OCI Operations Management, Part II

 Oracle Supply Chain Management

As mentioned earlier, the underlying use of Oracle’s Joint Venture Management solution will form the basis of what we develop in the overall Preliminary Specification. Each module of the Preliminary Specification outlines significant elements of the Oracle Cloud ERP suite of applications. These elements provide the starting point for the work we’ll do for oil & gas. We are not recreating the wheel, only building upon it. And leveraging Oracle’s defined method of development architecture that uses their Oracle Cloud Fusion Applications and Fusion Middleware as the tools to enhance our additions and not through individual stand alone applications. We can accept this architecture as Intellectual Property is one of People, Ideas & Objects' three competitive advantages. Our proprietary content is published and protected. In the Operations Management module, we'll use Oracle Supply Chain Management as the primary base offering. In addition, we'll incorporate many other Oracle applications and features incorporated through connections with other modules in the Preliminary Specification. 

To understand Oracle Supply Chain Management offering, review the following YouTube videos. 

Oracle developed their cloud-based Supply Chain Management solution through the development and integration of their enterprise hardware manufacturing business purchased from Sun Microsystems. This development brings Supply Chain Management capability into Oracle Fusion Middleware and ERP Applications. These were and are the sources of Oracle Cloud ERP today. One of the unique characteristics of Oracle’s hardware manufacturing process is that each order is "Configure to Order (CTO)" and delivery is made to 156 countries. Approaching the development of their Supply Chain Management module in this manner is consistent with Oracle’s past methodologies. What is commonly referred to in the software development industry as “eating your own dog food,” or using software you develop yourself, Oracle Cloud ERP is used throughout Oracle’s organization. 

At People, Ideas & Objects our user community provides the most profitable means of oil & gas operations, everywhere and always. That is the motivation behind what we do. Can producer profits from a "real" perspective motivate our user community to keep their focus and commitment throughout the development, implementation, service and maintenance of the oil & gas industry? I believe they’ll only need to reflect back on this period. They'll understand that the disaster that is oil & gas, the service and tertiary industries, and what will become of the industry in the next decade is a result. This catastrophe is entirely attributable to producers' lack of "real" profitability. When producers create real wealth and prosperity. It demands that the greater oil & gas economic structure participates in that creation, its wealth and prosperity too. Contrast this to today where only producers, officers and directors are satisfied. Therefore it is reasonable to suggest that our user community is motivated. But there’s more. Our user community are the only people licensed to prepare derivative works to the Preliminary Specification software and services. They are the principles of the service provider organizations they own and operate. These organizations service and support producer firms with People, Ideas & Objects software. 

Innovation is one of our major initiatives and one of the seven Organizational Constructs of the Preliminary Specification. Innovation needs to be structured and developed within an organization before its realization. Therefore much of the design and development of People, Ideas, & Objects is focused on the innovation demands of an organization for both the producer and the greater oil & gas industry. Dynamic, innovative, accountable and profitable producers will approach the dichotomy of their profitability vs affordable, abundant and reliable energy they'll innovatively provide to the consumer. 

It is here in innovativeness that Oracle presents a previously unrealized and otherwise unavailable benefit of Oracle Cloud ERP. Oracle Cloud ERP quarterly upgrade cycle is a feature. A feature in which People, Ideas & Objects have architected the Preliminary Specification and oil & gas producers will fully realize. Innovation is iteration and user involvement working hand in hand to progress forward. 

In Sources, Procedures & Macroeconomic Effects of Innovation by Professor Giovanni Dosi, we learned.

… the conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulations, tax codes, patent and trademark laws and public procurement.) p. 1121.

As Dosi notes, enhanced financial facilities provide real value for producers in the 21st century. Iteration on the integrated and aligned business, operations and technical ends of the producer and Joint Operating Committee is where the Operations Management module seeks to bring the disparate elements of the Preliminary Specification together for active management and control.

This next point ties into our earlier quote from Safra Catz regarding now is the time to be bold. The Operations Management module is an innovative type of application being envisioned that is a necessity when the Internet of Things (IoT) enables and begins comprehensive automation. What People, Ideas & Objects traditionally call the ability to monitor and control devices. We now prefer to use Oracle’s classifications of “Pull of Data” and “Push of Instruction.” This is a world of exponential data and complexity, risk and uncertainty with unimaginable rewards and opportunities. As the slide title states it is a journey not a destination. The journey begins with Operations Management and continues with the assistance of People, Ideas & Objects, our user community and their service provider organizations and Oracle established as a permanent ERP software development and integration capacity and capability within the oil & gas and tertiary industries.

The nature of unanticipated and foreseeable catastrophes is documented on the next slide. To the far right is the anticipated frequency of these and the time necessary to prepare for the catastrophic event. I’m unable to categorize the oil & gas industry into any of these situations. A four decade run of destruction, fueled by investor capital sourced through specious means and no action reflects to me that this industry has been built on the basis of catastrophes (boom / bust cycles) where the culture has accepted and accommodated a “hair on fire” situation as normal. However, when we review the financial statements of producers. A random sample of 10 or more producers. Can anyone point out the heroes and which ones are the zero’s? Over the course of a decade try to determine from these financial statements what the state of the industry is in? Was it a boom or bust and did the company win or lose? 

People, Ideas & Objects have painted a radically different vision of how administrative and accounting processes are managed throughout North American oil & gas. Turning overhead cost structures from fixed to variable based on profitable production. Enabling producers to shut-in any unprofitable production and reap substantial value from our software and service provider organizations. 

The question becomes how is this opportunity realized? Will a strategy of “muddle through” get us there? Or do these need to be undertaken purposefully? In the way that the fourteen modules of the Preliminary Specification establish and enhance Oracle Cloud ERP.

People, Ideas & Objects acknowledges the broader Oracle community of developers and users in the Oracle Cloud ERP, Oracle Autonomous Database and Java environments. This is a resource pool we can draw upon during our development, implementation and operations. This will provide further value and performance for North American oil & gas producers. We hope to contribute to this community through the challenges we face and need to resolve during this process. And the overall task of seeing an industry rebuild itself on performance and profitability.

Enabling Technologies

Internet of Things (IOT)

There are three inherent characteristics of the IoT that mark the changes in “what and how” the Internet is operated. The first is the ability to acquire unique individual addresses through IPv6, the next Internet iteration. Enabling an addressable range of 2 to the power of 128. Which is a sizable volume higher than the current IPv4 addressing capability of 2 to the power of 32. As a result, each device on the Internet can have its own unique identifiable location. Therefore it is identifiable and accessed by that one specific device in that one location in that one factory in that country… There are current workarounds being offered where IPv4 masks IPv6 addressing which is adequate for some purposes, however for IoT it is inadequate. IPv4 addressing is quickly running out of unique addressing and the cost to acquire an address reflects its rarity. The second and third enabling capabilities of IoT are the capacity for monitoring, or as Oracle describes “Pull of Data” and control, or Oracle’s term of “Push of Instruction” those devices that are connected and easily identified, and hence only that device, through their unique addressing.

