Allocation of our Margins

One thing about being in the software business is the healthy nature of the margins that are realized. For example Microsoft Office earns 73% profit margins for Microsoft. That also assumes you are able to attain the point in your business that you actually earn any revenues. The real downside of the software business is that all of your costs, the actual cost of development, is conducted without the benefit of any revenues. So you have to incur the costs of development before you get to the point of earning any revenues. Such is the way of the software business. And with People, Ideas & Objects large scope and scale, and the small market for ERP systems that the oil and gas producers make up, we have implemented a Revenue Model that is fundamentally different than most software companies. That is, we are developing the software with revenues from the producers. As the scope and scale is beyond the capabilities of the investment community.

Nonetheless the lead times to get to the point where the revenues are realized are significant. We are planning to commence developments in 2019 and complete them in 2021. I started working on developing oil and gas systems in May of 1991 and signed my companies first comprehensive development agreement with Oracle in February of 1992. It is coming up to 23 years that I have had this vision of the Preliminary Specification rattling around in my brain. It represents a life’s work and a life’s investment. I don’t count the amount of money that I have invested in this software nightmare, but it is substantial. The point is I am either crazy or I'm right. And I am very satisfied with being crazy.

So it is to the margins of our budget. I have allocated a 25% Intellectual Property Royalty, or $500 million to 1 billion to myself, the owner of the copyright of all of this material. I know this will cause some backlash in the industry, you understand that I am satisfied with my position in life. Alternatively you can start with your own vision as I did in 1991 and enjoy the smooth and glorious ride that offers. Bureaucrats will hold this royalty out as a reason not to proceed. Denying the investors the almost $100 billion in annual opportunity costs that are lost by using their current business model.

There are additional profit margins of 25% totalling $500 million to 1 billion as well. These are the profits of the firm and are distributed as dividends to the shareholders. It is true that I control 100% of the firm and as a result these dividends will end up in my pocket. I provide oil and gas producers with the most profitable means of oil and gas operations. This is a tangible difference in our business model. The question becomes how do I realize this value that I generate for the industry? The shares are worthless. Once the development is done the revenues will fall significantly and define a much smaller capitalization. Do I have to sell the company to realize the value that I earn? The methodology defined above is the means that I choose to monetize my efforts, and is commensurate with the value that I provide to the industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

#Oracle Budget

We now turn to the Oracle end of our budget. Oracle plays a critical part in the People, Ideas & Objects Preliminary Specification. Their Fusion Middleware and Fusion Applications are the foundation of the eleven module Preliminary Specification. We also use Oracle’s database, Java, hardware, services and solutions. One could suggest we are an Oracle shop. However with this level of commitment to these product categories we can secure Oracle’s commitment to provide the oil and gas producer with the most profitable means of oil and gas operations.

Lets start off with something tangible. Hardware is used by People, Ideas & Objects to run the People, Ideas & Objects Preliminary Specification in a cloud computing configuration. Oracle engineers their hardware to run their database and Java technologies at far faster speeds than the competition. Evaluating Oracle on a cost / performance basis is a slam dunk. No one can currently come close to the types of performance that Oracle is able to attain with their hardware and database. This is one of the premier reasons that we have selected Oracle. This is the reason that they are the dominant database technology in the world and will stay that way as long as Larry Ellison remains the head of the firm. Larry Ellison is the Steve Jobs of the corporate world, and Oracle is the Apple. We have therefore budgeted $100 to 200 million in hardware for providing the Preliminary Specification to the oil and gas industry on a cloud computing configuration. This amount of computing power is augmented with additional processing power. With a share of the $25 to 50 million in the services budget being allocated for the use of the Oracle Cloud service for any of our peak computing demand requirements.

The second budget allocation is $5 million for software. This number has no basis in its determination other than it is a best guess as to what the cost will be to acquire the software for the cloud configuration of Oracle Fusion Middleware and Oracle Fusion Applications. There are individual user licenses that are also budgeted and noted below, this is for the one time acquisition costs of the software for development purposes.

There are a number of services that are offered by Oracle that can be accessed through this budget. I mentioned the cloud computing services. There are also Database Administrators, tuning and related services that fall outside of the development domain. These are collected and provided in this budget allocation of $25 to 50 million.

