And Just Like That, Everything Changes, Again

Oracle CloudWorld 2023

Generative Artificial Intelligence was the technological theme of the Oracle CloudWorld 2023 conference. Oracle has now entrenched their entire product line into these tools with Larry Ellison stating “Generative AI is transformational.” North American producers need to be careful not to become the technically illiterate, second cousin of the S&P 500. What we see in Oracle's examples throughout the conference is. Generative AI is a productivity tool that enhances automation and supports the user with their dynamic needs of how to employ their systems efficiently. Wikipedia defines Generative AI.

Generative artificial intelligence is artificial intelligence capable of generating text, images, or other media, using generative models. Generative AI models learn the patterns and structure of their input training data and then generate new data that has similar characteristics. Wikipedia

In terms of the Oracle CloudWorld 2023 conference, I see the introduction of Generative AI into Oracle Cloud ERP to be of similar significance to last year's conference. Hence the title of this post. Taking advanced automation introduced at Oracle CloudWorld 2022 and building upon that with Generative AI. Which I see as providing the capability for users to implement and deploy automation as needed based on users' needs and input. The reduction of low-level work that consumes endless hours of today's time. Journal preparation, account reconciliation, management and financial reporting narratives. However, it's more than that. It includes a series of dependent tasks executed in serial and parallel methods that are generated dynamically based on user input. 

Another example of Oracle’s use of these technologies is their application of Machine Learning in the development of Oracle's Autonomous Database. A fully automated database that learns from itself what it needs to manage itself. It requires substantially less Database Administrators and relieves these resources to pursue higher value work loads. There are Generative AI frameworks as that is the most apt analogy for me. These frameworks are prepared in all disciplines by independent companies across the United States. These include the legal and medical disciplines. Adoption of one of these will introduce the framework's training data and when applied, will enhance the understanding of the individual Oracle Cloud ERP data and information. Clay Magouyrk keynote presentation demonstrated the benefits of such frameworks training on data in an ERP context. His video is highlighted below and the section noted is between 53 and 59 minutes.

Applying this to an oil & gas scenario. I would see members of a Joint Operating Committee engaged with their property resolving issues and opportunities. Individuals not involved in accounting and administrative disciplines. Based on the systems and data that have been prepared, they will be able to ensure the data they use is compliant and meets the needs of all stakeholders. Making sense of accounting information by asking natural language questions and then formulating new questions based on the output. Using that data to make decisions based on reliable, actual and factual accounting information.

People, Ideas & Objects provides a vision that encourages a dynamic, innovative, accountable and profitable oil & gas producer. This is to achieve the most profitable means of oil & gas operations. Accounting and administration are not competitive advantages for North American producers. But what should be clear is that the environment described in Oracle CloudWorld 2023 and in our Preliminary Specification does not provide oil & gas producers with a competitive advantage. However, a producer that is unable to function in a technological environment such as what is detailed in these offerings will have obtained a distinct competitive disadvantage.

These keynote presentations may be of interest. I highly recommend them to anyone interested in People, Ideas & Objects. 

Oracle’s vision for the future - Larry Ellison Keynote

Putting customer success at the heart of everything - Safra Catz Keynote

Building the cloud's intelligent future - Clay Magouyrk Keynote

Achieving lasting success with Oracle Fusion Applications - Steve Miranda Keynote

I thought I would share some of my thoughts on how Oracle continues to push the boundaries of ERP systems. What I am consistently surprised by is the pursuit of very similar objectives and features of both Oracle and the People, Ideas & Objects products. For example, one of the presenters noted that Generative AI training eliminated the need for each firm to employ these costs independently. This is Professor Paul Romer's New Growth Theory, or the sharing of non-rival costs, which is one of the seven Organizational Constructs of our Preliminary Specification. Another similarity is the marriage of their Analytics applications with Generative AI. 

Generative AI, Machine Learning and all of these facilities are a complete waste of time and energy if an oil & gas producer's data and information remains in the state it currently resides in. Without organizing ERP related data and information, none of these technologies are useful. These are part of the work done through our initiatives to organize, standardize and ensure objective data and information is generated and used across North America. The amount of work to organize this data, gain an understanding throughout the industry, and build ERP systems that capture, process, manage and present the data is far more extensive than what one producer firm can handle. If a producer attempted to do so it would be questionable if they could finish. In the case of one individual producer, the value of this process is minimal and it is unknown if they would still be in business after such an experience. This is an area where the sharing of these non-rival software development costs across the industry, as proposed by People, Ideas & Objects, will make the required time and cost incidental to each producer. In contrast, the benefits will provide reliable, understandable results for the user. It is as Larry Ellison stated in his keynote address that standardization is necessary for automation. Automation is necessary for Generative AI. None of this is viable or available without reliable, organized data and an understanding of what that data is. To begin this journey as a lone producer would be futile.

It was during Oracle CloudWorld 2022 that the theme of high levels of automation became a significant change in the way business conducts business. The two alternatives were battalions of green shaded and pocket protected people asking “what” as they squinted back at their questioner. Or, we could use these technologies. The J.P. Morgan Chase credit card example I cited from last year's keynote has now been adopted by both HSBC and Mastercard. These developments are generic business automations distributed to all of Oracle's global customers in all industries. We should expect further development of this type of automation in Oracle Cloud ERP. People, Ideas & Objects implement similar features for North American oil & gas producers. In Oracle Cloud ERP, we offer oil & gas "additions" on top of these Oracle business features.

Producers that continue without data and information organized, presented and understood will find their business environment costly and difficult. Accelerating business speed will accelerate confusion and misunderstanding. Automation reduces costs through human error reduction. If the data is unknown, confused but automated, what will it provide? Production data sourced from field data captured through the Internet of Things (IoT) will reduce costs. If we have a fully reconciled volumetric balance as the People, Ideas & Objects Material Balance Report proposes, and the automations from that data as proposed. Applying the scenario of what Generative AI might provide a Joint Operating Committee through a balanced and reconciled Material Balance Report may show new perspectives on this data. And in an environment where only profitable production is produced. Producers having all of their production in a system wide Material Balance Report might identify opportunities to save costs, increase production or build value.

However in this situation without the data managed appropriately, the Joint Operating Committee as the key Organizational Construct throughout the oil & gas and service industries will only lead to further confusion and accelerate issues on a logarithmic scale. To state that we’re not there yet is obvious. That however is where Oracle is today and People, Ideas & Objects are with their Preliminary Specification vision and business model. We have focused and expressed concern regarding the poor quality of the oil & gas administrative and accounting data. Data is where this journey must begin. 

The effect this will have on our service providers is substantial. They will be in the middle of the hurricane in terms of data, process, management and control of the producer's administrative and accounting software and services. Their service and support must be there. They’ll also be equipped with the tools to accommodate changes through their owner and operator. This being one of our user community members. 

SAP

These comments regarding SAP are a result of the SAP for Oil, Gas and Energy conference held in Dallas between September 13 - 15, 2023. A conference that I did not attend, and these are the comments of Carolyn Dolezal who is the Chief Operating Officer of ASUG, SAP’s user community. The conference focused on industry issues, however Carolyn listed only digital transformation, data analytics, and sustainability topics. A strong technological focus that meets ESG requirements. And noted SAP oil & gas leadership that made keynote presentations at the conference and the scattershot discussion of what energy needed. From how to invest in renewables, or “how to assess the near-term and long-term benefits of significant competing priorities?” The last paragraph noted SAP leadership even mentioned “value” and “profitability” at one point. A marked improvement on prior company talking points. 

What was evident, however, was that with all the great minds there was no vision or plan for what to do. How will they make money and build value for oil & gas producers? This is nothing more than a reflection of the oil & gas industry itself. No one can or will do anything about anything and as a result there is nothing to be done by anyone. Do what you can and make it look good. I’m not seeing the sense of urgency or the focus on what should concern those at the SAP conference.

As many producers have taken SAP as the first step in implementing Tier 1 ERP solutions. It is a technical solution to an unidentified existential issue. I would suggest that the process of implementing SAP is being undertaken at the behest of producers' investors who demand Tier 1 ERP systems. We would note that the oil & gas industry's existential issue is officers and directors' inability to accept appropriate profitability and accountability criteria. People, Ideas & Objects' focus throughout this period has been to use the Joint Operating Committee as one of seven Organizational Constructs to enhance “real” producer profitability. A vision we began with in August 2004, and even more valid today. I don’t think there could be two choices with more distance between them. 

