McKinsey, Measuring the Nets Growth Dividend

It’s the weekend which means its time to review some of our McKinsey backlog. Today we have the executive summary of “Internet Matters: The Net’s Sweeping Impact On Growth, Jobs and Prosperity” from the McKinsey Global Institute.

I want to highlight three quotes from the executive summary as they pertain specifically to the work that we are doing here at People, Ideas & Objects. The first quote states what should be obvious to most people by now;

Our research shows that more than 75% of the value added created by the Internet is in traditional industries. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet. 

Applying technology to the oil and gas industry is to benefit those that work within the industry and the industry itself. To a large extent, what the Draft Specification provides is necessary functionality and process management for the industry to innovate and meet the markets demands for energy. Its not a nice to have but a necessity.

A few days ago we discussed Professor Paul Romer’s New Growth Theory and the three themes of People, Ideas & Things. In this next quotation McKinsey Global Institute discusses endogenous economic growth’s impact on per capita GDP.

The maturity of the Internet correlates with rising living standards.

Leveraging endogenous economic growth theory, we have been able to show that Internet maturity correlates with growth in per capita GDP. Using the results of the correlation, a simulation shows that an increase in Internet maturity similar to the one experienced in mature  countries over the past 15 years creates an increase in real GDP per capita of $500 on average during this period. It took the Industrial Revolution of the 19th century 50 years to achieve the same results. This shows both the magnitude of the positive impact of the Web at all levels of society and the speed at which it delivers benefits.  

If we are currently seeing these dramatic effects on per capita GDP, then the Information Revolution is well entrenched and the benefits to society are beginning to develop. As time passes these benefits will multiply and the values realized will grow. Now is the time to become active in these areas and start at what can only be described as the beginning of the commercialization of the Information Revolution.

This last quotation from McKinsey’s report advises where business leaders should put the Internet in terms of their strategic agenda. The Information and Communication Technologies are too powerful to leave outside of the tool kit of any CEO or business leader. Not only are they are powerful ways in which to lever competitive advantages, they leave areas of weakness exposed to competitors who exploit these technologies.

All business leaders, not just e-CEO’s, should put the Internet at the top of their strategic agenda.

Business leaders must optimize the benefits gleaned from the Internet through innovation and change. It is no longer a choice, given that many businesses face competitors who capitalize on the power of the Internet to Innovate business models. Business leaders should play a significant role in the spread of the Internet and systemically review how the Internet allows them to innovate more aggressively and even reinvent their business models to boost growth, performance, and productivity. 

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

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

McKinsey, Preparing Your Organization For Growth

With the increasing demands in the oil and gas industry of more engineering and earth science effort in each barrel of oil produced. And the marketplaces demands for “more” makes the challenges faced by the industry far more complex then what has been faced in the past. Just standing still requires the producer to attain more capabilities. How does a producer prepare for growth?

In this McKinsey article the authors discuss three “pain points” experienced by three organizations. Although none of the three organizations mentioned are in the oil and gas industry, it is important to think ahead as to what we will face in terms of how the industry will need to change and grow.

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

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

The Preliminary Specification Part II

Yesterday in the first part of our discussion on the output of the Preliminary Specification. We talked about how technology was not an influence in the Preliminary Specification. And how producers, the service industries, society and individuals were all included in having their needs met by the software developments at People, Ideas & Objects. Today in Part II of our Preliminary Specification Output summary, we want to talk about the geographical scope of the application, and how that will be represented in the output of the application.

As part of the output of the Preliminary Specification the community will determine what the geographical scope of the People, Ideas & Objects application modules will include. This will involve determining which participating producers geographic needs are be to met in terms of areas of operations; U.S., Canada, Britain, etc. Regulations that govern those areas; royalty requirements, tax regulations, currency, security exchanges etc. Service industry providers etc. Etc;

In each instance a determination of the subscribing producers requirements of where their operations reside will need to be assessed. Next a determination of what the geographical scope requirements are for operations in that region will need to be populated within the Preliminary Specification. A determination of the cost benefit of developing software for that region (see the recent blog post “Budgets and Canadians” for more information) needs to be made. Finally decisions as to what the final geographic scope of the initial Preliminary Specification will be and how the budgets for any anomalies will be resolved.

