Copyright Notice

Politics, can’t live with it, can’t live with out it. This post is about the political realities around the use of copyright in the oil and gas industry. Specifically the copyright that I hold in the research around using the Joint Operating Committee. There are two key points that need to be considered, again, as there seems to be some belief in the marketplace that actions taken by industry members are not subject to the political or legal realities of copyright law.

First of all let me restate the copyright notice. Look at any and all blog posts and knols that contain any of my writings and you will see the copyright for these published works. These are all based on the original idea of using the Joint Operating Committee which originates in my September 2003 research proposal to industry. Now on with the politics.

Producers management and specifically the C class executives, will not wish to "break the (copyright) laws" by using any other software that does not comply with my copyright. This isn’t in a producers best interest due to the fact that it could be financially costly for them to proceed with the development, implementation or use of any other software that violates this copyright and therefore would be unusable. The financial costs of these activities, the time lost in implementing them and the potential loss of further time when the software would not be available for use could be severely detrimental to the producer firm. The software marketplace could be an organizational graveyard for the unaware or careless management.

The second area where intellectual property can be politically disruptive to a producer is when dealing with the hardware, software and services of major vendors like SAP, IBM and Oracle. They have no interest in diluting the legal value of their assets by belittling or diluting their assets by contaminating them with software that is not supported by associated research. That is to say they live and die by the value of copyright and have as much interest as I do in seeing that my copyright is upheld. It in fact supports their copyrights indirectly. They also have no interest in contaminating their IP with IP that may be in direct breach of someone else’s IP, and therefore indirectly becoming party to a breach. It was with this in mind that I informed these firms of my copyright, based on the Preliminary Research Report, in an email dated October 15, 2004 and cc’d to many of the CEO’s of the major Canadian producers.

On a related point. Oracle recently was awarded $1.3 billion in litigation with SAP for their breach of Oracle’s IP. Two very clear points are noted as a result of this. As I noted in the previous paragraph, no software vendor will violate another vendors legitimate claim. And secondly, this is now being extended so that customers don't want to be party to illegitimate use or violation of others IP.

Customers of People, Ideas & Objects can rest assured that the clarity and pristine nature of our IP is impeccable. The value of the idea of using the Joint Operating Committee as the key organizational construct is immense, and the development of that idea is evident and available for anyone to review through this blog and the referenced knols. There are over 800,000 words, 6 good sized text books, that support the work that has been done and that is reflected in the Draft Specification. This effort has been undertaken to ensure People, Ideas & Objects customers of our ability to compete in this marketplace.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

So What is Phase-Two

As we begin Phase-Two we see People, Ideas & Objects move away from our heavy focus on research. And turn our attention to the commercialization of the Intellectual Property (IP) contained within that research and this communities development. This is done with the objective of completing the Preliminary Specification and ultimately building the software that is defined there. With this blog post I have now updated the knol where the Preliminary Specification is listed. There is now a thorough understanding of the requirements of what people will need to see in order to participate, and the key deliverables of the Preliminary Specification. It’s still brief, but that’s the point, it has to be.

One of the key points noted is the budget for the Preliminary Specification has been set at $100 million. The controversial nature of the size of this budget will lead to much discussion. However, the more time and energy spent at the beginning in these tasks the less that will be spent in the long run in terms of actual development. These Preliminary costs also represent as little as 5 - 10% of the total software development budget. I don’t want to pollute this blog or the knol with discussion about the budget and therefore ask if you have comments to direct them to my email here.

The source of these funds for the Preliminary Specifications budget is based on the 2010 and 2011 fees and penalties that have been assessed at $1.00 per year and $3.00 per year, per barrel of oil equivalent, per year. Please see our Revenue Model for more information. Therefore if a producer was producing on average 40,000 barrels of oil per day over the past two years, the costs for them to participate in the development of the Preliminary Specification would be (2010 $160,000 and 2011 $160,000) = $320,000 for the two years. These costs are for the software development; and provide the producer with the opportunity to have their needs specifically addressed in the software development process. Today its not enough to own the oil and gas asset. You must also have access to the most efficient software systems that make the oil and gas assets profitable. Having direct participation in the development of that software will be an additional competitive advantage for the producer. That's what People, Ideas & Objects are offering.

