In Acquisitions



Defining Operational Excellence in Energy

by Alan Quintero

Many energy companies respond to the low price of oil by cutting costs and focusing on operational excellence. While this sounds good, the term “operational excellence” is translated many different ways.

One source ( defines operational excellence as “a philosophy of the workplace where problem-solving, teamwork, and leadership results in the ongoing improvement in an organization. The process involves focusing on the customers’ needs, keeping the employees positive and empowered, and continually improving the current activities in the workplace.”


There is confusion over the true meaning of attaining operational excellence in the energy industry. A quick look at the top five energy companies’ websites reveals significant inconsistencies in the definition.

Trenegy defines operational excellence as aligning critical business processes, systems, and organizational capabilities to focus the company on its core mission and outpace the competition.

This simple definition has a lot of hidden complexity. Executives typically have differing views on what outpacing the competition means. Most companies do not have processes in place to ensure continuous improvement. Worse, there is little data collected to measure and benchmark performance.

Attaining operational excellence is important for energy companies. A correctly implemented program will allow a company to efficiently and effectively serve and retain customers with the desired margins. In other words, continuously improving what makes an energy company money until the organization is considered consistently the best.

What to Focus On

Energy companies can focus on continuous improvement in the following areas to achieve operational excellence:

  • Safety – Focus on injury and incident-free operations to ensure the welfare of employees and those involved in daily operations. By involving these people in our business, we agree to send them home in as good or better shape than they arrived. Incident-free operations ensure that the infrequent yet catastrophic events never happen.
  • Reliability – Operations must run as required. Companies that focus on built-in quality and maintenance will ensure reliability. Reliability is measured in uptime—the time business is operating toward what makes money.
  • Major project execution – It’s important to retool or build upon the business through major projects, but only if properly managed to drive financial returns. Successful project execution is includes selecting the right projects and and planning to ensure a company’s growth.
  • Efficiency – Do what makes you money better, faster, and at a lower cost than your competition.

While it sounds easy to focus on these things, creating a successful operational excellence program is like building a house. Start with safety as the foundation and end with efficiency as the roof. In the end, the house becomes an operational excellence management system which should keep a company safe and out of the storms of financial pain.



Simplifying Oilfield Services Bid-to-bill Process

by Justin Gibson

Oilfield services companies can improve work order processes and lower receivables by focusing on the basics.

A few months ago, we made a quick visit to an exploration and production company’s regional office in the Barnett Shale. The topic of our discussion was operating efficiency. During the visit, I noticed a three-inch stack of paper on the regional manager’s desk. Out of curiosity I asked him about the stack of paper thinking it was a series of reports corporate asked the field to complete. He said the papers were saltwater hauling vendor invoices that needed review. After lamenting the vendor invoicing process, he moved on to the purpose of our visit.

As I drove home, the image of the stacked invoices stuck in my head. I couldn’t help feeling sorry for the services companies who were probably wondering why payment had not been received. Many services companies continue to struggle with invoicing and need to improve the billing process. The solution is simple: Address how price books are used, how data is captured on site, and how invoices are processed.

Price Books

Mention price books in an operations meeting and everyone in the room will begin to shift uncomfortably in their seats. Price books are perceived to be a hassle to maintain and they make it difficult for discount services to win work. These perceptions are common, yet unfounded. Price books can be a powerful tool for preventing customer price disputes.

An oilfield services client was suffering from a significant increase in days sales outstanding (DSO). After assessing the entire bid-to-bill process, we determined that inconsistent pricing was the primary cause of invoicing issues. Customers were receiving invoices with various rates depending on who was dispatching and working at the well site. After surveying more than 100 customers, the client quickly determined that rolling out regional price books would help eliminate confusion around pricing and invoice disputes. Customers were asking for consistent pricing!

The client developed new regional price books and posted them on a secure internal web portal. Dispatchers accessed the price books at the time of order to confirm pricing with customers and internal service staff. Office administrators used the information to validate pricing when completing work orders at the end of jobs.

Price book and customer contract maintenance was assigned to Accounts Receivable. Accounts Receivable found they could easily handle maintenance with the bandwidth gained from reduced disputes. Ultimately, the field managers saw the value in utilizing price books and eventually became price book champions in the regions.

Information Capture

Tool pushers often fail to capture essential information, including customer name, bill to address, lease/well number, AFE/PO number, contact number, county/parish, and company man’s name. Missing billing information leads to a large number of disputed invoices.

An oilfield services client was having trouble getting pushers to complete work orders in a timely manner. Completed work orders contained a large number of errors and company men signatures were delayed, often for weeks. The dispatch process was also inconsistent—call sheets and work orders were different for each dispatcher.

We developed a consistent set of call sheets for dispatchers to fill out when orders were placed. Pushers used the standard forms to capture information at the well site. After a short time, the customers’ company men became accustomed to the forms and were more comfortable signing upon completion of the job.

Once the standard forms were filled out and signed, the office administrator could enter the information into the system for invoicing. The amount of time researching pricing and the number of errors dropped significantly.

Timely Invoicing

One of the major causes of delays in processing invoices includes the activities required for obtaining the (customer) company man’s signature. Most customers require the service provider to obtain their internal company man’s signature on the field ticket each time a work order is completed. Unfortunately, if the company man is not on site at the time the work order is complete, the salesman could spend countless hours chasing him down for the field ticket signature. This delays the receipt of the work order in the office for billing, which leads to delays in invoicing.

An easy way to solve this issue is by addressing the company man approval process during contract negotiation. A number of global services companies have negotiated email approvals for the majority of the services provided at the wellhead. Email receipt isn’t a difficult request since most company men have email accounts.

Disputes are quickly managed through email. Once email approvals are in place, electronic field tickets are not far behind.

Strategy for Success

The lowest average DSO that service companies generally achieve is 45 days. Achieving 45 is possible for any service company. Honoring pricing contracts, maintaining consistency with pricing, capturing correct information at the time of order, and delivering invoices in a timely manner are all crucial.



3 Cost-effective Ways to Improve Field Customer Service

by Nicole Higle

Oilfield services companies that 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 services 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.

2. 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.

3. Responsiveness

Producer complaints often 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-communicating 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 log in 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 services provider. Act on customer feedback, reduce the number of dissatisfied customers, and maintain connectivity with existing customers.



Crew Pushers and Technology: It’s Not like Oil and Water

by Peter Purcell

Why do most oilfield services (OFS) companies hesitate to deploy technology to streamline the field ticket process and live with the inherent billing errors and delays associated with paper forms? It boils down to three things: access, ease of use, and rewards.

My father is a retired pipefitter who spent 45 years working in a variety of inhospitable environments installing and repairing pipelines, compressors, valves, and pumps. The family joke is that Grandpa Del, a union-card carrying, gruff, teddy bear of a man, can weld the perfect bead while manipulating the controls of a pipe bending machine in a blizzard with his eyes closed standing on one leg. He probably could.

The family secret is that my dad spends hours a day on his laptop. He sends and receives e-mail, banks online, co-hosts a Vietnam veteran’s blog, and loves to Skype his grandkids.

Recently, his dog knocked the laptop off the kitchen table. It took an act of congress to get my 72-year-old father to hold off buying a new laptop and let me send him one of my spares. He was pretty perturbed at waiting three days to get back online. I received phone calls just about every hour asking me to track the shipment until he received the replacement.

How did this man with plate-sized hands become so attached to a technological tool that most OFS companies are hesitant to give to their pushers or project managers? It was easy. We bought him the laptop.

At his retirement dinner six years ago, my dad expressed interest in emailing his friends. We went out and got him a new laptop that evening. My son made the laptop simple to use by removing all applications except email and internet access, which made it hard for my dad to get lost. Finally, we gave him the ability to Skype with his grandkids. I am not sure why he wanted to Skype my kids, but communicating with his friends and family rewarded his efforts to use the laptop. The rest he figured out on his own.