Then we come to the Oracle developers. It has been my experience that you can learn about Oracle technologies through experience, or you can hire their developers to implement that high level of knowledge for you. The ability to hire their developers provides you with the understanding of the technologies at a higher level. One that you would have eventually learned, at substantial cost. I choose the cheap way and have allocated a healthy budget for the inclusion of $150 to 350 million or 450 to 1050 man years of Oracle developers. Undertaking a large development such as People, Ideas & Objects Preliminary Specification and using Oracle Fusion based products demands that we extensively use Oracle developers. They are, in a very significant way, an insurance policy for the oil and gas industry in terms of the overall deliverability of the project.

The last budgeted item is for user licenses during the development for the developers and the members of the user community. These user licenses are for development only. Additional charges will come into play for the runtime use of the application. And the user license charges at that time will be much larger as their will be large portions of the industry using the application, not just the user community and the developers. These licenses include the entire stack of database, Java, Oracle Fusion Middleware, Oracle Fusion Application licenses. These are budgeted at $3,700 per man year for a total of $9 to 18 million.

Oracle brings a unique character to the Preliminary Specification. I am pleased to be providing People, Ideas & Objects applications on their technology. When we add the user community to this we become ever so stronger. We are building an application for the 21st century and now is the time to get involved.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

#User Defined Software

When does People, Ideas & Objects commit to the user community? How do we prove that we are user based developments? We say that we are user based ERP systems developments, but how do we differentiate ourselves from the marketplace in terms of being user based developments? Is it an important point to be “user community based” in the oil and gas industry? These are some of the questions that I will answer today. And in turn provide the direction and leadership that is necessary for the next phase of what we undertake.

Lets first answer the question “is it an important point to be user community based in the oil and gas industry.” It is critical to have the user provide the developers with the leadership and direction for the systems that they will use, in my opinion. If we look at Apple and Google, both of those systems are developed with heavy user involvement. There is a difference that is both quantifiable and qualifiable. The most important difference to us is the impact that the Preliminary Specification has on the industry. Every individual, producer, service provider, service industry participant, etc are affected. Primarily through the decentralized production model. This demands that the people who are involved in this work today, and those that are involved in it tomorrow are intimately involved in the design and development of these systems. We all know what happens otherwise with the traditional top down approach.

Assume for a moment that we had secured all of the financial resources that were needed for the development of the Preliminary Specification. What would be the first thing that we would do with those funds? It would be to develop the user community. And those financial resources would sit and wait for the day in which they could be used to develop the Preliminary Specification. Until the user community is developed there will be no development work undertaken at People, Ideas & Objects. Therefore the user communities development has to be our number one priority at this point.

To organize ourselves doesn't cost anything and helps us to prepare for the time when the development funds do arrive. It will be at that time that we can begin the actual software developments. As we stand today the bureaucracy is well in control of the situation and they will never participate in the development of People, Ideas & Objects. The CEO and CFO, the investors and many of the people in the industry agree that the bureaucracy needs to be replaced with something in the technology field. The Preliminary Specification is a possible alternative. If the user community for the People, Ideas & Objects developments existed it would make the Preliminary Specification a viable alternative. And that has to be our mission in the short term. To provide an alternative means of organization to the oil and gas industry.

By developing the user community we lose no development time due to the bureaucracies attitude towards us. This is work that we can do without the need for financial resources. Participation is simple, just setup, or use your Twitter account and Follow @piobiz its that simple. Things will happen within that network as a result. Users will be able to communicate with other users. People will be able to keep up to date on all that is happening within that network. And as time passes and the user community grows, the industry will see a viable group of like minded individuals that are capable of providing a means in which to provide the oil and gas producers with the most profitable means of oil and gas operations.