One key change in the Phase Two proposal is that we have centralized all of our operations in Houston. The President, COO, CFO, VP Community Development, VP Development, and VP Business Development will be based there as will all of their teams. (Previously the development team was to be in California). Houston provides the ideal location if during the Preliminary Specification the scope of the application is determined to be an “Americas” based or “Global” based solution. (P.S. Now would be a good time to start thinking about the many positions discussed in the proposal. People, Ideas & Objects (PI&O’s) will consider people for direct hires and those that are seconded from participating producers.)

In an April blog post we noted that management were too conflicted to participate in the financing of this project. That we were instead turning to the ownership class to fund our capital needs. Phase Two is not a development term but a business term of moving to a more mature foundation. It is not that we're seeking to source our funds directly from the ownership class but to have the ownership class direct management to participate. Doing "something" comes down to industry supporting PI&O's Revenue Model. Only then will anything substantial begin. People, Ideas & Objects revenue is based on a producers reasonable share of the costs of software developments, not on PI&O's cash balances.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Where we are at, Phase-Two Begins

The sabbatical is over and its time to get back to work. It’s been a restful and worthwhile break to recharge the batteries to make the crucial transition from phase one of the project to begin the second phase. It’s therefore best to start off with a quick summary of where we are at in terms of how we left things before the sabbatical.

Most importantly is the Draft Specification which was published in July 2008 and forms the basis or foundation of the second phase of our software developments, the Preliminary Specification. This eleven module system description defines what a producer firms systems would look like when we use the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. It is radically different and provides an overall vision of how producers would manage their assets in the most profitable manner. The Draft Specification is available for review on two pages located here.

From the period of time between August 2008 to May of 2010 we undertook a detailed discussion of how and what the Draft Specifications impact would have on an oil and gas concern. Taking issues and opportunities of the day and applying them to the specification. Providing real life testing and understanding of these ideas. We also had the opportunity to take McKinsey’s and others research and apply it to further broaden the overall understanding of the Draft Specification. These blog posts can be sourced through the archive during the period noted, or through the McKinsey label.

Although we continue to promote the Draft Specification from time to time we began to move the project forward with some specific deliverables in 2010. During the period June - August 2010 we developed the Phase Two proposal that forms the framework of the second phase of the work that is now ahead of us. These blog posts can be aggregated by selecting the Phase-Two label in the blog. One important difference between what is stated in that period and now is that I will be clearer on the budget requirements of the Preliminary Specification. So stay tuned for that.

Lastly during the time frame of August 2010 to January 2011, or the beginning of our sabbatical, we reviewed the key points in the Preliminary Research report. Our special emphasis was on Professor Giovanni Dosi’s paper “Sources, Procedures, and Microeconomic Effects of Innovation”. These blog posts can be aggregated by selecting the “Review” or “Dosi” label. I highly recommend reviewing this work thoroughly. Professor Dosi’s work is very pertinent and applicable to using the Joint Operating Committee in the manner that the Draft Specification suggests. In fact the Draft Specification is designed using the research of Dosi’s and many others research and therefore makes the understanding of his work critical.

It is on that note that we say so long to the heavy emphasis on research. I expect that the primary focus on research will fade from this blogs pages. We are moving to a commercial forum and one that focuses on building software. Research has provided us with a broad base of understanding and a foundation of almost 800,000 words of how the Joint Operating Committee builds real value for the innovative oil and gas producer. Now we turn to a new a focus that builds on that foundation. We are now focused on building the software that makes that value real. Value that recognizes that it its not just ownership of the oil and gas assets; but also access to the most innovative software to provide the most profitable means of oil and gas operation.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

People, Ideas & Objects - Wish List

Today we provide a list of the independent producers, National Oil Companies (NOC's) and International Oil Companies (IOC's) that People, Ideas & Objects are targeting. It would be ideal to have these twenty five firms use the applications that we are building. If you know, or have access to the decision makers in these firms, please contact me here. The company name and location are provided as are their web addresses.

