TECHNOLOGY AT WORK

E&P productivity enhanced by organizational realignment

John D’Angelo, Schlumberger GeoQuest; and Bob Troy, Holland & Davis, Inc.

ompanies cannot just purchase new technology and watch the savings / productivity model spiral upward. While a new technology may work as intended, it will not generate increased revenue without organizational realignment to accommodate its introduction.

There must be management vision and willingness to make changes in work processes and management practices to realize the full benefits. Additionally, performance goals must be set and measured. When that is accomplished, companies can be more successful with the technology they purchase, especially on the data management side – and they will be firmly positioned to manage successive technological changes.

How this may be accomplished is overviewed in the following discussions of: 1) the basic problem – need for data management, 2) how it is solved by the Organizational Realignment Bridge, 3) example of a typical, case-history scenario, and 4) an explanation of the "Value Iceberg" concept.

The value of data management. Exploration and production are either on a collision course with high technology, or E&P is poised to exploit exceptional opportunities. In fact, more companies are discovering that the true value of integrated data management is not in bits and bytes, state-of-the-art software or more data storage. Costs, features and functions of new E&P software are steadily taking second place to the goal of making more efficient and effective geoscientists – delivering increased productivity and revenue generation.

Ask key decision makers for an hour of their time to discuss the importance of integrated data management to their organizations. Typically, the request meets a lukewarm reception. However, ask the same executives, What if you could:

• Add another 1/2 to 1-million BOE per geoscientist to reserves each year
• Go from seismic to first oil 3 to 6 months quicker
• Recover $100 million or more in lost value due to lost data
• Avoid losing another piece of important data
• More accurately value leases?

Now, in pursuit of an extra million BOE per geoscientist, they are more than willing to talk about "non-executive" topics like data management. Striking opportunities, as noted above, are changing the mindset of companies toward the purchase of new E&P software and its real-value proposition to the organization. One estimate from a noted industry organization is that improved data management could save E&P companies at least $20 million per year.

Consider your company’s investment in geoscientists as analogous to a store’s investment in inventory. All other things equal, the company with faster turnover, i.e., more prospects per year for the same investment in inventory, will show higher profits and superior return on assets.

The overall dynamics tell a powerful story for industry’s future. If geoscientists spend 30 to 70% of their time looking for data, and even a fraction of that non-productive time can be freed up to find oil, the opportunity to better leverage assets is virtually open-ended. Company 1 in Fig. 1 represents an experienced, sophisticated practitioner of E&P data management. It clearly appears to have achieved a higher level of performance than the others in this sample.

The realignment bridge. How do companies get from the unsatisfactory A to the more successful B? That transition begins with a clear management vision and the recognition that technology alone does not make a company more productive – nor does the changing of processes and workflow. The solution is threefold: 1) processes and workflow, 2) supported by properly implemented technology, and 3) enabled by management to work as intended.

The Organizational Realignment Bridge is the key, Fig. 1. As shown in Fig. 1B, with leadership at the center, technology is but one of four tightly connected, "moving parts" of a company. First, the vision must be deployed, then technology implemented – the vision directly impacts the alteration of work processes and adjustment of the worker performance system. Above all, performance must be measured, because you cannot control what you cannot measure.

Realignment, or similar terminology, traditionally provokes varied reactions from within a company. In all cases, it is important for everyone involved to understand that, when properly executed, it does not change organizational charts or reporting structure. Realignment (which includes project management issues) focuses on changing how business is conducted – to make newly introduced technology perform best.

The Value Iceberg concept. All of this results, not from a hypothetical model, but from what is appropriately called the "Value Iceberg" of managed data in the real world. The tip of the iceberg is Cost Savings, which are built on effective support throughout the company and by optimizing resources.

The bulk of the iceberg is Value Creation, the solid foundation for Cost Savings. Value Creation comprises knowledge sharing, expanded opportunity for global resource sharing, lower learning costs, improved reliability of decisions, improved efficiency, reduced decision cycle time and improved decision-making quality.

The bottom line is that the cost to properly implement organizational realignment is not that different than continuing to handle data management as a software issue – isolated from its relationship with the people in the organization. Once the commitment barrier is hurdled, changes in processes and management practices will allow clear and tangible benefits to be realized.

Accomplishing organizational realignment. Organizational realignment is a complex task, consisting of numerous details and event sequences. Simplified, in this context, the goal is to assimilate new E&P software into a realigned corporate culture for maximum effectiveness by:

• Communicating to users the company’s vision of doing its work with the new software
• Clearly identifying how the company’s work processes will be done with the new system, including new procedures where needed, and roles each employee will play
• Clearly identifying and preparing all work tools and equipment that must be put in place along with the new system
• Getting all employees in affected departments to buy in and be trained
• Keeping all employees updated and on schedule for steps needed to complete all aspects of preparation and transition to the new way of doing their work with the new system.

With the high-technology era now settling into middle age, popular opinion might be that a healthy co-existence has long since arrived. Yet, E&P software is still being marketed as the sole solution to enhancing company workflow and increasing productivity, both in time savings and increased revenue productivity of geoscientists. Overall, that is simply not the case.

The authors

John D’Angelo, with 14 years as a management consultant and eight years with Schlumberger, is responsible for helping Schlumberger GeoQuest’s data management clients realize full value from the technology.

Bob Troy, with 25 years experience – currently focusing on organizational realignment – is with the Houston-based consulting firm Holland & Davis, Inc.

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