If you are concerned about retaliation from the bureaucracy. A very real concern. Set up an anonymous Twitter account. There is no need for anyone in the user community to take any career risk as a result of joining the network. The purpose of this is to communicate and collaborate around the needs of developing the user community and providing an alternative means of organization to the oil and gas industry. So join me now and lets spread the word to other like minded individuals who know there is a better way.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Developer Budget Category

We move on from the User Budget Categories to the Developer Budget Category. In many ways this is a far simpler budget in that it maps directly to the user budget. That is each hour of user community time is matched with one hour of developer time. So the allocation of the time of the developers will follow exactly that of the User Budget Categories that we have already spelled out. The costing of the developers is at the same rate of $185 U.S. as the user community. The main difference is that user community is a third party transaction with an independent business, and the payment to the developers is to salaried personnel. The $185 therefore also includes our overhead for office space, administration, computers, networks and software, etc.

We therefore have the same 1,000 to 2,000 man years of time, or $333 to 667 million budgeted for the developers for the term of the first commercial release. As we will see in the Oracle cost section we have additional developer time of 450 to 1050 man years of their developers joining the development. These are for a variety of reasons that we will discuss when we get to that budget category, however it is reasonable to assume that there will be some mixing and matching between the People, Ideas & Objects developers and Oracle developer categories in the user community.

We have two additional budget line items in the developer budget. The first is “Product Owner” which are positions that are part of the developer team. For the type of development we are conducting these people will represent the user community on the development team. They have broad authority and responsibility and can affect changes to the development. They are the user communities representative on the ground in the development team. They will be selected for their industry experience and knowledge of the specific nature of the module or characteristic of that specific development team. Therefore they will be speaking the same language as the user community. They will be senior in terms of their education and experience and understanding of the oil and gas industry. They will also understand the technology. We have budgeted for 25 product owners, one for each of the development teams. Each product owner is provided with support staff and a discretionary budget. The costs for the anticipated three year term of the initial development is therefore $33.6 million.

The second budgeted line item in the developer budget is for research. This is for oil and gas related research in terms of the work that has and will always be carried out by People, Ideas & Objects. We are a research and software development company. It is the ten years of research that we conducted into the use of the Joint Operating Committee that has brought us to the Preliminary Specification. It doesn’t stop here. As we mentioned yesterday the Preliminary Specification is a framework for solving problems. Expanding our research capabilities will help in providing some leadership and direction in terms of where the Preliminary Specification will need to move to solve future issues. We have therefore designated a budget of $10 million for the three year term of the development to provide for the addition of ten people. And therefore the total budget for the Development Budget Category is in the range of $375 to 710 million.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Review of the Decentralized Production Model

It has been a while since we reviewed the decentralized production model and I thought that a quick review for the new year would be timely. Our focus lately has been on the value that People, Ideas & Objects brings to its various stakeholders. With $667 million in development funds to the user community, tens of billions in revenues being established in the service provider sub-industry (this being through a reallocation of the G&A of the producers to the service providers), and the opportunity costs of $170 billion for 2013 and 2014 for the producers themselves. This value generation is the opportunity that is open to each of these communities as a result of implementing the decentralized production model of the Preliminary Specification.

Implementing the decentralized production model will be the first material operational solution that the Preliminary Specification has solved for the oil and gas industry. When we move the compliance and governance frameworks of the hierarchy into alignment with the legal, financial, operational decision making, cultural, communication, strategic and innovation frameworks of the Joint Operating Committee. We achieve a speed, accountability, innovativeness and profitability within our producer organizations and Joint Operating Committees. We are also able to solve the operational issues of the industry. This is the value of the Preliminary Specification, the ability to solve problems. Moving the industry away from its muddling along strategy to that of an innovative, dynamic, proactive and profitable industry.

The decentralized production model starts by stripping the prototypical producer down to the C class executives, the earth science and engineering resources, some land and legal, and support staff. The rest of the producer is reallocated to service providers who are focused on a process or subprocess and are using the entire industry as their client base. These service providers are new organizations created as a result of implementing the Preliminary Specification. And are generally owned and operated by the people who are involved in the user community that defines the Preliminary Specification. The service providers form a sub-industry due to their size. With a revenue stream in the tens of billions of dollars, monies that were previously spent by the producers on General and Administrative expenses.

One of the key differences in the decentralized production model is that the service provider will be charging for their service to the individual Joint Operating Committees that originate the transactions. Whether that is for production, revenue or royalty accounting or any other administrative, accounting or overhead item. The service will be provided to the Joint Operating Committee where the production originated and that is where the service fee will be charged. None of the fees for any of the service providers will be charged to the producer firms, only to the Joint Operating Committees.

