Top 18 Compelling Reasons

As promised an updated list of the reasons that users and producers should get involved with People, Ideas & Objects.

Twenty Trillion

$20 Trillion in additional capital expenditures to meet the market demand for energy. This is the generally agreed to scope of the problem that faces the oil and gas industry over the next 20 years. A business environment that is more difficult for all producers concerned. Success in the past is not a precursor to success in the near to long term.

$39 Billion Oracle Investment

What was once listed as a detriment is now a competitive advantage. Oracle has expended their money in a focused manner based on a broad vision of what IT could be. The vision became evident to People, Ideas & Objects during the five hour presentation explaining Oracle's revised strategy after their acquisition of Sun Microsystems.

As I write this we find that Oracle has beaten Alinghi 2 - 0 in the 33rd Americas Cup. Larry Ellison brings the cup home!

Williamson's Nobel

Transaction Cost Economics (TCE) has been formally recognized by Professor Oliver Williamson winning the 2009 Nobel Prize in Economics. TCE has been used extensively in the analysis and design of the People, Ideas & Objects Draft Specification.

Academics focused on organizational change and technology

We continue to see the premier researchers focus on organizational change and technology. The quality of the research being conducted is topical and valuable to the work being done in People, Ideas & Objects. It provides particularly strong support for the Users and oil and gas producers to get involved in this software development project. Giving direction on how to mitigate the fall out from the financial crisis and guidance as to where the future will provide the greatest value.

Fund the Budget

A call for $10 million during 2010 to support the user community and start the research and design work on the Preliminary Specification.

Value proposition - Competitive advantage

People, Ideas & Objects is based on a fundamental business model and value proposition. Producers collectively pay for the software development costs plus an element of profit for People, Ideas & Objects. This eliminates the large, costly and mostly ineffective SAP system installations that producers know don't work.

Our commitment to the oil and gas producer is that People, Ideas & Objects is the most profitable means of oil and gas operations.

User Interface

I recently documented how the User Interface (GUI) of People, Ideas & Objects would be based on Sun Microsystems Project Wonderland. Providing a "gaming" interface similar to the World of Warcraft. These will be of particularly value in the Marketplace Modules such as Petroleum Lease Marketplace, Resource Marketplace and Financial Marketplace. Where producers and users will be able to interact with other avatars and negotiate agreements, strike deals and all from the comfort of where ever they are physically located.

Perez the Information & Communication Technology Revolution (ICTR)

We are fortunate to be living at a time when the level of economic change is substantial. The old ways are being replaced by new and innovative means based on the Information & Communication Technology Revolution. Professor Perez has detailed the point where we are at in this fundamental transition. A transition to a far more productive way of life. Her work provides people with the understanding that economic stimulus is limited, and our future is waiting for us in organizational change and technology related areas.

Management is wrong

Management's Resistance to People, Ideas & Objects has been wrong. This is clearly evident as we look on the past 4 years. The time to move on making the change to the Joint Operating Committee as the key organizational construct of the innovative producer is today. Management are being called out by People, Ideas & Objects to make sure the transition begins as soon as is possible.

People, Ideas & Objects is Open Source

Although we do not qualify as a pure Open Source project. Our software code is open and available for the communities to review. Producers should establish an auditing procedure of the code to ensure it is compliant to their needs. These and other advantages of this openness are what People, Ideas & Objects is providing.

Penalty Structure of non - participation in People, Ideas & Objects.

For producers the costs associated with this software development project is fixed in terms of time. Effective January 1, 2010, all producers are being assessed a cost to participate in these developments. Companies that choose not to participate past March 31, 2010 will be assessed a 300% penalty when and if they do decide to join. Non participating producers will not be able to use the software until payment is made in full. And most importantly, producers who join later will have difficulty in asserting their needs within the established user communities.

Tech Company Earnings

Technology firms such as Apple, Cisco and Google are able to make substantial profits from their mature technology businesses. This is a trend that was noted in Professor Perez' research and is a direction that people can see is where the prosperous future lies.

Oil and Gas company earnings

Even with oil and gas prices being substantially higher then they were in prior decades. Costs have escalated and continue to do so. Oil and gas companies are seeing a downward trend to their earnings and production profiles. The business is becoming complex and those that were profitable in the low energy price era have no competitive advantages in this higher priced era.

