Agility and Differentiation in the Oil and Gas Sector

Published
  • February 21 2008, 9:44am EST
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Greg would like to thank Adam Gersting, Accenture Information Management Services - North America Resources Lead, for his contribution to this month’s column.

Across the oil and gas industry, initial investments have been made to formalize work processes and capture information and data within parts of the enterprise. However, there is business opportunity as well as competitive necessity to further standardize work processes throughout enterprises and integrate information with the work process. Leading companies are now grasping the potential of taking the right steps to do this.

This integration is being driven in part by compliance and standardization requirements. Regulatory groups are reviewing and analyzing the commonality and consistency of processes being performed across similar facilities. The expectation is to find consistency both within and across facilities. A global refining company, for example, is focused on driving consistent processes across refineries while capturing and making needed documents and insights available to execute the process steps.

Another pressure that this sector is acutely aware of is the impending loss of knowledge through the changing workforce. This is driving the capture and formalization of knowledge into work processes, an important shift from an expert model, in which knowledge and insights exist primarily in the heads of specialists, to an integration model, in which knowledge is embedded in formal processes, making it more easily learned and applied by others.1

On top of this, a lot of time is spent accessing and aggregating information and data. Today, people in many organizations spend 20 to 30 percent of their time looking for documents, reports, files and data. With the integration of information sources and core work processes, relevant information becomes much more readily accessible, allowing time previously spent looking for information to be spent taking action.

Finally, the industry is experiencing a demand for greater business agility. With core processes formalized and information access integrated, businesses can achieve the agility needed to focus on differentiation. One source of agility comes through the use of predictive analytics - identifying future potential issues versus reacting to actual issues as they occur. This proactive approach results in greater capacity and availability to deal with the unexpected. In an Accenture survey of more than 160 senior executives around the world, most (57 percent) indicated that competitive differentiation is their primary focus in the coming years, versus fewer (34 percent) focused on “staying in the game.”2

Establishing consistent process execution and information visibility environments involves a number of aspects. First, create process definition and standardization at multiple levels - including logic, flows and conditions - to complete work steps. While this may seem elementary, leaders of many companies indicate that process standardization thus far has taken place - at best - within departments or work groups. Second, with the process standardized, identify needed information supporting each process step. This is to include the documents, knowledge, records, analytics and insights that are necessary to best perform the step or task. This also provides the foundation as well as support for creation and capture of new knowledge or documents that result from the step execution. Third, identify and map information related to the process step, clarifying where and how it will be accessed and stored. Fourth, determine business measures and metrics aligned to the collection of processes. Capture and visibility of such metrics could, for example, allow a manager to see how many pump repairs are in progress versus completed and an executive to see the repair cycle type across facilities in particular geographies.

Technologies are available to address and support such execution and visibility environments and the business steps described. With processes defined, business process management technologies model process flows within an automated environment. Web services and data integration tie the information sources to the process steps. This provides users access to information (e.g., checklists, guidelines, documents, data) needed to perform individual steps and the ability to post new information (e.g., results, forms data, documents, reports) that need to be shared to progress and complete the step. Business activity monitoring used in tandem with defined metrics to alert regarding status and potential issues within processes - individually and collectively - drives effective management. Portals provide aggregated access to the process steps and supporting information as well as integrate the knowledge and analytic capabilities aiding in efficient and effective access and execution.

Leading companies are starting to take these steps from both business and enabling technology perspectives. One leading company is driving this type of process definition and formalization as well as integrated information access. Visibility into the process, knowledge, collaboration capabilities and metrics is provided via a single interface. Greater agility and improved performance are achieved through process consistency and increased specialist capacity as generalists are enabled to do more. A number of success factors have been defined, including:

  • Remain business focused. At the core of any business is the business process. A focus on the business process is necessary for efficient and effective actions and decisions throughout the process - with technologies, human change and other factors being enablers.
  • Address governance. From both a business and enabling technology perspective, governance - organization models, decision-making processes, policies and standards; goals and metrics - is critical to the successful establishment and sustainability of successful environments and the realization of business value over time. Accenture research shows that organizations are beginning to recognize and address the area of governance; 72 percent of executives surveyed will be focused on data governance over the next three years.3
  • Look to the future. Through the establishment of environments that provide data and process visibility, there is an opportunity to move from reactive to future looking. As described, an important aspect of business differentiation is available capacity and the ability to work in an agile, proactive fashion. One operating company has gained differentiation through defining models - based on historical mean time between failures and other data factors - to predict equipment failure. With this ability, a portion of the maintenance function is more forward-looking, more agile and has more capacity to focus on the unexpected.

Both business opportunity and competitive necessity are driving further process standardization, integration of related information and access through process execution and visibility environments. Through developing and sustaining such environments, leading organizations can achieve greater differentiation and agility. References:

  1. Leigh P. Donoghue, Jeanne G. Harris and Bruce E. Weitzman. “Outlook Journal: Knowledge Management Strategies that Create Value.” Accenture, 1999.
  2. Greg B. Todd. Accenture CIO Survey on Cultivating High Performance Through Information Management, 2007.
  3. Greg B. Todd.

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