People, Ideas & Objects Response to a Request for Proposal , Part XI

 Recommendation

The Issue

The world has begun to understand and appreciate the value inherent in oil & gas. With 10 - 25 thousand man hours of equivalent labor in each barrel. Our global level of consumption is 28 to 71 times the entire population's physical capabilities. To replace that this century would be ambitious. What we can do and what we must do, and what we should have done all along is not waste one drop of these resources by ensuring they’re produced profitably, everywhere and always. To ensure that we’re responsibly using the resources and leaving future generations with proof that we did, by passing on a viable, strong industry to manage that resource and the resource itself that is abundant, affordable and reliable?

Why would we ever produce any oil & gas unprofitably?

What we know today is that none of the North American oil & gas that has been produced in the past four decades has generated one cent in profitability at any time. It was a process of taking investor money to “build balance sheets” and “put cash in the ground.” Words that were spoken throughout the industry as if they had some actual meaning. A misguided and deluded group of officers and directors that have been self dealing for so long they know no difference and have failed comprehensively in their role of generating profits for their shareholders and now their organizations failure to meet the consumers demands for energy. Officers and directors who when faced with the challenge of making shale formations, or any part of their business, commercial decided it was best to walk away and pursue the green pastures of fake energy. 

These are not my issues and I certainly did everything I could to mitigate these disasters we’re about to experience. They are not my responsibility as I chose to address the issue and was ostracized and vilified for it. Which if the officers and directors of the producers might want to take note, did not deter me from doing my job. If someone suggests that People, Ideas & Objects et al Preliminary Specification is only “vaporware” they’d be correct. They’d also be stating the obvious fact that the officers and directors have succeeded in killing off a viable threat to their existence. An existence that has proven to be wholly unproductive and damaging to all concerned, and most particularly society in general. What I have had to persevere as a result of the engaged battle with these bureaucrats since the May 2004 publication of the Preliminary Research Report has been a shame in light of the consequences of the producers inaction regarding their lack of support for this initiative. I repeat, not one penny in support has been received from them towards the development of any aspect of this work. I only received abuse that I would equate to the equivalent of repeating beatings with baseball bats in the alley behind the dumpster. And now, with the desperate issues Industry faces, with no preparation or capacity to deal with them, what we’re seeing is what we’ve always seen “muddle through.” After seven years of their investors' refusal to continue being the “mark,” all we see in response from the officers and directors to their investors is that they’ll “muddle through.” 

People, Ideas & Objects are aware of the high upfront cost and makeup of our development and implementation budget, our budget is based on 5,000 man years of effort. The issue we’re resolving is comprehensive and we’ve discussed at length both the necessity of the Preliminary Specification and its cost. Officers and directors' concern for these high costs is moot when the value that has been wasted since its publication in August 2012 is tragic. These costs may have at one time been considered opportunity costs, however the fact that these costs have now been incurred annually for decades and led to such evident destruction proves they were never opportunity costs.

Management of risk in business is a skill and takes a certain amount of industry knowledge and understanding to mitigate. Officers and directors of the producer firms are alleged to be motivated by such objectives yet have done little to deal with the associated risk of the oil & gas business. In terms of hedging oil & gas commodities, our sample of producers which represent approximately one third of the Canada and U.S. production profile. Reported hedging losses of $34.2 billion in the last five quarters. Therefore we can assume this would represent over $100 billion in losses for the broader population of producers. Such is the skill of the officers and directors of the producer firms. The arguments regarding our budget are specious and self serving in light of the consequences being experienced today and the time constraints officers and directors have imposed on themselves.

The selection of the Preliminary Specification may be seen as the producers first step in reclaiming their integrity in the eyes of their investors. There would be incremental value beyond our defined value proposition in doing so. As the value differential in terms of the cash flow multiple vs. the market capitalization of our sample of 18 producers representing 11.562 million boe / day is $220.2 billion, therefore potentially triple the number for the North American producers. It may be that the capital market is predicting a decline in the oil & gas producer firms, or, is the fact that this differential is consistent across many quarters more valid? Of the more active traders in these firms markets are the producers themselves. In the first half of 2022 $13.4 billion in share buybacks were conducted by our sample of producers. Without these share buybacks how understated are these differentials? To assume action by producers is possible reflects my naive optimism. The reality is the officers and directors will “muddle through.”

What if the following scenario was the case. Producer officers and directors ceased to be subject to the whims of the commodity price swings and learned to build value everywhere and always through the implementation of the Preliminary Specification. 

• How much of that $220.2 billion for our sample of producers and $660.6 billion for the industry valuation differential would be reclaimed by proceeding with People, Ideas & Objects et al? 
• Elimination of the need to hedge commodities occurs when profitability everywhere and always is being earned and the cyclical nature of the industry is worked out.
• How much larger would that valuation differential grow when and if producers select SAP? 
• If officers and directors choose SAP does that prove People, Ideas & Objects allegations of a deliberate and destructive lack of performance and accountability? 
• For those major producers who’ve used SAP, in some cases for decades, reflect that they’re part of the problem?
• These are clearly not concerns of the producer firms based on their history. Will these ever become concerns of the producers, officers and directors?

My argument is this, the development budget of the Preliminary Specification is a slight after taste in terms of the scale of opportunity costs, hedging and market valuation losses that officers and directors feel are acceptable. We certainly don’t hear any concern coming from them about these issues. We have a highly advanced society today that has many complex and difficult issues and opportunities. When points of view such as the Preliminary Specification are offered in 2012 should they not be looked at objectively and evaluated on the basis of their potential to mitigate risk in the long run? Or maybe even before then, such as our Preliminary Research Report in May 2004. We have a similar situation captured in a Winston Churchill quote that addresses the point.

Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong - these are the features which constitute the endless repetition of history

Therefore the issue is the officers and directors of the producer firms who have personally benefited at the expense of all others associated with oil & gas. Officers and directors have been the ones who were responsible for ensuring none of this happened, had the authority to deal with it and the resources to correct it. They’ve now begun the process of sauntering off the field into unrelated industries and businesses. Unable to provide a viable solution to the difficulties they’ve created. Yet, they want to take the primary oil & gas revenues with them. Primary oil & gas revenues that were generated through the efforts of their investors, employees and the service industry who provided them and will be needing them to rebuild the industry from the mess that producers made. To add insult to injury, the one action they will take after seven years of not listening to their investors is they'll implement SAP instead of People, Ideas & Objects to ensure they won’t have to be held accountable for this damage and destruction, and no one will find any of the skeletons they’ve hidden in their closets. 

Accounting for the Damage & Destruction

There is no doubt that many in oil & gas don't fully appreciate what it is that I’m discussing when I talk about damage and destruction. Officers and directors do and they’ve clearly understood since the publication in May 2004 of our Preliminary Research Report. They’ve always seen it as a threat and know they would not personally benefit from it. We can all agree that the “endless repetition of history” is what we’ve been faced with for centuries in so many situations. However we live in a society now where time does not afford us the luxury of that viable scapegoats acceptance any longer. Many people will be affected negatively in the most dire manner in Europe and the Northern Hemisphere this winter. And what about subsequent years? Today people are waking up to the folly of green energy and the imminent environmental Armageddon's entry into its seventh decade. Oil & gas is nothing like oxygen to the body. It’s analogous to the blood that allows everything else to function. 

Nonetheless here is People, Ideas & Objects recommendation to North American producers. Select the Preliminary Specification as the industry standard ERP system. Bold, audacious and justified on the following basis. Today producers may feel they’re sailing on for a good run and do not have to concern themselves with the past. What is evident in their second quarter 2022 financial statements is that there are legacy damages and difficulties ahead. The greatest that I can see is the lack of trust, faith and integrity the capital marketplace holds for the producer firms. Cash flows are poor in comparison to the capitalization that’s been recorded and barely support the “lofty” valuations producers feel they may have earned through their obstinate “muddle through” strategy. Comparing today’s performance to the past four decades doesn’t impress. However, even these valuations are not being believed, and in most cases North American producers are trading at half those valuations. 

The handful of producers that are able to perform at the level of their cash flow multiples should be participating in the development of the Preliminary Specification as well. Those that are not performing will be the ones who will be desperate for revenue and putting their entire production profile on the market despite the implications to the commodity price. It might be wise to remember the negative $40 prices of April 2020 of which no one individual producer was responsible. The Preliminary Specification recognizes the Joint Operating Committee and the integration of the producers within the partnership will enhance the collaboration and innovation throughout the property, the producer and the industry. Having producers partners in their Joint Operating Committees operational on the same standard, objective basis through the Preliminary Specification will be beneficial.

