The Role of IT in Today's Organizations

The last time we discussed the user community we were addressing the two key motivating factors that people would be involved in the user community. And they were, that this was not your typical user community that is constrained in so many ways that caused it not to produce, or have any ideas, or even meet the needs of its community. The People, Ideas & Objects user community was different. In that we documented that it has both the power and the money to determine its and the industries direction with respect to the business models contained within the Preliminary Specification. These business models currently include the Joint Operating Committee and the decentralized production model. As time passes there may be additions to the user communities domain of business models and they would assert their authority over these as well.

Software can dictate the implementation of the business model. Indeed it is software that defines and supports the organizations that we use today. And that is why there have been no changes in your ERP software systems for the last ten years. The bureaucracy knows where their world begins and ends. And if they change the software they risk losing control of the organization. This is why they fight so hard against People, Ideas & Objects. When it comes time to structure the industries business model and provide them with the most profitable means of oil and gas operations it is necessary to get to the software development first. That is the role of Information Technology in the 21st century. It is not a cost of business. It is the business. Many people don't want to admit that fact. And as a result they will be left in the past. The fact of the matter is it is useless to own the oil and gas assets. If you don't also have access to the software that makes the oil and gas assets profitable. This is what People, Ideas & Objects, the user community and our service providers are providing the dynamic, innovative and profitable oil and gas producers.

It is our three organizations that are providing the industry with the choice of who manages their assets. The choice is between the bureaucracy and People, Ideas & Objects et al. We provide the most profitable means of oil and gas operations with over $705 billion in opportunity costs for the period between 2009 and 2019. These are incremental revenues above and beyond what the bureaucracy are able to provide. A substantial value proposition for a minimal cost and a reasonable amount of effort. The bureaucracy would have you join them in Church and sing hymns in prayer for another cold winter. That is what they think is valuable. We however, are offering an alternative.

The user community has defined a leadership team consisting of 28 representatives from the oil and gas industry. These people are being actively recruited now to help in the development of the user community. It is our plan to put together what is necessary, to provide the oil and gas investor, with an alternative means of organization for the oil and gas industry. What that actually consists of and how that comes about is unknown at this time. We will figure this out as time goes on. We have set out an appropriate amount of time for the development of the user community. Five years. And though this is an expensive time in terms of the opportunity costs to the industry. To expect that the bureaucracy will be doing anything but fight us and obstruct us in every way that they can, would be foolhardy. We therefore need this time to build this community on the basis of an effort that is built brick by brick, and stick by stick.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

The Dynamic, Innovative and Profitable Producer Part IV

One of the areas of the dynamic, innovative and profitable oil and gas producers competitive advantage is its land and asset base. It is also part of the producer firms lighter footprint that the land and legal resources are part of the firm. It would be inappropriate to leave these resources outside of the domain of the producer considering they are part of its competitive advantage. Within the Preliminary Specification the producer relies on the Petroleum Lease Marketplace module to develop and manage their land and asset base. It is this module that the producer uses to build their land and asset base and apply their competitive advantage. Just as in yesterday’s post, the Research & Capabilities and Knowledge & Learning modules were used to apply the firms earth science and engineering competitive advantages.

The Petroleum Lease Marketplace module sets the focus of the land and legal resources on building the firms assets. Using the Joint Operating Committee in the manner that we are requires that we look at these competitive advantages from a different perspective. Every firm has systems for their land and to a lesser extent their capabilities development and deployment. What is different in the People, Ideas & Objects Preliminary Specification, and demands that we begin these developments anew, is that we are using the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. There is a substantial difference in these systems over ones that use the corporate model as their organizational construct. There are also technical differences as the Preliminary Specification is hosted as a cloud computing software offering.

If we look upon this development as an opportunity to develop systems that are able to provide the industry with the elements that have been missing in the other systems. If we focus on the Joint Operating Committee and its alignment of the compliance and governance frameworks of the current hierarchy to the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. We can then begin to develop the kind of software that people know that is possible, if only. Well now is the opportunity and People, Ideas & Objects, the user community and the service providers are the means in which to achieve that which is possible.

The producers value is represented in the tangible reserves associated with their properties. How a producer develops those reserves is reflected in the interactions that occur during the life of a mineral lease. Providing the producer with the effective means to manage their leases is the domain of the Petroleum Lease Marketplace. A marketplace module that operates in the lease marketplace where people are able to interact and conduct their business. The Petroleum Lease Marketplace module uses the OpenWonderland interface to replicate virtually the lease marketplaces that exist today. There producers are able to post, bid, agree, trade, buy or sell mineral leases. It is this type of interface that will enhance the ability of the producer to build their firm.