A number of our OFS clients have followed the same simple formula to deploy tools that streamline the field ticket process and reduce contract leakage, billing errors, and cash collection times.


There is still a general perception that people who work in the field do not have the interest or capability to care for and use technology on the job. This perception is wrong. One of our clients was required to implement a safety and tool certification program in order to win a large contract. QHS&E determined that the existing paper-based process would not support the contract requirements. We helped the client select a laptop-based solution that would provide work crews with the latest policies, procedures, and equipment certification. With great trepidation, 300 new laptops were loaded with software and sent to all crew pushers. Senior management was convinced that the laptops wouldn’t last more than a few weeks in the field before they were destroyed. In meeting after meeting, IT described how the laptops were going to be dropped in the mud or slide off pick-up hoods as the pushers drove from site to site.

Their predictions could not have been more wrong.

Six weeks after the laptops were deployed, our client found that only four laptops had failed. The failures were due to bad hard drives installed by the manufacturer, not as a result of rough handling by the pushers.

Two months after the laptops were sent to the field, an even more interesting phenomenon occurred. The crew pushers had figured out how to use the laptops to make it easier for them to process field tickets. During a follow-up audit, the QHS&E group found more than 60% of the pushers had created digital field tickets in Excel or Word. When asked, the pushers stated they had worked with everyone from their kids to office administrators to figure out how to duplicate the field tickets electronically.

Pushers said paperwork was cut by more than 70%. Peer pressure drove other crew pushers to figure out how to use the laptops. As a result, billing disputes and contract leakage dropped dramatically for these crews and their offices as a whole. These positive changes occurred because the crews had access to the one tool that they supposedly could not handle.

Ease of Use

One of my clients spent a significant amount of money deploying sophisticated electronic work order processing on laptops to their project managers. Within four months, the business case for reducing the number of administrative personnel, contract leakage, and billing errors was not being achieved. In fact, the number of administrative personnel and DSO had increased dramatically.

We were asked to determine the cause and found that the new system was too hard to use. The system was developed without participation by the project managers, which resulted in an excessive number of screens to navigate and fields to populate. Company men lost patience while waiting to sign the work orders and left before project managers were done. Days, and sometimes weeks, were added to the work order completion approval process. Project managers started creating their own paper forms and stacked their laptops in field offices. Customers complained and our client lost business to the competition.

We asked the project managers what could be done differently. Should the company move back to a paper-based system? They said no.

In less than a week of facilitated sessions, the project managers helped redesign the system to reduce the number of screens and data entry fields, as well as make the system more graphical. The simplified design more accurately reflected what they did day-to-day. Special projects or odd jobs would be tracked outside the system.

The new system was piloted at two locations where previous acceptance was the lowest among 42 offices. The project managers on the pilot were hesitant at first, but quickly adapted to the new system. They made a few suggestions for changes and universally stated this should have been rolled out the first time. The system was rolled out to all locations within three months. A field audit seven months later has shown that the original business case has been exceeded and more than 99% of project managers use the tool daily.

Ensuring the tool is easy to use and supports common work ticket activities is critical to success.


Reducing the amount of time it takes to fill out paperwork should encourage the use of new tools, right? Not always. Some of our clients find their crews work in hostile environments where unshielded electronics are not allowed. This means the pushers or project managers have to capture critical information on paper and rekey into their laptops later.

Paper ends up piled on dashboards and often does not get transcribed into the system until days later. Billable time or equipment usage is forgotten and is not invoiced. Company men cannot remember exactly what was done and are hesitant to sign documentation for payment.

We helped one of our clients determine how to encourage their pushers and project managers to enter information into their work orders and field tickets more quickly. We randomly visited 15 projects and determined the project managers were under-invoicing by more than 20%, and that was when the project managers knew they were under scrutiny! It is likely that the actual number was more than 30%.

We led a series of workshops with a number of operations and project managers to determine what would encourage better compliance for using the work order system and increasing the accuracy of billing. The team determined that a bonus structure of 3-5% based on timeliness and accuracy was the best solution. Timeliness would be measured between project completion and company man signature. Accuracy would be measured based on the results of random audits. Simply stating that it’s part of the job and one would be fired if they did not comply was not an option. Project managers are in great demand and they could easily leave to work for the competition.

Within six months, the average revenue for these projects increased by more than 26%, DSO dropped by more than 15 days, and billing errors were all eliminated.

This improvement was the direct result of rewarding the appropriate behaviors.


Deploying technology to the field should be simple. Many software companies and consulting firms will try to over-engineer solutions that are expensive and difficult to use. OFS companies can take advantage of tools to support field-level operations if there is a focus on ease of use and rewards.



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

by Katy Wyrick

Many oil and 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 this 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 field technicians to capture, send, and receive data to be used by several departments across the company. Yes, the tool is geared toward 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.

3 Common Pain Points and Benefits of a Mobility Tool

1. 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 nonexistent. This disconnect is the most disruptive issue and impacts real-time, daily activities. Without communication between field personnel, back office coordinators, and integrated systems, the process takes much longer to complete. As a result, 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 internet isn’t available once the technician arrives on site? 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.

2. 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-heartedly 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.

Benefits: By implementing a field mobility solution, 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  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.

3. 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 as it increases the risk of human error and overall process timeline.

Benefits: Building an interface between the field mobility and accounting system doesn’t happen overnight, but with the correct ERP system and third-party integrator, the long-term benefits are well worth it. Such integration helps further reduce DSO by removing the need to enter data in multiple databases and reduces customer disputes, which are 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. We often find 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 (TCO) comparative analysis gives 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 end users. Focus on change management and get all users involved to buy into the project before it begins. Choose key resources who are hardworking and respected by their colleagues. 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 and included throughout the duration of the project, their coworkers will understand the reasoning and have the ability to see the benefit. Although not all end users will buy in quickly, introducing the idea early and reiterating the long-term benefits will 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 digitization. However, the reality of the benefits of digitization are easily realized when a 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.



Three P’s of Effective Field Service Automation

by Peter Purcell

A version of this article first appeared on

The economy is driving companies to mine value from key revenue-generating functions. The most value typically comes from reorganizing the sales and service functions while implementing new, efficient processes. Another way to find value is by focusing on operational excellence, which can reduce costs as a result of improved safety and reliability programs. As new processes and programs are introduced, many companies quickly realize the need to implement field service systems accordingly.

Field service solutions can eliminate paper-based systems and support processes while providing timely information to field employees.

However, selecting the right field service solution is a bit like hugging a porcupine. It must be done carefully given the impact on field employees. After all, field employees are the ones performing critical, customer-facing processes that generate revenue.

How can a company confidently determine which solution will support field employees efficiently and effectively? Consider the following:


Which processes should be automated? This question is often given little thought. Many companies assume that all activities performed by field employees can be supported by field service automation no matter how non-standard the activity. As a result, companies often select and start implementing field service solutions only to stop mid-project as budgets are significantly exceeded.

Field service solutions work best with standardized processes. Given the broad range of activities performed by field employees, determining which processes should be supported by a solution can be difficult. The most obvious processes to be considered include those that are checklist or form-based, including safety incident reporting, inspection, maintenance, and work tickets.

Standardizing these forms and processes across divisions and geographies is challenging. Create an inventory of forms reports and work flow supporting each process. Work with the divisions and geographies to determine if existing forms and processes can be standardized. Expect resistance! A lot of resistance! The business case for standardization should easily trump the “we don’t do it that way here” syndrome. A field service solution can be considered once agreement on the proposed future state is obtained.


Many field service solutions are sold as SaaS (Software as a Service) cloud-based software. The SaaS model is designed to help ensure reliable service without additional IT hardware or support personnel. The functionality of many SaaS solutions is based on the assumption that field employees have internet connectivity 100% of the time.

Unfortunately, expecting internet connectivity 100% of the time is unrealistic in many industries. Crew pushers, field mechanics, and field service technicians often work in environments that are out of range. Only consider solutions that provide robust functionality in disconnected mode.