In many ways this sounds like what current systems requirements do in terms of defining what needs to be done. As we progress through the Preliminary Specifications Output series we’ll see that the output will involve many things for People, Ideas & Objects that are different. These geographic requirements are capturing many of the compliance and statutory requirements of the system, but as we progress through this output summary we’ll see how this systems development differs.

In many cases the regulatory and compliance agencies that require producers to report to them have established advanced technical guidelines for their reporting. In many cases this has included technical frameworks, application programming interfaces (API’s), business rules and in the case of the Securities and Exchange Commission (SEC) Extensible Business Reporting Language (XBRL) an entire XML syntax.

What will need to be done by the community is to take these requirements and tie them into the various modules that exist in the Draft Specification. The SEC requirements would fall under the Financial Marketplace and Compliance & Governance Modules, and other areas such as Security & Access Control. The royalty frameworks would fall under the Partnership Accounting and Petroleum Lease Marketplace Modules. We will get into more specific detail of how the details of this output is specified in later posts in the Preliminary Specifications output summary. For the purposes of geographic scope I think we have the picture in that there may be ten’s or hundreds of lessor regimes to comply with in the People, Ideas & Objects systems geographical scope. As there may also be several securities regulators governing operations for producers located in geographical regions within the scope of the People, Ideas & Objects Preliminary Specification.

On Monday we’ll pick up with this discussion with the related topic of how the service industries are not only a part of the geographical scope, but also a critical part of the innovation that occurs in the oil and gas industry.

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

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

The Preliminary Specification Part I

For the next few months I want to talk about the output that the community will produce for the Preliminary Specification. Although I have hesitated in the past in making any comment about what the output would consist of, it may be appropriate at this time to offer some suggestions just to get the ball rolling. I don’t wish to limit in any way what the scope of the output would look like, only to offer a few suggestions as to how I might see the output of the Preliminary Specification. These posts will be able to be aggregated under the PS-Output label of this blog.

In general the first requirement of the Preliminary Specification is that it will have no consideration of any technology. It is all about the oil and gas industry and the people that will be using the application. Consideration of the technology is not valid in this project, technology will accommodate the needs of the users when the time comes. This means that the General Ledger, the Relational Database Management System, Java etc are not pertinent to the considerations of what is required in the Preliminary Specification. (Please note however that we have selected this Oracle Stack as the base of Detailed Specification.)

Secondly we are looking at the global scope of the energy industry. Or as been stated elsewhere, the producers, services industries, society and individuals. That’s maybe a bit broad and could use a bit more detail. What is intended to be included in these classification is as follows.

Producers

• Start-ups
• Junior
• Independents
• Integrated Oil Companies
• National Oil Companies

Services Industries

• Field Services 
• Research
• Development
• Operations
• Engineering
• Project Management

Societal

• Royalty
• SEC
• Tax
• Compliance
• Environmental

Individual

• Employment
• Entrepreneurial

As we can see the functionality and process management of the application modules will include organizations and individuals outside of the producer firm. Transactions, interactions and collaborations occur outside of the producer and these are being captured by the People, Ideas & Objects application and therefore will be used within the various firms, agencies and industries noted above.

The output of the Preliminary Specification will therefore include the needs of these other organizations and people in addition to the producer firms. Their inclusion in this process is not limited to just managing transactions. A thorough review of the Research & Capabilities and Knowledge & Learning modules reflects the needs of the producer and service firms transaction management are not the only aspect that needs to be considered.

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

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

What's In a Name...

One of the fundamental underlying beliefs of People, Ideas & Objects is that for the oil and gas industry to increase its output requires that we re-organize. Adam Smith wrote in his book, The Wealth of Nations, that all economic growth was a result of the division of labor and specialization. Applying these principles have been the primary means for all economic growth since Smith wrote his book in 1776. That is to say that all economic growth has been the result of the reorganization of labor around enhanced divisions of labor and further specialization.