As a result when the property is shut-in due to low commodity prices, the field data or activity that triggers the service providers to conduct their services, and bill their fees, are not triggered. Therefore no work is undertaken for that property and no service fees from any of the service providers are sent to the Joint Operating Committee that was shut-in. As a result the producer who has an interest in the property saves the reserves for a time when the commodity prices will provide for a profit, incurs a null operation (no loss, and no profit), and removes the excess production from the commodity marketplace allowing for the markets to remain in balance.

The $170 billion opportunity costs calculated above are based on the producers removing 15% of the natural gas production from the marketplace. And in turn they achieve what they prescribe as market rates of $6.70 / mmbtu on average for the year. The decline in production is possible with the decentralized production model because there is a commensurate decline in the overhead that the producer will realize. If they cut 15% of their production they will cut 15% of their overhead costs. Their financials will appear consistent in any production profile as their overheads are now variable under the decentralized production model. For the service provider it may be that they are faced with a 15% decline in their revenues as a result of low natural gas prices. And this is something that they can budget for.

With over 200 years of natural gas reserves, rationing production based on profitability is the only reasonable methodology. That is what the decentralized production model provides the industry. Any producer who produces natural gas at a loss would be penalized in the capital markets for a lack of production discipline. The alternative is to muddle along for another 200 years.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Contingencies User Budget Category

We come to the final User Budget Category, that being Contingencies. We will incorporate an overall summary of the User Budget Category in this post as well. How quickly we have spent the $333 to 667 million that has been designated for the user community. 1,000 to 2,000 man years of effort is a sizeable effort, and I think this series shows what the user community can accomplish in terms of ERP systems in oil and gas. Building off of the vision of the Preliminary Specification and the Oracle Fusion Applications provide you with a good foundation that will enable you to achieve our objective of providing the oil and gas producers with the most profitable means of oil and gas operations.

The Contingency User Budget Category is set at 6% of the total funds, or $20 to 40 million, or 60 to 120 man years of effort. These funds can be used in any area where we have misallocated our resources and find the need for more. At 6% it is a small percentage of the total funds as I suspect that there may be some areas where there are funds that are left unspent. Those monies can be clawed back into this contingency fund and used to allocate to other areas where there are shortfalls.

There has never been a software development initiative like People, Ideas & Objects. Basing our project in the user community is the only way in which I will proceed. The complexity of the oil and gas business does not make for the traditional ERP systems fit. It is like trying to stick a square peg in a round hole. The industry is too unique to be subject to a standard package of one size fits all industries. The need for the user community to define the processes that it uses, and have the developers build the software based on that user definition is the only way that the user will have what they need to do their jobs appropriately.

What job, and what process have we left untouched in the Preliminary Specification. We are exercising wholesale changes everywhere and on everything in the industry, the service industry and creating the service provider sub-industry. The prototypical producer is changed and how people are engaged with them. It is this level of change that needs to be analyzed and designed by the user community with the resources in the User Budget Categories. It will be the users that determine the actual makeup and means of the industry when the People, Ideas & Objects Preliminary Specification goes live in the industry. And it will be the user community, who will also be represented in the service providers, who will be the ones that make the transition to this new vision, a lucrative and profitable career choice for themselves.

If you see yourself in this new configuration, taking on a different role in the industry. One in which your skills, experience, education or leadership can be of value in the user community. Where you can see yourself as the proprietor of a service provider. Providing a unique process management to the entire oil and gas industry. Where your team uses the most advanced tools and thinking to provide your clients with the highest quality services. Then now is the time to prepare and begin the process of building that future for yourself.

We have now started the second year of our ten year plan. A plan which sees the Preliminary Specification operational throughout the tenth year. Our objective for this year is to get the word out and get like minded people involved in this community. We are at the very beginning, but we also provide the oil and gas producer with the most profitable means of oil and gas operations.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Earth Science & Engineering User Budget Category

The second last User Budget Category is the Engineering & Earth Science User Budget Category. We have allocated $20 to 40 million, or 60 to 120 man years of user community effort to this area. There will be some overlap from the Research & Capabilities and Knowledge & Learning modules in terms of budget synergies. However, I don't think there will be any other budgeted areas where there can be some joint development work undertaken.