The Internet has changed business in remarkable ways that today appear quite advanced from the prehistoric age of only a decade ago. Yet the corporate implementation of Information Technology is poor as the maturation of the underlying technologies have come of age. What appear to be dramatic developments and improvements have little effect on organizations' productivity and performance. Issues and opportunities that existed then remain unresolved and unrealized today. Information Technology has never been realized and business has false expectations. Having the latest version of the Windows operating system will not increase productivity. It is the application of Information Technology through the business model, the business strategy and making it work for us beyond the install script. This is where the value proposition lies. IT is not the solution but a tool to prepare the business solution.

In saying that, this next phase of the Internet will be difficult to ignore in my opinion. The Internet of Things (IoT) is one of three underlying technologies that provide oil & gas with People, Ideas & Objects Operations Management module opportunities. With the disparate nature of geographical regions and locations, process-based manufacturing demands a highly sophisticated infrastructure. This complexity and control has been well managed to this point by the producer firms. Questioning its continued management is reasonable when the service industry's capacities and capabilities have suffered such severe destruction. The recent strategy of the producers to focus on clean energy is disconcerting and reflects the uncaring nature of its officers and directors in approaching the oil & gas business. 

Applying IoT to the business model of the Preliminary Specification where the Joint Operating Committee is the key organizational construct. One of seven distinct Organizational Constructs that form the oil & gas industry culture we're building. It’s the natural consequence of a reasonable approach due to the value gained. Automation, specialization and the division of labor would need to be redefined by optimizing these three enabling technologies in the Operations Management module. A process that we’ve proposed and applied throughout our development. It would be redundant to undertake the process of developing the Preliminary Specification only to immediately return upon its completion to implement the IoT opportunity. Therefore it is within our budget that we are undertaking the Operations Management module at the discretion of our user communities and during our initial development.

Communications

Starlink

Technology has recently become available to enable this Operations Management Module. Elon Musk’s Starlink is a product launched by SpaceX. Although operational with 4,487 satellites, (7/2023) it has not fully deployed its planned 42,000 satellites. What we are witnessing is the deployment of new technology that enables the Internet to be available anywhere within the domain of our proposed North American marketplace. The speed at which this technology is deployed is remarkable.

Currently there are a variety of ways to connect to the Internet. With North America being the domain of People, Ideas & Objects, we are addressing a large geographical area. Producers will have remote operations and may have a variety of methods to connect to the Internet at some of their operations. None of these will be standard across the continent. With SpaceX, People, Ideas & Objects, will standardize the connectivity of all locations. In addition, we will enhance all producers' data and reporting capabilities through our Cloud Administration & Accounting for Oil & Gas. The advantages of doing so are substantial and they fall within the objectives of what we seek to achieve here in the Preliminary Specification. Although complex in its makeup, the Operations Management module is a contributor to the producer's automation, innovation and profitability.

Swarm

LOW COST GLOBAL DATA FOR IOT

Swarm provides low-bandwidth satellite connectivity for only $5/month using ultra-small satellites in low orbit. Swarm satellites cover every point on Earth, enabling IoT devices to affordably operate in any location.

In direct response to Starlink's high cost, SpaceX purchased a dedicated IoT network provider. The Swarm network is a configuration of 160 low orbit satellites. Although the bandwidth is lower than Starlink's, that is not an issue for the Internet of Things. Whether the need to capture small numbers of data variables on a real time basis throughout the day, or to gain the real advantage of IoT, which is the ability to “Pull of Data” and “Push of Instruction” devices. Network requirements are substantially less demanding than typical users' data requirements. No one will watch videos or browse the web on Swarm. The Swarm network is the means by which Starlink offers text-based cellular phone coverage in areas without it.

The cost of Swarm compared to Starlink is telling. Starlink is $2,500 for the equipment and $500 / month for the service. Swarm can bring these costs down by 96%. To have each Joint Operating Committee connected, no matter how remote, which is what I believe would be the requirement, would be far less costly to achieve a full implementation of IoT through SpaceX’ Swarm network. As an incidental cost, it would cost $100 for the hardware and $5 monthly for the service. What this purchase includes in terms of network configuration and IP addresses is unknown. 

As an example of the use of the Swarm network’s use in the Preliminary Specification and its application of IoT. People, Ideas & Objects have expanded the functions and process management of the Material Balance Report to the highly engineered document that it always should have been. The issue has always been that the value generated for one company is limited compared to the significant costs to engineer it appropriately. With our budget aggregation and distribution of the application across the industry, this value add is a critical feature of the Preliminary Specification. Information Technology has now matured to undertake a task of this nature. As originally written in 2012, the Material Balance Report used monthly production numbers. Now with IoT and the Swarm network the ability to capture daily production volumes and re-engineer the field data capture process away from SCADA would be attainable. This would not only be possible but an advantage. It’s not that daily production volumes are used for financial calculations today. They could be used in the Material Balance Report to calculate next month's revenue and royalty accruals. This is based on the reported daily volumes, on the known characteristics of production and the prices of those products. Increasing the accuracy of accrual with no man hours incurred in any aspect of the accrual process. 

The use and value of IoT, both Starlink and Swarm networks will be determined through our user communities' innovativeness and their interactions with the dynamic, innovative, accountable and profitable oil & gas producer firms. Any suggestion other than this obvious accounting accrual possibility limits the value of the IoT in terms of the Preliminary Specification. In terms of what the engineering possibilities are is certainly unknown to me. We can only assume that better information on a timely basis with remote Pull of Data and Push of Instruction is a benefit to that discipline. As a result, I am confident that there would be much more that our user community could generate in terms of value.

Joint Operating Committees subscribe to the Swarm network. The issue with defining the allocation of nodes to the Swarm network is the monthly demand for data. The network's maximum monthly use is limited to 600 kb, or .6 MB or 300 pages of text. Reflecting that only small packets of data are transported across the network. Whether that is Pull of Data or Push of Instruction, the IoT device, it is reasonable to assume that a small Joint Operating Committee would only demand one node and distribute the service to a number of addresses, whereas larger ones would need several to accommodate higher bandwidth requirements. Standardization and deployment of these technologies across the industry would create an infrastructure for innovation. When it becomes standard practice, a part of the business and available at reasonable costs through our user communities and service providers, the industry would be operational at a higher throughput capacity.

A proof of concept of the Swarm network, and an endorsement of its much lower cost model, is the fact that Swarm networks are currently deployed in oil & gas. 

