, and the environments needed for testing should be set up. This step always takes longer than originally expected.
  2. Next, conversion activities must be prioritized based on “Day 1″ functionality. Through the TSA, the buyer may only be processing invoices and GL transactions immediately, but Revenue and JIB processing the following month. For this example, the company would need to setup the chart of accounts, vendor information, AFEs, and validation rules for “Day 1″ processing. They would then be able to continue working on loading JIB and revenue decks, royalty and working interest owners, and revenue agreements. The project team must identify critical items for go-live and prioritize accordingly. Note: Integration between systems is considered a “nice-to-have” and should not be a priority for “Day 1″ functionality. Building interfaces is very complex and needs to be thoroughly tested before being released to end users. The backlash of a bad integration is immeasurably worse than making-do with disconnected systems for the short-term.
  3. Then, the project team must establish an issue resolution plan. There will always be issues with a new ERP systems. With a rapid timeline to plan, select, and implement an ERP system, the likelihood of issues increases. Issues must be prioritized in the same way the implementation tasks were prioritized. The responses should be based on critical due dates, focusing on issues which directly impact key deadlines. Most critical issues are identified in the first month of processing, so it is important to retain management consultants, system consultants, and full-time accounting project staff for a few weeks after go-live.
  4. Lastly and very importantly, there must always be open lines of communication between the project team and upper management, and between the project team and end users. There are endless moving parts, as resources work independently on various aspects of the project. Of course, it is unrealistic to include everyone in all decisions and timelines. Even so, it is important to communicate clearly and often to set management expectations and to obtain end user buy-in. In these critical communications, a strong consulting company can wrangle all moving parts to ensure the success of the implementation.

Recap

Many E&P companies don’t focus on the unique aspects of their company when going through the planning, selection, and implementation of a new system. They end up with a system that is either too simple for their operations or too robust and expensive, leaving them with buyer’s remorse for the unforeseeable future. There is a “right system” for each company, so it’s important to plan, select, and implement by prioritizing functionality and tasks, by making quick decisions, and by coordinating all moving parts. Overall, long system selections are costly, cause delayed project timelines, and don’t increase the likelihood of a successfully implemented system. Doing it right can still mean doing it fast.

Trenegy is a non-traditional management consulting company that assists changing Companies to make quick, simple decisions with lasting benefits. There is always a fit-for-purpose answer, and Trenegy is here to find it. For more information, contact info@trenegy.com.

Old Industry, New Tricks: AR and VR in O&G

Navigate

Technology seems to be moving at such a fast pace it may feel hard to keep up. Some may disagree – maybe they thought by now we would all be living in a world just like the Jetsons, with flying cars to get swiftly to and from any destination, and houses equipped with friendly robots to wait hand-and-foot on their masters. No doubt some group of millennials in Silicon Valley dressed in flip flops, jeans, and hoodies is working hard on creating these “Jetson-type” technologies, but there are plenty technological advances to keep everyone occupied and inspired in the meantime.

As fast as technology moves, it is no secret that the Oil and Gas Industry is typically a slow adopter to many new technologies. Making do with what you have and the “if it ain’t broke, don’t fix it” mentality is part of the industry’s culture. Why spend big bucks on today’s new technology when tomorrow’s is just around the corner? Not to mention newer technology is never tried and true, so companies realize they are taking a risk when implementing.

As it stands today, the Oil and Gas industry is not booming, and oil prices remain low. There may still be billions to be made, but companies are rightly cautious to avoid major expenses. Yet, a case can be made for shelling out some cash for technology in order to permanently reduce costs in the future. The only question is, in which technologies should Oil and Gas companies invest?

Two recent technologies to note are Augmented Reality and Virtual Reality. These terms may be familiar to those gamers acquainted with the world of video games, but for the rest of the population, here are the definitions:

  • Augmented Reality (AR) – taking a physical object and applying a digital filter to that object (via glasses, a cell phone, an iPad, etc.) in order to enhance the object and/or reveal and track more information about the object.
    • Example: Snapchat filters which recognize your face through the screen on your phone, and add features to your face like dog ears and a tongue, a crown and scepter, etc.
  • Virtual Reality (VR) – a simulated image or setting that an individual can explore and interact with using special equipment, typically some sort of headset.
    • Example: Many different VR systems exist in the video-gaming world; however, Samsung GearVR took a different approach. Samsung’s technology and headset can be used with various Android smartphones to generate a mobile VR experience by applying lenses to the top of the smart phone’s screen. Users can then have a VR experience through their smart phone (e.g. swimming with dolphins, walking through a haunted house, or even standing in the middle of a battlefield).

