The producers paradox.

I had been catching up on some of the better blogs and noted the commentary on Peter Rip's Early Stage VC. He noted a few things that are not only unique in Silicon Valley, but are applicable here in Calgary as well. He of course was talking about enterprise software. How the market for the software had all but dried up and was more of a wasteland in terms of venture capital. I can attest that the oil and gas marketplace suffers from the same symptoms as he speaks of in California.

To be more specific the only software that will be purchased by producers is SAP and Oracle. The producers believe the ability for smaller software players to provide any valuable product or service doesn't exist. However, we all know that the level of innovation and capability being built into these two jurgernauts is non-existent. So what is a company to do? What is an oil and gas producer to do? They could call IBM who have all the solutions if you listen closely enough. The producers are in the unfortunate position of needing something to enhance their performance and make them more innovative. Something more then just a blog, such as this one.

I am tempted to say that you reap what you sow. But since I still would like to do business with most of the producers, I of course won't say that. The paradox comes into play as the most innovation that has occurred in oil and gas systems in the past year was written in the theoretical vacuum of this blog. Nothing happens with the big software vendors because they truly don't understand the producers business. Besides they sold them the latest do-dad just last week.

At the lower end of the market. The place where I exist, nothing happens because we are too small to do anything of "value". That is other then I get to claim a lot of valuable intellectual property.

I could if I wanted too, sell the intellectual property to one of the big software vendors. Well of course I tried that, IBM said they weren't interested. I would not deal with Oracle as our last relations ended in them claiming ownership of what was rightly ours and one bitten, twice shy is the best way to restate that situation. And lastly I don't speak German. Now to be fair to SAP Calgary is one of the smaller ponds in a market that they don't really concern themselves with. Oil and gas is poorly handled by SAP and they seem to be more proud of that then anything else.

Anyways I determined that there was no market for any sales of the intelectural property "product" to the big guys. The producers are therefore left to cobble a series of tiny vendors with Cobol code together to make up their software systems. Ensuring that these software companies are run ragged and fed a diet of rice for sustenance. All and all a great situation.

So now we have a situation where the market is deemed as mature. The software companies are pursuing other industries like automotive and health care, and maybe in Houston the SAP sales rep will show up for a meeting. Here in Canada producers can continue to look down their nose at the small vendors across the table and generally complain about the poor state of any offerings. Meanwhile back at the stock market the demands for more continue to escalate and they are unable to figure out why they are having more trouble making money in this high priced environment!

I can assure anyone that may have a good idea on how to solve the producers paradox, your better off staying at home. The industry is just full of demanding users that are never satisfied and can only complain. Besides there is always hope that someone somewhere will pop out a new, all encompassing software application that they just cobbled together in their parents garage.

Technorati Tags: Genesys, Producers-Paradox, Innovation, Energy

Hagel & Brown, Pull Models, Part II

Continuing on with the review of this fine paper from John Hagel III & John Seely Brown.

Exploring the layers of pull platforms.

This paper continues on discussing the various layers of pull platforms. Needless to say these points have what the authors call a "High Tech Focus." A technological envrionment where the community of oil and gas workers and producers can and will be supported by the various frameworks. The implementation of these communication technologies creating the communities of users that aquire more elaborate and sophisticated capabilities.

Summarizing the information within a table provided by Hagel & Brown;

Infrastructure Layers

1.) Communications Networks

Facilitate the basic movement of information and goods.

2.) Service Grids

Provide enabling services to create more robust and tailored connections.

Performance Fabric Layers

3.) Technology enablers

Create more flexible ways of organizing and mobilizing resources.

4.) Social networks

Increase willingness and ability of people to share resources, especially knowledge.

Creativity Framework Layer

5.) Aggregation networks

Create metadata to help connect participants and resources.

6.) Process networks

Orchestrate capabilities to create new products and services.

7.) Networks of creation

Establish collaborative environments to generate new practices.

(Please note items 1 - 7 are verbatim recreations of a Hagel & Browns table.)

The activities within the pull platform are augmented by "Find, Connect, Innovate and Reflect in each layer of pull platforms." Hagel and Brown go on to further define the categorization of the layers in Infrastructure, Performance Fabrics and Creativity Frameworks. I highly recommend downloading this article and reviewing the details closer.