Moving to the key Organizational Construct of the Joint Operating Committee we’ve made a fundamental change in recognizing and aligning administrative and accounting to the operational culture, Using these three enabling technologies, IoT, Swarm network, and Oracle, we foresee dramatic increases in data, processes, and the number of service industry firms that producers use and opportunities. Much the same as our user community service providers will leverage such value from their work.

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. 

OCI Operations Management, Part I

 Operations Management

I am pleased to present the 14th module of our Preliminary Specification. Operations Management should be seen as an entirely different module from the Preliminary Specification. Other modules enable producers to capture, analyze, and report on their data, gain insight from them, and make informed decisions. The Operations Management module enables producers to actively engage with their producer and Joint Operating Committee organizations. To conduct their operations based on the decisions they make, the strategies they employ, and the unique competitive advantages that come from their land & assets. As well as coordinating the markets' earth science and engineering capabilities. 

The Operations Management module is at the crossroads between two separate and distinct operations and corporate groups that have developed over the past decades in oil & gas. These two groups work at opposite ends of the producer firm where the corporate silo is interested in the SEC, regulatory and tax requirements. They have not fulfilled their role in providing valuable operations information on an overall producer basis or to each Joint Operating Committee. Operations and technical environments have sought to mitigate the lack of business knowledge, understanding and information passed into operations. This in many ways has created the broad industry issues that have manifested themselves. 

We're rebuilding the oil & gas industry through the development of Preliminary Specification and Cloud Administration & Accounting for Oil & Gas. End-to-end planning, implementation, and optimization of the exploration and production process need to be undertaken and implemented. That will be done through the producer and Joint Operating Committee in this Operation Management module. This module more than any other is a producer-facing module. The key difference between what may exist today is that the Preliminary Specification will be populated with actual, factual accounting and administrative data and information. Not recycle costs or other estimates from reserve reports or elsewhere. We’re replacing what exists today in the industry and producer firms. Replacement of what has been done is necessary to rebuild industry culture towards profitability and performance.

Preamble

How does the producer firm focus on innovatively producing profitable oil & gas? The Preliminary Specification relieves them of their non-competitive tasks of administration and accounting. Supported by our user community and their service provider organizations, producers will no longer need to build and maintain their unshared and unshareable capacities and capabilities to meet the requirements of those aspects of their business. Engineering, geology and business operations in terms of exploration and development are their domains of expertise. Based on their ability to deploy their distinct competitive advantages of their land & asset base and to coordinate the markets earth science & engineering capacities and capabilities. 

North American oil & gas producers are in a state of organizational collapse which is catastrophic for all concerned. With internal and field capacities and capabilities that are severely deprecated, producers are incapable of maintaining their activity levels, assets and productive deliverability for the mid to long term. Their capital structures are and have been unsupported for almost a decade. The amplification of the accelerated shale decline curve has placed the North American economy and society in a situation where the status quo is proving incapable of even recognizing their difficulties. Leaving what will become a long term consequence of their inaction to be detrimental to the most powerful economy ever known to man when it's dependent on foreign sources of oil & gas. The opportunity to mitigate this is through the active disintermediation and rebuilding of the industry by way of the development of the Preliminary Specification. This is done by our user community, their service provider in People, Ideas & Objects Cloud Administration & Accounting for Oil & Gas software and service.

2023s natural gas price shows the one thing producers assured us they controlled. Production discipline doesn’t and has never existed under their current culture of “muddle through.” To them, producing unprofitable production is considered a right and a privilege. As a result, producers cannot determine whether a property is profitable. Their ERP systems are not structured to capture property data, especially the detail involved in overhead and depletion. Capital costs are intended to build balance sheets, not pass these capital costs onto consumers. The issue that People, Ideas & Objects Preliminary Specification is designed to resolve, is chronic, systemic overproduction of oil & gas since July 1986. Despite natural gas becoming a weapon of war and shale decline curves appearing in all basins, this anomaly of overproduction by the North American natural gas producers continues.

People, Ideas & Objects propose the vision of the Preliminary Specification and its 14 modules built upon Oracle Cloud ERP. Designed, developed, supported and serviced for the long term through our user community and service provider organizations. A rebuilt industry that provides the most profitable means of oil & gas operations, everywhere and always. Profitable operations are the only source and means of capital that is large enough to satisfy the demands of what oil & gas will require throughout the greater oil & gas economy up to the year 2050. What we know and understand of the current administration's is that when pressed, they never listen or act. They'll say anything to satisfy the present concern, do absolutely nothing, eventually regressing back to their cultural norm. Which is consistent with and part of their dedicated "muddle through" strategy.

Review of this Operations Management module will leave most people thinking that the scope and scale of the application is well beyond what's possible or practical. I would certainly understand that commentary and ask you to view this differently. It is the 21st century and we are building applications for the issues that plague the industry today, the next generation and the future. I see the Operations Management Module using the Preliminary Specification and leveraging it in ways that are the basis of the type of innovation that Oracle, People, Ideas & Objects, our user community and their service providers will be able to conduct with producers and Joint Operating Committees in the future. We are leveraging this opportunity to integrate a monitoring and control system for producers to manage their Joint Operating Committees. This will enable them to be the dynamic, innovative, accountable and profitable properties and producers they’ll need to be. 

The perspective that I see in these types of applications delivery, such as our Operations Management module provides to the producers. Will no longer contain a box of diskettes, digitized manuals available on the world wide web and supported through a help desk Monday’s to Friday’s from 8 - 5. It’s not from the early 1990s, and is worthless today. This is one of the reasons we've focused on our user community as our key competitive advantage and their service provider organizations. They’ll need to be available 7/24 supporting the Preliminary Specification, ensuring they’re operational and troubleshooting issues prior to any producer calling or discovering the issue. Capable of resolving difficulties in industry operational, technical, administrative or accounting domains. 

People, Ideas & Objects find today's producer expectations of our ERP competitors surreal. Paying for nothing, expecting miracles, casting aspersions when Service Level Agreement (SLA) expectations are not achieved. In addition, there is no producer participation beyond SLA execution. My expectations of our user community are for it to lead the development of new business models within the industry. I also expect it to provide the value proposition that the Cloud Administration & Accounting for Oil & Gas software and service is designed to deliver. The user community is taking proactive steps to address the issues and opportunities facing the industry. This is to ensure they’re providing North American dynamic, innovative, accountable and profitable oil & gas producers with the most profitable means of oil & gas operations. This role has been capitulated by producers through their culturally systemic “muddle through” strategy and must be undertaken.