Oracle

We are a customer of Oracles technologies. These technologies will be the standard component of the People, Ideas & Objects development environment, cloud offering, database, Java etc. Everywhere, from stem to stern, Oracle technologies will be deployed in making People, Ideas & Objects. This provides producers and users with a solid, reliable and scalable infrastructure in which to innovate and conduct their business operations.

Scrum / Agile

People, Ideas & Objects competitive advantages are many. One of these is the agile / scrum software development methodology that has developed in the last few years. Agile teams are 500 to 1000% more productive then prior methodologies. Velocity is the term used to note the speed at which these teams work. The overall reduction in costs and the faster turn around time are two of the larger benefits users and producers will realize through People, Ideas & Objects.

Complex Adaptive Systems is the technical term that captures the agile methodology.

Policies, Procedures & Positions.

Many policies, procedures and most importantly positions are being detailed on this blog. The positions include the Product Owners and Account Managers. Now is also the time for the user community and the Community of Independent Service Providers to begin their involvement in this software development project.

The five frameworks of the Joint Operating Committee

The legal, financial, operational decision making, communication and cultural frameworks of the industry are held within the JOC. Moving the compliance (Tax, Roy, SEC) and governance frameworks of the hierarchy in alignment with the JOC will define and support the innovative oil and gas producer.

Breaking the mirror. Actionable Transparency.

A concept that is introduced by Professor Carliss Baldwin in the "Mirroring Hypothesis". Actionable Transparency is a term that accurately captures the innovativeness of People, Ideas & Objects, the innovative oil and gas producers, working together to increase productivity.

If your an enlightened producer, an oil and gas investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Budget conversation

A quick note that one of the desired benefits of this first quarter 2010 fund raising drive. Is to prove the bureaucracy will not fall on its sword. Calling on the investors and shareholders in oil and gas to fund this software development is a reasonable approach to break this deadlock.

We see with the strong academic grounding of the ideas of using the Joint Operating Committee as the key organizational construct. This method of organization and software development is a reasonable approach to the problems in the industry.

It is difficult to see the investors and shareholders directly funding these developments themselves. It is anticipated that they would pressure their management to participate. This can be achieved at few times and with few opportunities in the calendar year. And that time is coming quickly.

If the investors were able to have their firms vote on supporting People, Ideas & Objects at their Annual General Meeting (AGM). Would this be an opportunity to speak over the heads of the bureaucracy and get People, Ideas & Objects funded? The form of proxy is currently being developed for the AGM. Is this the means to have the 2010 budget funded?

If your an enlightened producer, an oil and gas investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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January 2010 Update

This update is to advise of the budget activities around our 2010 Budget & Planning. Our deadline of March 31, 2010 is one third closer then where we were at the start of this year. The amount of interest or contact with either producers or investors and shareholders in oil and gas has been none. We currently have no funding commitments.

To my way of thinking we have but one choice. To start these developments in 2010. The scope of this project can not be undertaken on a volunteer basis, it must have the full support of the industry.

If your an enlightened producer, an oil and gas investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here. Our next update will be on or around February 15, 2010.

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Professor's Baldwin and von Hipple V

Part V of our review of Professor Baldwin's and von Hipple's working paper "Modelling a Paradigm Shift: From Producer Innovation to User and Open Collaboration Innovation." Lets assume for a moment the knowledge of how the oil and gas industry could be codified by 1,000 people. Much as the people are being organized and their contributions codified in the People, Ideas & Objects Preliminary Specification. Speaking prospectively, irrespective of the fact that these people are members of the Community of Independent Service Providers (CISP) and they earn their living through the contributions they make to the software, and their oil and gas producer clients. What's in it for them. Baldwin and von Hipple make the following point clear.

User innovators will choose to participate in an open collaborative innovation project if the increased communication cost each incurs by joining the project is more than offset by the value of designs obtained from others. To formalize this idea, assume that a large-scale innovation opportunity is perceived by a group of N communicating designers. As rational actors, each member of the group (indexed by i) will estimate the value of the large design and parse it into two subsets: (1) that part, valued at vsi, which the focal individual can complete himself at a reasonable cost (by definition, vsi > dsi); and (2) that part, valued at voi, which would be “nice to have”, but which he cannot complete at a reasonable cost given his skills and other sticky information on hand (by definition voi ≤ doi ).