Investors of these producer firms need to let it be known that the only acceptable solution to them is People, Ideas & Objects, our user community and their service provider organizations with Oracle Cloud ERP. Selection of SAP or any other ERP system is not an option. This has to be specifically communicated in the same manner that the prior request for a tier 1 ERP system was made. Otherwise there is much to lose for all concerned.

We’re kidding ourselves to think that officers and directors will act in any way contrary to their “muddle through” behavior. A behavior that has become the culturally systemic method of operation. There is no need to understand this than to assess the situation in terms of the industries standing today. All of these points are a result of decades of mistreatment and abuse of their position of power, authority, accountability and responsibility for the purpose of personal financial gain. The cumulative symptoms and attributes that have led to the damage and destruction People, Ideas & Objects rant about include… 

• Never selling the attributes of oil & gas that consumers gain from the use of their products. Losing the political agenda to environmentalists and woke politicians.
• Becoming wholly dependent on outside capital to support all business operations.
• Overreported capitalization due to “building balance sheets” and “putting cash in the ground” enabled producers to leverage their positions excessively during two decades of low interest rates. Creating a future crisis due to extreme levels of debt during a period of normalizing interest rates.
• Creating organizations incapable of profitability, understanding of how or what to do to earn it. Culturally sealing the inability to determine profitable operations were ever necessary and assuming they were not.
• Never taking responsibility or accountability for anything. Blaming, excusing and creating viable scapegoats of others whose fault they’ve fallen victim to. Enforcing a culture of “muddle along” and inaction.
• Liquidating the value of the industry to the point where it has a negative net present value. Current operations demand that capital be consumed in day to day activities.
• Deprecating producers' organizational structure, operational capacities and capabilities. Cannibalizing the service industry as their last source of capital financing by extending a/c payable to 18 months. Fundamentally destroying the greater oil & gas economy.
• Capital structures of producers and the service industry are unsupported by debt or equity providers. Zero remedial efforts taken to address these concerns. Approaching one full decade of inaction and uncaring since investors began their withdrawal from industry. Continuing cash flow from a capital intensive industry sustains their personal aggrandizement, therefore what’s at issue?
• Losing the mid to long term capacity to meet the consumers market demands for energy. The most powerful economy will consume the most energy. Creating a distinct threat to the most powerful economy ever developed. Therefore what’s at issue?
• Incapable of standing up to teenage wanna-be environmentalists. Asserting the value add of the oil & gas products in the lives of the consumer. Turtling at any and all points of conflict. Leaving it to pipeline companies and others to fight their battles, while they pay the grift to the environmentalists not to protest producers.
• Employing their cultural propensity to abandon prior efforts which include their latest and greatest effort, shale, which they’ve now declared would never be commercial. Instead of remediating these assets they moved on to the next latest and greatest thing. Notice the slight of hand?
• Sauntering off the field in the direction of the unaccountable clean energy businesses where they’ll continue to prosper personally and never have to concern themselves again with being successful. Using the oil & gas revenues to support these activities through contrived boardroom battles. Listening to the “investors” concerns for the environment is the only issue of the investors they’ve ever responded to.
• Therefore, the producers leadership has walked off the stage with the oil & gas revenues in tow to the land of unaccountability where they’re “saving the planet!” 
• After all of this, what are producers offering oil & gas investors? A history, a legacy, a culture of failure, greed and “muddle through.” A theft of their revenues they invested to build. An inability to understand their primary role is to earn profits. A point they not only disagreed with, they laughed when I suggested it and have no clue about how to earn it. Culturally incapable of doing so.
• Seeking to seal this culture permanently in their implementation of SAP to keep the party going. 

In all of this there has been no response from oil & gas producers. From our initial Preliminary Research Report in May 2004, the investors strike beginning in 2015, not a thing has been done. What needs to be acknowledged by these officers and directors of the producers is that it is within the scope of their domain to deal with their issues. Profitability is the issue. The solution is in front of them in the form of the Preliminary Specification. There will be no one from now on that hands them anything. If they dispatched their ways and means to the scrap heap of history. Adopting the Preliminary Specification profitability would provide all the money they could ever want to do as they pleased in terms of the business. Do they want to have $800 billion to build LNG facilities in Canada, make that money. The means of which are on the table. If they want to do anything that they can think of in North American oil & gas then the only thing stopping them is their own obstinance. Build a profitable business and the world is your oyster. I’ll spell it out explicitly. If you want to pursue green dreams make oil & gas profitable. 

But no, they’ll outlast the investors who’ll be back begging to get in. I mentioned that oil & gas ERP systems were abandoned by our investor class in the mid 1990s. This was due to our inability to perform financially because we were unable to convince producers to manage their business appropriately as far back as then. If we assume that the Preliminary Specification et al is the appropriate solution. If we assume that the value proposition is as it's stated, you would assume that the ERP investors would be bashing down my door. Two things are stopping this. 1) I won’t accept their money because I am unaware of how I can make money in this business without having the producer buy-in that this RFP Response addresses. 2) ERP investors are not here. They know what the situation is and based on their experience from the 1990s have left. Nothing has changed and therefore they remain where they are. 

Producers need to understand that they’ll never attract investors or bankers ever again until such time as they change the performance trajectory of their firms. There are no signs of that, only their obstinate and stubborn “muddle through” strategy that destroyed everything and continues to do so.

These are the issues that People, Ideas & Objects set out to address with our Preliminary Research Report in May 2004. What had become the basis of our research that led to the Preliminary Specifications publication in August 2012. An interesting quotation from Mark P. Mills of the Manhattan Institute has a direct application to the history of oil & gas.

Brookfield’s CEO said that the strategy follows the same deal-making common in other capital-intensive industries. Companies will happily take any supplemental money, but the market opportunity, not the subsidies, underpins such big investment gambles. The key, to use the famous truism from Walter Wriston (the former, storied CEO of Citibank), is that “capital will always go where it’s welcome and stay where it’s well treated. Capital is not just money. It’s also talent and ideas.”

Putting this into context as to what’s occurred in North American oil & gas. Culturally, producer officers and directors grew to believe that investors became an organizational subsidy. Not the means to pursue the market opportunity. 

To deal with this today demands only one solution and that is People, Ideas & Objects et al as defined in this RFP response. What this also proves is the common knowledge that “organizations don’t change, people do.” The resistance to change that we’ve experienced, and that of the producers' investors, has originated in one area of each and every North American producer, the officers and directors. Our final attempt to deal with them was in sending an offer to the directors of the producers in July 2021 which they ignored. This Response to a Request For a Proposal is highly derivative of the proposal that was sent to them. This proposal is not directed at them and therefore, no harm no foul, my abuse is inert. 

We are directing this RFP Response at those investors who have seen enough to know the situation today is not being addressed effectively. People, Ideas & Objects don’t need to tear things down in order to start over. That’s already been done, we need to rebuild the industry in the vision of the Preliminary Specification. The only way we’ll accomplish that is for the investors to tell the producers officers and directors to fund the Preliminary Specification specifically. What will happen in North American oil & gas if this doesn’t happen has been speculated earlier in this proposal and can be assumed some time this winter by looking out the window.

People, Ideas & Objects Response to a Request for Proposal, Part X

 Our User Community & Their Service Provider Organizations

People, Ideas & Objects user community is our primary focus and priority. They are the means in which we can ensure that we’re building a quality Cloud Administration & Accounting for Oil & Gas ERP system.

The competitive advantages of our user community and service providers provide the following areas as their distinct competitive advantages. This is a fundamentally different basis of competition and one that overall provides significant value from the producer firm to the entire oil & gas economic structure. Approaching the overhead costs of the producers in a systemic and analytical manner and breaking down the individual processes into standardized, objective methods provides the industry with the overall value proposition of the Preliminary Specification. Each individual user community member will work part-time with our development team defining, designing, developing and implementing their understanding and the input of the producers into derivative products of the Preliminary Specification. They are the principal individuals of their service provider organizations that then operate the accounting or administration process on behalf of the industry. 

What you will not find here is any mention of price based competition. Service providers are setting their own prices for their services. And are provided with exclusive licenses to manage their specific process. All human endeavors are motivated by self interest and our user community and service providers are no different. However, their self interest is achieved when they focus on the task of providing the oil & gas producers with the most profitable means of oil & gas operations. And not have to concern themselves with another firm establishing a competitive service, based on price, that did none of the heavy lifting in terms of determining “how and what” was needed, and will continue to be needed, to provide the oil & gas producers with the most profitable means of oil & gas operations. The competitive basis of our user community enables them to get their head in the game and fight to ensure that producers are profitable everywhere and always by using these distinct competitive advantages. Leveraging these with their ability to exercise change in the software and methods of their process management and how they’re conducted in industry. 