The optimal solution will download all the necessary information to support field employees as they perform day-to-day tasks. At a minimum, this should include work tickets, price lists, engineering drawings, and checklists. The solution should also allow field employees to enter changes to work tickets (including pricing) and capture key checklist items. Once the employee gets back into range, the solution should sync with the cloud. Local databases and software should be updated at the end of the sync process.


“This new solution will not work for me!” Put a new technology solution in front of field employees and the reaction will be almost unanimous. Why this reaction from the same people who have no problems navigating smart phones when not at work? Perceived difficulty in navigating and using a new technology tool leads to resistance.

Watch these employees in the lunch room on smart phones and you’ll see a lot of poking at the screen. Smart phones are “pokeable.” Menu layouts are intuitive and activities require few screens to navigate. Unfortunately, many field service solutions are quite the opposite—very hard to navigate with many screens capturing small amounts of information.

Field service solutions that support menu and screen simplification through configuration will be easier for field employees to accept and use. Getting to screens that support key processes should use no more than two menu drop downs. Each process should be supported by no more than two or three screens. Workflow should support approval processes with a minimal number of steps.

Additionally, one of the biggest mistakes companies make is selecting a solution that supports both tablets and laptops. Choose one platform or the other and optimize features and functions for touch or keyboard. It is difficult and costly to choose both. Think Microsoft’s Windows 8 release.


Choosing the right field service solution to improve customer service must be done carefully. The biggest challenge will be process standardization, but don’t let that be a barrier. Expect initial resistance, but don’t let that porcupine scare you. Implementing a field service solution in the right technical environment can reduce costs and increase efficiencies, all with the greatest ease of use.





You Never Bring Me Donuts Anymore: Changing the Sales Model in Oilfield Services

by Peter Purcell

How do oilfield services (OFS) companies change the habits of a stagnant sales force that follows the timeworn model of delivering donuts and running up big expense tabs as their primary sales technique? It may be easier than the pundits would believe. The sales force should think less about selling individual products and transaction services and more about how to work with their customers to design and support critical exploration and production projects.

Several years ago, I had the privilege of meeting with a seasoned OFS executive from Baton Rouge who had successfully started, grown, and sold three services companies over a 40-year period. The conversation quickly focused on what he did to beat the competition in the oil patch. “In the early days, it was easy,” he said. His sales teams found out which bars company men frequented after a hard day at the rig. They would run up a large bar tab, buying round after round for their thirsty companions. By the end of the night, sales team members were best friends with the company men and left with a contract for services (aka a hand shake).

I asked the executive how he felt things have changed over the years. He lamented that centralized purchasing and the use of supplier analysis for selecting services has trumped watering hole relationships. As a result, the old ways of selling OFS no longer apply. His sales force needs to spend less time on the golf course and more time understanding prospects’ procurement processes and determining creative ways to win work. If he were starting a company today, he would have his sales force do things differently. He would have his sales force prioritize customers, provide a little lagniappe along with the sale, and understand their real problems a little better.

He reiterated that service companies who cannot figure out how to partner with customers will never be market leaders and grow.

Since then, we have watched numerous OFS companies over the years successfully adapt to their customers and partner with them to solve their most difficult challenges. These service companies followed my old friend’s suggestions of prioritizing customers, differentiating services (lagniappe), and earning the right to partner with their customers.

Prioritize Customers

First, focusing on the right customers is all about setting the right strategy. There is a general feeling that all good OFS sales people are self-motivated, aggressive, freelance mavericks who chase and close every opportunity. Any imposition of structure around the sales process will result in a mass exodus of these valuable and irreplaceable individuals. Most OFS companies would consider the scenario of losing key sales people frightening and paralyzing. The fears may be unfounded.

One of our clients was losing market share and could not understand why. They had a very aggressive sales force that delivered a lot of donuts and seemed to close a lot of deals. However, margins were not meeting forecast, cash collection was low and major customers were moving to the competition. We performed a quick analysis and determined that the sales people were pursuing small companies that were eager to sign contracts for services. Larger prospects were ignored. Meanwhile, the competition had stopped doing business with these smaller companies because they were cash-strapped and not paying bills. Larger prospects required hard work to close the business.

We worked with the SVP of Marketing and Sales to develop an account management strategy for the company. The team visited with the top customers to understand why our client was losing business. We quickly found that the sales force was focused on selling to project managers and not spending time with people managing the sourcing selection process.

The sourcing programs were doing business with OFS companies that:

  • bundled services across geographies and service offerings
  • scored well within the customer evaluation process
  • had sales teams who were willing provide the focus and resources to determine how to leverage new technologies and services to solve critical problems

Our client quickly created ten account teams that consisted of sales people, engineers, and operations personnel. These teams were assigned to the top ten customers and given a clear mandate. The sales people would spend their days at assigned accounts and not call on anyone else. The sales people would work hard to understand the procurement process and be ready to respond quickly to requests for services. The team would work together to identify cost effective solutions for customers. Senior management was nervous because the account focus was a different model and there was concern the sales people would leave because they were no longer involved in maverick sales activities. The selected sales reps were now responsible for a more thorough approach as part of a team.

Within six months, it became clear that the account team approach was working. Sales within the top ten customer base rose more than the decline in the transaction sales loss. Margins on services were high and post-project audits revealed excellent customer satisfaction. Over the next year, billing disputes and contract leakage dropped dramatically. Our client decided to revisit the rest of the customer base to determine which should be treated with the same level of focus and which should be treated as transactions. Although there was some voluntary turnover, our client found this to be a blessing in disguise.

Differentiate Services (Lagniappe)

Providing a little more service with the sale can make the products OFS companies offer less of a commodity. Drilling mud is drilling mud, right? Not always. Mud mixes change based on the porosity, salinity, bottom-hole pressure, and a variety of other formation characteristics. Branded additives are often included in the mud mix to address drilling lubrication needs. However, these branded additives are not what drives the customer’s decision—price and availability usually do.

A drilling fluids company developed a laptop-based application to help their mud engineers more quickly determine the appropriate mud mix. The application was integrated with the order entry system to ensure availability of the appropriate components when a mix was approved by their customer. Substitutions would be suggested when certain components were out of stock. Used correctly, the system would help prevent rig downtime if the mud components were missing or the mix was wrong.

The drilling fluids deployed the system along with new laptops to all mud engineers. During the deployment process, a number of customers heard about the system and their company men requested the software and training. The initial group of trained customer company men used the software to double check the competition’s mud mixes. When errors were found, the company men told their peers and recommended using the application to other customers. The drilling fluids company’s customers started sole-sourcing to them. We asked the company men why.

The answer was simple. There is a high level of value in the tool, which translates to a high level of confidence in our client’s ability to deliver. Heavy discounting is no longer necessary and margins are well above prior years’ margins. In the future, there are plans to allow the company man to order mud directly through the application.

The drilling fluids company would not have achieved the sole-source status by pursuing a traditional sales strategy. Other OFS companies can use a comparable differentiation approach to get similar benefits.


Finally, fully understanding the customer’s real problems can only be achieved by partnering with them. Most of our OFS clients never question the content of the requests for proposal (RFP). At times, cost is the primary focus and responses are developed without questioning critical technical components.

A cost-focus approach can lead to a variety of challenges at the drill site if well construction design is not adequate or specified equipment was undersized. Improper scoping inevitably adds unnecessary costs and may create other safety and environmental issues. In some cases, RFPs are drafted by new engineers and procurement personnel who have never been in the field. The more seasoned personnel with  field experience reviewing the RFPs are often overworked and may miss critical items.

We were engaged by a mid-sized drilling company to review their bid-to-bill process because they had recently lost several significant opportunities. Their equipment was relatively new and their day rates were reasonably competitive. We analyzed the RFP responses and interviewed project managers and engineers from the prospects. The responses were eye opening. The competition had reviewed the RFPs and had suggested ideas for the well construction design and other equipment. This was provided in addition to the RFP response. Our client typically provided a few recommended changes to the project, but not at the level provided by the competition.