This is a unique area for an ERP system to consider and one that we pay appropriate attention to. Using the Joint Operating Committee brings about an operations focus for all that are involved. That is also reflected in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. This operations focus brings the earth sciences and engineering into focus in the business of the oil and gas producers. It is therefore necessary that we allocate an appropriate amount of our budget to the earth science and engineering areas to ensure that we have included all of the necessary elements that a producer and Joint Operating Committee will need.

Our research produced the Research & Capabilities and Knowledge & Learning modules. They allow a producer to focus on the development and deployment of their scientific capabilities. And to conduct specific tasks such as moving the knowledge to where the decision rights are held. These elements arise more from the business side than they do from the science. I am not familiar with the science from the point of view of the processes that are used in the day to day use and development, outside of capabilities development and deployment. There are, I am certain, many things that I am unaware of that would build value in the People, Ideas & Objects application modules that engineers and geologists would immediately ask for. This budget is for the development of those items.

We are also not recreating the engineering or geological applications that exist in the marketplace today. We are looking to manage the processes that are prevalent within an oil and gas producer that can be more effectively managed in a user driven application. Recall that we have reorganized an oil and gas producer through the decentralized production model. Where the producer is a highly focused unit consisting of the C class executives, the earth science and engineering resources, some land and legal, and support staff. With the remainder of the resources being relocated into service providers. The manner in which these earth science and engineering resources operate will therefore have changed materially as a result. Both production and exploration administration are located in service providers. Therefore the processes that the producers will rely upon will need to be redefined, redeveloped and the software built.

For all intents and purposes the oil and gas producer has changed in material ways and we are unaware of how those affect the earth science and engineering resources of the producer firm. At the same time this area is fully one half of the critical competitive advantage of the producer. And we should be able to take this opportunity to move the processes of the producer firms and move them to a higher level of performance. These are the objectives of these User Budgets.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Accounting Firm User Budget Category

This next User Budget Category is interesting in that we are achieving many different objectives with the establishment of this user budget category. What we have done is allocated 17% of the User Budget, or $56 to 112 million to the Professional Accounting Firms. This would total 168 to 336 man years of effort. These are the firms that are responsible for the annual audits of the oil and gas firms for compliance to the SEC and other regulations.

The objective here is to have the accounting firms sign off on the People, Ideas & Objects systems in terms of their integrity on behalf of the oil and gas producers. This work is done in the normal course of an audit, however, with the establishment of People, Ideas & Objects there will be a sizeable burden that the producers will have to undertake in order to achieve this sign off. By inviting the accounting firms into the development process, and having the costs of the producers aggregated in the manner that we have, we can mitigate the total costs to the producers, achieve the sign off at an earlier time and achieve a compliant system in the process.

Allocating this workload across the accounting firms that are present in the U.S. and Canadian regions will make it possible for them to acquire the talent necessary for these purposes. No one firm will be asked to deal with this exclusively as that would slow the development work down. The need for these people to keep pace with the developers and the user community would be their responsibility and obligation. Our responsibility would be to implement their recommendations and achieve the sign off.

These funds have synergies with a variety of other pools of funds that are within other User Budget Categories. The Compliance & Governance module holds the coordination and application design roles over the compliance and governance of the producer and Joint Operating Committee in the Preliminary Specification. Its budget is somewhat small but we are looking at this as the overall check and balance of the Compliance & Governance module. Other funds are coming from the Compliance (Tax, Royalty, SEC) category which will be relying heavily on the work that has been done in the compliance areas of the SEC, royalties and tax regimes in publishing technical frameworks. Other miscellaneous resources have been allocated such as the development of royalties in the Partnership Accounting Module.

There are significant resources being allocated to compliance and governance in the Preliminary Specification. When you consider our application relies on Oracle Fusion Applications which have this area covered off well, we will provide the producer with an effective compliance and governance product. The service providers who will be providing the software and services to the producers will also be well versed in the ways that the application operates. This is due to the fact that they will be participants in the user community that are involved in these developments. Moving on after development to provide the software and services on the basis of the decentralized production model.