Professor Paul Romer of Stanford University and New York University is a proponent of what has come to be known as New Growth Theory. We have written about Romer on this blog many times before. In this Reason Magazine interview Romer talks about his People, Ideas and Things as the three underlying themes of new growth theory. I have taken these themes as the basis of our name People, Ideas & Objects and only transferred Objects for Things as we are Object based software developers.

(From Reason)

As one of the chief architects of "New Growth Theory," Paul Romer has had a massive and profound impact on modern economic thinking and policymaking. New Growth Theory shows that economic growth doesn't arise just from adding more labor to more capital, but from new and better ideas expressed as technological progress. Along the way, it transforms economics from a "dismal science" that describes a world of scarcity and diminishing returns into a discipline that reveals a path toward constant improvement and unlimited potential. Ideas, in Romer's formulation, really do have consequences. Big ones.

So what does all this mean. Simply new growth theory, and the reason it resonates here at People, Ideas & Objects is that these underlying concepts can multiply the output of industries.

(From Romer’s Paper Economic Growth)

Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding: possibilities do not merely add up; they multiply.

People, Ideas & Objects provides the oil and gas industry with a means to have people, their ideas and things to be used in new and innovative ways. By having the software, and most importantly a software development capability available to accommodate the changes made from any new ideas, the industry can realize its full potential. This is what Professor Romer is talking about in New Growth Theory and what is enabled here by the software and particularly the software development capability proposed by People, Ideas & Objects.

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

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

So Much For SLA's...

Building on yesterday’s post of how the Preliminary Specification is what the software development team will be building to. In today’s post we discuss the use of Service Level Agreements (SLA’s) in the People, Ideas & Objects community. Simply SLA’s will not be used by People, Ideas & Objects in determining software definitions.

It would seem counter productive to have the community established to produce the Preliminary Specification. With the producers, users, service industry and others being a critical part of that community. And then have some producers not participating in that community because they feel they have their needs contractually agreed to through an SLA with People, Ideas & Objects. SLA’s have been the traditional manner in which firms have managed their technological needs and they will probably see no reason to change this culture. However, there will be no SLA’s here to manage the software definitions.

By contractually defining the relationship between the producer firm and PI&O within an SLA. The producer would seek to manage the specific details of the SLA and claim that we are in technical default when our main page did not load within the 0.125 seconds or other such nonsense. This is the state of vendor relationships when SLA’s get in the way.

As we stated yesterday. Our developers will be developing software that meets the needs of the producers as defined in the Preliminary Specification. If the producers do not wish to participate in the Preliminary Specification that is their choice and therefore their needs will not be specifically met. However, if they are interested in having software that meets their needs, and are willing to actively participate to define their specific, detailed needs then the community is the place for them to be. You’ll have to give up your SLA’s, but maybe those agreements have had better days.

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

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

Developing to the Preliminary Specification

Through out the course of software developments, People, Ideas & Objects (PI&O) developers will be developing software to the Preliminary Specification. That may be another obvious comment but it may not be too obvious from the point of view that I want to stress in this blog post. The possibly not-so-obvious nature of the comment is that the community is responsible for the accuracy of the application. If there is an error in the software, it will naturally translate to an error in the Preliminary Specification. Therefore the community must ensure that the Preliminary Specification, they approve, is correct.

So what does this mean? The old systems adage garbage in, garbage out. So how do we ensure the quality of the Preliminary Specification? Here are just a few of the many reasons that PI&O’s approach is different.

Users
There has never been a user focused development like PI&O. Where the responsibility and authority for quality fall exclusively within the domain of the user community. Where the user community is comprised of the producers, service providers, society and individuals as vested interests in their software.

Eyeballs
The product of the community, the Preliminary Specification, will be available on a read only wiki to everyone. Ensuring that anyone and everyone in the industry can have input through the community.

Unconstrained approach
People, Ideas & Objects approach to development is unconstrained by the demands of existing software code. And is unconstrained by the installed base of any software currently in use. It is a clean slate approach that is oil and gas industry focused, based on what is needed.

Draft Specification
Guided by an overall vision of what is possible. The Draft Specification provides an understanding of what is possible when we use the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. Using this vision as the starting point of the community developments ensures that the Preliminary Specification will be all that it can be.