A key attribute of these Networks and Frameworks is to provide enhanced capabilities to all those within the pull systems. Reflecting on the oil and gas industries potential use of these networks. There could be such a rich environment to operate within. An environment in which the desire and capability of each individual and producer are enriched by their potential of employing resources in this optimal pull manner.

An environment where the limitations of participation are reduced to the lowest common denominator. Where anyone and everyone who has value can contribute. To open a much larger dialog where the collective knowledge and capabilities of larger communities are applied in the most efficient manner. And as Hagel & Brown say

"These communities can also amplify the power of reflection and accretion by bringing together a diverse and often distributed set of participants." p. 38

Or what I foresee is the elimination of the bureaucracy that invades, restricts and limits the potential of companies and individuals. A bureaucracy that has fullfilled its role in enabling the communications and technology markets to be built. A bureaucracy that must now fall on its sword as opposed to fight for its inevitable elimination.

In addition of the bureaucracy stepping aside Hagel & Brown suggest the core capabilities of the company will need to reassess its purpose and role within the community. Companies that limit their role to the "Innovation, Learning and Capability" realize these can be achieved through other intermediaries then command and control. Enabling "each other to reach new levels of awareness and understanding".

Hagel & Brown also suggest as companies begin to adopt these communities of practice the performance tragectory will accelerate quickly, such that companies that choose to maintain command and control will have fewer competitive advantages in the marketplace. I foresee Genesys impacting the performance tragectory of oil and gas firms such that it would be very difficult to maintain any current competitive advantage without its use.

"In a world of pull platforms, the rationale for the enterprise itself must be re-examined. Enterprises will continue to add value in one of three ways; accelerate capability building within communities of practice; orchestrating capabilities across multiple enterprises in process networks or aggregating so that they can be more conveniently found and accessed by other participants in pull platforms. Ultimately, the success of these enterprises will depend on their ability to master different approaches to talent development, including the deployment of more flexible IT support systems to develop talent." p. 42

In oil and gas the reality of this environment is what Genesys provides. The joint operating committee as the key social and organizational construct is the only logical choice. With the legal, financial, operational decision making and cultural influences reflected within oil and gas operations over the past 100 years, how could their be a more effective means in which to define and build software to support the producer.

Technorati Tags: Genesys, Hagel&Brown, Innovation, Energy

Follow on article from Fast Company.

The title of this entry will take you to an article from Fast Company. The article entitled "Team Doctors Report to ER" asks if the focus on teams is misguided or appropriate in certain situations. In light of yesterdays article "The Social Aspect of Software" I think it has some very valuable insight.

Technorati Tags: Genesys, Social-Context, Innovation,

The social aspect of software.

Ross Mayfield writes one of the more popular blog's and also comments on the "many to many" blog site. He is the CEO of social text, a wiki platform that I am reviewing as a possible addition to this blog. I recommend visiting his websites as the commentary is of a high quality and he speaks with authority on the topic of social software.

Mayfield's July 3 posting "Markets are Social" provides a link to an excellent research article called "How not to build an online market: the sociology of market microstructure." this is a research article that was written by Peter Kollock of UCLA and E. Russel Braziel of Bentek Energy. This research reflects on the B2B exchanges that were the rage in the .com boom days and provides an excellent analysis of the social aspect of markets.

In the article the success of the propane B2B exchange in Texas is contrasted by its lack of market acceptance in the smaller California market. The information is invaluable, I think. I want to add a related matter before I discuss the implication and affects in oil and gas. Implications that are directly related to these entries and as it applies to the Genesys software developments.

I want to introduce another comment from another blog Professor Andrew McAfee has also written an article that is closely related to Mayfield's. Entitled "Raising the least common denominator" McAfee notes from a comment that there is a risk that the effect of too great of participation could erode the quality of the business decisions. If everyone has a say then the collective wisdom may be reduced to the least common denominator. A concern that these social markets have and one that I think can and should be addressed here.