• Abu Dhabi National Oil Company                          United Arab Emirates
• Anadarko Petroleum Corporation                            The Woodlands, Texas
• Apache Corporation                                                 Houston, Texas
• BP                                                                            London, England
• Chesapeake Energy Corporation                             Oklahoma City, Oklahoma
• Chevron Corporation                                               San Ramon, California 
• CNOOC Limited                                                     Hong Kong, China
• ConocoPhillips Company                                        Houston, Texas
• Devon Energy Corporation                                     Oklahoma City, Oklahoma        
• ExxonMobil Corporation                                        Irving, Texas
• Forest Oil Corporation                                            Denver, Colorado
• Hess Corporation                                                    New York, New York
• Iraq National Oil Company                                    Baghdad, Iraq
• Kuwait Petroleum Corporation                               Safat, Kuwait
• Marathon Oil Corporation                                      Houston, Texas
• Occidental Petroleum Corporation                         Los Angeles, California
• Petroleos Mexicanos                                              Mexico
• Petroleo Brasileiro SA - Petrobras                         Rio de Janeiro
• PetroChina Company Limited                               Beijing, China
• Petronas                                                                 Malaysia 
• Pioneer Natural Resources Company                    Irving, Texas
• Qatar General Petroleum                                       Doha, Quatar
• Saudi Arabian Oil Company                                 Dhahran, Saudi Arabia
• Royal Dutch Shell                                                 The Hague, The Netherlands
• Total S. A.                                                             Courbevoie, France

In addition to these firms, People, Ideas & Objects would be pleased to include representative firms from the startup oil and gas producer community. Producers are encouraged to contact me here in order to begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here.

Technorati Tags: People's Phase-Two Community Wish-List

Our Revenue Model - Defined

I am pleased to have defined the Revenue Model for People, Ideas & Objects. I have aggregated the material in one knol located here. We now have the justification for producers to support these developments. Definition of the Revenue Model initiates Phase Two of this projects development, the Preliminary Specification. Readers can aggregate all of the posts for Phase Two here.

Producers are encouraged to contact me here in order to begin their participation in these communities.

Technorati Tags: People's Revenue-Model Phase-Two Specification Community User

Getting it Right

The Draft Specification provides a clear vision of how the innovative oil and gas producer would be supported by Information Technology systems. By building IT systems that use the industry standard Joint Operating Committee, innovation is facilitated and enabled. The Draft Specification is however, only the beginning and is by no means the final say. It is the beginning of a process that will discover the right solution with the input of users, producers, the Community of Independent Service Providers and others. Only then can we begin to develop the “right” systems for the industry.

Getting it right will be the difficult part of developing these systems. Community based developments are the only possible way of discovering what is “right”. Producers need to realize these are critical and necessary elements of their future systems success. To assume a vision, or technology driven solution from another vendor would require the same user-driven process. Unlike other ERP vendors, we are not selling a solution to users, we are building the user the “right” tools they need to efficiently do their jobs.

Technorati Tags: People's Specification User CISP

The Budget for Phase Two

Here we step into the truly surreal world of People, Ideas & Objects budgetary needs. The objective of Phase Two is to complete the Preliminary Specification. A task that has been defined as 100 man years of effort. A task that when complete would be a significant step forward for the innovative oil and gas producers. Costing this part of the development is relatively easy. We pay standard rates for contributions of $125.00 U.S. per hour. Therefore 100 man years at 1,760 hours per year totals $22 million. I could identify many other costs involved in supporting these developments, however.

Our revenue model sets an annual rental fee for each calendar year. That fee was set at $1.00 per barrel of oil equivalent for the 2010 year. Penalties are due and payable effective March 31 on any outstanding fee for that year. As of today’s date, each and every producer will be assessed the 300% penalty on their 2010 rental fees. These fees and penalties are to be paid in full by all producers irrespective of when they may join the developments. No participation or use of the software is permitted by any producer until all outstanding fees and penalties, back to January 1, 2010, are paid in full. The incentives are to participate early, and there are no financial benefits in waiting for other producers to pay disproportionately the fees and costs of these developments. Early participation is rewarded with a reduction of 75% of the total potential fees, (penalty avoidance) and greater participation in the definition of the software. (Or the ability to map the software to deal with the producers organization.)

To set a dollar amount to complete the Preliminary Specification is beyond what can be reasonably budgeted or defined. We are therefore proceeding with Phase Two on the basis that as producers join, and pay their required fees and penalties, we will proceed with the further development of the project. A pay as you go basis as producers join the development. The nature of the Preliminary Specification facilitates this stop-and-go type of development.

It is also time to set the fees for 2011. As in 2010, 2011 fees are set at $1.00 per barrel of oil equivalent. This fact alone shows the value proposition of this project. That although the costs of development are high, the costs to an individual producer are not only reasonable, they are a mere shadow of the traditional ERP software costs.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Phase-Two Revenue-Model Budget Development

S + B's Big Oil's Big Shift

We have today a remarkable article from Booz & Co’s “Strategy + Business” (S + B). Prospective users of People, Ideas & Objects software applications and members of the Community of Independent Service Providers need to see that the work that they can do at People, Ideas & Object is topical, and hence valuable. This S + B article entitled “Big Oil’s Big Shift” provides an understanding of some of the issues in oil and gas. Many of the points in the article are specifically addressed in the Draft Specification. Although S + B considers the majority of these issues arise as a result of the BP Gulf of Mexico spill, to many, these issues were evident irrespective of the spill.