It is easy to imagine the applications of these two technologies in all things entertainment, but the Oil and Gas Industry can also benefit greatly. Companies should take advantage of data-driven tools to maximize production while minimizing downtime without compromising safety standards. These technologies will allow companies to decrease the amount of issues with their equipment, increase process efficiencies, simplify their organization, and decrease accidents or incidents on the job. Sound too good to be true? The sections below explain how the improvements can be realized.

Increased Equipment Life and Decreased Maintenance Costs

Purchasing and maintaining or fixing equipment on a drill rig is extremely costly. So much so that when oil prices are down and cash in is low, maintaining equipment becomes a low priority – or is cut altogether. The logic is to put off maintenance so as not to incur costs until oil prices rise again. But the result? Unsafe equipment and much higher maintenance costs down the road.

Today, visibility into the life and history of a piece of equipment is sitting in a system that may or may not be updated regularly. Even if the data is regularly input, it is likely still inaccurate. However, with Augmented Reality, finding and tracking data on a piece of equipment becomes both easy and accurate. Imagine looking at a wellhead through glasses or a tablet application and instantly having visibility into valve pressure, lubrication, etc. There would also be the ability to determine if any cracks are present due to corrosion. An operator could look at a hydraulic pump and see operating pressure on the tablet’s screen. While standing in front of any piece of equipment on the job site, all the relevant information around this equipment can be captured and tracked in real-time. Maintenance costs can be kept low by identifying issues as soon as – if not before – they occur, saving time and money.

Increased Process Efficiency

Process efficiencies can increase greatly from these technologies as well. Tasks that typically require a significant amount of time and effort become simpler and faster with the use of AR and VR where it makes sense. Google Glass first came out 2014 and, while not a best-seller for average consumers, it allowed for significant reduction in the production time for Boeing, one of the largest global aircraft manufacturers. Google Glass is a pair of glasses that act as a type of hands-free smart phone and respond to spoken commands. When building an aircraft, each plan requires an intricate and complicated set of wires and other materials to be manually put together with the strictest precision. Before Google Glass, a technician would print out a diagram of the wires or have a laptop open for reference, looking back and forth between their screen and their task at hand. By implementing Google Glass, technicians could see the diagram through the lens of their glasses and work on wiring and constructing the aircraft while following a live tutorial. Production time was reduced 25% and error rates dropped drastically. And that was three years ago; today’s AR devices offer even more functionality.

Simplified and Safe Organization

Many times a specialized service technician is needed to fix a piece of equipment. For an offshore rig, flying a specialist out to perform the fix is costly and dangerous. With Augmented Reality, a specialist does not have to be physically present on the job site to perform the fix. The specialist can gain visibility of the equipment through the same tablet with which the issue was identified. Holding the tablet up to the equipment, the specialist can see what is causing the issues and walk an on-site operator through the steps to resolve the issue. This minimizes the need for a large amount of specialists who need to be available to travel around wherever a need arises. Instead, all specialists can be located in one central hub, available virtually, anytime an issue arises.

In addition, companies will find they can move away from employing teams of specialists and take advantage of a large range of specialists through platforms. Many service and support companies are taking advantage of crowd sourcing, or using the internet to share information and request the help of a specialist or expert. Crowd sourcing is the 21st century equivalent to asking a mechanic neighbor to help change a car’s oil. RigUp is a service-driven crowd-sourcing platform that allows Operators to sort from a list of specialists and choose the right contractor for a specific job. Instead of hiring a large team of people and training them with highly specialized skills, companies should consider using platforms to source one or several specialists with a specific skill-set on an as-needed basis. (For further insights on Platforms, read 4 Reasons Why Corporations Are Losing in the New World of Platforms and Five Tips for Building the Right Multi-Sided Platform for Your Company.)

Furthermore, technology can change the game of training employees and reinforcing safety procedures in the Oil and Gas Industry. Virtual Reality companies can create digital, 3D versions of each offshore rig and simulate many situations an employee might encounter on each of these rigs. Without this technology, it would be difficult to train an employee for emergencies like hurricanes, glaciers, blow-outs, and other dangerous and emergency scenarios. On a more basic level, this Virtual Reality training has proven more effective than traditional classroom training, as workers can get acclimated to very nearly their actual environment without having to be there every day. The more practice and experience a worker can gain in his or her environment, the less likely they are to have an accident.

