TEC’s research model of oil and gas ERP systems is now live. This means you can research and compare ERP solutions for the oil and gas industry at TEC’s Oil and Gas Evaluation Center. Solutions include ERP systems from Microsoft, Oracle, and SAP, and many other vendors coming soon. We’ll keep you posted on some second-tier vendors offering exciting products that emulate first-tier solutions, but geared and priced for upstream explorers and developers.
What Makes an Oil and Gas ERP System Different?
Oil companies, big or small, want the functionality and integration possibilities provided by an ERP system. This means full functionality for finance, HR, maintenance, and supply chain management. It also means a number of functional areas that are highly specific to the oil and gas industry, such as oil and gas production management (including production data capture and reporting), as well as a couple of other categories:
Joint interest accounting
In many respect, upstream oil and gas companies run like (and have the same needs as) most other process manufacturing companies. However, they also have “alter egos” made up of parts of their core companies and parts of joint interest venture partners. Partnerships like these allow smaller exploration businesses to succeed in cases when going solo would not be feasible, by sharing finances, expertise, equipment, and other assets.
In some cases, these hybrid entities are huge in terms of value, complexity, and importance. A joint interest can be complex, with ownership details changing by production process, location, and even over time. Because of this complexity, the accounting community has defined a specialized set of accounting practices specifically for the oil and gas industry.
Functionality related to joint interests
Oil and gas ERP systems try to emulate the structures and processing needs of joint interest accounting. For purposes of modeling the software for evaluation purposes, TEC has grouped ERP functionality into two subcategories: one encompassing the joint interest financial framework; and the other defining how financial and operational transactions are actually processed, i.e., costing and billing.
• An oil and gas company’s financial framework defines how the joint interest components are structured and organized. It defines the interfaces with the company’s internal accounting system, as well as transfer details and external report structures for partner companies.
• Costing and billing functionality defines how day-to-day accounting transactions are processed. It also includes joint operational functionality such as shared project planning tools, business intelligence, and specialized project costing and billing requirements.
What Should You Look for in Upstream Oil and Gas ERP Software?
1. Flexibility in operational scoping
As an upstream company, you may already have your financial infrastructure under control. However, will it be up to handling expansion and changes in operational scope? Ask yourself if your current systems can handle these considerations:
• multiple simultaneous ventures
• roles played by multiple venture operators or working interests
• multiple operating regions and nationalities
• multiple legal entities (and associated complexities)
• equipment and materials management
2. Integration with legacy systems
I remember a downstream oil company that had built a state-of the art marketing/pricing database—one that gave them a major competitive advantage. When it came time for ERP implementation, the company balked at replacing the program with a standard (but less sophisticated) module included in the ERP package. For them, the capacity to integrate was a must-have, and it may be for you.
3. Hardware management
Oil and gas companies ride a fine line between balancing technology costs with the functionality and performance they need. Most companies have five or more corporate entities and operate in more than one country. IT managers are hard-pressed to plan, let alone justify, hardware costs. Many organizations are actively looking at cloud/SaaS capabilities as an attractive feature in oil and gas ERP software.
4. Industry standardization
The industry is likely to experience exponential data growth due to the development of digital oilfields. This growth will focus on real-time data management and business analytics—in other words, production and financial analysis. The report concludes with a number of key tactics for success:
• adopting oil and gas data standards to create clean data
• using technology to speed real-time data collection and analysis
• improving data-sharing in the organization
For oil and gas ERP buyers, a system that facilitates adoption of new data standards allows the purchaser to kill multiple inefficiency birds with one stone.
If you’re an oil and gas company looking for ERP solutions but don’t know where to start, TEC can help. Our RFP templates can help you get started in your software selection. Our ERP for oil and gas upstream RFI/RFP template lists and describes 3,790 features and functions found in ERP for oil and gas upstream software solutions.
What are your thoughts and comments? Let us know in the comments below, and we’ll respond as soon as we can.
In the meantime, use TEC’s Oil and Gas Evaluation Center to express your business needs, prioritize your software requirements, and evaluate how well oil and gas ERP systems will meet them. Try it now.
If you are a vendor whose product falls under TEC’s new oil and gas research area and are interested in a product briefing, completing our RFI, and getting listed in our vendor directory, please contact us.
CM Mitchell Consulting Corporation is now offering an automated imaging product for paper remittance statements, Gas plant statements, and JIBs. It uses Kofax capture KTM with Optical Character Recognition and auto-reads, performs information validations, calculations, gross and net, etc. to fully support the capture of the information to send to your ERP application and/or Document Management system.
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