The targeted market for the People, Ideas & Objects software applications is the entire oil and gas industry. This definition includes start up oil and gas companies, independents, International Oil Companies (IOC’s) and National Oil Companies (NOC’s). All of these firms use the Joint Operating Committee (JOC) systemically throughout their organizations.

Risk has always been inherent in the extraordinarily complex projects that extract oil from the ground or sea. During the past few years, industry trends have added to this risk. The most accessible and productive oil fields, including those in the Middle East and Russia, are now owned and operated solely by national oil companies (NOCs). Leading international oil companies (IOCs) such as BP, ExxonMobil, and Shell — also known as the oil majors — therefore find their access to “easy” reserves rapidly shrinking.

For the reasons noted in the above quotation, People, Ideas & Objects believes the four classes of producers will partner to approach the remaining technically difficult and demanding reserves. Therefore it is imperative that these JOC’s and partnerships are able to deal with any combination of producer classes, in as many geographical areas as necessary. Access to an ERP system that can identify and support these different producers business operations is therefore a necessity.

Supporting the interactions between producers within a JOC is only the beginning. The ability to work closely with the service industries is also a necessity. The Draft Specifications Resource Marketplace module provides the ability for the producers represented in the JOC to deal more closely with service providers in the service industries, communities and contractors. The Draft Specification also provides a new governance model to facilitate these interactions through the Military Command & Control Metaphor. S + B states:

But the oil majors will have to manage their contractors differently, working more closely in teams with business partners that earn their trust over a long period of time, and in some cases taking stakes in third-party providers to better control their performance. This partnership model must be built on interdependence and mutual respect — a significant change from long- standing practices in some parts of the sector. The oil majors will also need to revise their operating models, sorting out a different mix of activities to outsource, and bringing some of the most critical oversight functions back in-house — so they can address quality issues and place employees on the front line to better oversee the growing situational risk in oil drilling.

To make this possible requires management to fall on their sword. As I have noted in each of this blogs recent closings, management are conflicted, and the executives at the producer firms need to make the decisions to financially support these developments.

Perhaps the biggest uncertainty in this new and challenging business environment is the ability of the major oil companies to change as conditions shift measurably. Most large oil companies — including both international oil majors and state-owned NOCs — have rigid management cultures and adversarial, penny- pinching relationships with suppliers and partners. Historically, they have tended to focus on short-term cost cutting without sufficient consideration for collaborative operations that could benefit themselves and their partners.

Lastly, S + B notes that the time for these changes to become effective is now. Prospective users and members of the Community of Independent Service Providers will be the ones at the forefront of these changes.

Many people in the oil industry have foreseen these types of changes, but they haven’t been forced to act. Now they will be. Those who figure out how to move beyond their past practices, troubled contractor relationships, and rigid management structures will lead the next generation in the oil sector — on land, in shallow waters, and in deep and remote locations. The time for these changes could come surprisingly soon. 

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Phase-Two Call-to-action Governance Military-Command

Our Revenue Model Part VII

People, Ideas & Objects focus is on its users and the business issues that they face. We are not providing “new” technology for technologies sake. With respect to our revenue model, technology has a substantial impact on our product delivery.

Past systems development and integration projects have led to time and monetary black holes. Users have frequently had to adapt to poor or technology focused perspectives of their jobs. These are the issues that users face in the marketplace today.

A key area of People, Ideas & Objects competitive offering is that our software development capabilities are based on the “Agile” development principles. In addition to being user focused, these capabilities provide iterative developments that are substantially more productive then past methodologies. More productive due to the focus on working with the user to solve their systems development needs. Getting the users needs satisfied, not chasing blind bunny trails.