Today, BP is utilizing Virtual Reality software to simulate the exact conditions of a drilling operation – same rocks, temperatures, pressures, and ocean currents – that mimic completed jobs to provide a more accurate and realistic training experience. With this technology, drilling teams practice critical jobs that replicate past scenarios and allow for entire teams to work together in a group environment just as they would on a real job. BP realizes there is no better way to train employees than by letting them experience and handle actual situations they would on the rig. While the implementation of this Virtual Reality software is recent, BP expects to see a significant drop in accidents and incidents.

In this era of pervasive data, implementing the proper technology to better analyze the data that drives effective decision making is crucial. As with all technology, the hardware and software that drive AR and VR technology development will continue to improve over time. The biggest challenge – but also the biggest opportunity for success – is in determining where in your company it would be best to apply technology to get the most value. The opportunities are out there, and there is not a better time to search and implement.

Trenegy takes a non-traditional approach to consulting, helping our clients think outside the box and to utilize available technologies to eliminate inefficiencies across the organization. Find out for yourself info@trenegy.com

Enterprise Resource Planning: What is an ERP System?

Navigate

Ever have one of those days when nothing goes right? When you get dressed in the morning and realize all the socks are in the dirty laundry basket? When you attempt to run a quick load of laundry but realize your teenager has just started a load – consisting of one pair of jeans? In a rush and out of options, you find your son’s skateboard socks with the (very professional) Incredible Hulk pattern.

Note to self: do not sit cross-legged today.

Later, in the middle of a meeting, a call comes in from the wife, checking if we made the quarterly donation to the local children’s home.

Great question… I have no idea.

After a tedious day in the office, grilling some steaks sounds great. After fighting traffic all the way home from the grocery store, it is time to fire up the grill but somehow there is no charcoal.

Fantastic…

It would be great to have some miraculous visibility into planning laundry better. Or a way to check home inventory at any time. Or to quickly see all our expenses by category for the year.

Now, imagine a large corporation dealing with similar issues. How do they handle planning their resources? Back in the seventies, someone came up with the bright idea to create a resource planning system for companies. Later, someone added the word “Enterprise” to make it sound official and voila: “Enterprise Resource Planning” or ERP. Since there is already so much confusion around what an ERP system is, it might be most effective to also clarify what an ERP system is not.

ERP Table 2

 

An ERP system is not a cure-all for a company’s woes, as many expect. Unfortunately, the acronym ERP conjures bad memories due to not meeting expectations. One of the keys to making a system successful is setting the right expectations, while prioritizing between necessary functions and “magic button” requests.

Example of a “magic button” request: “Wouldn’t it be great if after partially completing a purchase order, the system automatically completes the order and knows exactly what we need to order? And then when they complete it, the shipment arrives on time with the right amount?”

Companies often bog down their systems and implementation efforts with these “magic button” requests in an attempt to “cure all,” which leech time, resources, and budget from the critical requirements that should be the main focus. Just because something can be automated, doesn’t mean it should be.

One of the most common misconceptions is that an ERP system will make bad data an issue of the past. No system -no matter how smart or laden with data-validation – will prevent human error 100% of the time.

Furthermore, an ERP system will not cleanse existing bad data from an old system or Excel spreadsheets. “Bad data”  refers to data that is outdated, contains duplicate values, and includes data entry errors or typos, or incomplete data sets. If a company has bad data in its old system, that data will remain bad when migrated to the new system unless a human being with human logic takes on the task of cleansing the bad data first. If a company’s customer list has the incorrect contact details for twenty percent of the customers, and that list is loaded into the new system, the new system will reflect that incorrect data, unless someone takes the time to manually correct the bad data.

No ERP system is able to spin straw into gold.

While an ERP is set up to streamline standard business processes (i.e., purchasing, accounts receivable and accounts payable, inventory management, and accounting) and to generate basic financial statements, there are some things an ERP system simply will not do. An ERP System will not:

  • Eliminate the need for every other system in a company’s IT environment
  • Eliminate the need for every third-party service in a company (sales tax rate updates, bank accounts)
  • Reduce operational headcount by automating jobs
  • Reduce IT headcount by simplifying the IT environment (ERP actually adds IT headcount)
  • Create sophisticated and dynamic reporting dashboards out of the box

So what is an ERP system?

In its most basic definition, an ERP is a tool that supports a business. It provides a company with the tools to purchase supplies, fulfill orders, bill customers, pay vendors, manage inventory, and maintain accounting records from a single system.