We see this as the future of enterprise software. Business' dynamic nature can't be managed through a generic configuration conceived decades ago and not amended. Software to manage the enterprise alone is an inherently dangerous assumption. Nothing of complexity, substance or significance works in that way. People, Ideas & Objects is a comprehensive software and service offering that is a permanent capability of North American producers. This is the level at which the software industry has reached. It is the promise it has always had. Officers and directors assume it will be available by flipping a switch. Conversely this does not imply that producers will continue to define the terms of what they expect in a Service Level Agreement. They will sit back and criticize any deficiencies. It is too late to settle for old failed processes in a world where software dominates the workplace. It’s no longer enough to just own the oil & gas asset, it’s also necessary to have access to the ERP software and services of People, Ideas & Objects et al’s Cloud Administration & Accounting for Oil & Gas, which makes the oil & gas assets profitable. This must be an all hands on deck commitment by all for success to be achieved. That is Oracle Cloud ERP, People, Ideas & Objects, our user community, and their service provider organizations. This is for development, implementation, service and support of the Preliminary Specification. Dynamic, innovative, accountable and profitable producers and the service industry will all need to participate actively.

With the Preliminary Specification we are seeking a transformation in the profitability, performance and culture of the producer organization and Joint Operating Committees as we’ve detailed throughout. These will need to undergo a transformation that is far more radical than what the status quo culture can comprehend. How this transformation will happen will be through their efforts in this Operations Management module. Through this process, they will be able to reduce their process and activity timelines, as well as raise their performance criteria and expectations consistently throughout the century. Tighten up the interactions between the tier 2 and 3 sub-industries to optimize the producers and Joint Operating Committees production and exploration processes. An industry-wide rebuilding process that will need to be and can only be conducted and funded through oil & gas production profitability. Where producers can compete effectively on North American capital markets. They will also maintain affordable, reliable, abundant and secure domestic sources of oil & gas for consumers. 

People, Ideas & Objects

We are Enterprise Resource Planning software developers for oil & gas. Our competitive advantages include our user community, Intellectual Property and research. Delivered through our Cloud Administration & Accounting for Oil & Gas software and services. It’s no longer adequate to just own the oil & gas asset, it’s also necessary to have access to the ERP software and services of People, Ideas & Objects et al’s Cloud Administration & Accounting for Oil & Gas that makes the oil & gas asset profitable. 

Our user community

Our focus and priorities are on the People, Ideas & Objects user community. We have established our user community with a comprehensive vision. This ensures that they can make the changes that provide for the most profitable means of oil & gas operations, everywhere and always. Three significant attributes of their structure provide them with the means to do so. 

Only user community members are licensed to make changes and prepare derivative works to the underlying Intellectual Property of the Preliminary Specification. 

Our developers are licensed to take instruction and input only from our user community. They are deaf, dumb and blind to all others. Producers can discuss their issues and potential opportunities directly with our user community members. 

Our user community controls their own budget.

The method and means of communication that producers, Joint Operating Committees and service industry representatives will use to engage our user community will be through this Operations Management module. This communication and collaboration portal will simply be a representation of a stand alone, dedicated, collaborative module established throughout the Preliminary Specification. This module will enable enhanced and focused communications.

Service provider

Each user community member is licensed to establish one or participate in the ownership and operation of many service provider organizations. Service providers enable the change People, Ideas & Objects et al make to oil & gas producers' cost structure. Moving from fixed, producer-based, overhead, accounting and administrative capacity and capabilities. To variable, industry-based, overhead, accounting and administrative capacity and capabilities. Variable dependent on profitable production. Service providers are independent organizations owned and operated by our user community members that manage an individual process operation within the Preliminary Specification. Applying their services and competitive advantages in the form of quality, specialization and the division of labor, automation, innovation, leadership, integration, deployment of their tacit knowledge, issue identification and resolution, creativity, research, ideas, design, planning, thinking, financing, observing, judgment, reasoning, conflict and contradictions, collaboration and compromise.

Using these unique skills and industry understanding to apply their process across the industry data set. Populated through a reallocation of the producers current accounting and administrative resources these people will be the ones that deliver the software and services of Cloud Administration & Accounting for Oil & Gas to North American based producers and those they interact and transact with. 

As with our user community, service providers will use the Operations Management module as a portal for communication between themselves and the larger oil & gas community. Collaborating on issues and opportunities of concern and information pertinent to the various stakeholders identified in this module. Communications for enhanced software and services development, integration, issues and opportunities.

Oracle

People, Ideas & Objects have selected Oracle as the base Information Technology provider for the Preliminary Specification. Using Oracle Cloud ERP as the foundation, with all of their underlying technologies, which hold the premier spot among enterprise technology providers. Oracle recently began moving towards heavily automating processes to build substantial value for organizations throughout the business world. Partnering with J.P. Morgan Chase to employ their credit card to record corporate expenses during expense reporting processes. When an employee uses this credit card they can designate the charges destination and Oracle will process it to ensure it fits within the companies eligibility policies. The individual will not have to spend hours filling out expense reports. Others won’t need to review them and charges will be paid appropriately. Eliminating the many thousands of hours consumed in expense reporting annually to a few milliseconds of processor time. Additional process automations are being undertaken for logistics with providers in those industries, for example. 

These automations will be comprehensive in nature and will build upon themselves as users realize the combinations and permutations of the various processes and how they’re related. The value earned by those firms that move to this architecture and organize themselves in this manner will reap substantial rewards in performance, productivity and profitability.

This is the same undertaking that People, Ideas & Objects, our user community and their service provider organizations are conducting with the development and implementation of the Preliminary Specification. The difference between what we propose in the Preliminary Specification and what Oracle does is that they provide generic business processes. We tackle North American producers' specific oil & gas attributes. Having the full stack of unique oil & gas and generic business process automation handled and improved continuously for enhanced productivity and profitability. 

People, Ideas & Objects targets North American oil & gas producers as the market for our Cloud Administration & Accounting for Oil & Gas software and service. We have further defined this market to include Exxon Mobil and Chevron down to the startups that began at the breakfast table this morning. This appears to be an impossible and misguided ambition when we consider that Oracle Cloud ERP and their underlying technologies are among the most comprehensive and technically difficult Information Technologies to support and use. We agree. Our user community and their service provider organizations, however, provide the software and services needed to support all producers. We would ask, under this configuration, what would preclude a small startup oil & gas organization from realizing the benefits of using People, Ideas & Objects for expense reporting? This is with the Oracle / J.P. Morgan Chase credit card integration we just highlighted.

This theme is evident and became abundantly clear during Oracle CloudWorld 2022 conference. It was there that they unveiled the comprehensive nature of their offering and the drive to move in this direction. It is this drive that led to the rewrite of the Preliminary Specification and the inclusion of the Operations Management module. People, Ideas & Objects believes that Information Technology has never fulfilled its promise. This is due to the lack of maturity in the underlying technology base. Oracle has worked diligently since its founding to put that architecture together and make it robust. And they can now turn it towards what everyone expected Information Technology to provide. It would be a shame for those companies that have become disenchanted with Facebook to believe that Information Technology is a false promise and will never deliver. The time has come to understand the time we are in, and to act accordingly.   