Agile developments affect our revenue model by budgeting for the current years activities. Although our total costs remain high, taken from an annual perspective helps to break down the ominous nature of these developments. A release early and release often schedule also benefits the entire community, leading to further focused iterative developments in the short term. I anticipate the only time users will be working without the assistance of developers is in the development of the Preliminary Specification. While the Preliminary Specification is being developed, our development team will be forming, installing the infrastructure and working with Oracle to become familiar with their Fusion Middleware product offerings. Then the two communities will begin to use and develop the systems based on users priorities.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Revenue-Model Phase-Two Budget User Community

Our Revenue Model Part VI

Throughout the past few months (here, here and here) we have talked about the risks of becoming blind sleep-walking agents of whomever will feed us. An issue when we are discussing systems development. People, Ideas & Objects Revenue Model shows these risks are real and require a new approach to funding these software developments. It serves no ones interests, People, Ideas & Objects, the Community of Independent Service Providers, Users or Producers to proceed without dealing with this issue. It is best to identify these conflicts and compromising situations now, while the influences are manageable.

Producers are expected to fund the software developments on the basis of their production profile. Rental fees are assessed on all producers starting January 2010. This eliminates the possibility that some producers will pay disproportionate shares of the development costs. All producers will be required to have their rental fees, and penalties, paid in full from January 2010 to the current year in order to access the applications. These methods and penalties eliminate all incentive to delay and avoid financial participation by producer firms.

Financial participation is how the communities are supported and hence able to avoid the trap of becoming blind sleep-walking agents of whoever feeds them. People, Ideas & Objects are user focused developments. The choices that a software development project can prioritize are many. Users are one, technical efficiency another and there are many other possibilities. For users to support the producers focus on its competitive advantages of their asset base, oil and gas leases and earth science and engineering capabilities. Users need to have the software tools and means of production, (the financial resources to build those tools) within their control.

This discussion does not preclude the producers participation in these communities. Producers, on the contrary, are critical elements of the user community. These developments will need their full participation and contribution. What is necessary to proceed is the appropriate “political environment” in which users are able to define, build and use the software tools they need to do their jobs.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's CISP Community Funding Organization Revenue-Model Software User

Our Revenue Model Part V

Another element of our Revenue Model is the means in which People, Ideas & Objects is capitalized. Traditionally software developers are stand-alone organizations with their own banking, regulatory and venture capital influences. People, Ideas & Objects is taking a project management perspective in providing this software solution to the marketplace. The differences in our capital structure are significant, with our Revenue Model being a critical element in defining and supporting these differences.

The fact of the matter is, by having user based developments defined and supported by various communities. To then have various venture capitalists, or other groups involved in a traditional capital structure, influence whether or not the software was built to specification is too large of a compromise to be viable. Therefore People, Ideas & Objects is funded by its Revenue Model and focused on its users.

To be clear the scope of People, Ideas & Objects is beyond what venture capital groups would be willing to fund. That is to say if the producers are unwilling to invest in this software development, based on the value proposition put forward, no venture capital groups would touch this type of venture. Amortizing the costs of this development over the production profile of the industry is our value proposition. Complicating our capital structure only complicates and compromises the deliver-ability of the software.

To suggest that People, Ideas & Objects can be structured without the traditional involvement of investment capital might be naive for me to consider. However I do know, that it would be naive to suggest that the systems as described in the Draft Specification could be built with the influences of a traditional capital structure. Therefore, it is with that in mind, and to ensure that the Preliminary Specification captures the full scope of the technical and geographical concerns of each subscribing producer. That producers would be wise to support these developments to ensure their concerns remain the appropriate priority of this software development.

One area where our capital structure is not a concern is in the hosting of the application on the cloud computing infrastructure. I have addressed these needs by separating these business concerns from the software development activities. As I have documented in our Hardware Policies & Procedures, the hardware infrastructure is directly managed by the producers themselves. The purpose in structuring the hardware in this fashion is to eliminate the producers regulatory concerns in running their ERP systems, and to ensure that all parties have a vested interest in the infrastructure. In the process of meeting those concerns the business of the firm that hosts the application will have its own capital structure that will not in any way affect or influence the software developments or communities of People, Ideas & Objects.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Funding CISP Revenue-Model User

Our Revenue Model Part IV

This post seeks to clarify People, Ideas & Objects revenue model and provide an understanding of the flow of funds within the associated communities. Needless to say all the funds flow from the Producers, however that is where the money is. I’ll break down the general flow to show how each of the different groups are sustained over the long term.

To start we need to clearly identify the three different groups that are supported directly by the producer firms. These groups include (1) People, Ideas & Objects, (2) the user communities and (3) the Community of Independent Service Providers (CISP). The need for this financial support is as follows.

