As in most industries, lack of good information in oil and gas operations to support decision making can kill productivity. Having people sift through reports, distill critical numbers, and then—finally—e‑mail the information to interested parties is common but painful to most companies. Nevertheless, reporting is critical to oil and gas company operations.
Here are five major ways in which better enterprise resource planning (ERP) reporting streamlines operations in the oil and gas industry.
Capital Spending Control
The oil and gas industry requires unique and specialized capital equipment. In the boom-and-bust cycle, it is sometimes difficult to see how particular equipment has returned value for the investment.
An oil and gas company’s ERP system shows the projects on which individual equipment was used, how long it was in use, and the costs of its maintenance. This information is adequate for judging a single piece of equipment, but a good report is needed to combine different equipment numbers or projects or to provide a point-in-time costs. It is from these reports that management really judges equipment—whether more equipment is needed and from whom to purchase it.
Operational expenses need to be kept down regardless of the niche a company occupies in the industry. Standard reports from an ERP system are usually decent but often give too much information.
There is a tendency in software companies to create a set of reports that are all things to all people. That way, during the ERP evaluation process, the ERP vendor can say that it has all the reports the customer requests. In reality, the customer discovers later that there are only a handful of reports that have a lot of information. The customer ends up transferring that report to a spreadsheet, and then deleting the data he or she doesn’t want to get to the specific information needed.
Good reporting from the ERP system means that the oil and gas company doesn’t have to go through that manual process. It also means that executives and management can see snapshots of spending that match their own management styles.
Keeping track of vendor costs is something an ERP system does well—when looking at a single vendor. It’s easy in most ERP systems to see invoices coming from and work orders going to vendors by date. It’s less easy to aggregate individual subcontracts into single views. Of course, that single view is what management needs to be able to examine how vendors actually perform. Most vendors work across multiple projects and at multiple sites over time. Reporting from an ERP system needs to present different views of the same vendor to enable project managers to better evaluate individual vendors and even compare against other vendors.
Equipment Utilization Alerts
ERP applications are good at telling companies what happened or even what’s about the happen. They are not so good at presenting what did not happen—in other words, which assets or people were underutilized. Whether it’s against a plan or a standard, companies need customized reporting to identify those resources that aren’t being used efficiently.
As equipment becomes more sophisticated, there are more and more sensors that continuously report on status. This gets into the realm of big data. Not all of these data can be stored in the ERP system, but before these data can be effectively analyzed, they must be linked to the ERP database. Machine ID, project numbers, operator numbers, and other descriptive data are stored in the ERP system.
Linking the descriptive data to the incoming big data stream is the only way to analyze the data in a way meaningful to the business. Some ERP systems are not set up to do this, and require third-party reporting tools to handle the task.
Integrated Reporting or Separate Business Intelligence?
Companies usually start by trying to use the customizable reporting module that most ERP systems come with. The advantage there is that the underlying database is already demystified, and most business users can create simple reports to get the data they need. Unfortunately, they quickly hit the limit when they need complex reports or data from databases other than the ERP database.
At that point, the oil and gas company needs to consider implementing a business intelligence (BI) system. The downsides to BI systems are the cost, time, and effort needed to implement such a system.
One aspect to consider is mobile device support and how critical access to key data is when people are traveling from site to site. This is something the BI system does well but an ERP system may not. For most oil and gas companies, the upside of a separate but integrated BI system greatly outweighs the costs. When looking for a new ERP system, these companies should consider the vendor’s BI system: the easier to use the vendor’s BI system, the easier the ERP system will seem to the business’ users.
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