The structure of the producers overhead through the reorganization to our Cloud Administration & Accounting for Oil & Gas service has turned these fixed costs variable, based on profitable production. Overhead costs will be recaptured in the current period, and therefore the cash incurred to fund overhead will be paid by the consumer and returned immediately to the producer. Replacing the twenty year process that exists today and the cause of the producers heavy reliance on investors for cash. It is these competitive advantages that provide substantial value to the producer firm. To be able to get to the root of the value generation demands deep analysis and complex work. Something that would be difficult in an environment where price competition was the primary concern.

What it is that the user community will compete upon is the following classifications of items. These will be the basis of a shared understanding between the user community that determines how one user member was able to leverage specialization to enhance productivity in their process by… When we factor in the time and sense of urgency in which this product must come to market, then this will be highly appropriate. This sharing will be collaborative and competitive. Seeking a performance and quality product on a never ending basis. This is the effective way in which the user community and their service providers have been configured in their licenses. 

The last point regarding our user community and their service provider organizations competitive advantages. Is the distinct specialization and division of labor between computers and the people involved in this community. Computers have excelled in the areas of processing and storing of data and information. People on the other hand have the distinct advantages that are listed below. This is a unique perspective in comparison to today’s oil & gas producers ERP systems implementation.

Accounting & Administration Expertise

Well trained and experienced in their fields, our user community members are providing the administrative and accounting expertise as their primary value add to the process. This applies to their service providers as well. As stated our Cloud Administration & Accounting for Oil & Gas service is a sub-industry between the technology and the greater oil & gas economy. Filling a gap that we see between the two as we feel they’re not communicating effectively. 

Analysis of Conflict & Contradictions as Analytic Tools

Conflict and contradictions indicate the source of the issue. Analysis of these two factors will help to reveal the possible alternative solutions. When we apply these in the business world the behaviors, communication methods and other factors can provide insight and understanding to issues and their resolution. These are part of the more advanced style of tools that will be needed to resolve the many exceedingly large issues the industry and our user community will encounter. 

Application of AI & ML

Artificial Intelligence is overrated in the marketplace at this time. AI is a module in the Preliminary Specification where we are able to establish effective and efficient algorithms from our user community that can be shared and are shareable across the industry. Offsetting the inordinate cost of each producer involved in the difficult business process of developing, testing and proving AI algorithms. Machine learning is a far more effective tool that will be valuable to the user community due to the unique perspectives they have on industry data. They’ll have data sets of the process they manage of the entire industry's data. This data set would be interesting to analyze from the point of view of its unknown unknowns. 

Automation

Automation will be invoked to ensure that the most effective and efficient operations are provided to those producers participating in these developments. Relieving the administrative and accounting resources to pursue higher level, value added opportunities. Reduction of costs in this sense is a worthwhile pursuit, not just from the point of view of the reduction of the costs. Reduction of costs implies high levels of automation are in play. Automation does not just reduce cost directly it does so indirectly through the reduction of error. Reduction of errors reduces time. What admittedly is becoming a more critical resource as we proceed through the 21st century economy. 

Collaboration

I noted earlier a collaborative, collegial environment would be the basis of the competitive environment between our user community and their service provider organizations. The basis of collaboration and cooperation is the importance of the work that they’re undertaking and their critical role in rebuilding the oil & gas industry. 

Compromising

Finding the solution in a world of difficult and complex issues demands that creative solutions meeting the needs of those parties are understood and accommodated. Although we are rebuilding brick by brick and stick by stick there are established industry methods, regulations and processes that need to be adopted. We need to bring about new ways of implementing them and organizing them. This demands that our user community members offer industry solutions that work for all concerned. 

Creativity & Design

It may be hard for some to imagine the concept of creativity in the field of administration and accounting. However there is nothing that will be more critical in the discovery, testing and implementation of new and innovative procedures that provide value to the oil & gas industry. We published the Preliminary Specification in August 2012 and soon after, in March 2014 began the development of our user community. As a result people within the larger oil & gas industry have had the model in the form of the Preliminary Specification and our user community vision in their minds for the better part of a decade. Understanding what their involvement could be, should they decide to join our user community based on the principles set out in these documents. Enabling them to prepare themselves, both directly and indirectly for the time when our development and implementation begin. 

Creative Destruction, Spontaneity & Serendipity

Each of these are established economic principles that have been eliminated from the business landscape of the 21st century through the development of software. The unchanging methods and procedures that software defines in organizations, and particularly the ERP systems locks organizations into unchanging and unchangeable situations that only serve the status quo. People, Ideas & Objects have established through our user community and service providers that they’re able to make the effective changes necessary to ERP systems that will be derivative of the Preliminary Specification. Establishing a permanent user community and software development capability is a necessity for businesses to continue to evolve throughout the 21st century. 

Explicit and Tacit Knowledge

Providing software in the marketplace is a small part of the solution today. What software does is capture the explicit knowledge and codifies it within the software processes management. It is the service that is affiliated with that software where the value of the software is derived. The service must include the tacit knowledge as part of the package offering, such as our Cloud Administration & Accounting for Oil & Gas. The software and service must be able to make the changes necessary to accommodate the accelerated pace of change in today’s market, and what we can only assume will be the case tomorrow. 

Ideas

The uniquely human element that will be in demand. The idea that generated a dollar today will produce a nickel tomorrow. The need to have exponential volumes of ideas will be a demand of the future in everything that we do. How these are captured and implemented in the software and the services provided here will be a necessity. And with the shared and shareable model these ideas, once proven, tested and appropriately implemented will be leveraged throughout the industry. Building value for all concerned.  

Innovation

People, Ideas & Objects at al’s Preliminary Specification and these supporting services are structured under the basis of innovation. Our research into the Preliminary Specification determined that innovation is a defined and replicable organizational process. These have been incorporated throughout this sub industry that we’re building. Importantly our user community and their service providers are able to affect the changes that are needed to facilitate the oncoming innovation in efficient and effective ways through the design of their organization.  

Integration

Integration or implementation falls under the domain of responsibility of our user community and their service providers. These are the critical components and the final steps in ensuring the quality of software and services we’ll be providing. Integration begins on day one of the development in terms of the planning and preparation of these changes. It will be our user community members who will ensure that their service providers are appropriately implementing their processes management throughout the industry. As the principal owner of the service providers they’ll be duly authorized and the responsible parties.

Issue Identification & Resolution

“Muddling through” is over. They’ll be no more ignoring the issues in oil & gas. People, Ideas & Objects are providing the tools, methods and organizational constructs in which issues are addressed and resolved. We see that software is the issue in that it is sealing organizations in concrete. Which is good from a governance perspective, however it must be innovative and capable of change in order to achieve the higher level performance trajectory of a dynamic, innovative, accountable and profitable organization in the 21 century. This will be an order of magnitude more difficult than what the culture of oil & gas is currently familiar with. As difficult as the situation in industry appears to be today. Consider how much simpler it was only a decade or two ago. What will it be in a decade from now in terms of the issues and opportunities that these firms face. To be unprepared as we are today is dangerous. 

Judgment

Not a distinct competitive advantage of computers. A uniquely human characteristic that will be the basis of understanding for the remainder of this century and as long as we choose to. Oil & gas is being seen for the value that it is in the consumer marketplace. Unfortunately for the risk of shortages and its impact on civilization. Setting the proper landscape for a more dedicated environment in which oil & gas can prosper and conduct its business operations. What is our judgment regarding the capability and capacity of the current producer organizations to realize these opportunities?

Leadership 

I expect that our user community will provide leadership in terms of the administration and accounting of North American oil & gas producers. An expectation that includes the development and evolution of the business model and “what, how and why” the industry earns its profitability. The objective and standard basis of how that is evaluated and provide the industry the tools to evolve at the speed and capacity necessary to meet its future demands. 

Negotiating

Negotiation and compromising on the basis of the interactions between producers and our user community will occur on a frequent basis. Compromises and negotiations on the Preliminary Specification however can not and will not occur. The business model is integrated and wholly dependent on that model functioning together. Changes at the Preliminary Specification level may have implications that are unknown in other areas of the system. If these changes are necessary then these can be analyzed and corrected based on the best understanding, once developed. 

Planning

Planning in a dynamic environment is a futile activity at times. It however communicates to participants the information necessary to begin the process. It is the first step. 