A well-implemented ERP system allows a company to streamline and standardize business processes, provides the opportunity to store company data in a centralized location, and empowers companies to capture an almost endless list of metrics, which can be compiled into sophisticated reports. If implemented properly and used for its intended purposes, an ERP is a powerful tool that positions a company for growth by allowing it to standardize processes, streamline operations, and capture data that can be leveraged into well-informed, strategic decisions.

Now, if one could only implement an ERP for their house, dads might not be subjected to wearing their son’s skateboard socks to work.

 

This article has been adapted from a chapter from the author’s book Jar(gone).

Trenegy helps companies select and implement ERP systems to make reporting and analysis easier. Our non-traditional consulting method cuts through the ERP confusion, providing our clients efficiency and confidence. Contact us at info@trenegy.com to find out for yourself.

Preventing Corporate Scandals | By Trenegy Guest, Alan Quintero

Navigate

Early in my career I asked a mentor how to tell the difference between right and wrong in the business world. He responded by saying, “Before acting ask yourself: ‘Do I want to see this on the front page of the Wall Street Journal?'” That’s great advice, but someone must have forgotten to teach it to some corporate leaders as of late. Opening fake bank accounts, rampant sexual harassment in news organizations, cheating on emissions testing, and super-expensive essential medical devices are just some of the recent examples of scandals in the news. We can learn from these events to prevent corporate scandals from happening in our business. As a leader, here are a few things you can drive in your organization.

Teach by example

When growing up, our parents and teachers did not give us written home policies and procedures, or check on us with a Kid Audit Department. So how did we learn right from wrong? We did it by watching and mimicking those people around us in positions of authority.  In other words, our parents, teachers, older siblings were teaching by example.

The same is true in an organization. People in positions of power are mimicked by others in the organization. Therefore, the first and most important step in preventing corporate scandals is to ensure that your company’s leadership models proper behavior to the organization.

For the top managers of small companies, where employee interaction happens on a daily basis, this is as simple as doing the right thing every day – simple but not easy. But many companies are large enough that direct interaction between top management and most employees do not happen daily. For those companies, other controls must be put in place.

The first thing the company must have in place is an ethics policy statement. This document is known by many names (e.g. “Our Values”), but it essentially outlines management’s expectations of how the company will conduct business, and the values the company shares and esteems. To remain credible, the company’s management has to ensure nothing the company does or espouses through policies and procedures contradicts these values.

In addition, the company must have an independent and secure whistleblower system that allows the reporting of potential infractions and unethical behaviors anonymously by any employee. The best whistleblower systems are managed outside the company and are reviewed at the highest level (including the Board of Directors).

Most companies have required annual training for their employees covering topics such as conflicts of interests, cybersecurity, etc.. It is a good practice to include a review of the company’s values and how to use the whistleblower system in this training.

Finally, there is a lot of truth in the old adage of “what gets measured get done.” Therefore, be very careful with your company’s compensation schemes. When establishing a performance indicator for bonus payments ask yourself, “What unintended behavior could this metric cause?” The very noble drive for increased sales at Wells Fargo and Volkswagen led to employees opening fake accounts for customers and inventing a way to cheat emissions tests. Also, your employees will know if you are rewarding those who “push the boundaries” to get results over those who do not. Make sure your employee evaluation programs measure the right behavior in addition to the right results.

Follow the profit chain

Now that you have set the right tone, it’s time to run your business. The goal of any for-profit business is long term profitability. In the book The Service Profit Chain, authors James Heskett, W. Earl Sasser, Jr., and Leonard Schlesinger outline the way companies turn a profit. Nowhere in that book is cheating advocated as a way to increase profitability!

Instead, a sustainable profit is achieved only through loyal customers. To keep your customers happy, you need to manage a series of properties of your operations that, when performed together, lead to customer loyalty. The authors all this the service-profit chain (See figure).

service profit chain

The authors’ research shows that to get to the ultimate goal of Profitability (shown in the upper-right hand side of the figure), a company must invest in the Employee chain (shown at the bottom of the figure), and on Customer Value.  Furthermore, each step in the chain drives the next chain (i.e., the Employee chain drives Customer Value, and Customer Value drives the Customer chain).

Therefore, to avoid corporate scandals, investment decisions must determine whether that investment is driving a step in the chain. For example, software to “cheat” emission testing does not enhance any of the steps, and increasing the cost of medicine 600% actually reduces Customer Value.