Oracle CloudWorld 2022

Being bold is the way to win, that being timid could wipe you out.

Safra Catz, CEO Oracle 

End-to-end transformation is another common theme throughout this conference. What purpose would it serve to trim around the edges and try to resolve truly existential issues with the oil & gas organizational methodology used today? One of the many points this conference reflected on is that now is the time to act. Bold action at this point will enable organizations to realize the benefits of Information Technology disruption. Safra Catz's Keynote Presentation stated that it is not time to issue a White Paper. The time required to evaluate options will be too costly. The lead time for considering opportunities and researching issues has passed. The time to implement a “plan” is now. The producer's plan needs to be bold. It has to address the issues that are causing significant difficulties throughout North America's oil & gas economy. There are existential issues confronting the current producers organizational method, which has failed and has no support or future. And the only plan available is Oracle, People, Ideas & Objects, our user community and their service provider organizations. In the form of the Preliminary Specification.

Oracle is the Premier Tier 1 ERP Provider

What has been difficult to express in the Preliminary Specification is the robust platform it is built upon. Oracle Cloud ERP is the premier tier 1 ERP solution in the marketplace. Which is difficult to understand if you've never seen it in action. Their products, technology and the Redwood interface must be seen. This is to understand that it is People, Ideas & Objects et al purpose to stand on the shoulders of this absolute giant. This URL refers to Oracle’s Best Practice Demo Series. In this series, there are several videos to learn about Oracle Cloud ERP quality, fit and feel. I cannot recommend highly enough that everyone should view "Simplify Your Month-End Close by Automating Joint Venture Management” to learn the details of how comprehensive and high quality Oracle’s Joint Venture Management product is. It is the most comprehensive Joint Venture Management system available today. And I am not aware of any North American producer using it. 

The Preliminary Specification defines seven distinct Organizational Constructs. Our key Organizational Construct is the Joint Operating Committee. This is the organizational structure to deal with Joint Ventures, the cultural method to represent partnership organizations established in oil & gas. When we move the current corporate model culture into alignment with the Joint Operating Committee, everything within the producer and industry changes. Nothing in oil & gas remains consistent with management's operations today. We are aligning the business directly on to the operational and technical cultures of how the industry has operated for 100 years. This is a culture derived from oil & gas operations partnerships everywhere. 

It is our hypothesis that in the 1960s when computers were introduced accounting became one of its uses. Soon after tax, royalty and regulatory environments were established, ERP systems focused on the corporate organization. They had nothing to do with the oil & gas business. A separation between business and technical areas grew and became a source of conflict. This precipitated a lack of communication and two independent islands competing for control. Operations dominated out of necessity and corporate elements were left to satisfy cash demands. That is what we’ve eliminated in the Preliminary Specification by aligning the business to the operations and technical culture. The Operations Management module outlines what and how that will be accomplished.

We use Oracle’s recommended architectural method of “additions” to the base of all Oracle products. This way none of the code between their efforts and ours will cause any difficulties being released into commercial software if there are changes in either environment. Exploiting the full potential and value of object-oriented programming. At the same time I can state unequivocally that both Oracle and People, Ideas & Objects are relational database developers first and foremost. 

Recently Oracle implemented a quarterly update schedule for Oracle Cloud ERP where incremental changes and upgrades are scheduled for release each quarter. People, Ideas & Objects will be participating in this quarterly release schedule for our own updates and have noted an added benefit as a result of the Preliminary Specifications structure benefiting from the Organizational Construct under the title “New Growth Theory.” That we are sharing the “non-rival” costs of the infrastructure of accounting and administration across the North American producer population. Therefore the need for each producer CFO to be heavily involved in these ERP changes each quarter can be reduced to a less onerous task when the industry can plan and implement the upgrades on a shared or non-rival basis. Innovation is incrementally increased through iterative developments. They are not big bang changes unless the organization is challenged by existential threats such as the oil & gas producer organizations are today.

We are not rebuilding an ERP system from scratch to achieve the Preliminary Specification. We are defining and catering for specific oil & gas related software developments needed to deal with oil & gas issues and opportunities today and in the future. Configuring and augmenting Oracle Cloud ERP to do so. Reorganizing the industry to function efficiently and profitably. The Operations Management module combines business, operations and technical groups into one functioning organization using the same data. Establishing the team environment necessary to collaborate within the producer organization and each Joint Operating Committee. This is deemed necessary to move forward in a challenging and difficult future. Where the most dynamic, innovative, accountable and profitable producers are provided with the most profitable means of oil & gas operations, everywhere and always.

OCI Performance Evaluation, Part II

 Collaboration's Risks and Rewards

While working in isolation we can achieve a lot of what we set out to do. When we collaborate with others, the possibilities grow exponentially. Reviewing a mountain of data seems fun. For a few people that might ring true. However, for most people the possibility of finding joy in the task is limited. As a team however, the task becomes something of an adventure with the findings being multiples of what one individual might discover. Collaborative capability needs to be part of the Performance Evaluation and Analytics & Statistics modules. 

Professor Giovanni Dosi noted that a technological trajectory is the activity of technological processes along the economic and technological trade-offs defined by a paradigm. Dosi (1988) states “Trade-offs being defined as the compromise, and the technical capabilities that define horsepower, gross takeoff weight, cruise speed, wing load and cruise range in civilian and military aircraft.” People, Ideas & Objects assumes the technical trade-off in oil & gas is accurately reflected in commodity pricing. Higher commodity prices will allow more innovation to be funded.

Trade-offs facilitate industries' innovation based on changing scientific and technical paradigms. Crucial to the facilitation of these trade-offs is a fundamental component that spurs change and is usually abundant and available at low costs. For innovation to occur in oil & gas, People, Ideas & Objects asserts that the ability to seek and find knowledge, and to collaborate are two “commodities” that are abundant today. With their inherent low direct costs, knowledge and collaboration are the triggers for a number of technical paradigms that will provide companies with fundamental innovations.

Collaborating and sharing knowledge in the Performance Evaluation and Analytics & Statistics modules, and the other modules of the Preliminary Specification, will fuel innovation. Whether that collaboration is within a producer firm, a Joint Operating Committee or a working group recently established through a Work Order. Access to these two modules should enable participants to evaluate the data with the toolset provided.

These two modules will be more useful if they are made collaborative. Not the obscure applications favored by the data obsessed. Remember Professor Dosi says that “In very general terms, technological innovation involves or is the solution to problems.” Discovery of those problems can be collaboratively done here in the Performance Evaluation and Analytics & Statistics modules. 