We led a series of workshops with a number of account teams to identify ways to combat the competition. The teams suggested assigning engineers to each project, from RFP response through well completion. The engineers took ownership for the entire project and were available for the customer during the sales, deployment, and drilling processes. There was initial pushback from customer prospects but now the engineers are welcomed as partners in the process.

Two years later, these engineers are in high demand by repeat customers. Marketing and sales costs have dropped and margins are increasing. These engineers are considered as partners by customers and are often invited to review well construction designs before RFPs are issued.


Selling services to oil and gas companies is no longer a simple task, and the methods of the past are no longer effective. Success in the market is based on the ability to understand who should be customers, providing more service with the sale, and becoming a partner.



4 Keys to Automating the S&OP Processes

by Julie Baird

Manufacturing companies’ ability to compete often hinges on meeting customers’ delivery expectations. Customers want the product when they want it, and delivery failures result in customer attrition. With the introduction of platforms connecting producers to consumers, moving from one supplier to another can happen overnight. Unfortunately, customer product demands are difficult to predict. Customer unpredictability requires manufacturing companies to closely manage the balancing act between material requirements, production capacity, and inventory levels.

To address the predictability challenges, manufacturing companies must have a robust integrated business planning process aligning sales, operations, and finance. In many organizations, the Sales and Operations Planning (S&OP) process is disjointed and cobbled together with various spreadsheets and emails. Companies can leverage technology to innovate and streamline the S&OP process. An S&OP platform can automate processes across sales forecasts, demand planning, materials planning, network optimization, and financial planning.

Keep in mind, processes must first be standardized and organizations aligned before investing in a technology solution in order to realize any real benefits. Before starting an implementation, consider the following:

Know where you stand today. Business functions operate in silos and have unique processes, systems, success metrics, and terminologies. Understanding the current state and identifying pain points within the process is key. For example, the sales organization speaks in “dollars” and the plants speak in “units.” This means the pricing process must be well-defined to interpret what sales is saying versus what the plant must produce. Assess current processes across the supply chain, then determine actionable steps for improvement. Automating an ineffective process will not yield greater effectiveness. Be realistic about the current state and develop a plan to implement the desired future state.

Roles within the organization will change. To effectively implement and utilize a S&OP tool, everyone involved in the S&OP process should understand their individual role and accountability. Undefined roles and responsibilities lead to duplication of effort and multiple versions of the truth. The plant receiving one forecast from sales and yet another version from the demand planners will experience confusion and second guessing. Developing a RACI (Responsible, Accountable, Consulted, Informed) model for each step in the S&OP process is a great tool to align roles. Clarifying how each individual contributes to the S&OP process and fostering collaboration across teams is essential to success.

Data is everywhere. Identify authoritative data sources and clearly define data inputs, calculations, and outputs. Most companies with a manual S&OP process have data stored in multiple systems, spreadsheets, servers, and hard drives. With data coming from multiple sources, companies spend the majority of the time validating the data, leaving little time for analysis. Demand Planners plan production at a product SKU level, and finance forecasts production at a product line level. The two versions are rarely reconciled or shared between operations and finance. This creates a tedious and time consuming task, leaving little time for analysis. Before implementing an S&OP tool, the team should design a data model that aligns the company’s sales, financial, supply, and operations planning process and requirements.

Build consensus among key stakeholders. It is difficult to argue the benefits for implementing a platform for S&OP process automation. Sales, finance, operations, supply, pricing, marketing, and product management teams must be aligned, given the cross-functional nature of S&OP.  Establishing who will be accountable for the S&OP implementation isn’t always easy. Organizations need top management from commercial, finance, and operations commitment to be aligned. This includes aligning project objectives. A good exercise to start the S&OP implementation, includes developing S&OP guiding principles. The guiding principles set the tone for the implementation and give all functions a clear understanding of the path forward. Any disagreements will be resolved by the guiding principles for the project. With executive leadership and buy-in from key stakeholders and the rest of the team in place, the S&OP process can succeed.

While technology can automate and simplify the S&OP process, the processes, data, organization roles, and expectations must be aligned across the business.





The Blind Men and the Elephant: Why Major Spares Should be Managed Centrally

by Gracilynn Miller

In the old anecdote of the Blind Men and the Elephant, six blind men each describe an elephant based on the part they touch. One man describes the elephant as a snake while holding the wiggling trunk. Another describes the elephant as a tree while feeling the knee. Not one of the men has a complete picture of the elephant since each only knows a small portion of the truth.

Decentralized management of major spares inventory by drillers often leads to the same result—a disjointed approach based on limited viewpoints.

In a decentralized model, local operations exercise greater autonomy while held accountable for their P&L. This structure is often necessary to meet the differing complexities presented by each geography, but it poses a challenge for managing major spares at the local level. A local operation often lacks the time, incentive, and visibility to make decisions that are in the best interest of global operations and rather does what is best for its own bottom line. The result of decentralized major spares management is often suboptimal sourcing decisions and excess or poorly maintained inventory that sits in the shipyard.

How can offshore drillers effectively manage the most critical, expensive, and highly technical inventory across a worldwide fleet? Major spares should be managed by a group who understands the technical, operational, and financial components of managing such specialized equipment. Then, it is important to do the following:

1. Determine scope of major spares

Develop and prioritize criteria for what constitutes a major spare. Criteria may include the potential for safety incidents in case of spare failure, cost of spare part, and lead time for fixing or replacing the spare. The major spares group manages equipment that meets the set criteria while all other inventory is managed by supply chain. The group also oversees major spare processes including sourcing, inventory planning, certifications, technical specifications, and retirement decisions. The group needs full visibility of inventory within its scope across shipyards, warehouses, and assets worldwide. When disputes arise regarding needs for major spares across geographies, the major spares group has the final say. Centralized management supports improved longevity of assets and financial decisions regarding inventory levels and allocations of spares on a global scale.

2. Centralize decision making, decentralize execution

The central group manages major spares, but coordinates with other parties (and geographies) affected by major spare activity. This includes consulting with the projects group regarding impact on newbuilds and overhauls, operations regarding their needs and concerns, and supply chain regarding the procurement and warehousing of major spares. While decisions are managed centrally, this does not mean all spares should be stored in one central location. In fact, spares should be located close to local operations at strategic hubs that serve particular regions. The goal is to find the right balance between enabling a quick response to operations and achieving economic cost efficiencies through pooling resources.

3. Align processes to support the new major spares program

Decide and communicate how decisions will be made going forward and the action steps required for activities involving major spares. This entails eliminating, modifying, and adding policies and procedures to reflect the new major spares process. Part of this process is data input, as the output is only as good as the data entered into the system. If end users lack uniformity and transparency of maintenance tracking or inventory levels, the major spares group will lack visibility into the information it needs to make informed decisions at a global level.

4. Ensure the right systems and tools are in place

In order to have global visibility into the major spares inventory, the company needs a tool that captures inventory levels and tracks maintenance across geographic locations. A user-friendly system will increase likelihood of effective data entry. A critical step often missed is the initial configuration of the system to meet the information and reporting needs of the business. Once in place, end user training and acceptance testing will allow the users to learn the system and catch any issues that need fixing for a smooth go-live.

While there are unique complexities faced by each company, Trenegy has the industry experience to help companies tailor solutions to meet their needs.



Creating a Disciplined Construction Process: 4 Practices for Midstream Companies

by William Aimone

Although acquisitions are a quick way to expand midstream operations, midstream companies are also presented with opportunities to grow organically. Organic growth requires disciplined engineering, construction project management, commercial operations, and processes. The glue that ties the process together is a disciplined Authorization for Expenditure (AFE) process. The commercial modeling of projected revenue from producers, engineering estimates for construction, and project management must be linked throughout the AFE process. 