Turning to the oil and gas producer, what's in it for them to support the People, Ideas & Objects developers and the associated CISP? Clearly the User innovations as Baldwin and von Hipple call them applies to the producer as well. They have access to a system that replicates any and all processes within the oil and gas industry. It's not that they need to have all those processes managed, but it is possible for them to run their firm in the most profitable manner by using People, Ideas & Objects and the CISP. The costs of the software are as little as a $1.00 per year per barrel of oil equivalent daily production. Yet they too are benefiting from these open collaborative innovations in the same manner the CISP is.

Consider finally the model of open collaborative innovation. Recall that open collaborative innovation projects involve users and others who share the work of generating a design and also reveal the outputs from their individual and collective design efforts openly for anyone to use. In such projects, some participants benefit from the design itself – directly in the case of users, indirectly in the case of suppliers or users of complements that are increased in value by that design. Each of these incurs the cost of doing some fraction of the work but obtains the value of the entire design, including additions and improvements generated by others. Other participants obtain private benefits such as learning, reputation, fun, etc that are not related to the project’s innovation outputs. For ease of exposition, we will derive the bounds of the model for user innovators first, and then consider the impact of other participants on those bounds.

Simple, but why has this not been done to date? Clearly the costs of collaboration on a large scale have dropped to minuscule levels. The Internet not only reduced the costs but also enabled these formerly disparate groups to associate with little to no costs. The only requirements to finding other groups of interested people is to Google the topics of your interest.

This is the first bound on the open collaborative innovation model. It establishes the importance of communication cost and technology for the viability of the open collaborative model of innovation. The lower the cost of communicating with the group, the lower the threshold other members’ contributions must meet to justify an attempt to collaborate. Higher communication costs affect inequality (5) in two ways: they increase the direct cost of contributing and they reduce the probability that others will reciprocate. It follows that if communication costs are high, an open collaborative project cannot get off the ground. But if communication costs are low for everyone, it is rational for each member of the group to contribute designs to the general pool and expect that others will contribute complementary designs or improve on his own design. This is in fact the pattern observed in successful open source projects and other forums of open collaborative innovation (Raymond, 1999; Franke and Shah, 2003; Baldwin et. al. 2006; Lakhani and von Hippel, 2009).

It would have been prohibitive, boring and frustrating to attempt the collaboration design of the Preliminary Specification without the Internet. Communication and design costs would have escalated to exorbitant amounts and the quality of the end product would be far less then the "open" collaboration design that Baldwin and von Hipple write about and is being employed by People, Ideas & Objects for this software development. There's more. As in this next quotation, the scope and scale of these designs can now be undertaken. The 2010 budget for the preliminary specification has been set at $10 million, yet the scope of the application is far greater then any other application designed in the oil and gas marketplace.

Note that this bound is N times greater than the bound on the design cost of the average single user innovator. Thus given low-enough costs of communication, open collaborative user innovators operating within a task-divisible and modular architecture can pursue much larger innovation opportunities than single user innovators acting alone.

The importance of this fact is how individuals should reconcile the ambition of this project to the reality of life. Building an application that uses the "industry" perspective through the JOC brings the scope to a frighteningly large level. The JOC is a generic organizational structure that is and can be populated by any number of changing numbers of producers and the people that work within the oil and gas industry. The use of the JOC in the Draft Specification is what demands open collaborative innovation design. Critical to making this an operational possibility is the ability of the Preliminary Specification to implement the Draft Specifications Military Command & Control Metaphor as a key cornerstone of the Compliance & Governance module.

But if communication costs are low enough to clear these hurdles, then the second bound [(6) and (6’)] shows that, using a modular design architecture as a means of coordinating their work, a collaborative group can develop an innovative design that is many times larger in scale than any single member of the group could manage alone.

Figure 3 in the paper shows that the Open Collaboration Innovation is able to approach a far higher level of design sophistication then the Producer Innovators. At no time before has this level of design sophistication been possible nor has the scope and scale been so (relatively) easy to approach. Producers and Users, and particularly members of the Community of Independent Service Providers stand to gain substantially from their contributions to this project. The overall design is comprehensive and ambitious. Today's technologies, and particularly the Internet, enable the type of systems design that the Draft and Preliminary Specifications involve. And although I don't think I mentioned the last two phases of the design publicly before. Now would be a good time to note that the Preliminary Specification will be used in a similar manner to the Detailed and Final Specifications. (Please note with a lag of six months the Detailed Specification can be completed concurrently to the Preliminary Specification.) The costs, which are budgeted at $10 million for the Preliminary Specification are negligible. To participate in these development as a supporting producer please follow our Funding Policies and Procedures here. And if you want to participate as a User or a member of the Community of Independent Service Providers please join us here.