McAfee notes in essence that the broader participation is already evident in many things that we do these days. Google searches provide the entire world of information, yet we generally are able to discern the right provider of what we are looking for. The technology is more a tool of the users and as a result the users decide what is satisfactory.

The UCLA research paper describes the success that the propane exchange experienced in Texas and also shows why the same software failed in California. Two completely separate markets with Texas being sizeably larger due to the international flavor of the operations. The Texas market was large enough that the software did not impede the communication that the market participants wanted. The size of the market enabled everyone and anyone to conduct their business as they needed. With ample buyers and sellers in the market, it was able to operate just as a commodity market should with a high level of anonymity.

In California the market only had a few small players. Their understanding of each other made the transactions transparent and everyone could essentially discern the buyer and seller behind each transaction. Here is where the software failed as it didn't capture the personal relationships that the buyers and sellers had. Going on to state that employees of the various companies were more like employees of the market as opposed to the firm. And it was their job and their benefit to help and get along with the other players. In essence creating a market of favors that someone would do for someone else when and where they were needed. These personal attributes were best dealt with over the phone and the software was unused, unlike the Texas marketplace where the software was a success.

Mayfield's posting notes in "Markets are Social" that most markets fall within the California category where the generic manila transaction based software was of no value. The social aspect circumvented the California market and the players created there own "favor" market.

How do I see these "social" aspects playing out in Genesys' software. I think clearly the two articles define exactly the role and nature that people will have in using this software. What I see happening is that the people that you do business with now would not change fundamentally other then providing access to greater numbers of partners and participants.

The decisions remain with the people that are involved and the personal face is implied in the software through codification of the agreements and understandings that the partners have. The way that I see things happening is the people will be able to rely on the system to document, facilitate communications, and process transactions based on these personal or social attributes. In essence sharing a social environment that is noted in the UCLA paper and captured in the collaborative tools that are essential features of this software. Whether they are blogs, wiki's, email or instant messaging, the commercial components and transactions will be handled with these communications as a result of the communications.

For example, if I agree that we will drill a well at your recommended location, the systems would record these transactions and report them as a basis of the fall out from the communication. Essentially eliminating the capture and processing of the data as separate, instead it will be implied and processed as it is agreed to.

I foresee these transactions being a critical part of the communications that are part of the joint operating committee. The participants in the industry will feel more of a belonging to the partners reflected at the committee level as opposed to the investor that they work for. The joint operating committee has for over 50 years on a global basis operated in that fashion. It is only recently that the bureaucracies have been preoccupied with accountability requirements and are essentially disregarding the tools and value of the joint operating committee.

Given that the focus will be on the property that is jointly owned and operated, this will allow these social aspects to flourish. The understanding and speed that the communications and transactions can move will be directly dependent on the capabilities of the collective ownership group and participants. The accountability will fall out of these processes as opposed to driving them, as they do so poorly today.

Technorati Tags: Genesys, Social-Context, Innovation, Joint-Operating-Committee

Hagel & Brown, Pull models, Part l

John Seely Brown and John Hagel lll have written another excellent paper entitled "From Push to Pull, Emerging Models for Mobilizing Resources." (October 2005) These two researchers continue to impress me with their leadership capability in this new technology frontier. As I have stated here before, they have been pushing these themes now for over 5 years that I am aware of and continue to be the leading edge thinkers.

The final paragraph of the introduction captures much of what I believe and write about in this blog.

"By mastering the techniques required to make this new model work, companies will be well positioned to create substantial value. Those who adhere rigidly to the old model will likely destroy significant value." Hagel & Brown p.4

Contrasting the efforts of Petro Canada in this blog is designed to provide a real life example of what this blog is attempting to solve. If the "pull" model of innovation and creativity were operational in the oil and gas industry, this commentary would have achieved its objective. However, there is ample resistance to these changes. Many vested interests have aligned against these ideas and Petro Canada to me provides the greatest contrast to what this blog is not proposing. If by reviewing this Hagel and Brown document, we can gain additional insight from these two top notch researchers it will be well worth the effort.

Forces that are driving the search for alternative mobilization models, Hagel and Brown identify 5 forces that undermine the push model.

• Increasing uncertainty.