What we do know is that “things” happen fast. Except in organizations. Providing people with the appropriate knowledge and information to act in a fast-changing environment is difficult. Some of the difficulty in getting the knowledge and information to the right people is ensuring the integrity of the information is not breached by those not part of the organization. And we are not recommending an open information policy. The Security & Access Control module imposes high levels of integrity on all communications, data storage and information. Collaboration between firms and transparency are areas where some perceived leakage of proprietary information may occur. It is here in these collaborative communications that I ask if information loss threatens innovative oil & gas producers' competitive advantages. Those being their land & asset base, or earth science & engineering capabilities. No they don't. As we have discovered, collaborations enhance firms' and Joint Operating Committee innovation and capabilities.

The question therefore becomes how is this proprietary information and capability deployed on an as-needed basis? Professor Giovanni Dosi notes that although the free movement of information has occurred in industries for many years, it has never been easily transferable to other companies within those industries. The ability to replicate a competitive advantage from one company to another is not as easy, and may not be worthwhile doing. Dosi (1988) goes one step further and states, “even with technology license agreements, they do not stand as an all or nothing substitute for in-house search.” A firm needs to develop “substantial in-house capacity in order to recognize, evaluate, negotiate and finally adapt the technology potentially available from others.” Therefore why not focus on the need to increase the company's unique and specific competitive sources and directions?

Collaborations in the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification will provide increased value in getting original, innovative ideas and information to the appropriate people. This is in the right place and at the right time. These are the attributes the firm should pursue rather than worry about losing proprietary data or information. We note that innovation involves discovering problems. It also includes changes which Professor Dosi notes in the following.

Organizational routines and higher level procedures to alter them in response to environmental changes and / or to failures in performance embody a continuous tension between efforts to improve the capabilities of doing existing things, monitor existing contracts, allocate given resources, on the one hand, and the development of capabilities for doing new things or old things in new ways. This tension is complicated by the intrinsically uncertain nature of innovative activities, notwithstanding their increasing institutionalization within business firms. p. 1133.

It would therefore seem prudent for an innovative producer to enable collaborations in all modules of the Preliminary Specification. This is a key to their innovation strategy. Focus on dealing with the change in routines as a result of the discovery of problems and solutions. These are the areas where the innovative oil & gas producer will need to deal with the outcomes of innovation, and the overall capability to continue to innovate.

Dynamic Data and Information

How the innovative producer attains a higher innovation factor is through a constant search for petroleum reserves, increased production, lower costs and more effective management of their oil & gas assets. This search will begin with a query in either the Performance Evaluation module for the Joint Operating Committee or the Analytics & Statistics module for the producer firm itself. Having access to the data and information of the respective domain provides the user with the ability to formulate queries on the basis of different scenarios, what if’s, and other mathematical calculations. 

If we refer back to earlier parts of this module we find that performance is a key motivating principle behind the use of the module. People use these modules to find the next value increment. To determine where that value is located, it is necessary to use these specialized tools to identify it. Recall that these are subject to the Security & Access Control module, therefore the data and information they can access will be limited to the domain of the users' authority, i.e. only the Joint Operating Committees they’re assigned to. And the application modules will be collaborative, allowing interaction with others.

Running a query is a fairly basic operation that produces static output. The result just sits in the spreadsheet for the user to act upon. Within the Performance Evaluation and Analytics & Statistics modules we can invoke messaging services which include the following processes: person to person, person to process, process to person and process to process, on any of the system processes. Therefore if a process is running, and at any time that process obtains criteria for which it is necessary to know, the system will send out a message. Or if the same process was completed, it would invoke another process to initiate another action. It would also have the option of texting the system to invoke a number of different scenarios. Messaging processes bring the power of the ERP system into play from the point of view of using these calculations to act. People, Ideas & Objects have many tools in this area. Through Java, Oracle Autonomous Database, Oracle Fusion Applications and Functional Programming this area will be a rich environment for users to benefit from.

Professor Giovanni Dosi (1988) states that profit-motivated agents must involve both.

 “the perception of some sort of opportunity and an effective set of incentives.” (p. 1135) Professor Dosi introduces the theory of Schmookler (1966) and asks “are the observed inter-sectoral differences in innovative investment the outcome of different incentive structures, different opportunities or both”? (p. 1135) Schmookler believed in differing degrees of economic activity derived from the same innovative inputs. p. 1135.

Performance Evaluation and Analytics & Statistics provide incentives and opportunities to innovate.

Focused on Changing Capabilities

As part of a competitive strategy, we focus on the key competitive advantages of the producer firm and Joint Operating Committee. These are their land & asset base, and earth science & engineering capabilities. These are the things that differentiate them from other producers and how they produce value for their shareholders. Everything else is secondary. We have adopted what Professor Richard Langlois calls the “capabilities approach” in his paper “Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization.”

When users are in the Performance Evaluation and Analytics & Statistics modules they will be able to look at an additional type of cost that we have recorded in the accounts of the firm and Joint Operating Committee. That is the costs associated with “Dynamic Transaction Costs” which are the unique costs incurred during times of change. Professor Richard Langlois described these costs in his article “Transaction Cost Economics in Real Time.” 

Over time, capabilities change as firms and markets learn, which implies a kind of information or knowledge cost - the cost of transferring the firm's capabilities to the market or vice-versa. These "dynamic" governance costs are the costs of persuading, negotiating and coordinating with, and teaching others. They arise in the face of change, notably technological and organizational innovation. In effect, they are the costs of not having the capabilities you need when you need them. p. 99.

The types of these costs will vary and are not necessarily the same in all instances. Breaking these down into their types may be overkill from an accounting perspective. Instead, putting them into an account called “Dynamic Transaction Costs” might be a better option. And we have mentioned that in other modules of the Preliminary Specification. However, having the ability to further analyze these costs when the time comes, from the Performance Evaluation and Analytics & Statistics modules could lead to further insight and learning into organizational changes that might, or should, be occurring. 

Indeed, in cases in which systemic coordination is not the issue, the market may turn out to be the superior institution of coordination. In general, the capabilities view of the firm suggests that we look at firm and market as alternative and sometimes overlapping institutions of learning. p. 99.

And

Economic progress, then, is for Marshall a matter of improvements in knowledge and organization as much as a matter of scale economies in the neoclassical sense. We can see this clearly in his 'law of increasing return,' which is distinctly not a law of increasing returns to scale: 'An increase of labor and capital leads generally to improved organization, which increases the efficiency of the work of labor and capital' (Marshall, 1961, IV. xiii,2 p. 318) pp. 101 - 102.

And maybe we need a page or screen in each of these two modules dedicated to breaking down these costs. Then a producer or Joint Operating Committee will have some point of reference to determine the state of change. This will enable them to determine its impact in terms of costs, and types of costs, on the organization. How the transition in the firm's or Joint Operating Committee capabilities is managed. 

