Oil field service (OFS) companies are unlike other service providers. There are long-term contracts, late-night emergency calls, lots of travel, and not a lot of forward-looking revenue security if the past couple of years (decades?) are a guide. Despite the recently dropping price of oil worldwide and the low price of natural gas in North America, many companies can still grow in this market. Despite the boom-and-bust cycle of this industry, skilled technicians always find a way to make money. Many will even grow their businesses during the down times because of their specialized skills.
Nevertheless, there comes a time when companies hit an operational wall.
Sometimes, that wall is the investors who are going to provide capital for equipment to expand services. Sometimes, the bank requires better governance to get the expansion loan the company needs. Many times, the owners and managers feel like the business is running but they have little control over what’s happening.
In the current price squeeze, driving down costs through more efficient management is a big motivator. These are all signs that OFS companies need to find a real enterprise resource planning (ERP) system.
The first hurdle is finding the time to look for an ERP system. If the work is there, small and midsize companies need to fulfill the contracts to be paid. Still, at some point, it must become a priority to find an ERP system. These companies should put the effort in when they start to feel the pain rather than waiting for an emergency situation. In addition, ERP solutions take time to implement. Waiting until the last minute to find a suitable package usually results in a poor choice. Going with the recommendation of a friend who runs a different company is not typically the best way, either: the other company invariably has different needs and offers different services.
Those differences make a difference. Some business processes work well in a spreadsheet because there’s a person dedicated to manual entry and calculation. That type of operational logic needs to be built into the ERP system.
OFS companies typically piece together different applications as they grow. Many small and midsize services firms have separate applications for asset and equipment management, human resources and payroll, customer billing and accounting, and customer relationship management. These systems were purchased piecemeal and implemented quickly. The downside is that they require manual transfer of data between them to run the business.
What to Look For
It is impossible to provide a recommendation for a one-size-fits-all solution for OFS ERP.
The best thing to look for is a service provider that can offers a rock-solid ERP system that offers setup flexibility to accommodate specific needs and operational processes. One good solution for small and midsize businesses to look at is Microsoft Dynamics ERP.
Interested in learning more? Register to view the “Fuel Your Business Growth: ERP for the Oil and Gas industry” webcast.