The ultimate goal of the AFE process is to minimize the variation between the budget and actual value-add curve. Create a disciplined and streamlined AFE process to minimize value-add variation:

1. Make the AFE central

The AFE should not be viewed as merely the document used to obtain approval for beginning the planning and construction process. The AFE should extend across the budget, forecast, commitments, and spend. The AFE should be connected to the GIS, land, accounting, procurement, and forecasting systems. For example, we helped a client build an AFE process linked to each of these systems. Any recorded changes to the land right-of-way (ROW) and GIS data are connected to the AFE. Purchase commitments, forecasts, and actual spend is recorded against the appropriate AFE line items. The AFE system is part of a hub that provides one place for reporting and analysis of midstream value-add projects.

2. Capture initial assumptions

The initial assumptions used to budget the construction project should be captured and recorded as a part of the AFE. Key considerations such as ROW costs, pipe cost per foot, and compression requirements should be documented. Inevitably, a variation will occur. The ability to look back at engineering assumptions to improve projections over time is key to continuous process improvement. When the project is complete, you will have information to perform a thorough analysis of budget versus actual assumptions.

3. Measure accountability

Project managers leading a construction process are accountable for completing the project on time and within budget, and managing cash flow requirements is vital to maintaining investor confidence. Therefore, project managers should be accountable for accurately projecting cash flow requirements. The projection of cash commitment timing and estimated cost to complete should be tied into the AFE forecast and possibly an updated budget. One of our midstream clients monitored their project managers’ forecasting accuracy on a sliding scale. Forecasting accuracy expectations were set at certain thresholds based upon time horizons.

4. Involve the project manager early

The project manager should be assigned as soon as a commercial opportunity is identified. Often, commercial terms are set based upon expectations of the project manager’s ability to meet cost, quality, and time commitments. The project manager should be a part of these discussions and provide input to the terms of the agreements with producers. For example, the project managers have intimate knowledge of availability of materials, labor, and equipment. A labor shortage in a particular basin will impact delivery and cut overtime.

Trenegy encourages our clients to use the AFE process as a mechanism for ensuring cost, quality and time targets are met for all construction projects. Trenegy specializes in helping companies design and implement AFE solutions to manage the entire construction lifecycle.



Drilling Through a Downturn

by Michael Critelli

This article was originally published in 2015, and data/statistics in this article reflect that.

Offshore drilling companies are the first to feel the blow of dropping oil prices. No matter the size of the organization, a downturn hits stock prices across the board: Transocean, Ensco, Seadrill, Atwood Oceanics, and more. However, an immediate change in stock price is not always a true representation of performance.

Stock market valuations give us a sense of analysts’ speculations regarding a company’s future value. In reality, falling oil prices won’t impact drilling company operations for six to eight months.

Much of this lag is due to the long-term nature of drilling contracts. Large contracts are developed six to twelve months before a job begins. Offshore contracts usually last between one and six months. Consequently, drilling companies only recently feel the results of lower demand. Likewise, old contracts are paid out at rates set a year ago.

Oil Price Politics

According to Scotia Bank Research, Saudi oil costs about $17/b and U.S. oil costs about $55/b, on average. Saudi Arabia’s refusal to cut production has created a 1.7 million barrel/day oversupply, forcing oil prices to unforeseen lows. In previous years, the Saudis have cut production with the intention of raising prices and margins.

Analysts and economists are proposing various motives and alternative causes for the refusal:

  •  The Saudis want to hurt the Russian and Syrian economies.
  • The Saudis are intentionally preventing U.S. oil production from surpassing their own.
  • The Saudis intend to level off the market in order to lower costs.
  • The U.S. caused the oversupply, not Saudi Arabia.
  • China’s decline in demand growth caused the oversupply.

However, while low oil prices are a predominant factor impacting offshore drilling operations, the market is also saturated with a glut of new builds raised in the midst of the $100/b frenzy.

Below is a historical look at rig count fluctuations during other downturns:

Drill Rig Fluctuations

Expect to see companies react to the downturn by stacking old rigs, implementing cost cutting measures, and making strategic investments.

Rig Stacking – Based on historical rig counts (Table 1), it’s safe to say there will be fewer rigs utilized in the coming year. Old rigs and jackups are dangerous assets to own in excess when large producers move away from the shallows and into the deep, higher-producing basins to counteract bad oil economics. Companies with a high concentration of old rigs and/or jackups will suffer the most in this downturn.

Cost Cutting – Oil and gas industry veterans know that downturns are inevitable. Widespread cost cuts through layoffs and divestiture are standard early measures. This month, BP announced it will cut 300 jobs in the North Sea, Baker Hughes will lay off 7,000 employees, and Schlumberger will cut 9,000 jobs. If oil prices don’t rebound, expect more cuts across the industry.

Strategic Investing – In conjunction with divestitures and spinoffs, acquisitions are forthcoming. The fat cats (large companies with lots of cash) love the buyer’s market created by downturns. In the year ahead, smaller companies will shed excess assets to improve balance sheets. Bigger companies with liquidity will buy up assets or organizations to invest in their own futures.

Preparing for an Upturn

The most important question is: How long will this downturn last?

Historically, oil price drops and corresponding downturns last between six and eighteen months. This is generally enough time for demand to catch up with supply and for oil producers with high debt to exit the market. In other words, one year is the average amount of time the market takes to correct itself. We will likely see a price correction (toward $70-80/b) in the next 12 to 18 months, but expect a more volatile market going forward.

Despite the downturn, according to Business Wire and Rig Data, demand for drill ships and semi-submersibles is growing. Drilling companies who commissioned new drill ships and semi-submersibles in the past 15 years will have an easier time weathering the storm. Expect these companies to maintain stable revenue and make strategic acquisitions.

Offshore drilling companies who have prepared through investing in new rigs, cutting overhead costs, and selling off old assets will have fewer problems weathering the storm. Companies with excess overhead, debt, or old rigs will stack rigs, divest assets, and take other serious cost-cutting measures to survive.



Fundamentals of a Successful Project Manager

by Adam Smith

When it comes to planning for a major initiative, such as a merger integration or ERP implementation, a lot of time and effort goes in to determining the proper project management methodology, defining team roles and responsibilities, creating and maintaining project plans, and providing status updates to executives. And rightfully so. All of these tools are necessary to see the initiative through to completion.

The project manager (PM), while often involved in planning, is ultimately responsible for a successful execution. No matter how carefully frameworks and plans are put together, when the starting gun goes off, a certain level of chaos is inevitable.

So how does a PM maintain control, ensure project success, and maybe even retain their sanity? Focusing on the basics and establishing core fundamentals is a good place to start. Below are some suggestions, in no particular order, that have worked well for successful project managers.

(Author’s note: Some of the fundamentals listed have been proven to work. Others made the list assuming that the inverse of what did not work most certainly should work. You get the point. Enjoy.)

Manage Your Time First

  • Be selfish about reserving time for performing your tasks. If you aren’t, you’ll find your team members will be more than happy to consume your calendar.
  • Learn the signs of stress and figure out a couple of ways you best relieve it. Then do it. Is it running? Go for a run. You think you don’t have time, but you’ll actually get more accomplished if you manage stress and stay healthy.
  • Tackle the day’s most arduous task first. It will consume your thoughts all day if you don’t.

Maximize Your Day

  • Mornings can be the most useful. Take advantage of the calm before the day’s storm to catch up, organize your thoughts, and plan for the day.
  • Prepare to miss lunch. Keep a stash of granola bars, yogurt, or other snacks around to get you through a long day.
  • Come to terms with unread emails in your inbox. You know the priorities at any given time, so prioritize reading and replying to emails accordingly. Get the rest from your team meetings, even if you have to endure hearing, “I sent you an email…”

Practice Good Managerial Skills

  • Get to know your team members. Understand their differences and what motivates them as individuals.
  • Give your team the necessary autonomy to take ownership of their roles and work streams. If a team member doesn’t step up to the plate, have a conversation about why. Likewise, if a team member is taking on too much work or overstepping boundaries, have a conversation.
  • Solicit frequent feedback from key team members. Ask what’s working well and what isn’t, and listen. Make changes based on their responses.