Push models require stable environments. "In today's environment it is harder to deploy resources in anticipation of demand." p.14 Oil and gas producers seem to be unable to agree on why the high energy prices persist. I believe they are a fundamental reallocation of the financial resources to encourage and reward innovation. The companies themselves seem to believe they are a temporary aberration.

• Growing abundance.

With bigger markets, involving more competitors and shorter product cycles. China and India have joined the Former Soviet Union and eastern block countries in consumer based economies. The production from these areas is substantial and the markets are immense. All of these markets will demand greater volumes of energy.

• Intensifying competition.

Outsourcing of secondary tasks like accounting. Push models are overwhelmed "by extended business processes." p.17 The authors are essentially noting the interdependent nature of the supply chains are growing longer and more diverse. I fundamentally believe that the joint operating committee configured with the proper software is the best way for the industry to deal with these "extended business processes". The complexity of the supply chain, the diversity of the offerings leads to greater opportunities for innovation.

• Growing power of customers.

Hagel & Brown cite iTunes and other applications that are effectively disintermediating large portions of distribution channels. Due to the oil and gas industry being capital intensive I don't see the risk of disintermediation, however, the efficiencies that can be had with better systems is something that the industry needs to consider today.

• Greater emphasis on learning and improvisation.

Training is replaced by coaching and apprenticeship. The retirement of the oil and gas industry veterans will need to occur after their tacit knowledge is captured.

Pull Platforms.

I believe it is a testament to both Sun Microsystems and Dr. James Gosling that so much effort and time has gone into providing Java with superior exception handling capabilities. It is not by accident that pull platforms are identified by Hagel and Brown as heavily relying on exceptions to the standards.

"Pull platforms are designed from the outset to handle exceptions, while push programs treat exceptions as indications of failure." p. 22

and then go on to say;

"Because of loose coupling of modular design, pull platforms can accommodate a much larger number of diverse participants. The more participants, the more valuable the platform becomes."

Although this may currently run against the more secretive culture of the oil and gas industry. The demands for energy are now insatiable and remove the competitive nature of the industry. This competitiveness is, I think, going to be replaced by coopetition.

Pull platforms have the following characteristics which work to encourage creation and use.

• Find

All the necessary resources are available at the critical time they are needed. The authors note WSDL (Web Service Description Language) an XML description of a resource. Just as I have noted the value in XML tags here before, WSDL provides an automated manner of discovering new resources.

• Connect

With other participants of resources as required through elaborate networks. The technologies that are available today are designed to provide greater participation. Participation with like minded groups that are able to identify and resolve issues in the oil and gas industry.

• Innovation

Provide a more flexible environment to innovate with the resources made available to the producers.

• Reflection

Recombine and improvise with much more rapid feedback regarding their impact.

I will cut the conversation at this point and pick up the rest of this document in another post starting with "Exploring the layers of pull platforms."

Technorati Tags: Genesys, Hagel&Brown, Innovation, Energy

IPv6 is available today!

That's right today. A cornerstone of the Genesys technical vision, IPv6 can be implemented now. The title of this post will take you to "Command Information" a web site that is designed to "leverage the change" to IPv6. This is significant news to this blog's developments in that there is now no technology that is not available today. The market for technology is moving so fast now that these software developments are possible with today's commercial technologies. Please click on the IPv6 technorati tag below to aggregate the posts I have written on this subject.

According to this website (downloading the two .pdf's is very valuable) President George W. Bush in his state of the union address on January 26, 2006 launched the American Competitiveness Initiative. Within this initiative it was noted that the majority of the east Asian countries have already implemented IPv6 in their network backbones. That for America to compete requires the rapid implementation of IPv6 in their networks.

"This paper emphasizes that American organizations must adopt IPv6 today." Describing what IPv6 provides as accommodating more devices, faster speeds, greater mobility, enhanced connectivity, integrated security, enforceable privacy and easier management. IPv4 provides 4.3 billion unique addresses, IPv6 provides 3.4 trillion, trillion, trillion, trillion (340 undecillion) unique addresses.