Instead, investments that enhance the chain include:

  1. Employee chainInvest in strong quality programs, customer facing systems and organizations, and systems and tools that make it easier for your employees to do their job.  An unsatisfied employee is three times more likely to leave a company than a satisfied employee. That employee is also more likely to sabotage the company or create a situation that may lead to a corporate scandal. Some studies show that the cost to hire and train a new employee is six to nine months of salary. But the real cost of losing employee loyalty comes from the cost of loss productivity. In one study, it took five years for brokers at a securities firm to rebuild relationships that had been established by their predecessors (at a total cost to the company of $2.5 million!).
  2. Customer Value:  Perceived value by the customer increases with the results that the customer sees, and decreases with the cost of these results to the customer. Therefore, invest in products and services that the customer wants (and in ensuring that these products are of high quality), and also invest in ways to reduce the cost of these products.

If a company invests in these things, the results will be an improvement in the Customer chain (the top line in the figure). To highlight the importance of that chain, studies show that those customers who describe themselves as “very satisfied” are shown to stay a customer 80% or more of the time. They are also likely to tell up to five other potential customers about you. On the flip side, those customers that describe themselves as “slightly dissatisfied” or worse are prone to remain a customer less than 40% of the time, and are likely to tell eleven other potential customers to stay away.

Not only is following the service profit chain good business, but it will keep you out of trouble.

Remain vigilant

So now you’ve set the right tone, you’re investing in the right things, and your company is running like a fine-tuned machine. Unfortunately, your job is not done (and you can blame science for that!). In science, the second law of thermodynamics states that any system, left alone, will become more disorganized over time. This is true of a corporation as well, so you must remain vigilant.

To prevent corporate scandals, diligently review the data collected in your organization and look for trends that do not make sense. Are you seeing an increase in new products sold without a corresponding increase in revenues? Did your team solve a long-standing challenge without introducing a new technology or system? Are you experiencing an increase in HR complaints or calls to your whistleblower hotline? All these could be indications of trouble brewing.

In addition, you should cultivate a culture of continuous improvement. Are you mining the root causes of incidents that did not go as planned? How are those learnings incorporated into the way you do business?

Victor Hugo said, “Initiative is doing the right thing without being told.” Thankfully, you can help the initiative of your organization to prevent corporate scandals by setting the right tone from the top, investing only where it drives customer loyalty, and remaining vigilant for signs of trouble.

 

Trenegy assists companies design and implement controls frameworks to ensure policy and procedures are in place to prevent slips and scandals. For additional information, please contact us at: info@trenegy.com.

Alan Quintero is the Senior Vice President, Chief Technology Officer at Rowan Companies. Alan served as Senior Vice President at Transocean from 2010 through 2015 overseeing Operations, Asset Management, and Major Capital Projects. He also served in various management roles at Atwood Oceanics from 1993 through 2010, where he ended as Senior Vice President with responsibilities over Operations, Technical Services, Supply Chain, Projects, Quality Assurance, and Maintenance. Immediately prior to joining Rowan, Alan was a Partner at Trenegy.

Your Field Mobility Tool Isn’t Broken: 3 Steps to Ensure Its Success

Navigate

Many Oil & Gas services companies still opt to use a manual process for scheduling service delivery, gathering field data, and translating that data into various systems. But in today’s day and age there are abundant options to perform the same activities in a more accurate and efficient way.

A field mobility tool is an application installed on handheld devices, such as a tablet or smartphone, that enables the field Technicians to capture, send and receive data that is used by several departments across the Company. Yes, the tool is geared towards and primarily used by field technicians going to customer sites, performing a job, and finalizing invoice information – but the process doesn’t end there. Once the job is done, how does the captured data impact the rest of the organization?

There are consistent pain points we see across the services industry that can be addressed and resolved when introducing the right, fit-for-purpose mobility tool. The tool will introduce vast benefits that impact all aspects of the company, if selected and implemented the right way.

Common Pain Points & Benefits of a Mobility Tool

Internet Connectivity
Issue:
Most commonly, Oil and Gas services companies and their personnel travel to desolate or off-shore field locations where internet connectivity is sparse or non-existent. This disconnect is the most disruptive issue and impacts real-time, daily activities. Without communication between the field personnel, back office coordinators and integrated systems, the process takes much longer to complete. As a result, the field users find their own “creative” ways to get the job done.