Understand that the end of a project will be the most hectic. Remind your team of each project milestone that has been met. Keep a list of preferred food delivery vendors and your corporate Amex nearby at all times. Good luck.



40 Ways to Make Improvements in Times of Uncertainty

by Trenegy Staff

Our team has assembled a collection of advice on streamlining operations, reducing costs, and improving business in uncertain times. If you’re in need of business improvements, these are some great places to start:

1. Offer finance education for sales and operations. Executives often take for granted everyone’s understanding of basic financial principles and how spending impacts the bottom line. However, most operations and sales personnel will privately admit wanting to know more about basic accounting and finance—they just don’t know who to ask. A large oilfield service company rolled out a web-based “Accounting 101” training for sales and field service personnel, which helped field teams better understand how their decisions impacted the bottom line. After the first few months of training, field managers were able to help save the company thousands of dollars.

2. Streamline customer invoicing. Ensuring invoices are accurate and sent quickly is key to managing cash flow. Organizations waste time creating a customer invoice by seeking unnecessary approvals, manually entering data, and not using current systems to automate the invoicing process. A large energy services company was using multiple spreadsheets across Operations and Accounting to produce a single customer invoice. They realized the inefficiency and worked together to create a single customer invoicing spreadsheet to be shared between Accounting and Operations. They were able to improve accuracy and deliver invoices to customers three days faster.

3. Reduce invoice approvals. Organizations waste a lot of time on unnecessary or duplicate approvals for spending money—and most approval steps are made after the company has already committed to the spending. An oilfield services company frequently required the purchase of expendables (gloves, safety glasses, helmets) on the job site. Field managers would make the purchase under a company purchase agreement, then they were required to have Regional VPs approve the invoices. This was a waste of Regional VPs’ time and caused payment delays to vendors. The organization reviewed its approval policies, eliminated the steps, and used monthly financial reviews to hold field managers accountable for spending.

4. Rationalize bank accounts. Large global organizations notoriously have hundreds of bank accounts to support diversified business operations. The more bank accounts an organization has, the more difficult it is to manage cash flow. A large manufacturing company had separate accounts for each country in which they sold products for each division. Every week, the treasury group had to manually extract cash transactions for more than 50 accounts. They reviewed country-specific regulatory requirements and found that 42 accounts could be consolidated into a single banking relationship. The 42 accounts were moved to a single bank, allowing the company to automate the interface of bank transactions into their SAP ERP system. This improved cash flow and eliminated manual efforts to gather cash transactions.

5. Use purchasing cards. Managing vendor invoices can be tedious. Think of the 80/20 rule—20% of invoices require approval, and 80% of invoices are small amounts that don’t require additional approvals. It’s the small invoices that bog down AP departments. A mid-sized manufacturing company moved all non-purchase-order payments to a purchasing card. Each plant manager had an American Express card for small purchases. One invoice to American Express replaced thousands of smaller ones, allowing the company to reduce AP contractor fees and receive rebates from the bank as additional savings.

6. Outsource payroll. Keeping up with local, state, and federal payroll regulations and taxes is challenging, particularly for those with employees in multiple jurisdictions. Having the internal expertise and time required to process payroll and manage a payroll system can be a burden. A mid-sized service company was faced with losing in-house knowledge when two key payroll team members retired. The company was able to quickly migrate payroll to an outside provider without losing expertise or having to replace staff internally. Today, companies such as ADP and Paychex have made it easy to outsource the entire business process.

7. Simplify the budget process. Organizations tend to spend an inordinate amount of time going through massive iterations of the annual budget. A large services company eliminated thousands of hours during the budgeting process by starting with a top-down budget and focusing on what was most important. The company was able to let operations to focus on operations instead getting bogged down in administrative budgets.

8. Enact activity-based costing. Many organizations don’t have a clear picture of true customer or product profitability. Organizations often spend too much time supporting one customer over another without understanding the bottom-line impact. A chemical company went through an activity-based costing study that helped them see which products were contributing the most to the bottom line, and they eliminated underperforming products. The one-time study allowed them to improve profit margins by 5% during the first year.

9. Eliminate discounts for early payments. Organizations often rely on providing early payment incentives to their customers. For example, they offer a 1% discount for paying in 10 days versus 30 days. With low interest rates, the 20-day cost of cash is much less than 1%. Furthermore, many large customers take the discount regardless of payment date. Most organizations are eliminating the early payment discounts and accepting longer payment terms, saving companies millions of dollars.

10. Centralize purchasing. Companies operating in different geographies often miss out on consolidating purchases to enable buying-in-bulk discounts. When three different locations need similar items at the same time, they often send three different orders to one or two suppliers. A land drilling company used requisitions to consolidate purchases across the company and started buying in bulk, which saved thousands of dollars each month with bulk discounts and freight savings.

11. Value stream map it. Value stream mapping is a simple exercise that can be done without hiring droves of consultants. It is a process improvement method that focuses on eliminating wasteful, non-value add activities. More often than not, when the current state value stream map is analyzed, many opportunities for eliminating wasteful activities will emerge. A manufacturing client value stream mapped their pricing process, quickly identified transportation margin leakage in a few product lines, and was able to adjust accordingly.

12. Gamify it. Gamification is more than a fun way to keep people engaged. It also provides a way to keep people’s minds off of uncertainty by allowing them to compete for new ideas or small improvements. A production company used gamification to generate new ideas for improving their controls environment. As employees brainstormed, they were able to focus on positive changes and help eliminate inefficiencies and unnecessary control steps.

13. Kaizen. In Japanese, Kaizen means improvement. When done right, it’s a proven way to get people together with a specific improvement goal in mind and quickly develop solutions. Our chemical client used the opportunity for a one-day kaizen to improve production turnover cycle time between batches. They developed a solution that allowed them to meet customers’ ever-changing demands and reduce change over time by 20%. Learn more about kaizen here.

14. Eliminate unnecessary reports. Administrative departments within organizations love to produce reports. At times, it seems that’s the reason they exist. A large offshore services company counted the myriad of accounting-related reports produced each month and challenged the team to eliminate time spent creating reports by 50%. The treasury team decided to stop delivering all internal reports for one month. 80% of the reports were not even missed by the people who received them on a daily, weekly, or monthly basis. As a result, the treasury team reduced report stacks by 80%, allowing the team to spend more time reducing working capital.

15. Rationalize internal contractors. When organizations employ hiring freezes, managers often resort to hiring independent contractors for work otherwise done by a full-time employee. In many cases, independent contractors cost 50% more than a full-time employee, including benefits, and they end up becoming a fixture in the company. A pipeline company CFO asked every department to build a business case for each of their contractors. They found that contractors made up 34% of the permanent workforce. In one case, they had an independent contractor writing reports for more than 15 years. After reviewing the business cases, the organization discontinued 75% of the contracts entirely. Many contractors were hidden in the organization with little to no justification for their job.

16. Streamline new idea approval. Large organizations often unintentionally (or sometimes intentionally) hamper the process of turning great ideas into action. Suggestion boxes and Quality Teams are formalized to generate ideas, but the approval process is stymied with corporate bureaucracy. A new idea requires consensus, and one naysayer can shoot a great idea down. A large oil and gas company completely redesigned their idea acceptance process with a small group of business unit representatives who could accelerate new ideas into implementation without jumping though the usual hoops to get the ball rolling. The new ideas generated a positive ROI in the first six months.

17. Rationalize controls. Many organizations have implemented new controls as a part of their internal audit or Sarbanes Oxley requirements. It has become easier to appease auditors by just adding a control as needed. Over time, certain controls became superfluous and hampered business productivity. A production company performed a detailed review of their controls framework and found that their delegation of authority matrix was overcomplicated. The audit simplified the matrix and removed hundreds of unnecessary approval steps across the company, allowing management to spend less time on unnecessary approvals and more time focusing on operations.