1. People, Ideas & Objects assesses an annual rental on all producers for access to the software applications, cloud computing infrastructure and the communities involved in the development. These funds are assessed based on an annual rental for each barrel of oil equivalent of the producer. This rental has been set at $1.00 per barrel of oil equivalent for the 2010 calendar year. In addition, assessments are due and payable by March 31, of each year. Producers are subject to a 300% penalty for any late payments. All producers are required to pay the rental from 2010 forward. 
2. The second group that receives producer funds are the users themselves. These users are the producers employees or consultants that they hire to do the work within their organizations and Joint Operating Committees. These funds are incurred indirectly as a result of the individuals doing their jobs and are not necessarily a direct cash payout. These costs are incurred by the users on behalf of the producers in working with the Community of Independent Service Providers and the People, Ideas & Objects developers. The work the users are compensated for is in defining and designing the systems they and the producers want and need. 
3. The third group that receives direct funding from the producers is the Community of Independent Service Providers. This community is engaged by the producers to handle many of their specific systems related needs. Accounting integration and systems development are the two areas where the CISP will be used most often.

What happens to these funds is also important to note.

1. People, Ideas & Objects incurs the costs associated with the hosting of the infrastructure for running the application and software development environment. We also have the developers on staff who are working with the Community of Independent Service Providers and user groups to define and enhance the systems they need and want. Lastly we directly compensate the CISP for the work that is done concerning the applications development.
2. Users are direct recipients of the funds they earn in their positions with the producer firms. 
3. The Community of Independent Service Providers are independent in that they are not affiliated with one specific producer or Joint Operating Committee. They are service providers to the oil and gas industry. Their services to People, Ideas & Objects and subscribing producers are provided as independent organizations. 

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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Our Revenue Model Part III

Continuing on with our discussion of People, Ideas & Objects revenue model. Today we discuss the impact of the revenue model, and the Draft Specification, has on the competitive advantages of the producer firm.

We start off with recognition that China is now the world’s number one consumer of energy. The demand for energy in the next several decades will be insatiable. The somewhat fixed number of earth scientists and engineers will have substantial business opportunities addressing this world demand. It is through a reorganization of these fixed human resources, by having People, Ideas & Objects software applications define and support enhanced divisions of labor and specialization, that this demand for energy will be satisfied.

Building systems that deal with the commercial interactions between the producer, society and the individuals that work in oil and gas, and the service industries, is beyond the direct concern of the producer. Yet, are a necessity of basic operations. If we agree that the competitive advantages of the producer firm are based on it’s unique composition of oil and gas leases, physical assets of the firm, and application of the firms earth science and engineering capabilities. The producer will remain involved and focused on the development of efficient software systems to identify and support those competitive advantages. Much in the same manner as society and individuals will work to develop those same systems to meet their needs.

Therefore, the producers decision to financially support these developments affect society and individuals. The producer firm receives 100% of the direct revenues from oil and gas sales. Allocation of a portion of these oil and gas revenues towards an initiative like People, Ideas & Objects can not be evaluated based on its competitive return at the producer level. Everyone is familiar with one or more software development or implementation projects that were terminated as the result of a lack of long term funding. These failures have little to do with the quality of the project or the people that were behind it. Over time the sense of urgency that the project may have put forward fades as does the financial support. Approaching a project with the scope of People, Ideas & Objects, without having an answer to a fading sense of urgency would be a failure.

The question therefore becomes, how does the revenue model of People, Ideas & Objects 1) sustain these communities throughout the development cycle and 2) provide these communities with the software tools they need to expand economic output? We provide this by way of the inherent promise or guarantee of this project. That being, this software development, and associated communities, provide the innovative oil and gas producer with the most profitable means of oil and gas operations. The profitable nature arising as a result of the expanded oil and gas output, based on the enhanced division of labor enabled with the People, Ideas & Objects application, and, the value proposition we have put forward.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Revenue-Model Community Development Value-Proposition

Our Revenue Model Part II

In this our second instalment that details our Revenue Model, we apply and extend Professor Jurgen Habermas’ 1960’s theory of different knowledge interests. Building on yesterdays discussion of People, Ideas & Objects value proposition, and targeting the oil and gas producers as the sole source of revenue, this post will delve into the difficult question regarding what we need these systems for.

We need to ask ourselves what we need these systems for. Are we developing systems that manage the commercial operations of an oil and gas producer? Of course we are, but that does not address the societal and individual needs of these systems. If we continue to look at just the needs of the producers, then we are leaving many needs unaddressed. Society and individuals are critical elements of a successful oil and gas industry. For example society benefits by having producers and the service industries efficiently interact and develop profitable operations, and individuals create innovative solutions to the demand they see for their services. Overall organizations, individuals and society benefit by an increased and expanding division of labor and specialization.  In today’s globalized, high technology workplace, an expanded division of labor and specialization can be more efficiently created through a software development capability like that described by People, Ideas & Objects in its Draft Specification.