It is one of the indirect advantages of approaching the compliance and governance and using the accounting firms to sign off in this manner. And I do not wish to sound too derogatory here. By having the accounting firms provide the compliance and governance sign off. They preclude themselves from participating in the user community in any other capacity. Which also precludes them from any participation in the service provider community. Theirs is a unique service which is not dependent on the type of firm that they are auditing. They believe that they can take their people and move them into other areas, such as the opportunity that the service providers reflect, and build value. And with their brand and marketing dollars overcome the common sense of some of the producers. I know different, and I don't want them servicing the People, Ideas & Objects software and I don't want them pushing out the user community from the opportunity that the service provider marketplace provides them. Having the accounting firms conflicted in this regard will keep the service provider marketplace open to those with the experience and skills, and investment in the user community, to service the oil and gas producers and Joint Operating Committees.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Service Provider User Budget Category Part II

Clearly the establishment of the decentralized production model will be one of the most significant events that will happen in oil and gas industry. It will provide the oil and gas producers with the ability to achieve market rates for their natural gas and by-products. It will establish a sub-industry of service providers that are dedicated to the efficient and effective administration of the oil and gas industry at the Joint Operating Committee level. And make for a thriving sub-industry that can undertake the types of workload the industry needs in the areas of administration, accounting, process design, technology implementation and research. I see a significant infrastructure being built just to support the service providers that will enhance the service offerings to the Joint Operating Committees. This administrative and accounting capability, available on an industry wide basis, is what is needed for the 21st century oil and gas industry.

In addition to the User Budget Category allocation that we discussed yesterday. We will have a variety of synergies with the Joint Operating Committee User Budget Category allocations that we discussed in Part I to X earlier this month. These allocations will help to define specifically what the processes the service providers need to provide. Additional synergies are available from both the Compliance (Tax, Royalty, SEC) and Service Industry User Budget Categories.

It would be nice to have the industry hand these monies over in a timely manner and for this community to begin these developments. However that is not going to happen. We have to stick to our ten year plan and be prepared to implement them on that basis. The bureaucracy is hell bent on our failure. They want nothing of this initiative to exist. And they will do everything in their power to ensure that it doesn’t. Remember that there's strength in our numbers and we have the ability to state that we provide the oil and gas producer with the most profitable means of oil and gas operations. The bureaucracy is certainly in control today. However, the CEO’s and CFO’s are with us, but they can’t fight the bureaucracy either. If they tried to turn the ship, the ship would fight back and they would have a mutiny on their hands. Our appeal resonates with the investor class and they are more frustrated with the lack of performance than we are. We need to get the word out, which is our 2014 goal. This is so that the user community can begin to form and the investor class knows that there are alternatives in the marketplace.

What I can do to make this happen is show you that there is money on the table. And there are significant budgets and revenue streams associated with the work we are doing. From the $170 billion in opportunity costs for 2012 and 2013 for the producers, $667 million in development costs for the user community and tens of billions of dollars to the service providers in terms of annual revenue streams. What exactly has the bureaucracy offered you lately? The structure that I am detailing here is going to appeal to the movers and shakers in the oil and gas industry and together we are going to revolutionize the way that it is run, managed and operated. One in which we are structured to solve the operational issues as they occur. That is exactly what the Preliminary Specification does. By using the Joint Operating Committee the producer is enabled to solve the operational concerns that they face. So issues such as low natural gas prices can be resolved through solutions like the decentralized production model. That is the value of this business model. And the fear we strike into the bureaucracy. The fear that people are actually solving problems and concerned for the performance of the oil and gas industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Service Provider User Budget Category Part I

We now look at the user budget category that will be the area which we will see the greatest level of change in the industry. Seeing how the service providers don’t exist as of today, and the majority of the people that will be working for the service providers are currently working for the oil and gas producers, that is a significant amount of change and we have barely started. Employing the decentralized production model is critical to the dynamic, innovative, proactive and profitable oil and gas producers economic health. Critical to the decentralized production model is the establishment of the service providers and their ability to charge service fees for their work to the individual Joint Operating Committees. It is in that way that the producer becomes flexible in their production options. In a world where there are 200 years of natural gas reserves, production discipline based on profitability is the only solution, and that is provided to the producers through People, Ideas & Objects decentralized production model.