Quality

Define it, clarify it, communicate it and ensure that it's implemented. It used to be when you drove downtown to go to work in the morning, and when you returned at night. You would see 2 - 3 cars broken down on a 15 mile trip. This was the opportunity that Japan exploited to enter the North American auto market. They introduced reliability. Software is going through a period of higher reliability primarily due to the cloud computing era having the ability to secure the environment of software and services operations. Phones are far more sophisticated than people realize with Steve Jobs starting in the mid 1980s when he was fired from Apple. And Sun Microsystems with the commercial release of Java in 1994. Cloud Administration & Accounting for Oil & Gas, standardization, objective accounting and other methods will secure higher reliability on top of these technologies. And there is so much more that can be done by a duly authorized and capable user community. 

Research

The abundance of primary research today is as we would expect in the 21st century. We can choose to stand on the shoulders of giants, or recreate it again if we like. The amount of primary research that has been unused at this point is probably larger than what has been implemented. There is rich ground here for value generation to those that can begin to turn these ideas into reality in oil & gas. In light of all the competitive advantages listed under our user community, putting research under their domain is a natural fit. We see this as highly complementary to the research that People, Ideas & Objects have listed as part of their competitive advantages. 

Specialization & the Division of Labor

We’ve covered this extensively in all areas of this RFP Response. It is the source of all economic value generation realized since 1776. However, software disables its natural process of development by “gap-filling” when it has no capacity, and the organization has a vested interest in the status quo. Producers have relied on “cost cutting” to generate value for decades and have nothing to show for it but a fundamentally destroyed service industry. Specialization & the division of labor in terms of development of our user community and their service providers will be continual. And they will be introducing the same throughout the greater oil & gas economy.

Thinking

The contrast between “doing” and “thinking” may grow more significant as we proceed through the 21st century. Writing is thinking. Time and the speed of organizations to provide their basic functions, such as oil & gas, is in jeopardy today. “Doing” more may not resolve the issue. Getting ahead of the game may be a thing of the past and a luxury we can tell our grandchildren about. What we’re faced with today is an environment that will demand testing of hypotheses of various scenarios of possibilities and assessing the different outcomes. Determining what is right based on what will work to generate value for the firm. An environment where what the individual gets out of it will be based on the value they’ve generated. 

People, Ideas & Objects Response to a Request for Proposal, Part IX

 Competitive Advantages

We turn now to the distinct competitive advantages of the three separate and somewhat distinct elements of People, Ideas & Objects offering. These consist of three separate groups of organizations that make up this sub-industry, the sub-industry we’re creating here between the technology providers, the oil & gas and service industries. These consist of ourselves, our user community and their service provider organizations. Each providing a component of the Cloud Administration & Accounting for Oil & Gas software and service we’re offering. 

People, Ideas & Objects

The three competitive advantages that we’ve selected that match our competitive strengths are our user community, Intellectual Property and research. 

Our User Community 

Quality in a product or service, much like profitability, is hard to achieve. Implementing a tier 1 ERP system to an industry on a revolutionary, disintermediated basis is in summary ambitious. A rebuilding of a dynamic, innovative, accountable and profitable North American energy independent oil & gas industry is needed for the long term. We’re not setting out to tear down the industry to conduct this rebuilding. Officers and directors of the producer firms have done that destruction. Delivering the Preliminary Specification to all classifications of producers brings about additional challenges that have not been attempted in any industry. Now add quality. Can this be done? Not on the basis of the industry's current point of view, attitude or method of operation. In a word the cultural inertia against our success would assure us a 100% failure rate. A 100% exhaustion rate and a high probability of systemic mental health difficulties for all concerned. It would leave the producers the viable scapegoat that they’re the only solution, all else had failed. 

The point needs to be made that what has been done by the oil & gas producers doesn’t satisfy today’s market need. As with the inability of the Soviet Union to feed its people, organizations eventually exhaust their ability to meet the demands of what they’re established for. The structured hierarchy can no longer operate effectively or efficiently enough to meet the needs of any aspect of the greater oil & gas economy. The producers, service industry, and critical resources of both financial, operational and political frameworks are all structurally and financially depleted through long term unaddressed issues created by producer officers and directors. Our proposed method of rebuilding the greater oil & gas economy brick by brick and stick by stick is therefore the constructive approach. 

It is here that we can look to our user community for their leadership in terms of the business aspects of this rebuilding. People, Ideas & Objects have provided our user community with the power and control over this rebuilding process through our user community vision. There we find two distinct policies that enable them to instill the quality and leadership that such an initiative requires. 

Only user community members are authorized to prepare derivative works to the Intellectual Property of People, Ideas & Objects. 

Our development team is authorized to only look to the user community for their direction and needs. They are operating at the behest of the user community and are deaf dumb and blind to all others. 

Therefore if anyone from industry needs or desires to have any aspect of the Preliminary Specification dealt with. They will only need to speak with the appropriate user community member(s) that are responsible for that area. Providing a resource for all those in the industry to have input and a say in what it is they need to do their jobs. A resource that is permanent, along with our development capability to provide for the changes and enhancements that producers need and desire to continue to achieve the dynamic, innovative, accountable and profitable objectives they set for themselves.

I’m only briefly introducing the competitive advantages of our user community here. There is a section below detailing and describing their specific attributes and how they’re applied. 

Intellectual Property

We’ve covered this area fairly extensively in its Organizational Construct section of this document. IP forms the basis of our strategic and operational approach to the industry. We do not see IP being as much of a legal construct as it is the political and cultural foundation of how the western economy and its civilization now operates. With software dominating industries, or having the potential to do so, the underlying value and protection of that asset class is held in the IP that software is derived from. Organizations involved in this western cultural economy are law abiding citizens and uphold the rights of those claims by those software companies. This particularly is the case with software companies where the use of other firms IP is carefully managed and only used in contractual agreements. The value of Intellectual Property is best expressed in what we describe… 

it’s no longer enough to own the oil & gas asset, it’s also necessary to have access to the software that makes the oil & gas asset profitable.

While we were operating in the 1990s this was not the case. Intellectual Property was more of the wild west in terms of whoever had the largest armament had the largest opportunity. The development and respect of IP in the 21st century, particularly in the software industry, has been necessary and dramatic. It has been necessary from the point of view that the much needed innovation and development of intellectual thought and leverage of our economy can be undertaken. Much as mechanical leverage benefited society in the 20th century. 

We will continue to apply our IP in the manner that we have. It is our desire and we are pursuing the opportunity to resolve the issues in oil & gas as an operational software and service related sub-industry through our Cloud Administration & Accounting for Oil & Gas. The continued consequences of the actions of the North American producers have been highly consequential. We see the industry making a decided move towards SAP’s ERP offering as it is the only other tier 1 ERP offering in the market and doing so in order to satisfy producer investors' demands. If this scenario continues, this would preclude People, Ideas & Objects et al from continuing as an operational software organization. 

Research

Our capacity and capabilities in the area of research of oil & gas administration & accounting is proven to be of value to the industry. The issues we identified in our May 2004 publication and resolved in the Preliminary Specification in August 2012 have now become the primary concerns of the industry. As we had suspected and were concerned at that time, if the issues industry was facing remained unaddressed, they would lead to an existential crisis for the industry. With devastating, fallout consequences to society due to the mechanical leverage derived from each barrel of oil. Officers and directors chose instead to continue to run their firms for their personal interests. Without concern for their fiduciary duties and greater responsibility to conduct and operate a profitable business. 

It should be noted that we were ridiculed by these individuals who said profits don’t matter. Profits always matter. Running a profitable business is fundamentally different from taking investor money and spending it. It is difficult, challenging, it takes skill, courage and fortitude to achieve, persevere and provide the necessary leadership. None of the characteristics or culture of what we’ve seen from those who stated profits didn’t matter. They’d “muddle through.”

I’ll also note that today the consequences of running a profitable operation are not within the domain of understanding or the culture of the oil & gas industry. The litany of excuses, blaming, viable scapegoats, “muddle through,” “put cash in the ground,” and other nonsense permeates the culture. A culture that has now failed to meet the market expectations of its needs. Maybe not today, Europe is our warning, but we’re headed in that direction. Running a profitable operation is the only source of capital that is unlimited. Limited only by one's imagination which answers why we’re in this existential crisis. The complaint that investors demand everything to be done in the short term quarterly reports is a viable scapegoat used by all public companies. It misunderstands that if the organization pursued profitability everywhere and always they would meet their investors demands and have the resources they needed to fulfill their market opportunities. If industry wants to do this or that, if this is the direction they want to move to then a profitable operation will provide them the opportunity to pursue those areas. If the new investments don’t turn out then they’ll pay severe consequences of diminished profitability and difficulty in moving forward with their next initiative. Such are the perils of a profitable operation. There are far more capital resources available to those that can run a truly profitable operation than any investor class. This fact is either lost in the cultural malaise, conveniently ignored through bureaucrat mismanagement or it could be they’re just busy coming up with more excuses. 