18. Restructure customer contracts. In many cases, customer contracts were developed years ago with many restrictions that constrain the company and the customer. A midstream company restructured their customer contracts to allow for more shared inventory capacity offerings, increasing near-term cash flow. This also allowed the customer to improve working capital.

19. Refine sales prospecting. What worked years ago no longer works today. Communication with prospective clients is always changing due to the dynamic nature of digital communications. For years, one engineering firm primarily used CRM automated emails to communicate their service offerings to prospects. This worked well 10 years ago, until the firm’s prospects started blocking automated emails. The firm shifted their marketing efforts to focus on more personalized, direct emails and consequently attracted two new accounts in the first six months of their email campaign.

20. Re-evaluate your risk management program. Assessing and proactively addressing business risks is a vital part of every organization strategy. When an unusual event threatens your company’s profitability, you must be prepared to respond. Companies can implement programs to re-assess risks at least once a year to make sure their risk programs and controls are up to date. Even one election cycle or a single technology shift can have a significant impact on risk.

21. Define your sales process. Uncertainty has the biggest impact on sustaining a company’s revenue. Sales teams tend to try anything at all costs when competitive or environmental factors threaten customer retention. Ultimately, sales decline and selling costs increase. This is the best time to establish a sales process to keep sales teams focused on attracting, qualifying, and responding to the right customers. A service company examined some of their most successful sales efforts and used these efforts as a model for developing a company-wide sales process. The new sales process enabled them to reverse shrinking revenue and increase year-over-year sales.

22. Review insurance coverage. After a while, renewing insurance policies becomes a rote process inside organizations and rationalizing coverage levels is ignored. A professional services company had a client who asked them to have a multi-million-dollar liability insurance policy. In haste, the company complied and increased their coverage without asking the client if they would accept lower coverage amounts during contract negotiations. They ended up spending thousands of dollars on excessive property and casualty insurance coverage that wasn’t necessary. Later, the company renewed their contract with new, lower limits and saved thousands on insurance policies.

23. Update company policies. Corporate manuals are often wrought with outdated policies that hamper decision making. New policies are added over time, but old policies are rarely revisited or eliminated. For example, a chemical company had a policy requiring employees to retain copies of paper invoices. For three years, the company scanned and electronically stored 100% of their invoices while also making copies to adhere to company policy. Once they realized the inefficiency, they were able to save filing space and eliminate extra work. This was just one of many policy changes.

24. Do a quick culture check. The increase in remote work and remote technology has affected company culture. Longer term impacts could result in increased attrition. We suggest every organization do a quick assessment to see where small improvements can be made to reinvigorate the culture. A professional services company sent out a quick check-your-temperature survey to employees. Out of the survey, the company identified and solved several issues that would have otherwise caused a handful of employees to leave the company.

25. Develop organization guiding principles. Amid uncertainty and change, organization leadership often struggles to respond in a consistent manner. Individuals on a leadership team often have their own principles defining how to respond to change. This causes confusion and a lack of cohesion in the organization. Well-defined guiding principles are a compass, helping leadership know how to respond to change and uncertainty. These guiding principles become a single source of truth and reduce conflicting messages to employees, customers, and partners.

26. Review your benefits plan. Your benefits provider should be conducting an annual assessment of how your current plan compares to competing plans. This includes comparing costs and benefits with alternative plans within your current provider. A professional services company offered its employees both an indemnity plan and a high deductible plan as two alternatives. An option to consolidate all employees on a single high deductible plan offered by another provider saved thousands of dollars. The company also contributed to employees’ health savings accounts to offset concerns about out-of-pocket expenses for doctor visits. The savings from moving to the new plan more than offset the costs of the contributions.

27. Repair instead of replace. Perhaps your ERP system is in dire need of an upgrade. Instead of trying to justify a replacement, consider beefing up reporting capabilities on top of the ERP solution. For example, Power BI has proven to be an inexpensive way to harvest information from ERP solutions to drive value. Consider our oil and gas client who was able to automate cash reporting for the executive team in a few weeks to improve forecasting and working capital. These quick wins enable teams to maintain improvements without breaking the bank.

28. Consider the cloud. Running a piece of software on company servers costs more than having the software company run it. When software makers run their software via the cloud, they are better equipped and take on the responsibility of continuous monitoring. Many on-site software applications enable companies to reduce internal support costs and deploy cloud-based alternatives by merely moving support to the software provider. A pipeline company moved their on-site project management system to a hosted environment, thus reducing support costs and improving system response time.

29. Eliminate or reduce landline telephone contracts. Even though we’ve all migrated to cell phones and video conferencing, landline phones are still around. They’re really just security blankets costing companies thousands of dollars. A large insurance company eliminated all landlines that weren’t involved in external customer service and implemented a cellular program for office lines, contracting with a large carrier to provide employees with discounted cell service. This change saved the company thousands of dollars and provided a more flexible office environment free of phone relocation.

30. Provide cybersecurity education. The bad actors are finding new and creative ways to expose your company to hackers. Recently, a couple of our team members received several email faxes and emails from our IT help desk. But we haven’t used a fax in years, and we don’t have an IT help desk. Without proper knowledge, it would have been easy to click one of the emails and expose the company. Most cyberattacks are a result of human error. In these uncertain times, we recommend every company offer frequent reminders and education around new ways hackers try to inch their way in.

31. Evaluate IT support. With the advent of cloud computing and the increased technical sophistication of most employees, the help desk and ticketing process in most IT organizations is antiquated and costly. A manufacturing company had two full-time IT contractors performing help desk duties. When the CIO dug into their day-to-day activities, he found that 90% of help tickets were routed to a specialist and 95% of the support tickets could be resolved in 30 minutes or less—but it took a long time for a specialist to get around to a ticket. In light of this, the CIO implemented an on-demand, ticket-less solution to connect users immediately to the right expert for help. He was able to eliminate the two contractors, improve response time, and lower IT costs.

32. Expand the use of current technology. Many organizations utilize less than 50% of their existing technology while lamenting its inability to meet business needs. An oilfield services company recently reviewed the functionality offered in their Microsoft E5 license. They found they could improve audit performance by utilizing the Microsoft Power Automate functionality—something that was already licensed as a part of the Microsoft E5 package. Automating the audit workflows improved audit cycle time by 30%.

33. Rationalize applications. Many organizations either over-purchase software licenses or continue to pay for software they aren’t using. Organizations often lose track of the myriad of software agreements and payments, especially the smaller licenses used by a few engineers. A manufacturing company did a review of the software licenses in their plants and found dozens of software applications that weren’t used enough to justify the costs. For example, a 20-license plant scheduling software was only being used once a week by one plant supervisor. The supervisor quickly admitted he could be using a spreadsheet instead to avoid spending thousands of dollars for the software each month.

34. Bring your own device. Many organizations supply their office staff with laptops and, at times, cellular devices. It allows the organization to standardize and secure devices that access company software, but the cost of supporting these devices is extremely high. Instead, many organizations have adopted a BYOD (bring your own device) plan. The company simply puts in a VPN that allows an approved employee to securely access the company’s software through any device. They also offer a stipend to pay for the laptop and phones. Companies that have adopted a BYOD program have reduced IT support costs by 20-30% per year.

35. Reduce office space. Continued efficiencies with remote work has resulted in underutilized office space. Consider renegotiating office space requirements and opting out of a downtown high-rise or office park and leasing a smaller space. Doing so can drastically reduce costs. Some companies are benefitting from hybrid work models where employees have a shared workspace and work from the office every other week.

36. Reduce office services. If your employees have the opportunity for a flexible work schedule and fewer people are in the office, the nice extras such as coffee machine rentals, copier machines, a stocked fridge, and food purchases should be reevaluated. Certain office perks might not be utilized if your team plans to work remotely in the long run.