Benefits:
By implementing a field mobility solution, the dispatcher has the ability to view a technician’s availability and schedule jobs accordingly, a completely automated process. When technicians receive job notifications electronically, they can review details including job specifications, location, pricing and parts needed to complete the service. A standard scheduling system also allows for quicker scheduling time and reduced mis-bookings.

But what if no internet is available once the technician arrives onsite? No problem! The mobility tool will store the job information offline, which can be reviewed with the customer prior to beginning work. Once the work is complete, the technician can update the electronic field ticket to reflect actual time and materials used capture the customer signature and submit the ticket for invoicing. A copy of the field ticket can even be sent to the customers email straight from the handheld. Data can be collected offline and will immediately sync with integrated systems the next time the device is connected to the internet.

Of course, many customers in the industry do still require paper field tickets with job details. Even without internet connectivity, the mobility tool can directly connect to printers on-site or in the technician’s vehicle and print the updated information and signatures.

Information Gathering
Issue:
In the world of hand-written field tickets, a Dispatcher will quickly jot down job details on paper field tickets, but complete and accurate customer information is rarely collected. And is that a coffee stain? When the Dispatcher is in a hurry or half-headedly filling in the paper form, information is sloppy, incomplete and often illegible. Additionally, many services companies do not have standardized templates for pricing from a price book and collecting customer requirements.

Benefit:
By implementing a field mobility solution, the end users are required to provide all necessary information up front. Price books can drive job pricing, based on area of operation and required job details will always be provided. This will ensure all information required for customer billing is captured and sent to the invoicing group upon job completion and the data is actually legible! Accounts Receivable clerks spend much of their time reviewing field tickets and reaching out the field technician for guidance; but most of all, they are coordinating the invoice details with the customer. When all information is available and the customer signature is provided, there is not much a client can dispute. Ultimately, this leads to decreased Days Sales Outstanding (DSO) and personnel overhead expenses.

Integration with ERP
Issue:
A field mobility tool is a standalone solution that incorporates the scheduling, pricing and field information gathering processes. When a field ticket is sent to the back office, the accounting staff must re-input the information from the mobility tool to the accounting system. This is a dual effort and an unnecessary use of time. Maintaining a dual effort input process is feasible, but it’s not ideal, and increases the risk of human error and overall process timeline.

Benefit:
Building an interface between the field mobility and accounting system is not something that happens overnight but, with the correct ERP system and Third-Party Integrator, the long-term benefits are well worth it. Such integration would give the company the ability to further reduce DSO by removing the need to enter data in multiple databases and would reduce customer disputes, often due to human error. Overall, an automated and streamlined Order to Cash process reduces the Company’s DSO and SG&A, and increases process efficiency and customer satisfaction/retention.

How to Ensure Success
1. Select a Fit-for-Purpose Tool
Many companies will select a tool that is demonstrated as a fully-functional and robust solution. What we often find is the company is over-promised and under-prepared to take on the implementation on their own. Conducting a full field mobility system selection is critical to ensure a successful implementation. Reviewing several options, comparing functionality to Company requirements, and performing a Total Cost of Ownership comparative analysis (TCO) give the Company the information needed to make the most fitting long-term decision.

2. Identify the Right Resources
Along with engaging the right consulting company to perform a system selection, a Company should asses the appropriate Project Managers to guide the implementation. The worst approach a company can take is not planning the implementation steps, resources, budget and timeline. Internal resources and Third Party integrators should be discussed and determined early in the planning stage to delegate responsibilities and expectations, and to reduce unknown factors and downstream issues.

3. Engage the End Users
Focus on change management and get all users involved to buy into the project before it begins. Choose key resources who are respected by their colleagues and hardworking individuals. Interview and understand what makes their jobs more difficult (see above for their answers) and determine how the implementation would benefit their job. If stakeholders are engaged from the beginning of the project and are included throughout the duration of the project, their coworkers will understand the reasoning, giving them the ability to see the benefit. Although not all end users will buy in so quickly, introducing the idea early and reiterating the long-term benefits with increase user buy in.

Many companies are living in the Stone Age of manual field processes. There are plenty of failure anecdotes to deter companies from making the plunge into digital. However, the reality of the benefits of digital are easily realized when the tool is selected and implemented correctly. When the current manual process is compared against the long-term benefits of the right field mobility tool, the answer is simple.

Trenegy is a non-traditional management consulting company that helps companies identify the best fit-for-purpose field mobility solutions and implement based on the company’s unique business model. For more information, contact info@trenegy.com.