Friending someone on a social network does nothing from a commercial point of view. There is no commercial value generated and it is questionable if any value is destroyed. Participation in a virtual representation of a marketplace has as its core a commercial purpose behind the interaction. It is to buy, sell, trade or otherwise engage with someone for the purpose of attaining short or long term value. Marketplaces have always existed. Having a virtual representation of a marketplace is what the People, Ideas & Objects Preliminary Specification provides in order for the user to engage in the marketplace of mineral leases. Engaging in a manner that is more efficient than having to have the physical requirements of participation that the traditional marketplace demands. That is the value of the Petroleum Lease Marketplace.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Dynamic, Innovative and Profitable Producer Part III

Adopting the lightweight footprint that is available with the Preliminary Specification provides the dynamic, innovative and profitable producer with many attributes over what are available today. The dynamic nature of the producer will be one of these attributes. Focused on their key competitive advantages of their earth science and engineering capabilities, their land and asset base. As opportunities and issues arise they will have the flexibility to approach these with new alternatives as a result of this footprint, its lower cost and its dynamic nature. It will also afford more opportunities than the classic bureaucratic style that is in use today.

Within the Preliminary Specification there are the Research & Capabilities module for developing capabilities, and the Knowledge & Learning module for deploying capabilities. It is within the Research & Capabilities module that the process of innovation has been captured and codified in the various interfaces. If a new technology were to look promising in terms of its ability to expand the reserves or deliverability of the firm. It would be in the Research & Capabilities module that the producer would undertake the research necessary to develop the capabilities within the producer firm to build that value. It is where “knowledge begets capabilities, and capabilities beget action.” And where capabilities have been quantified as the “knowledge, skills, experience and ideas” of the producer firm.

Concentrating the energies of the producer firms competitive advantages of its earth science and engineering capabilities in the development of new capabilities based on the understanding of those resources and the activities within the industry is the focus that a producer wants to achieve. In a dynamic, innovative and profitable oil and gas industry things will happen quickly with little consideration for the laggard firm. Oil and gas success will be based on its scientific principles, if it isn’t already. The days when Lawyers could exorcise value through good deals, or financial people could structure good returns are gone. It is the principles of science that will lead the dynamic, innovative and profitable producer for the foreseeable future. The ability to focus on the development of the producers capabilities in the manner that is discussed here will be a critical part of a producers competitive advantage.

Consistent with that ability to focus on the development of the capabilities the dynamic producer will also need systems that enable them to deploy those capabilities in a focused and dynamic manner. And that is where the Knowledge & Learning module comes in to play. First we need to realize that the ability to maintain a focus on all that is happening within the industry will be beyond the capabilities of the majority of the oil and gas producers. The need to specialize in specific domains of the engineering and earth science professions will be a necessity due to the financial constraints of attempting to pursue everything. As we mentioned yesterday the dynamic, innovative and profitable producer will share their capabilities with their Joint Venture Partners who are specializing in their capabilities. It will be a pooling of those capabilities that make up the projects overall requirements. Additional capabilities will be supplied from the marketplace, if required.

It is the Knowledge & Learning module that presents the capabilities of the partners that are involved within the Joint Operating Committee. Each producer tags their capabilities for certain criteria and specific Joint Operating Committees. While in the Knowledge & Learning module for that Joint Operating Committee the user would be presented with the capabilities of all of the participants who are working interest owners in that Joint Operating Committee. It is in that way that the “knowledge begets capabilities, and capabilities beget action” and the “knowledge, skills, experience and ideas” of the people associated with the Joint Operating Committee are able to be employed in a Dynamic, Innovative and Profitable manner.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Dynamic, Innovative and Profitable Producer Part II

Continuing on with our exploration of what the prototypical producing firm will appear like as a result of implementing the Preliminary Specification, the user community and its service providers. Without having to host the administrative and accounting staff. Without having to deliberately and actively go about the development of the necessary capabilities within your organization. The prototypical oil and gas producer will be able to offload, not just physically, but also mentally and emotionally the development of these internal capabilities. What the Preliminary Specification does is move the producer from a reliance on their administrative and accounting capabilities, to a reliance on the industries administrative and accounting capabilities.

The burden for the development of the industries administrative and accounting capabilities falls on the user community and the service providers themselves. They will be the ones that are incurring the physical, mental and emotional effort on behalf of all of their industry clients. When the time comes to enhance the tax capabilities of the oil and gas industry due to some change in legislation it will be the individual service providers that augment their organizations with the requisite resources to enable them to meet the requirements on behalf of all the producers in a timely fashion. The producers will be busy pushing the sciences.