My frustration is that this societal mess we find ourselves in was unnecessary and avoidable through the adoption of the Preliminary Specification in August 2012. People, Ideas & Objects provide a mid to long term solution to the problems being experienced in the marketplace today. Those that had the responsibility and authority to act and deal with this appropriately did nothing other than to fight this initiative with underhanded, cheap tactics. It is not that they did not fully comprehend the issue or the solution that People, Ideas & Objects have been promoting. If they didn’t understand the issue or our solution why would they have undertaken these tactics towards People, Ideas & Objects? 

The results of our research today shows. Society in general does not have the time or luxury in this fast paced world to satisfy personal concerns at the cost of the fiduciary duties and fulfilling one's roles, responsibilities, authority and undertaking the appropriate accountability. People, Ideas & Objects concern is we’re well behind the time necessary to turn this around. Possibly seven years before we’ll be able to do so. Which may be more time than our issues allow. And in that seven year time frame the development and implementation of the Preliminary Specification is a small fraction of the total work and effort that will be needed to be carried out across the entire North American oil & gas industry. 

People, Ideas & Objects Response To a Request for Proposal, Part VIII

 Information Technology

Our next organizational structure that defines the way in which oil & gas producers operate in the Preliminary Specification of People, Ideas & Objects, our user community and their service provider organizations is the Information Technology environment and the revolutionary impact that these have had on business in terms of enhanced productivity, performance increases and leveraging value out of a firm's business model. The promise of additional performance and productivity enhancements are available as these technologies have matured and are more integrated to provide their consumers with substantial value. 

The key technology today and the one that we’re leveraging in this community is the establishment of cloud technologies. Introducing a shared and shareable cost model across its users. This is how People, Ideas & Objects et al sees Information Technology materially affecting the performance of producer firms. With cloud computing, instead of incurring large capital, infrastructure and operating costs to acquire their IT capabilities, users are able to access these needs as a variable monthly operating cost, variable based on usage. The shared and shareable cost model doesn’t just end there. The producer's users are provided with the most recent applications and the quality of technology service and support is enhanced through an enhanced and constantly evolving definition of specialization and division of labor. Cloud computing is expanding throughout the business community due to the capability of accessing the IT resources that businesses need and want. One that provides a lower overall cost, yet provides the full value of IT that would otherwise demand that each company invest in unique capacities and capabilities outside of their competitive advantages, and demand significant corporate resources and focus in order to build, achieve and maintain.

 People, Ideas & Objects see cloud technologies as revolutionary to oil & gas. Having oil & gas producers accessing the same state of the art IT capabilities, capacities and infrastructure at low, variable and affordable prices will enable the opportunity for producers to participate in the anticipated future performance, productivity and value enhancements that they choose to. We also see a further extension beyond the IT infrastructure, software, service and support. We have adopted the shared and shareable cost methodology of cloud computing and applied it to the oil & gas administrative and accounting processes and functionality conducted in the Preliminary Specification software, our user community and their service provider organizations. Introducing the Cloud Administrative & Accounting for Oil & Gas service to North American producers.

If we look at the difficulties of “what, how and why” producers are consistently unprofitable. We see high overhead costs incurred within each producer that are what we consider to be the secondary cause of a systemic lack of corporate profitability. Building the necessary administrative & accounting capacities and capabilities, particularly in this regulatory environment, is costly to achieve and maintain. It’s also incurred individually by each and every producer on an independent and isolated, or unshared and unshareable basis. These are not core strategic competitive advantages. We are faced with the same issues that the earth science and engineering resources are faced with as a result of their advancement of specialization and the division of labor. The need for the resources to cover each and every aspect of the corporate administrative and accounting demands has or will soon breach the commercial capacity of all producer firms. I would assert that happened decades ago. People, Ideas & Objects' multi trillion dollar value proposition should show that the need for attention in the area of managing the business more effectively and efficiently is necessary, desirable, achievable and tangibly valuable. A shared and shareable business model through our Cloud Administration & Accounting for Oil & Gas will attain variable administrative and accounting state of the art capabilities and capacities. Providing lower costs from two distinct perspectives that are unavailable in the current business model. From an overall industry and individual producer perspective, a lower cost due to the shared and shareable nature of these services. And, due to their conversion to variable nature overhead will only be incurred when profitable production is attained. These are just a few of the methods from our focus on providing oil & gas producers with the most profitable means of oil & gas operations. 

When we listen to customers who have implemented Oracle Cloud ERP applications within their organizations there are a number of consistent messages coming through that I find interesting. The first is their roles as senior management and officers of their firms change to begin dealing with the prospective changes that are coming in the quarterly release or upgrades of the Oracle Cloud ERP offering. These are now in the area of around 200 individual additions per quarter. Note, additional changes will be made when the Preliminary Specification is operational in addition to this volume of Oracle changes. 

People, Ideas & Objects would ask, based on the selection of which ERP solution is determined by the Board of Directors, how many of these quarterly changes will be the concern of the producers senior management and officers, or be handled on their behalf by our user community and their service providers. The majority of these changes would be handled by the user community under the People, Ideas & Objects et al model and implemented, maintained and supported by the service providers. With input from the producers being funneled through to the user community, consolidated and optimized from the producers point of view. Let’s call this a shared and shareable senior management and officers role. Ensuring effective and efficient management of the producer's processes, both from a time, effort and cost perspective. Which brings up an important question. Who can effect change of this entire ERP ecosystem as proposed by People, Ideas & Objects et al? It is the greater oil & gas economy and most specifically the producers who our users who have the power to make those changes will look to for input of any and all information. Our user community are deaf, dumb and blind to any others, however share my allergy to bureaucrats. Our developers are deaf, dumb and blind to all others except our user community. 

The traditional approach to having a unique ERP system that caters to the needs of a specific industry is to customize the vendor's application to do so. This is frowned upon by Oracle and recommended not to be done. People, Ideas & Objects have adopted Oracle’s policy in our user community and service provider licenses. Stating that all customizations of the application are to be avoided at all costs. This certainly seems to be at odds with what it is that we’re doing. The point is subtle and is a unique characteristic of the Oracle Fusion Applications. Other than Workday they are the most recently written applications of all ERP systems. They were the first to be written in the Java Programming Language which introduces the full object model to those applications. Providing the characteristics of inheritance, encapsulation and polymorphism. The Fusion Applications are supported by Fusion Middleware which is an enhanced Java Server with expanded function and process management that is generic and written by the Oracle Fusion developers. This is the base of the Oracle Fusion Applications. It is also the base of any “additions” that are written to provide industry specific application capabilities to the Oracle Fusion Applications. Enabling People, Ideas & Objects to embed the oil & gas industry features directly into the Oracle Fusion Applications through the Oracle Fusion Middleware as “additions.” 

This is opposed to the industry customizations which would traditionally sit on top of the ERP application. Oracle’s method avoids a key difficulty in the environment where the needs of the users are dynamic and changing. Any system changes at the Cloud ERP, or Fusion Application ERP level are therefore not going to break any of the customizations that sit on top, as there will be nothing there. The new quarterly release of Oracle features will be embedded with the “additions” from People, Ideas & Objects and therefore, as they too are Java object based, independently updated as well with their own new and unique features, unaffected (encapsulation) by them without any of our additional developer involvement. Yet, I am satisfied that our application code base is separate and distinct from the Oracle Fusion Middleware and Fusion Application code. Maintaining full control over the Intellectual Property that is a key source of People, Ideas & Objects competitive advantage. I have to mention another unique characteristic that will soon be available to the Oracle Fusion Applications and Middleware. A feature that they’re calling “Fusion - Future Zero Down Time.” Seems self explanatory. 

This next point is one of contention between the IT community and those within the business community. It is a method of implementation that is becoming increasingly the norm and the more successful method of ERP implementation. It goes by the name that I’m fond of and captures it most effectively, that is “rip and replace.” I subscribe to it simply for the time element of the roll out of the Preliminary Specification when completed in its commercial release. Please note it is the domain of our user community and service providers who will be planning and conducting the implementations for each of their individual processes themselves and of course the producer firms. At this time rip and replace is the most appropriate implementation methodology for a rebuilding process.