Proper Scope and Highly Engineered Solutions. 
Our budget accepts the realities of developing a solution with these aspirations. We have also provided an overall value-proposition to the producer firms that participate with PI&O. One in which producers receive highly engineered software solutions at very low costs. 

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

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

McKinsey on Big Data

In this paper McKinsey are writing about what they call “Big Data” which they define as “datasets whose size is beyond the ability of typical database software tools to capture, store and analyse.” Although their recommendations are limited to this definition I find that they apply to the growth in data in general. In particular McKinsey’s recommendations may be applicable to the data sets that are in use in business and particularly the growth of data that may occur in the very near future. Specifically in oil and gas it is anticipated that the demand for data will continue to grow. People, Ideas & Objects have anticipated this growth and based our architecture on a Technical Vision that can accommodate that growth.

McKinsey’s “Big Data” recommendations are listed here. The full report is available here. It is a comprehensive report, however I do recommend reading at least the Executive Summary.

1. Data have swept into every industry and business function and are now an important factor of production.
2. Big Data creates value in several ways.
1. creating transparency
2. enabling experimentation to discover needs, expose variability, and improve performance.
3. segmenting populations to customize actions.
4. replacing / supporting human decision making with automated algorithms.
5. innovating new business models, products and services.
3. Use of Big Data will become a key basis of competition and growth for individual firms.
4. Use of Big Data will underpin new waves of productivity growth and consumer surplus. 
5. While the use of Big Data will matter across sectors, some sectors are poised for greater gains. 
6. There will be a shortage of talent necessary for organizations to take advantages of Big Data. 
7. Several issues will have to be addressed to capture the full potential of Big Data.

To deal with the associated issues of data People, Ideas & Objects Draft Specification provides two modules. The Analytics and Statistics Module which is looking at the producer firms data and Performance Evaluation Module which looks at the Joint Operating Committee data.

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

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

McKinsey, Google's Eric Schmidt

Its the weekend and that means McKinsey. This Saturday’s post provides a video of Google’s Executive Chairman Eric Schmidt talking on business culture, technology and social issues. I find that Eric Schmidt’s video presentations are as informative and valuable as those of Apple’s Steve Jobs. As such when either make presentations on any topic they are in the must view category. This McKinsey video doesn’t disappoint, enjoy.

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

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

Revisiting our Wish List

As part of our Phase Two proposal we published our “wish list” of who we would ideally like to have subscribe to our developments. These firms and national oil companies provide the majority share of oil and gas production in the world. And as such, should we be successful in securing these producers we would have a large subscription base in which to draw our funding from. Again this would be the ideal situation for People, Ideas & Objects (PI&O).

One of the key deliverables of the Preliminary Specification is the geographic scope of the application. If we had the “wish list” as our subscribing base, then this geographic scope would replicate the geographic area of the subscribing producers. Its as simple and obvious as that, however something that maybe needs to be stated explicitly.

Once our subscribing producers have set the scope of the PI&O application during the Preliminary Specification; going back and adjusting the scope in the Detailed and Final Specification will be difficult, expensive and time consuming. In fact changing the scope of the application after the Preliminary Specification has been set is something that should not be done. Therefore the next opportunity for the community to adjust the scope of the application would be when the Final Specification is complete, and we begin the Preliminary Specification for the next iteration of development. In other words those that miss this opportunity to participate in defining the scope of the Preliminary Specification in the first iteration of development, may still participate in the community, however will have to wait to have their unique needs met in subsequent iterations of development.

Waiting has its costs, as has been stated here before, the additional costs of the late fees, and possibly the most costly aspect of missing out on the initial scope of the Preliminary Specification might be that of an outsider looking in. Some might argue that the scope of our wish list is too ambitious. An alternative scenario that I see forming is that the Preliminary Specifications scope is formed around the America’s. This being more controllable from the point of view of what is possible and probable. We have based our organization around the Houston area to deal with the determination of any scope of the application. Given time the wish list may become possible and probable, and maybe the reality of such an application won’t seem so impossible.

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

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