The .pdf's also provide an understanding of the key impact areas such as:

• Mobility. Maintaining constant fixed point (static IP address) no matter where you are or move to.
• Security from better architecture and limited ability for viruses.
• Real time / peer to peer, or as I call it "the elimination of the client server model".
• Providing a faster broadband and less costs by removing the need for NAT boxes. (Network Address Translation).

IPv6 is available in operating systems from Apple, Microsoft, CISCO, HP and Sun. Your ISP will be linking to root servers this summer. The good news is that the entire IPv6 infrastructure is available today. Genesys only needs to purchase Internet service from a tier 1 telecom provider in order to begin developments and operational use of IPv6 within oil and gas.

The author of this .pdf refers to a recent government report that states the move to IPv6 will cost $1 billion per year for the next 25 years. The returns will be over $10 billion / year in savings. The costs are mostly bourne by software developers, such as us in reprogramming to use the enhanced feature and capabilities.

Is IPv6 big? Bill Gates thinks so. He is quoted in the article that "Enterprise Applications will be the "Killer Application" that makes IPv6 necessary."

Technorati Tags: Genesys, Development, IPv6, Technical-Vision

June Business Report

Marketing

Petro Canada continues to provide ample material for analysis and comment, and we are anxiously awaiting the companies second quarter results. The results of this marketing are beginning to provide the exposure that we seek, particularly locally.

In the Technorati service we are still jumping around a fair amount, however this last month we have seen our ranking down to the low 500,000's. Not bad for a six month blog, and considering the total number of ranked blogs has jumped to almost 42 million.

Content

We set out to see what kind of pace we can attain in terms of the frequency of blog postings. With the stated May objective of writing one article per day, I am now putting this in place for the long term. The discipline to write one story per day is a rather torrid pace for one individual. But it has an indirect effect of increasing and focusing the quality and value of the entire process. Therefore I want to try and establish a new guideline for July, that being of 8 posts per week, and, one per day as new minimums in posting.

My Favorite entries.
My favorite entries for the past month are:

• The completion of the summary series on partnership accounting.
• The completion of the summary of Genesys' technical vision.
• The ongoing series on Petro Canada
• Is the joint operating committee revolutionary

Technical Architecture

No changes to the overall technical architecture were made in June 2006. GlassFish continues to soar in terms of its acceptance and value to the community. Discussion with BEA Systems were brief and uneventful. The cut off point between GlassFish and a business oriented functionality is unanswered at this point. The more I research this area, and the more we define the unique areas of using the joint operating committee, the more I believe that we may be best off developing these ourselves.

Budget

Revenue to the end of June: $0.00

July 1, 2006 budget items. (All costs are in U.S. dollars and include the 33% premium for the development copyright fee.)

1. Project management and development = $300,000
2. Sun Grid The first thing we need is a home for the code. The grid provides everything we need in this instance, and the Grid that I selected was Sun's. At $1 per processor hour, a very affordable way to secure the resources we need. I think that our first years requirements would be amply satisfied with 10,000 hours of processing for the remainder of 2006 calendar year. Total requirement = $13,300
3. Ingres Open Source database and part time DBA, Total requirements = $57,000, Collabnet, I would like to have a generous budget for this critical tool. Provides the code management, community process, project and issue management. Budget includes tools, appropriate setup and consulting services. Total requirements = $34,000
4. General and Administrative, first 6 months of operation Total requirements = $60,000
5. Membership in W3C Total requirements = $9,000
6. Total Capital and Operating budget, 2006... $484,000

Notes

• Sponsors, producers, and user contributions and donations are accepted.
• Please recall that this community is and will be supported by the producers. Based on an annual $ assessment per barrel of oil. For 2006 the assessment was fixed at $1 per boe per day per year.
• A company such as Encana in Canada would therefore be expected to support the community to the tune of $700,000 for the 2006 calendar year.
• These Monthly Business Report budgets are being proposed on a pay as you go basis for 2006 to support the community and ensure the community develops in the manner that is expected.
• Your donations are greatly appreciated, no donations mean no development work is being done.

Technorati Tags: Business-Report, Genesys

Genesys' definition of success.