It is the division of labor that enables the producer firm to focus on their competitive advantages of their earth science and engineering capabilities, and their land and asset base. It is the same division of labor that has the service providers and user community focused on their competitive advantages of automation, specialization, division of labor and reduction of the bureaucracy. Currently the producer firm enjoys none of the competitive advantages associated with their administrative and accounting capabilities. They are a tax on their speed, their innovativeness and most importantly their profitability. Each producer must maintain x capabilities in order to function as a producer. This level of compliance and governance is costing the producer a large share of the profits and there are no opportunities for cost control or cost sharing among producers. Use of the service providers moves the capabilities to the industry, enables the service providers to control the costs and most importantly shares the cost and resources among the producers. Key to the cost sharing will be the reduction in costs from the key competitive advantages of automation, specialization and the division of labor. The fact that the bureaucracy will not be paid for is a triple bonus.

This lightweight form of organization gives the producer distinct advantages. People, Ideas & Objects state that the Joint Operating Committee is the key organizational construct of the oil and gas industry. It is the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. By moving the compliance and governance framework of the hierarchy into alignment with the seven frameworks of the Joint Operating Committee we attain a speed, innovativeness, accountability and profitability in our producer organization. It is these attributes that a dynamic, innovative and profitable producer needs in the 21st century.

What is the bureaucracy offering you today. Exactly what was on offer during the 1960’s. The fact of the matter is organizations don't change and the current bureaucracy is proof of that. Although they have taken elements of our ideas and used them to make them sound like they offering more than a hope and a prayer for a cold winter, as a strategy. Its a false hope. Organizations don't change, but people do. And that is why we appeal to the individuals in the oil and gas industry. The investors who are fed up with the earnings performance. The people who are tired of the bureaucratic ways of stuffing another ream of paper in the printer. It is the individual decisions of those that will join us in the next few years that will offer an alternative means of organization to the oil and gas industry. And then the investors can choose who they want, the bureaucracy or People, Ideas & Objects, the user community and the service providers to manage their assets.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Dynamic, Innovative and Profitable Producer

One topic that we haven't spent too much time on is the effect that the Preliminary Specification, the user community and the service providers will have on the producer firm itself. We have noted that the producer will have a smaller footprint in terms of its size. With only the C class executives, the earth science and engineering resources, the land and legal and some support staff. However we haven't discussed the implication beyond the footprint size of the producer firm. Specifically in terms of how they will operate in this new environment as a result of the changes that we are discussing in the Preliminary Specification.

First of all the producer firm will be more focused on its competitive advantages of its earth science and engineering capabilities, and its land and asset base. Those are the only remaining resources within their domain that are of interest to the producer. And here specialization and the division of labor is at work to enhance the producers capabilities to focus on their specialized attributes of the sciences. This is done through the Preliminary Specifications ability to mitigate the resource restrictions in the earth science and engineering disciplines that are affecting those professions in the mid to long term. By each producer firm specializing within the sciences; then they are able to share these specialized capabilities among their Joint Venture Partners and pool their resources to achieve the necessary capabilities to meet the demands of the projects.

Additionally new engineering and earth science based service providers will need to be employed to provide some of the basic services that are currently handled within the producer firms. This offloading of lower level tasks will be as a result of a reorganization based on specialization and the division of labor across the industry that seeks to increase the output from the limited resource base. A new organizational method is the only way in which to achieve the mid to long term demand requirements of the professions. Having each producer firm build individual silo’d capabilities that cover off their domain of responsibilities will soon bankrupt each producer. Specialization could be used to correct this, however, specialization without reorganization will cause further problems. A bankruptcy will occur as the scope of the specialization without reorganization within the professions would become so broad as the requirements would exceed the financial capabilities of one firm.

Moving back to the administration and accounting of the producer. These will be done by the service providers that we have been talking about. The service providers that are derivative of our user community. These people will be located within their own firms away from the producer firm and will process the producers documents remotely. Much as the administration and accounting is remotely conducted today. Earning a service fee based on the task and transfer network. Denoting that only when activity occurs within the network will their be a service providers billing generated to the producer. Automation, specialization and the division of labor are the key competitive advantages that the service providers are able to provide the producer firm. And we should add the elimination of the bureaucracy to that list too.

This lighter weight of a producer firm will be much easier to manage for the production profile of the firm. Based on the capabilities of the firm, they may be able to scale up or down based on the commodity prices, or depending on their earth science and engineering capabilities. The administrative and accounting capabilities are industry based capabilities and are available to them on a service fee basis. Their production profile will determine the amount of their G&A costs. If they should double or triple their production profile their administrative and accounting capabilities would immediately be capable of dealing with the new properties or acquisition. And if the producer were to scale back production, the G&A costs would scale back in line with the production profile. This is the nature of the revised industry makeup based on the decentralized production model of the Preliminary Specification and the service providers.

The key focus is what are you capable of in terms of your earth science and engineering capabilities. Both in terms of the scientific capabilities and in terms of your production profile. Those are the two guiding objectives of the producer firm in terms of what they need to concern themselves in managing their organization. The issues of where to get a new tax accountant are today’s problems with the bureaucracy, and I'm suggesting we leave those issues behind by adopting the Preliminary Specification.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.