When we concern ourselves with the economic output of the oil and gas industry. To expand that output requires that we organize based on greater levels of specialization and a further division of labor. The responsibility for increasing output does not fall to society, individuals or organizations in isolation but to all three. Therefore it is reasonable to state that what we need these systems to address society, individuals and organizations needs. I do not foresee the further development of the division of labor occurring without the active involvement of systems development. In a somewhat deliberate manner where all groups are represented.

If we look critically at the division of labor, and eliminate some of the constraints to expanding it further. Constraints like the limitations of working within one firm or one Joint Operating Committee (JOC). If an individual has the capacity to apply their skills to a task for a geographical region that includes 100 producers and 200 JOC’s, the efficiencies could be substantial. The ability to manage a task in this fashion doesn’t exist within our current organizational context. Maybe it should.

Following on the logic of the previous post, where the producer firms are the sole source of the revenue for People, Ideas & Objects and associated communities. Sharing the input of these systems development across society, individuals and the organizations might appear to be inconsistent with the reality that 100% of the funds are coming from the producers.

That’s why the People, Ideas & Objects revenue model shares the one time development costs across the subscribing producers. Just because the producer firms receive 100% of the proceeds of oil and gas sales, doesn't mean that they earn 100% of the revenues of the oil and gas sales. Individuals and society have a role and responsibility in these systems and therefore, these need to be considered irrespective of the desires of the producer firms. We’re not going to develop systems that address the needs of society, individuals and organizations when producers have a disproportionate influence due to their control of the revenue stream.

To sustain this software development requires that we cease being subjected to the individual decisions of one or more producers. A company that chooses not to proceed with the development or implementation of these technologies can not hold up the greater benefit of all concerned. Essentially I am stating that the decision to support these communities needs to be made where appropriate representation considers the needs of all concerned. Looking at the cost benefit analysis of supporting this software from the point of view of only one producer misses the benefits to society and individuals.

Habermas theories deal with the issues of power, influence and most importantly emancipation.

But when it comes to using science or computers to change the relations of power in our society, when emancipation is put forth as a knowledge or development interest, then the question of values becomes more controversial. Who is to be emancipated, and from whom? Who is to loose power, and who is to gain? And how can it be the business of scientists or computer professionals to take part in a political struggle for power?

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Revenue-Model Development Organization Orlikowski Value-Proposition

Hofmeister on BP's plans

Former Shell Oil Company president has the following comments on Bloomberg today.

It's very important for BP to turn the page so to speak, although they still have the well to put out, and hopefully that will go according to plans over the next couple of weeks. But they have to turn their attention to the future. And part of that future in addition to the asset sales is getting on with what I call the boring bits of business, and that is, under John Browne they did a great job of expanding the portfolio and growing the company. But I don't think they ever integrated the company and turned it into a high performing institution, that takes a lot of time and Tony Hayward saw this and started the process but didn't get far enough. Now I think its time to really get into the structures, processes, systems the procedures so that the whole company operates the same way all over the world. 

Makes at least two people that think the boring bits of business are needed.

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Our Revenue Model Part I

When looking for the revenues for People, Ideas & Objects and its associated user communities, all paths lead to the oil and gas producers. This is the logical choice as they are also the primary benefactor from the use of the applications and communities development. In latter posts we will document that society and individuals also derive benefits. However, oil and gas is a primary industry that generates over $3 trillion in annual revenues. It is the source of value generation for itself and a variety of industries that provide it with products and services. It is therefore logical and appropriate that we focus on producers to generate the revenues for these communities. So how is it that People, Ideas & Objects and these communities raise the funds for these software products and associated services. The answer to this and other questions is what will be defined as our “Revenue Model” in this and subsequent blog posts.  

With these points in mind it is important to restate our value proposition. People, Ideas & Objects provides the oil and gas producer with a user focused software development capability. The costs incurred in developing and hosting the software application are charged to the industry once. Providing a value proposition that is substantially more competitive then any other ERP vendor. To cover the development and associated user community costs, use of the software by the producer requires payment of all of the fees retroactively to January 1, 2010. For 2010 these fees were determined to be $1 per barrel of oil equivalent production per day. Based on these factors, a producer that produces 50,000 barrels of oil per day ($1.4 billion in annual revenues.) would be assessed $50,000.00 for the 2010 calendar year. Motivation to participate in a timely fashion is provided by assessing 300% penalties for any payments that remain outstanding after March 31 of the billing year. All fees and penalties from 2010 forward are to be paid prior to the producers use of the software. These revenues will be used to offset the costs of developing the software. Users are not charged for their use of the software.