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2010 Budget and Planning

As promised the 2010 Budget and Plans are set. This post will highlight the aspects of "what" and "how" this is being undertaken. Further discussion is encouraged by contacting me by email or the "Call Me" feature on the bottom left column of this blog.

First off is the objectives for 2010. Completion of the Preliminary Specification was mentioned yesterday. The Preliminary Specification is a collaboration of the end user community. It's cost is based on 100 "People" years of effort and will determine two key components; the scope of the application modules and the detailed analysis of the oil and gas business in a comprehensive, codified manner. The two constraints placed on this development are they must use the Draft Specification as it's starting point and be focused exclusively on the business of oil and gas. Technology is not part of this specifications deliverable. The only technological requirement will be the generation of stories in line with the agile manifesto.

We seek to capture the ways and means of the optimal innovative oil and gas producer in the Preliminary Specification. The understanding of the industry is beyond the scope of a handful of contributors and involves multiple disciplines. The collaborative output of the Preliminary Specification will be well beyond the scope of one individuals understanding of the industry. Therefore clarification and compromise will be a necessary and difficult part of the process. Using advanced business techniques focused on the conflicts and contradictions that arise, the output will resolve many of the issues within the industry and its application to the Draft Specification. This is a business design process that will involve literally everyone and anyone with experience and understanding of the oil and gas industry. More specifically it is a place where people can contribute their ideas and build their own service based offering in support of the innovative oil and gas producer and users of the developing People, Ideas & Objects software.

Contributors to the Preliminary Specification are invited to join this development through this process. Users will be compensated for their contributions. I have allocated an average $125.00 U.S. / hour for user contributions. Each of the 100 People years is determined on an eight hour day and 220 days per year. 30% of the $10 million budget is allocated to users. The total population of users may possibly number in the thousands of individuals. This will not be a full time task for any of users, and it is anticipated that no one would be required to leave their current positions in order to contribute to these developments. Subscribing producers are encouraged to second their human resources to this process in order to ensure their unique business needs are met by the Community of Independent Service Providers and the software itself.

Additional financial resources are budgeted in the support of this developing community. Maintenance of the private wiki where these postings will reside, in addition to the multitude of other support requirements; requires we allocate an equal amount of resources to support the community. The remaining 40% of our budget is allocated to overhead, organizational development, preparation & testing of the technological architecture, and the software configurations themselves.

As indicated the time frame for completion of this critical community development and specification delivery is the end of the 2010 calendar year. The determination that 100 People years is adequate is a judgment call made based on my experience and understanding of the oil and gas industry. I anticipate that towards the end of 2010 we may be consuming as much as one People year with each day of development.

As always, please join us here.

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2010 Funding Policies and Procedure

Establishing 2010 as the year that this project stops the passage of time without consequence. We have a problem in oil and gas. That problems definition, size and scope is generally understood and agreed to. The current oil and gas companies organization models are unable to meet our needs and they are certainly not positioned to address our future. And by "our" future it is intended to define societies future. For this reason we need to move to begin the development of the Preliminary Specification, and have it completed in 2010. The next blog post will document the budget and planning necessary for this to occur. Key to attaining these goals is the scope of the effort has been determined to be 100 "People" years. People years is the same as the gendered "man" years in defining what the effort is. With statement of these goals it is necessary that we create the mechanisms to raise this money.

The budget will also document that the 2010 capital requirements total $10 million. By stating this it shows the serious nature of properly identifying the user community. The May 2004 Preliminary Research Report documents the issues the oil and gas industry is currently facing. The document also establishes the accuracy of the research that has been conducted in this weblog. Now that management of the oil and gas companies understand these issues, they should also understand the need to act.