F.A. Hayek (1945, p. 523) once wrote that 'economic problems arise always and only in consequence of change.' My argument is the flip-side: as change diminishes, economic problems recede. Specifically, as learning takes place within a stable environment, transaction costs diminish. As Carl Dahlman (1979) points out, all transaction costs are at base information costs. And, with time and learning, contracting parties gain information about one another's behavior. More importantly, the transacting parties will with time develop or hit upon institutional arrangements that mitigate the sources of transaction costs. p. 104.

Conclusion

Work in the 21st century will continue to be different. People's tools will also need to be different. The Performance Evaluation and Analytics & Statistics modules are the beginning of these 21st century tools for people's work. We often discuss specialization and the division of labor in the Preliminary Specification. There is also specialization and division of labor between what people and computers do and that is reflected here in these two modules. Computers handle storage and processing. People will be responsible for thinking, ideas, decisions, creating, collaborating, innovation and many other things. Much of this information will be generated based on facts determined through the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification.

OCI Performance Evaluation, Part I

 Introduction

Performance Evaluation and Analytics & Statistics modules have similar interfaces. The Performance Evaluation module is focused on the Joint Operating Committee and the Analytics & Statistics module is focused on the producer firm. Essentially these are user-based tools that enable analytical and statistical calculations run against the data and information contained within the People, Ideas & Objects ERP systems and other unstructured data. Providing users with the ability to analyze data in novel and innovative ways in seeking value for their firm or Joint Operating Committee. 

The types of data and information prepared and presented in these modules depend on individual users. They will be unique based on their needs and interests, their scope of authority and the type of work they do. When it comes to who will bring up the next breakthrough innovation we should expect it from anywhere. Part of the innovation process is the discovery of the problem and we all see the situation from different perspectives. The point of view and innovation of each will therefore be highly dependent on the viewpoints of different groups. Someone working in the trenches may find innovations that affect their work materially, which may not interest others and vice-versa. This process of discovery should be assisted by the types of tools that include the Performance Evaluation and Analytics & Statistics modules. Professor Giovanni Dosi notes in “Sources, Procedures, and Microeconomic Effects of Innovation.”

Thus, I shall discuss the sources of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search, and the nature of the incentives driving private agents to commit themselves to innovation. p. 1121.

Irrespective of the source of the innovation the fact that it materially affects someone's work should indicate that it should be followed through. These opportunities are challenging to discover and we need to be able to evaluate them and assess them based on their impact and ability to build value. What sometimes appears to be a sound idea can also become an area where the firm could be exposed to unnecessary risk or loss. Historical data is necessary. However, in the 21st century it is also necessary to have advanced analytical tools available to analyze that data. 

In the Preliminary Research Report, People Ideas & Objects identified two critical developments. The first is that innovation can be reduced to a quantifiable and replicable process. Analytical tools are part of that process. And two, the Joint Operating Committee is the key Organizational Construct of an innovative oil & gas industry. Therefore having analytical tools in the Joint Operating Committee and producer firms is critical. 

Tools for the 21st Century

This discussion deals with people's motivations to use the Analytics & Statistics and Performance Evaluation modules of the People, Ideas & Objects applications. It's one thing to have statistical analysis tools available for those who want to use them. It's another thing to have these tools being used by people who are actively looking for the next measure of performance or metric. This will reflect on how their performance can be improved. This latter use is the reason for these tools to be in the fourteen module Preliminary Specification.

We pick up on our discussion of the McKinsey article “The 21st Century Organization.” We now discuss the fourth element of that paper, “Measuring Performance.”

The final set of ideas rounding out this new organizational model involves relinquishing some level of supervisory control and letting people direct themselves, guided by performance metrics, protocols, standards, values, and consequence management systems. 

And as noted in "The 21st Century Organization” people are not measured and told explicitly what to do in their jobs. There is too much activity taking place for someone to give task lists to mindless automatons. What a responsible and productive person needs to do in this world of massive information and activity is focus on what is essential. To deal with the critical value-generating areas of their jobs that can add, and avoid destroying, value. That is where the Analytics & Statistics and Performance Evaluation modules of the Preliminary Specification come into play. Providing the user with the ability to focus on building value for their clients and employers, the oil & gas producers.

Whether they are earth scientists or engineers, business professionals or in any field that the oil & gas industry employs, access to the data and information through these modules will be critical to building value. Using the “dashboard” metaphor where algorithms monitor various processes. The user would run statistical and analytical programs that look at data in novel and innovative ways. It could be conceivable that some people may dedicate large percentages of their day to day thinking of creative ways to analyze data and information available to them.

The Downside of Analytics

I have seen this happen many times in oil & gas. Situations where the divestiture of assets is done without the full understanding of how the asset fits into the overall makeup of the organization. These types of situations happen when the “cash” mindset takes over all rational thought and the highest resale price wins over every other consideration. This is the danger of analytical tools. As we move into a period of sharper and more accurate tools, that danger becomes more prevalent.

There’s math, and then there’s strategy. The situation we observe is when an oil & gas firm runs into problems financially or operationally and rationalizes their asset base. They think they need to raise money by selling some assets. So they naturally think they’ll sell some of their “midstream” assets. A gas plant, gathering facility, and processing facility that earns only a fee. These assets, when looked at from a financial performance point of view, are nowhere near the right street where the ballpark is on. Therefore they get sold for the highest replacement cost and the seller believes they made a good deal. The fact is that most small producers may have provided their C3+ products directly to gas plant operators for fire sale prices. This is because they otherwise have no capacity to deal with them. Gas plant operators being the only ones in the area with processing facilities negotiated a favorable bargain. They acquired the majority of the natural gas liquids in the area for royalty costs. Now that the plant is sold, those products are lost and production is transferred to the newly acquired plant owners. Materially and negatively changing the properties' performance.

The majority of oil & gas producers I have seen and studied take a while to fully understand what is happening. What seems to be a jumble of activity for no apparent reason can, upon further study, become a symphony of brilliance. This was assembled over decades by someone with such profound vision that it is truly breathtaking. Selling a gas plant out of the middle of this shows that the seller doesn’t see the vision. And none of their assets will perform in a satisfactory manner. Having tools like the Analytics & Statistics and Performance Evaluation modules in the hands of people who may not fully appreciate the vision of how the firm is built could have detrimental effects on the overall health of the firm.

We found this quotation from Professor Richard Langlois in his working paper "The Austrian Theory of the Firm: Retrospect and Prospect."

The question then becomes: why are capabilities sometimes organized within firms, sometimes decentralized in markets, and sometimes coordinated by a myriad contractual and ownership arrangements like joint ventures, franchisees, and networks? Explicitly echoing Hayek, Jensen and Meckling (1992, p.251) who point out that economic organization must solve two different kinds of problems: "the rights assignment problem (determining who should exercise a decision right) and the control or agency problem (how to ensure that self-interested decision agents exercise their rights in a way that contributes to the organizational objective)." There are basically two ways to ensure such a "collocation" of knowledge and decision making: "One is by moving the knowledge to those with the decision rights; the other is by moving the decision rights to those with the knowledge." (Jensen and Meckling 1992 p. 253). pp. 8 - 9.