The service providers will therefore have a User Budget Category allocation of 25% of the entire user budget. That totals $83 - 166 million or 250 to 500 man years of user effort. A significant undertaking in terms of budget, and a significant undertaking in terms of the scope and scale of the processes that are being moved from the producer firms to the service providers. In the Preliminary Specification many of the processes will originate and be managed in their entirety by the service providers. It will be the user community that determines which ones and how they should be structured. I would suggest that 90% of the accounting, 80% of the production, land and exploration administration processes will be moved to the service providers. With the prototypical producer being focused on their earth science and engineering capabilities, and land and asset bases as their competitive advantages. Having these service providers provide for the generic administration of these processes on a daily basis will be the most cost effective and profitable means of oil and gas operations. The more they rely on this structure, the more profitable they will be as the lower the overhead of the producer firm will be. I would see this as a means of competitive differentiation in how a producer operated their firm. The leaner that they could operate from an overhead point of view, the more attractive the producer would be to the investment community.

As we have indicated the user community will be the people that determine the processes that will be managed by the service providers. Taking all of the processes that are currently necessary within the industry and determining the appropriate manner in which they should be managed. Using a variety of different tools, but most particularly specialization and the division of labor, they will be able to identify the optimal solution to the way a process should be managed in the industry. From there they will work with our developers and develop the software on the basis of the processes that they have designed. They will also work to develop the service providers and the configuration of what that sub-industry will be comprised of. It will be the user community participants that will have the inside edge in terms of who establishes these service provider firms.

Let me point out once again that the revenue streams of the service providers will be the G&A expenditures that are currently being spent by the oil and gas producers today. These total in the range of $40 to 60 billion per year for the North American producer marketplace. The majority of these costs will be what are carved out and used to establish the service providers revenue base. The question becomes how does an individual position themselves to acquire the ability to manage a process in this new sub-industry?

To answer that question we go back to how the Intellectual Property for People, Ideas & Objects operates with respect to the user community. We use the IP of the Preliminary Specification to raise the funds from industry to develop the software. Included in that is the costs of the user community. These funds are to support the user community as this is not a volunteer effort, and secondly as a means in which we purchase the IP from each of the participants in the user community. You are paid for your IP contributions. Now, if someone, or a group of people were to have established a process that became the process that was managed within the People, Ideas & Objects Preliminary Specification. Then that individual or group would have been compensated for their efforts, and, they would have acquired specific skills and understanding regarding the management of that process. They would have value to People, Ideas & Objects in managing that process on behalf of industry. And we in turn would provide them with a service provider license that gives them monopoly rights to the management of that process in either Canada or the U.S. This would be provided through the exclusive access to that process in the People, Ideas & Objects software. There is no purpose in having multiple service providers focused on the same process. The service provider will be focused on providing the best service they can offer without the distraction of having their client base being attacked by new entrants to the marketplace. Whether someone would see that this is an investment opportunity or not is up to them. We are operating on the basis of our second year of a ten year plan. I think it is an interesting proposition in that those that invest heavily in the user community will be rewarded with a position in the service provider sub-industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Service Industry User Budget Category

Within the Preliminary Specification the oil and gas producer has an enhanced reliance on the service industry. It is this enhanced role that has led us to designate a $40 to $80 million user budget category for the user community. This works out to 120 to 240 man years of effort. These funds will be used in combination with the resources that are designated for the Resource Marketplace, Research & Capabilities, Knowledge & Learning and Security & Access Control modules that we discussed in the Joint Operating Committee user budget category earlier this month.

When we talk about the service industry we are talking about the organizations that provide the field services to the oil and gas producers and Joint Operating Committees. Specifically we are concerned with how they do their accounting, their billing, their contact information (Federated Identity) and the interaction of that business information with the producers and Joint Operating Committees. We want to provide the oil and gas producers with the most profitable means of oil and gas operations and that requires that the administration of their operation be as efficient as is possible. In order to achieve that efficiency the service industry that services the producers in the field must interact with the producer at high levels of technical efficiency.