Therefore I want to reiterate that the targets for funding these developments are primarily to the shareholders and oil and gas investors. They are the ones that have been adversely affected by managements co-opting the governance frameworks to better secure their existence. Clearly investors want and need an alternative governance and organizational method to build and manage their oil and gas assets. People, Ideas & Objects makes these changes in the Compliance & Governance Module of the Draft Specification. Our secondary markets are the National Oil Companies like Pemex, Petronas and Saudi Aramco. Quasi governments and corporations who hold the dual role of managing their countries oil and gas resources. Lastly our openness of communications enable the International Oil Companies and Independent producers to contact us and participate. The benefit in being part of this development is to have their unique organizational needs met by the software being built, and the CISP's service based offerings. Lastly Start-ups, primarily due to their lack of any substantial production, are also welcomed to this development.

Fees for 2010 have been set at $1.00 / BOE / Day. (A producer that produces 50,000 / boe / day would be assessed $50,000 for 2010). These fees are due and payable on or before March 31, 2010. Invoices will not be provided outside of this blog post. We are also establishing a Penalty component as follows: 1) Penalties are assessed on March 31 of the current year. Penalties are 300% of the years fees. 2) Any participant to this development will need to make up any and all Fees and Penalties back to January 1, 2010. Therefore if a producer joins in 2012, they will need to pay the Fees and Penalties of 2010, 2011 and 2012 before they would be entitled to participate in these communities, developments, or use of the software. Choosing to wait to join this development will preclude the communities and developments ability to cater to the producers needs. As time passes the inertia of these developments will make it progressively more difficult for one firm to address the scope of their development needs. 

The Business Model of People, Ideas & Objects provides substantial value to our subscribing producer firms. The basis of these developments uses the cost - plus model. Where these costs are amortized over the participating producers, once. Our objective, and that of the Community of Independent Service Providers (CISP) is to provide the innovative oil and gas producer with the most profitable means of oil and gas exploration and production.

Management may want to sit back and continue to belittle this process. Noting that it doesn't have this and hasn't got that. That it is a start-up with no proven record of delivering any commercial software. If the research, business model, user focus, using the Joint Operating Committee as the key organizational construct, and our understanding of the oil and gas industry from a business point of view doesn't sell you, nothing will. Our competitors will be far better at selling you the next great technology that comically brings you closer to your customers.

To participate please contact me at this email or call me by selecting the "Call Me" service on the bottom of the left hand column. And for those individuals interested in joining, please join us here.

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2009 Year in Review

Starting off 2010 it's important to highlight some of the 2009 developments of this project. 2009 was our first full year of community development. It is clear that using the Joint Operating Committee resonates with many of those who work in oil and gas. Through analysis of the numbers of subscribers to this blogs feed. Shows the community is large and engaged with the content. Another point that is clear is the risk of being seen to be active and committing to this process. We are well aware of the consequences of being too early and too closely affiliated with these ideas. Management of the oil and gas companies want nothing to do with this development, or with the people associated with it. Keeping the community anonymous, in addition to its further development is our number one priority for 2010.

Our second priority for 2010 is to secure our budget and implement our plans for the development of the Preliminary Specification. The budget and plan will be posted here in the next few days. Securing the financial resources to proceed with tangible developments is necessary for further community development.

Highlights of the past year.

• A general understanding the issues in oil and gas production and exploration are substantial. Over the next 20 years, companies such as Exxon, have quantified the scope of these issues as being an additional $20 trillion. This requires a different approach.
  
• Oracle Corporation released their Oracle Fusion product offering. Oracle's activities in this area have been an unknown in the oil and gas ERP marketplace. This unknown has had the effect of freezing the decision making process of producers. Two things stand out in Oracle's offering. One is Oracle's comical desire for the oil and gas producer to get closer to it's customers. And possibly fatally, Oracle has spent $39 billion in capital in the Fusion investment. Both of these points show that Oracle needs further development to meet the needs of the innovative oil and gas producer.
  
• Professor Oliver Williamson's winning of the 2009 Nobel Prize in Economics. Much of the Draft Specification uses the theories and ideas of Williamson and others. I find the awarding of the prize brings substantial credibility to the Draft Specification, and hence to it's community of users.
• Clarification and confirmation of the targeted market for these software applications and communities services. Through the development of this community it has become clear that the software offerings and services appeal to International Oil Companies (IOC's), National Oil Companies (NOC's), Independent Oil and Gas Companies and Start-up producer firms.

People, Ideas & Objects future is bright. We understand that people who are interested in joining this Community might only be able to contribute a few hours per week, so please join us here.

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