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Digital Oilfield: Getting over the obstacles

Thursday, December 22, 2011

When implementing digital oilfield technology, there are always lots of obstacles. How do we get around them?
By Dutch Holland, PhD

Imagine a typical upstream business operation that has operated smoothly until one major piece of equipment breaks.

That's an obstacle.

Imagine that same business operation losing a key employee to a competitor. Another obstacle.

US government department BOEMRE issues another new regulation that directly impacts upstream operations. A big obstacle.

People find their way around the obstacles.

But imagine that same upstream business decides to implement an IT application ('SpeedAP') to speed up management decision-making.

A few months later, the business unit leader asks the implementation project manager how the implementation is going and hears: 'Nowhere. There are obstacles everywhere. We are shut down.'

The surprised business unit leader asks for examples of obstacles that have shut down the implementation.

'First, the people are using Excel spreadsheets and are comfortable with that. Another obstacle, the 'SpeedAP' software is not even reachable from engineers' desktops. And I could go on. The last asset manager I talked to about the implementation said she didn't even know anything about an IT implementation.'

Obstacle based thinking

Obstacle-based thinking in a change process labels every needed change step as an obstacle, with somebody or something being the hindrance to progress.

Pursuing that thinking, imagine hiring a contractor for a kitchen renovation.

In the first progress meeting with the contractor, he says he is shut down because of many obstacles.

Obstacle: the new sink cannot be installed because the old sink is still in place.

Obstacle: the new stove cannot be installed because the electrical power line in the kitchen doesn't carry the amps or voltage needed by the new stove.

Obstacle: the lovely new picture window cannot be installed over the work area because there is a wall there.

Any thoughts about what to do or say to that kitchen renovation contractor?

Design-based Thinking

An alternative to obstacle-based thinking is design-based thinking that focuses on action steps needed to reach a goal or a result.

Design-based thinking identifies which changes must be made to the machinery inside an organization in order to gain value from improved business processes enabled by digital technology.

Design-based thinking produces the 'work breakdown structure' that must be accomplished for a project to be completed (i.e., a project like a DOF implementation or a kitchen renovation).

Action: Remove the old sink to make room for the new sink

Action: Install new, high-power electrical line to kitchen to be used to power the new stove

Action: Break through the kitchen wall to begin installing the kitchen window

Where does design-based thinking come from?

Certainly it can come from pure logic if the need is for a simple kitchen renovation. For a more comprehensive and complex renovation, the body of knowledge around renovation engineering and construction can provide best practices as well as 'lessons learned' from successful renovations.

The source of design-based thinking for implementing DOF technologies to enable operations processes to generate more business value comes from several bodies of knowledge.

These include technology insertions/deployments, technology transfer, diffusion of innovation and transformation/change management.

In addition, there is no shortage of failed or underperforming technology implementations that provide rich case histories and lessons learned.

Obstacles to design parameters

What about taking some obstacles of concern to operators as well as DOF vendors and translating them as design parameters?

Issue: A frustration that many products being sold do not meet user requirements

Design based thinking: Is it possible to say that products which do not meet user requirements are being sold (and therefore bought)? Looking past this apparent paradox, vendors frequently say that they cannot get precision requirements from their buyers that the vendor needs to meet an operator's user requirements. The design-based action step for operators is to put their own operations personnel and their own technologists to work defining rigorous requirements for the digital technology to enable business improvement opportunities they target.

Issues: More products using WITSML (a standard system for drilling data) and a slow but sure move toward cloud technologies

The design-based action step for operators is to strengthen their 'watch capabilities' for detecting and assessing advances in technology, development of standards and evolving best practices in security. Proficient watch capabilities combined with rigorously-defined operational requirements are keys to the design-based approach to gaining business value from DOF.

Issue: Operators' frustration about lack of progress

Operator frustration depends on the organizational function and level of the frustrated. Without an organization-wide pro-active approach to design and implementation, DOF progress is likely to be elusive and remain 'just fine for some' and 'hugely frustrating' for others.

Comparing the approaches

So, what are the differences between the two approaches and does it really matter?

Yes, there can be night-or-day differences in the result of the two approaches.

Compare the two scenarios below.

Obstacle approach

Technologists in operating companies continue to listen to concerns of operations and other IT users in their organization. They continue to shop for DOF technology that 'looks interesting and must be useful' and, of course, they shop everywhere but buy the big name vendors (how could that be criticized?).

New hardware and software are installed and integrated with existing systems and infrastructure. Obstacles to DOF are noted as they occur and are reported. Technology vendors are encouraged or allowed to propose technology solutions as the primary means of defeating or going around the reported obstacles.

In order to defeat the obstacles, technologists can go back to the 'Bank' (top operating company executives) and get even more money. However, the executives typically do not understand, do not want to understand, are becoming increasingly disillusioned and who don't worry about the money (an actual quote from a real live CFO: 'Heck, DOF expenditures are only rounding errors in our financial statements anyway.').

The result of such a scenario can be an unmanaged, herky-jerky, slow and frustrating journey to limited success in gaining business value from DOF.

Design based approach

In this scenario, operators get clear upfront on what business value results they need from the operations side of the business. Operations managers, working with technologists, identify the most desirable business improvement opportunities along with the enabling digital technologies.

After positively assessing the power of DOF, the business case for operations improvements through digital technology is made and approved at the highest organizational levels.

After learning from other industries that have experienced multiple waves of technology innovation and implementation, top management puts DOF business value architecture in place to achieve business goals.

Operators engage the immediate competence to jump-start technology importation as they begin to build the necessary competencies inside. The result of such a scenario can be relatively linear, orderly and brisk progress toward the business value goals of operators.

Conclusion …

Certainly, there is progress in DOF implementation. However, the progress varies enormously between operators, some seemingly content with the herky-jerky progress of chasing obstacles and a few others using design-based thinking to extend the use of digital technology to create business value. That seems to be how it goes as an industry segment digests a new technology wave. Will the industry ever learn?

About the author: Dutch Holland has long been a student of the business value architecture needed for an organization to gain full business value from importing new technology. His book, Business Value Architecture for exploiting the Digital Oilfield, is about to be published by the Digital Energy Journal.

Associated Companies
» Holland Management Consulting
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