Time is the demand that should be focusing the minds of the producers on dealing with their shareholders issues of accounting integrity, accountability, tier 1 ERP systems use and the melting down of their financial position due to absolutely no capital structure. People, Ideas & Objects primary issue is that we are conducting this across the North American producer marketplace. Therefore the need to focus the energies of the industry on this task will need to be a priority. Both from a software development and implementation point of view. Otherwise the industry will just melt down and oil & gas will have failed in its primary role of providing affordable energy to the North American consumer. North American’s will become dependent on foreign sources of energy to meet consumers' needs. And as we’ve noted the most powerful economy in the world is also the largest consumer of energy. These foreign sources of oil may therefore deprecate us from that traditional economic role. 

People, Ideas & Objects have chosen to pursue our user community, research and Intellectual Property as the three areas of focus for our competitive advantages. Note that none of these involve the development of the software code. We’ll own and provide the software code that is derivative of the Preliminary Specification and our Intellectual Property. We have contracted all of our software developments to Oracle Corporation. Their services division are well versed in their ERP products and are ready and capable. We believe we would need to dedicate at least a half decade in order to assemble a team of the size capable to deal with this project and then an unknown amount of time necessary to turn them into a functioning capable team competent to put out the quality of software necessary. We’ve been working on the development of the user community since the first quarter of 2014. A task we’ve assigned as our priority since then and one that differentiates our product offering in terms of quality. Time is not the commodity available to the producers at this stage. The time we’ve invested in developing our Intellectual Property and most importantly our user community will offset industry needs tremendously. Contracting Oracle in this manner extends this time advantage. Focusing on the IP and our user community aspects of this project will be a better use of our time, resources and skills. It is also where we see the value in the software business. It is consistent with our belief that specialization and the division of labor will need to be applied to all aspects of the economy and by doing so we are able to do a better, more productive job.

If directors believe these ERP developments can be done within their organization then why haven’t they happened? Our scope of application development in the Preliminary Specification would be considered equal to what each and every one of the producers would need to undertake if they chose to continue to go it alone in the unshared cost model. The main difference is in terms of scale. To acquire just the depth of understanding and detail necessary of the Oracle ERP Cloud offerings would require the same costs being replicated across the industry in each and every one of the producer firms, assuming producers had a timely, oil & gas, workable, profitable business model. I could be reading things differently in terms of timing and expectation of the producer investors and bankers. 2015 was when investors began to express their discontent with the industry at large. The industries lack of performance, accountability and transparency were identified as issues by them at that time. I would never have assumed that the better part of a decade of inaction was a tolerable amount of time. 

I should state here that the bulk of this RFP Response is being written as a derivative of the one that I wrote specifically and is entitled “To the Board of Directors, Our RFP Response…” in late June and July of 2021. I raise this point as after 17 years this blog receives a high distribution across the North American producer population. Yet not one phone call or any other method of communication was used by any of the producers at that time to contact People, Ideas & Objects. A unanimous…, we all know the slang term that was implied here.

I personally have been working on bringing ERP systems to the oil & gas market for thirty years. Our first attempt in 1991 failed in 1997. This initiative began in 2003 and there have been other failures. There are few ERP providers available in the market today and nothing else that is a dedicated development towards oil & gas with a tier 1 provider. The benefit that I’ve gained from this latest initiative is that copyright law is now upheld in all marketplaces and I’ve secured what it is I’ve developed. My point in this is to suggest that oil & gas companies have mistreated the vendors of oil & gas ERP systems development in the three decades I’ve been involved. Much as it has mistreated the service industry, its investors and bankers, not saying anything about their current and former employees. The need to financially support these initiatives from the primary revenues of oil & gas sales is now a result of this mistreatment and a reality that has yet to be realized by producers. Just as there are no oil & gas producer investors, there are no investors that are interested in anything associated with oil & gas. 

To the point of Intellectual Property. It is the basis of all software. No software vendor is going to violate another's Intellectual Property. SAP or any other reputable company would adhere to those principles as that is the basis of all of the value of their firm. It does them no good to be violating others IP. Therefore the producers will be left to develop their own systems and may, or may not adhere to respecting Preliminary Specification and People, Ideas & Objects Intellectual Property. That would be their choice and we would transition from an operational software company to one in which we ensure our IP is respected. Alternatively each producer could come up with their own methods of ERP software development and fight it out amongst themselves as to who owns what. This is after the money necessary to fund all those developments has been spent and the IT resources that were consumed in the process are sent on to their next industry with all the other service industry resources to find gainful employment elsewhere. As I’ve stated, administration & accounting are not distinct competitive advantages of the producer firms. 

Although I feel highly productive today, that will not be the case in thirty years. Who’s coming into the field with the scope and scale of opportunities that are being presented in the marketplace that these producer bureaucrats have created. What Intellectual Property will those that enter in thirty years bring, and conversely after consideration of People, Ideas & Objects et al, what IP can they bring? It may be surprising for producers to learn that there are other industries that are dynamic and exciting right now. I can conclude that I am stuck with the consequences of my choices and am able to live without regrets of what I’ve done. I doubt those that follow me will feel the same after they’ve put in the three or more decades of effort necessary to generate that first penny of revenue from oil & gas producers. And that assumes People, Ideas & Objects will make it to that point. Conversely, who do I appeal to now that the Boards of Directors have failed to act and fund the Preliminary Specification? Alternatively, the better question may be who do producers go to for funding in the future when its proven directors don’t care about investing in their organizations profitability, or even oil & gas?

Throughout our writings we have alleged the accounting conducted by producers over the past four decades, and particularly the profitability reported, is specious. That overhead and other costs are handled inappropriately. Depleting cash on a chronic basis and raising serious governance issues that have now resonated throughout the investment community and elsewhere. This accounting allegation of ours is that the specious accounting methods conducted throughout the industry have been obscured through poor ERP systems that were deliberately created through producers' bureaucratic mismanagement. Governance over the quality of the accounting and the companies systems has become an issue at the level of the board of directors in the last few years. Due to a direct ask by their investment community. There are no tier 1 ERP systems providers selling oil & gas systems today and more importantly, outside of People, Ideas & Objects et al no interest. Again, SAP sells an oil & gas system to producers however it is inadequate for oil & gas. A valid question may ask, how much of these producer issues are attributable to poor SAP systems? It has not been the case that there was no opportunity for producers to participate in the development of these systems. 

A purpose built oil & gas ERP system will need to be developed on a tier one systems vendors platform in order to implement a governance model that will satisfy the investment community. People, Ideas & Objects uses Oracle Cloud ERP. The unquestionable leader in ERP systems according to Gartner. With our Preliminary Specification, our user community and their service provider organizations we’ll be providing a comprehensive and complete oil & gas solution in our Cloud Administration & Accounting for Oil & Gas software and service offering. One that provides a comprehensive value proposition in the form of reducing the infrastructure, operation and maintenance of each producer's overhead costs. And turns what remains of those costs to variable, based on profitable production. 

People, Ideas & Objects Response to a Request for Proposal, Part VII

 Markets

In terms of the Preliminary Specifications marketplace modules, we have the Financial, the Petroleum Lease and Resource Marketplace modules. Each replicating the three primary markets of which a producer is actively participating on a daily basis. Seeking to profitably and innovatively apply their distinct competitive advantages of 

• coordinating the markets of earth science & engineering capabilities 
• their land & asset base. 

The Petroleum Lease Marketplace module is as one could imagine. An opportunity to post, bid, purchase, sell mineral rights and producing properties in the marketplace that exists and is replicated virtually within the Petroleum Lease Marketplace module. Everything from the opportunity to participate in a joint venture to establishing and ensuring the surface rights payments is fully supported by the Cloud Administration & Accounting for Oil & Gas of the Preliminary Specification. Our ERP product sits on top of Oracle ERP Cloud which includes their tier 1, Oracle Fusion Applications that Gartner rates as the highest quality offering. These oil & gas Marketplace modules include the data of the Federal, State, Provincial, Freehold and Offshore leases. An opportunity for industry to consolidate on a dynamic platform which uses proven tier 1 technologies with the constant support of the service providers maintaining transaction administration and accounting in a standard and objective manner. 

This will be enhanced with the constant iterative design and development being undertaken by People, Ideas & Objects user community and developers on a permanent basis and available through our Cloud Administration & Accounting for Oil & Gas service. Whereas if a jurisdiction reviewed and changed their royalty rates at some point, in terms of either the rate or method calculated, producers would not need to concern themselves with the administrative or accounting aspects of those changes. The user community, developers and service providers would have them covered and implement the necessary changes in the software and services in a timely and accurate manner. Producers would only need to deal with the issues regarding any revised royalty costs and performance consequences. 

