The Preliminary Specification Part CCCXX (AV Part XVI)
The Accounting Voucher presents some difficult conceptual problems that I think I have begun to identify. The most difficult is the concept of designing transactions and what purpose it fills in the Preliminary Specification. This post will be a summary of designing transactions that will hopefully clarify what it is that we are trying to accomplish in the Accounting Voucher.
Essentially we have discussed the detailed information that the service industry providers will provide in the “Vendor / Supplier Contact Database”. This will include general contact information that everyone is familiar with however there are three important distinctions regarding this information. One is it’s maintained by the vendor / supplier themselves. Two it is located in the People, Ideas & Objects Preliminary Specification. And three it contains details which includes their banking information, their field staff and representatives and their calendars, which are able to be committed to projects of specific producers. Producers understand that having the field staff committed to their projects reflects quality, and in turn reflects additional costs for that commitment.
Now this situation provides the opportunity to define some service industry systems integration that would be complementary to the Accounting Voucher of the People, Ideas & Objects application. The service industry provider could have their people populated into the Work Order system that we discussed earlier. Or, the Purchase Order system could also be used as a means of direct communication between the producers represented in the Joint Operating Committee in the Accounting Voucher, and the service industry providers. As well as other interfaces.
Therefore, according to the research of Professor Richard Langlois the transaction costs will be an immaterial item in comparison between suppliers and producers or Joint Operating Committees. That is to say the cost of processing these transactions will be the same in all instances. And People, Ideas & Objects have asserted that they will be immaterial due to the application of Information Technologies. However the differentiating costs between suppliers and producers and JOC’s will be the costs of coordinating the market. Making the Accounting Voucher module a critical tool in the ability to offer the producer firm and JOC the most profitable means of oil and gas operations.
... while transaction cost consideration undoubtedly explain why firms come into existence, once most production is carried out within firms and most transactions are firm-firm transactions and not factor-factor transactions, the level of transaction costs will be greatly reduced and the dominant factor determining the institutional structure of production will in general no longer be transaction costs but the relative costs of different firms in organizing particular activities. p 19
and
Here again, I think the problem is one of conceptual imprecision. It is perfectly common, and often unobjectionable, to contrast a market and an organization, that is, to contrast the institution called a market and the institution called an organization (such as, notably, a firm). But the opposite of “organization” in the abstract sense is not “market” but disorganization. More helpfully, the opposite of conscious organization is unplanned or spontaneous coordination. In this sense the market-organization spectrum (and similar spectra one could imagine) are arguably orthogonal to the planned-spontaneous spectrum. One could well wonder, as I have (Langlois 1995), whether large organizations do not in fact grow far more as the unplanned consequence of many individual decisions than as the result of the conscious planning of any individual or small group of individuals. And it is certainly the case that, as Alfred Marshall understood, both firms and markets “are structures for promoting the growth of knowledge, and both require conscious organization” (Loasby 1990, p. 120).
In this day and age, with such large distances, geographic, size, language and other, between vendors and producers leaving the coordination of the markets to “spontaneous order” is asking too much of human ingenuity. Particularly with the focus of the industry to a further division of labor and specialization, where the risk and reward of oil and gas operations are so great, market coordination or transaction design will be a critical and necessary task to be carried out. Each operation may be the result of more people being involved. Once again it is not from an operations point of view that we are attempting to influence the operation, it is from the business point of view. How will the transactions and business be captured in such a manner that the firm and Joint Operating Committee are incurring the lowest possible costs of the most efficient methods of these business transactions. That is what is intended when we talk about “transaction design” in the Accounting Voucher.
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 (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.
The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.