In People, Ideas & Objects we have moved knowledge to those with decision rights, which reside with the Joint Operating Committee. And rather than contradict ourselves, we find clarification of this issue in the following fact. Decision rights are the authority of the Joint Operating Committee to make operational decisions. Each individual producer holds strategic decision rights regarding ownership and divestiture regarding their working interest shares. Therefore there is no risk that the property will be “harmed” in any material way by making a strategic decision of that type in the Performance Evaluation module. It is beyond the Joint Operating Committee's authority. It is reasonable to assume that the authority of decisions made through the Performance Evaluation module will be limited to one producer's operational concerns. This will be mitigated in the short term. That is to say any negative decision would be reversed as soon as it is realized.

I think that it would be worthwhile to have a strategy review “attached” to each decision based on the Analytics & Statistics and Performance Evaluations. To counter the quantitative elements of the modules, the decision analysis is qualitative. If this qualitative analysis could be embedded into these modules for documentation, it would add value.

User-focused Development Tools

When it comes to what we are currently given to work with in terms of ERP systems, they can leave much to be desired. If only we could have “this, that and the other thing,” our lives would be so much easier. It would appear, however, that the inertia necessary to overcome "this" requires saintly fortitude and political skills. So we continue in what can only be described as someone's bureaucratic vision. People, Ideas & Objects seeks to resolve some of the issues users face in confronting "this, that and the other thing” in systems by basing our development on our user communities' vision and participation. Inherent in that offering is that People, Ideas & Objects are not conflicted by the traditional constraints of software code and customers. That is to say we only earn our fees based on software code changes. We are therefore agents of change, not seeking to obstruct change.

The point is that our user community can enhance the system. People, Ideas & Objects are motivated by business reasons to do so. That’s how we earn our revenue. We believe software should be constantly improved, driven by users' imaginations and requirements.

When the time comes for a user to think that if they had “this, that and the other thing," they will have a means to effect that change and have it fulfilled through our user community and their access to our software developers. But this isn’t about that change process specifically. It's about a stop-gap measure they may want to implement in the short term. This is while they wait for our user community to implement their idea.

For that stop gap measure we turn to the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification. These modules will be able, since they have access to the data, to prepare ad-hoc reports that the user can develop for themselves. Granted most of these user developed reports won’t be ready for prime time, however for the purposes of the user they can fit the need in the short term.

The user generated reporting tool will be part of both the Performance Evaluation and Analytics & Statistics modules. And provide users with a sophisticated graphical user interface to manipulate data and develop queries. We’ve all seen these tools before and I’m not suggesting anything original here. What I think is different however is access to information. First, the volumes of data will be increased and secondly the Security & Access Control module will provide access to that data and information based on users' privileges.

A World of Data

Turning again to Professor Giovanni Dosi in “Sources, Procedures and Microeconomic Effects of Innovation” for the determination of the three key factors of innovation. He notes that they are the result of: 

Search, development and adoption of new processes and products in market economies and are the outcomes of the interaction between:

• Capabilities and stimuli generated with each firm and within the industry of which they compete.
• Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers etc.
• Additional issues include the conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulation, tax codes, patent and trademark laws and public procurement.) p. 1121.

While in the Performance Evaluation and Analytics & Statistics modules the user would search for information or insight into the data. This is the beginning of the innovation process. The tools provided in these modules would be part of the capabilities necessary for innovation to be developed within an innovative oil & gas producer. Professor Dosi's three key factors clearly show this. With growth expected to continue. These tools provide a rich resource for developing an innovative perspective on data. 

Recently, we've heard about an emerging field of data that is growing in importance. Unstructured data. Data that isn't managed by a database and has no implied meaning to its structure. The marketplace modules of the Preliminary Specification, the Resource, Petroleum Lease and Financial Marketplace modules and to a lesser extent the Research & Capabilities module all have “marketplaces” within them. These marketplaces would have substantial unstructured data that would be of use to potential users of the Performance Evaluation and Analytics & Statistics modules. Organization and access to this information on an industry-wide scale is one objective of these modules.

Taking a step further, these two modules should not be constrained to producers' internal systems. They should be able to access other sources of data and information, structured and unstructured. This is so that the user can use all three of Professor Dosi’s key factors of innovation to develop original and innovative ideas. It might be worthwhile to have a “Help” section within the People, Ideas & Objects modules. A section that includes Professors Giovanni Dosi's and Richard N. Langlois' innovation research. People would have a quick reference to items like the three key factors. This is so that they could use them in their day-to-day tasks to develop a more innovative mindset. 

For example, Professor Giovanni Dosi states 

“In very general terms, technological innovation involves or is the solution to problems.” Dosi goes on to further define this as “In other words, an innovative solution to a certain problem involves “discovery” (of the problem) and “creation” since no general algorithm can be derived from the information about the problems. Certainly the “solution” of technological problems involve the use of information derived from experience and formal knowledge (e.g., from the natural sciences); however, it also involves specific and uncodified capabilities, or "tacit-ness” on the part of the inventors. pp. 1125 - 1126.

It is therefore asked specifically, how can the knowledge, information and capability of oil & gas firms solve the technical and scientific problems of the future? How can a firm more effectively employ its capability to solve problems and facilitate the discovery of existing problems and creation of their solutions? These are the questions that the Preliminary Specification is determined to answer. From the perspective of the Performance Evaluation and Analytics & Statistics modules I think we can provide the user with a variety of tools that help them drill down into the data and ask questions that haven’t been asked. People, Ideas & Objects is an ERP system. However, as we have seen with the modules in the Preliminary Specification there is a lot of data and information generated through collaborations and item documentation. It won’t be just accountants that will want to use these two modules, but anyone employed by a producer firm or Joint Operating Committee. 

Here is a quick summary of some of the functionality and process management the Performance Evaluation and Analytics & Statistics modules provide users.

• Ability to rise above transactional work managed by other modules. We are moving from recording transactions to designing transactions in many modules. Leaving the recording of transactions to computers and the analysis to the users of these modules. 
• Use of the “R” statistical language and Apache Spark as embedded programs within both modules.
•  https://spark.apache.org/
• Configured user tools that enable the user to demo, or build small applications that fit small niche needs. If these needs grew to where more people wanted similar programs for a producers other Joint Operating Committees, they could be used as a prototype for the People, Ideas & Objects developers to build. 
• Querying and determining where the performance and direction of producer firms or Joint Operating Committees' value is. Allowing people to focus on value generation and avoid value destruction.