As with the Resource Marketplace module we see many changes in this oil & gas marketplace. Which I would think producers would welcome at this point as financing is next to impossible for producers and particularly the service industry. Moving to the Joint Operating Committee as one of the Organizational constructs of the dynamic, innovative, accountable and profitable producer is achieved in the Preliminary Specification. We noted that the movement of the knowledge to where the decision rights were held, which is the Joint Operating Committee, enhances accountability. It's here that the Financial Marketplace enhances that accountability with the board of directors' interaction with their current and prospective shareholders and bankers. A review of the Financial Marketplace modules specification would be the best source of information to capture an overall understanding of the module. There is also the standard and objective nature of the accounting that is conducted throughout the Preliminary Specification and the service providers. Consider if that would satisfy some of the issues that investors and bankers have raised regarding their investments and loans in the industry? Whereas with the Preliminary Specification everything being produced is profitable and the producers are seeking to maximize their profits by shutting in unprofitable production. 

The demos for the Marketplace Interface were prepared by the underlying technologies that are available to us. These were prepared over a decade ago. Much has developed in the technological environment since. There are many points that I would argue that are different today which include.

• The work from anywhere and its enhanced productivity of employees.
• The co-mingling of professional and personal lives, the reduction of redundant travel times and archaic rituals has had a marked increase in the performance of white collar workers being engaged over a 12 to 14 hour day. 
• Zoom induced hell. (The demand to always be on camera.) 
• Turning cameras off for peace of mind is now a necessity to this ball and chain. All to satisfy one’s immediate supervisor's demand for command and control through continuous mandatory attendance.
• The lack of ERP tool support availability.
• Search, contracting, buying, selling, financing, billing, paying, marketing etc. What is currently being done in the ERP area of oil & gas vs what could be done in a hybrid ERP with a marketplace interface could not be more stark. Oil & gas is in the dark ages.
• Proliferation of bots. Both good and bad. Note, Oracle’s Cloud ERP now has “good” bots that fight the “bad” bots that may be attempting to get in. 
• “Always there” capability. 
• The establishment of permanent, virtual real estate for your bot’s and organization. 

Looking at the establishment of IT in other industries where technology has been embraced we can ask some interesting questions. Why is there such volume on the stock exchanges today? What are all those algorithms doing? It’s been more than two decades that they’ve existed. How is it that NASA, Ford and GM can all be collectively outperformed by Elon Musk? And how is it that oil & gas is generally and rightly regarded as having many of the best science and engineering Information Technology available to it. Yet its business is about to be thrown on the trash heap of history? 

The economic principles of markets and price discovery are two of the mechanisms by which North America has advanced its overall quality of life. Adoption of these within the oil & gas industry are therefore a necessity and the Preliminary Specification has done so as part of the structures that define and support these industries. Our decentralized production models price maker strategy relies on the principle of oil & gas commodities being priced based on these satisfying the economic definition of a price maker. The need for producers to produce only profitable production, after full consideration of all of their costs on a timely and accurate basis, is how they’ll operate under our ERP system and service provider offerings. Using all of the information contained within the commodity markets price, (production, inventory, consumption, reserves) to determine profitability and ultimately what will and will not be produced. It is the same mechanisms that are involved in every transaction involved in a free market. 

From the Preliminary Specifications Resource Marketplace module we quote from a paper written by Professors Richard Langlois and Nicholas J. Foss entitled “Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization.” they note.

The organizational question is whether new capabilities are best acquired through the market, through internal learning, or through some hybrid organizational form. And the answer will depend on (A) the already existing structure of capabilities and (B) the nature of the economic change involved. p. 21

And

If by contrast, the old configuration of capabilities lies within large vertically integrated organizations, creative destruction may well take the form of markets superseding firms. History offers many examples of both. p. 21”

And

Either way it boils down to the same common-sense recognition, namely that individuals - and organizations - are necessarily limited in what they know how to do well. Indeed, the main interest of capabilities view is to understand what is distinctive about firms as unitary, historical organizations of cooperating individuals. p. 17

We first need to discuss two components of how I see one of the marketplaces in oil & gas. The reliance on the field service industry providers to extend the producers capabilities and capacities into their regions of interest. For producers to own and operate their own field infrastructure would otherwise be an impossible impediment and constraint towards progress. The second component is the history of abuse and disrespect that producers have displayed and presented to the service industry over the past forty years. And particularly since 2015 when the producers recognized their financial difficulties were amplifying. The assumption that oil & gas is a boom / bust industry has been accepted over the long term by these producer bureaucrats. All other industries sought to work these issues out of their businesses and industries many years ago. It is this continuing acceptance that has left us with a legacy of maybe five good years out of the past thirty five. Officers and directors don’t understand this point as they’ve experienced thirty five years of excellent compensation. 

Producers assume the service industry needs to adjust to the boom / bust trend in lock step with the producers. There is an implied assumption that the service industry, like the oil & gas industry itself, enjoys revenues as a primary industry and therefore continues business as usual during the bust cycles. The diversity of the service industry offerings, and their coverage across the various regions of their operations throughout North America spreads them relatively thinly. As secondary industry participants they are not as resilient as the producers believe them to be. The collapse of their revenue streams into the low teens in terms of percentages has been devastating.

Now the consequences of this downturn have destroyed much of the service industries capacities and capabilities that were once available to producers. This decline in support since 2015 on top of the cumulative difficulties administered the many decades prior by oil & gas producers has created the situation where it will be difficult for many of them to survive. The largest service industry providers have left the continent as a result of the abusive treatment they’ve received. Therefore working out the boom / bust cycle through our price maker strategy will go a long way to rectifying this issue in the long run by providing a stable environment, or constant level of demand for which the service industry can prosper. However, investors in the service industry have had it for the remainder of this millennium. They invested in good faith and were abused by the producer firms. They’ve witnessed the equipment they invested in being cut up for scrap metal to pay the light bill and taxes on the shop. This was primarily due to the producer bureaucrats determining they could get away with leveraging additional field activity by not paying their bills for 18 months after the jobs were completed. As their last source of capital necessary to keep the show continuing. The dilemma today is who’s going to provide the financial resources for the service industry to recapitalize itself and reestablish the capacities and capabilities that will be necessary for a self-sufficient and profitable oil & gas industry? The Resource Marketplace module engages the producers and service industry participants in constructive discussions regarding the business of the business of the oil & gas and service industry business. 

This is what’s known and understood in the market today, it’s not news. Producers will expect the service industry to dance for their dollars just as they’ve always done. If People, Ideas & Objects are correct and no one’s going to play that game, what would be the result. I would point to the example of the history of the ERP providers in oil & gas over more than the past three decades. I can report there is still no consideration whatsoever of a second chance these first tier ERP providers will be riding to the rescue of the producer firms. Why, they feel the industry is too complex, too costly and there are not enough producers to be able to negotiate their sales prices fairly. The last two tier 1 ERP providers left in 2000 and 2005, as documented on page 17 of our White Paper, due to the inability of producer bureaucrats to pay for their software development in advance. Producers have never paid for any ERP systems anyways, so why start? 

Producers have had over a decade to invest in the Preliminary Specification to make their organizations profitable and to avoid this inevitable, predictable and disastrous outcome but didn’t. Not a penny has been spent on People, Ideas & Objects at any point. Therefore producers will be paying for all of the costs of the Preliminary Specifications development and user community in advance. The need for skin in the game is the apt approach when so many ERP providers and their investors have been betrayed so comprehensively. This will be the necessary approach throughout the oil & gas producers industry-rebuilding process.

As the producers sit upon the primary industries revenues they so enjoy. (And mostly for enhanced, innovative, executive compensation. I do question what's in those capitalized overhead accounts we never see.) Officers' and directors' inactions have consequences which have been wholly detrimental to everyone else in the industry. They will no doubt argue, rightly, this does not remind them of what markets and price discovery should look like. Correct, it's what’s necessary after the destruction of the markets they’ve caused. It is the rebuilding process. These facts on the ground are what bureaucrats refuse to consider or admit. Until they do the industry will be plagued with problems. And they’ll never admit this, what they will do instead is they’ll just leave which is the historical action other bureaucrats have taken in other industries since 1929. Which is possibly what they’re doing in their transition to clean energy. Taking the oil & gas revenues with them. These issues need to be dealt with and I am unaware of any other solution. The need to rebuild these industries brick by brick and stick by stick must be financed by the only means available. The primary industry revenues of the oil & gas industry. Facilitated through the Preliminary Specifications decentralized production models price maker strategy and active participation in the development of the industries that support the Primary industry of oil & gas. Or in other words, ultimately the consumers. Granted there will be those within the service industry that will continue to scrounge for the pennies falling from the bureaucrats pockets. However, that does not create the dynamic, innovative, accountable, profitable and energy independent oil & gas industry that we need.