37. “Airbnb” for your office. Companies that cannot move or downsize due to a multi-year lease are using on-demand platforms such as GotSpot to temporarily lease office space to independent contractors who need a short-term place to conduct business. This allows companies to generate extra cash and put their otherwise stagnant office space to good use.

38. Automate manual processes. Manual processes are often accepted as a cost of doing business. However, staying competitive requires manual processes to be challenged. A mid-sized construction company had three AP clerks scanning invoices for processing. With employees working remotely, they notified vendors to submit all invoices electronically, which reduced scanning efforts. One of the AP clerks was able to focus fully on improving the close process and reporting.

39. Bring resources home to automate. Over the past 30 years, organizations have made a mad dash to offshore back-office clerical tasks. Savings were based upon hourly cost reductions; however, companies failed to account for other hidden costs. The most obvious costs are selection, transition, and ongoing management of offshore contracts, but hidden costs involve quality and cultural issues. Companies have started to bring billions in offshore cash back to the U.S. in the past few years. These companies are finding it easier to manage local resources and automate processes. Process automation tools are making this possible and dramatically reducing costs for many organizations.

40. Automate reporting and analytics. Spreadsheets have become the lifeblood of reporting and analytics for every organization. These spreadsheets have often grown into complex and burdensome tools that require manual uploading and manipulation of data. A regional healthcare VP of Finance said he spent 80% of his time digging through myriads of data and spreadsheets every month when his time could have been better utilized. He decided to automate the reporting process and used Power BI to automate the retrieval and processing of information from the company’s ERP systems. This allowed him to focus on strategic initiatives instead, virtually eliminating the manual data gathering and manipulating process.



Implementing a Business Operating System That Works

by Peter Purcell

“Business operating system” is a relatively new term but the concept has been around a long time. The jargon has morphed over the years, and you may have previously heard it called “company management system” or “operating model.”

Contrary to how it sounds, a business operating system is not a computer program or a replacement for an ERP or CRM. It’s the processes, systems, and roles and responsibilities that allow organizations to operate consistently and efficiently.

Put simply, a business operating system is an operating model where an organization’s mission, vision, and strategy influence how they do business.

Why a Business Operating System?

Too often, norms and processes in an organization are morphed out of individual leadership capabilities. Finance adheres to a set of norms, IT adheres to a different set of norms, and so on—but they conflict with one another. It creates inconsistencies, inhibits collaboration, and prevents organizations from scaling effectively.

A strong business operating system allows departments and functions across the organization to align and collaborate. A BOS sets an organization up to scale faster, improve cash flow, and drive more value because every person and/or function operates to the benefit of the organization. Think of a BOS as the core of operations.

Implementing a Business Operating System: The Toolkit

We’ve put together a toolkit organizations use to develop a business operating system. The tools listed further down serve as a framework for a business operating system in which every person, function, and activity drives strategic value and cash flow.

 What to Know Before You Implement

Before jumping headfirst into the toolkit, organizations must prioritize the following. This is the starting point that lays the foundation for a business operating system.

  1. Start with what you already have. Most organizations have a mission, vision, and goals. Make sure decision makers are aligned and understand these.
  2. Understand performance metrics. What drives success in your organization?
  3. Understand your capabilities. Is there anything preventing you from achieving your mission, vision, and goals? Where are your strengths and weaknesses? This is where a SWOT analysis, internal surveys, and a maturity model assessment might come into play.


1. Guiding Principles: Guiding principles are short statements that describe core values. They outline goals for interacting with and serving the rest of the business. For guiding principles to have a real impact, they should be based on input from all other areas of the organization. These guiding principles serve to provide structure and direction. Without them, it’s a little like riding a horse without a bridle. You’ll get somewhere, yes, but it might not be where you intend.

2. Process Improvement Vision: A process improvement vision is a picture of how well a company wants to perform across key processes and what capabilities are needed to accomplish goals. Creating a process improvement vision helps companies decide what peak performance looks like for each department.

3. RACI: A RACI is a tool enabling organizations to identify roles within processes established in the Process Improvement Vision. The RACI identifies who is Responsible, Accountable, Consulted, and Informed for each business activity. A well-constructed RACI identifies duplication of efforts and allows organizations to streamline roles and decision making. It’s often used to ensure the organization isn’t wasting money on excess staff.

4. Performance Metrics: Performance metrics identify key leading and lagging indicators of an organization’s success. Performance metrics give individuals and teams a way to measure success in alignment with overall organizational goals. An integrated and well-defined performance metrics program helps teams and individuals know what’s important to success and drives them to focus on achieving what’s important.

5. Service Level Charters: Service level charters rationalize the work being done in each role and drive accountability for meeting efficiency targets. Defining responsibilities and accountabilities can prevent duplication and reduce error rate. A service level charter that defines roles between departments improves communication, provides a source of accountability, and increases efficiency for everyone involved.

6. Initiative Charters: Initiative charters are a way to scope and prioritize project work that needs to be accomplished within the organization. Initiative charters are a mini business case and scope document containing the rationalization, scope, milestones, risks, and resources for each initiative. Initiative charters hold teams and individuals accountable for success and ensure the organization is aware of upcoming changes across teams. 

After Implementing the Toolkit

After implementing this framework, it’s important to establish governance to maintain it. As things change, we recommend setting a regular cadence for refreshing materials and making updates. Frequency of updates will differ across industries and depend on the volume of changes made each year.

For a Deeper Dive

We’ve further outlined key steps, examples, and do’s and don’ts regarding each tool in our Business Operating System Guide. Get the guide here.



How to Drive Efficiency in a Decentralized Organization

by Bill Aimone

Many organizations are faced with the decision of operating under a centralized or decentralized model. They find themselves in a difficult situation where they need to meet local market demands, customer needs, or a variety of different product or service offerings, which necessitates a decentralized structure. They need to run as one company, but geographic, product/service, and customer-centric groups across the organization require autonomy. So how can organizations maintain optimal efficiency while implementing a decentralized model? Here are a few ways.

1. Clear Communication Channels

Decentralization can empower employees, but it can also muddle communication. Without the traditional top-down information flow, clear, effective channels of communication are crucial. It’s important to ensure communication flows efficiently throughout the organization. This includes:

  • Establishing regular team meetings to keep everyone in the loop. Keep meetings efficient by staying on topic.
  • Implementing real-time communication tools (Slack, project management tools, etc.). Email isn’t efficient for everything.
  • Setting communication norms and standards.
  • Encouraging open, transparent communication to help mitigate misunderstandings and keep everyone on the same page.

2. Defining Roles and Responsibilities

Employees must understand their specific roles in order for the decentralized organization to stay efficient. Role clarity prevents double work, reduces confusion, and ensures all key tasks are accounted for. It’s a way to keep everyone accountable for and focused on their responsibilities. Clarity leads to efficiency.

Regularly reviewing and updating these roles also helps maintain efficiency as the organization evolves.

3. Harnessing the Right Technology

Modern technology enables a decentralized organization to function. Digital tools allow teams to connect in ways that were difficult or impossible in the past.

Project management tools can help teams coordinate their work and track progress, while instant messaging platforms simplify communication. CMS platforms, CRM platforms, and online scheduling tools, and are also crucial for many organizations. AI is transforming the way we work even further.

Harnessing the right technologies that enable people to be more efficient without overcomplicating daily work processes is key.

4. Continuous Learning and Development

As employees are given more autonomy in a decentralized organization, they need the skills and knowledge to make effective decisions. Organizations should prioritize ongoing training and professional development. This could involve leadership training for those in decision-making roles, technical training, cybersecurity training, or even role-specific workshops.

As markets change and businesses evolve, continuous learning helps ensure team members can contribute effectively, driving overall efficiency.

Key takeaway: Efficiency within a decentralized organization is not automatic—it must be actively cultivated. By establishing clear communication channels, defining roles and responsibilities, harnessing the power of technology, and promoting continuous learning and development, organizations can continue to grow.


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