The $1.00 fee that is assessed on each barrel of oil equivalent could theoretically generate $120 million during 2010 for People, Ideas & Objects. Our motivation is to expand the volume of energy that the fee is assessed upon. Raising the rate assessed per barrel would also increase our revenue, however, increasing the volume of energy production represented in our assessment base provides a stronger value proposition for all concerned. It is critical to recall that the costs associated with the second copy of the software is zero. Therefore the costs of development are allocated over the entire subscribing producer base. The producer firm receives, just in the first year, a potentially $120 million software application for a small portion of the actual costs.  


At an average price of $77.00 per barrel of oil. The percentage costs of the People, Ideas & Objects fee for 2010 equals 1 / 28,105 = 0.0035%. Determination of the annual fee is based on the projected costs of the software development and communities plus an element of profit for People, Ideas & Objects. Inherent in this pricing is the belief that the applications are never considered static, but are in perpetual development, therefore the firm remains profitable and motivated to continuously improve the applications.


Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, this reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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Focusing on our Revenue Model

We will now begin our focus on this software development project and associated communities revenue model. (These posts will be aggregated under the new Revenue-Model label.) The purpose of these posts will be to fully explore the contradictions and conflicts inherent in developing the revenue to support People, Ideas & Objects software development and associated communities. We will be asking difficult questions that reveal these conflicts, questions like what are these systems developments for, and how do we sustain the financial support throughout the development life cycle. 

It is expected through the discussion of our revenue model, that producers will begin the process of financially supporting these developments and communities. Much of the discussion will bridge the surreal world in which this project currently resides, with a prospective future that promises to surprise. I guarantee an interesting discussion. 


Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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The Marketplace Metaphor

The Draft Specification includes three modules that employ what we call the Marketplace Metaphor. The Petroleum Lease Marketplace, Resource Marketplace and the Financial Marketplace Modules. Each of these modules create an environment that is similar in many respects to a marketplace in the “real” world. A virtual representation, and means for people to interact in marketplaces. Definitions of a marketplace include;

market: the world of commercial activity where goods and services are bought and sold; "without competition there would be no market";

The Petroleum Lease Marketplace (PLM) is a virtual market where partners can interact with each other to post and bid on petroleum leases, negotiate and execute agreements, buy and sell properties to name just a few of the many activities that can be carried out in the PLM. The PLM is designed to facilitate and support these transactions and activities, and capture the data and information necessary to manage the assets for the producers involved. 


The PLM is in many ways the beginning or initiation of the JOC. Since the JOC is the communication framework of the industry, many of the partners communications will be held within the Petroleum Lease Marketplace module. Mail ballots, AFE’s and agreements are initiated by the user while using the PLM module. 

The Resource Marketplace module creates a virtual representation of vendors, suppliers and the people who work within the oil and gas and service industries. Working closely with the Knowledge & Learning and Research & Capabilities modules, the Resource Marketplace provides the producer or JOC with the ability to interact within the Resource Marketplace to engage with vendors for the products and services that producers and JOC’s need. These interactions will include the capacity to contract, seek bids, billing, accounts payable and e-commerce capabilities. 

Recall in a recent post we documented how the Draft Specification facilitated a greater level of specialization and division of labor. These two economic theories being the source of all economic growth. That post documents that the process of “gap-filling” is how the division of labor is expanded. This “gap-filling” is part of the Resource Marketplace where producers and suppliers find one another in an effort to expand the output of the industry. 

Finally the Financial Marketplace module provides a virtual representation of the financial marketplace. Using the perspective of the Joint Operating Committee presents a different view of the oil and gas assets. Traditionally each producer has maintained their own financing of their oil and gas assets. What the Financial Marketplace module does is change the perspective, of how oil and gas assets are financed, from the producer firm to the Joint Operating Committee.

Each of these marketplace modules employ the People, Ideas & Objects user vision. The point of this post is to reinforce the use of the marketplace metaphor in the development of these systems. When we adopt the Joint Operating Committee as the key organizational construct of the innovative producer, we gain the ability to create this kind of software and methods of interaction within real and virtual marketplaces. 

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Market Governance PLM