The project management book that I am reviewing and commented on earlier stated a project needs a definition of success. This is my definition of success for this project, please feel free to comment. Also recall that the definition of success can and will change over the course of the project life.

"Revolutionize the managerial and administrative performance of the innovative oil and gas firm. Through active participation of the future user's of these systems develop a global "Enterprise 2.0" software application. An application built explicitly to identify, support and unleash the potential of the joint operating committee. The natural form of organization of all producers."

I'll post this as the header of the entire blog so that it is available and can easily be referred to. This will also make any changes more noticeable.

Revolutionary? Yes based on the criteria that I noted here earlier this week and in consideration of this other point.

"Doubt is the father of innovation". Galileo

Technorati Tags: Genesys, Success, Innovation, Energy

A vigorous debate about alternative energy.

MIT Video has a "soap box" with Professor Donald Sadoway about the sources of alternative energy. The video discusses the majority of the alternatives that are "believed" to be available. And Dr. Sadoway dispatches some rather brutal common sense as to the viability of these alternatives.

The take away for me was the efficiency and ease of use of the internal combustion engine. Alternatives are not that easy, and they are certainly not within the scope of anything that is safe or affordable. Dr. Sadoway notes the following regarding some of the alternatives.

It was 1839 when William Grove invented the Hydrogen fuel cell. Today the costs and possibilities of this promising energy source are further then ever from being realized. I highly recommend watching the video by clicking on the title of this entry. It is a complex and difficult process that is best explained by Dr. Sadoway.

Batteries have experienced significant development over the last two decades. Fueling the laptop and cell phones to their prominence today. To power a vehicle however becomes rather costly. To travel 100 km would cost the consumer approximately $1 million in state of the art lithium ion batteries.

Dr. Sadoway responds to a number of questions from the audience, one being the viability of nano technology capacitors. These seemed promising yet many years away. Brief mention of Emery Lovins use of switchgrass and book "The end of the oil game" are, I can assure you, not cost effective at this point. To burn more energy then you produce seems somewhat counter productive to me. And that is what is required for switchgrass and corn based ethanol's. Just because of the large corn subsidies do these alternatives even get mentioned.

So what is the answer to the use of hydrocarbon based life style? I think there are three very good answers that promise the most value in the short to mid term. They are the increase in horsepower from the average internal combustion engine. To double the horsepower per gallon would reduce the size requirement of the engine and reduce the demand for energy. If each molecule of gas contains E=MC2 of energy, we are a long way from realizing the full value of each drop of gasoline. The second alternative is the Segway, and the third is the funding of this software to enable more innovation in the supply side.

In Formula One, the engines are as powerful as they were in the 1980's when they were propelled with 1.5 liter turbo specifications. Gobbling up gas at a phenomenal rate these engines were in race configuration capable of around 1,000 horse power. Today the use of normally aspirated 2.4 liter engineers generate almost 700 horsepower with spec gasoline and use less then 160 liters per race. This is directly comparable to the 3.5 liter engineers that were generating 500 - 600 horse power with exotic fuels at the end of the turbo era in 1989. In other words we have probably doubled the horsepower per drop of gas in the past 2 decades. How much more can be achieved in this area?

The Segway is faster then most cars in rush hour traffic. I'll leave Dean Kamen to explain the efficiencies of this transportation device that he invented on MIT video here. I think this type of rational thinking needs to be adopted. The prices at the pumps have done nothing to defer the desire for energy. The world is consuming 1.5 million additional barrels per day since this time last year. What price is necessary to stop the increase and reduce the demand? Obviously much higher. If the Segway can get 20 km on $0.50 of electricity, and get you to work faster, there is value in that.

Technorati Tags: Genesys, Alternatives, Innovation, Energy

Petro Canada

Petro Canada has revised it's offer for Canada Southern Petroleum Ltd. to $165 million from $113 million. Does this mean that they are overpaying for this asset? Recall what they said about Canada Southern Petroleum's expectation of value, that it was too high.

Petro Canada's increased offer of 146% may be the result of the humiliation in knowing that their previous offer received only 61,587 tendered shares. Thankfully they did not call themselves explorers in the press release.

Technorati Tags: Genesys, Petro-Canada