What I am suggesting here is not so much that we establish a technical framework in which the service industry will comply. Since we are a cloud computing environment. We provide the accounting and administrative software and service providers to the service industry in combination with the software and service providers that are provided to the oil and gas producers. It would be in that way that our software and service providers would handle the processes that saw high levels of oil and gas industry interaction with the service industry. That way the oil and gas industry would be able to account for its activity in the manner that it sees its interests best represented. The service industry would have their own accounting and administration systems which would then interface with the cloud computing services that we provide. And these would be reconciled by the service industry representatives.

Throughout the Preliminary Specification we have highlighted the areas where the service industry is represented and the interactions they will have with the producers and Joint Operating Committees. And it is a much more involved relationship. The current situation between the two industries is unsustainable and inconsistent with what is required for a dynamic, innovative, proactive and profitable oil and gas producer. In all areas, from the creation and securing of Intellectual Property, to the participation in the Security & Access Controls Military Command & Control Metaphor. The need for the producer to operate their field operations with military precision requires that the service industry has the type of systems that we are considering here. And our service providers being active in providing those systems to the service industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

Compliance (Tax, Royalty, SEC) User Budget

Lets move back to our discussion of the user budget and the allocation of its funds. The first section that we completed was the Joint Operating Committee user budget allocation. It used 22% of the $333 - 667 million user budget for development of the Preliminary Specification. These resources were allocated under the blog posts entitled Joint Operating Committee User Budget Category Part I - X posted earlier this month. The next allocation is the Compliance (Tax, Royalty, SEC) user budget category and we have allocated $40 - 80 million in total for this section of user community involvement. Or 120 to 240 man years of effort.

The objective of this section in terms of output is to ensure that the systems that we build are in compliance to the various regulations that the producers and Joint Operating Committees are required to comply with. Of particular concern are the various royalty regimes that are in place in the various jurisdictions the producers produce from. It is our competitive advantage that we provide the oil and gas producers with the most profitable means of oil and gas operations. With royalties being the largest cost component of an oil and gas operation it would be incumbent upon us that we ensure that the producers and Joint Operating Committees pay the lowest possible royalties. And that should be one of our objectives, to ensure that the royalties are calculated in the manner that provides the lowest possible royalty to the producer organization.

A large part of the costs incurred in this budget category will be for the royalty component. There will be many that feel that the various governments and administrations that collect the royalties should provide us some relief of those costs to help in dealing with these high development costs. To accept this money would be a betrayal of our interest to the producers we represent. We are financed by the producers and provide them with the most profitable means of oil and gas operations. If we accept money from the royalty regimes then we have compromised ourselves and cannot guarantee that we are working in the best interests of the producers. I would extend this conflict of interest to the user community and the service providers at large. We have a duty to the producers to maintain our competitive advantages and there are those situations that could potentially put us in a conflict of interest. Please be aware of this and avoid them at all costs, if you find yourself in one you should deal with it immediately.

To deal with the tax, royalty and SEC requirements in the North American marketplace will require more than the resources that have been allocated here. And there have been. In almost all cases the royalty regimes have established high levels of technical frameworks and regulations that can be implemented quite easily. The hard work in many instances has already been done. In terms of the SEC and tax the same situation applies. The XBRL syntax is used by the SEC for its reporting purposes and it has been adopted throughout the Oracle Fusion Applications that are a base of our application. What we need to do as developers, users and service providers is the work that is unique to oil and gas, and unique to People, Ideas & Objects Preliminary Specification.

Specifically that involves integrating these technology frameworks within the DNA of the application. So that they are an inherent part of the application, not an add on that is used later. The service providers will be providing the services of the actual process management on behalf of the industry. It will be you who will be actually using the applications and we need to define what it is to ensure that your management of the process is the most efficient and effective for the producer firms that are your clients. If you are managing the eligible capital costs for gas cost allowance for the Texas Railroad Commission. What is it that you want and need in order to manage that process on behalf of all of the Texas based producers. Or if you're managing a duplicate payment verification process for the entire North American based producer population, what is it that you need and want?

As we indicated during the Joint Operating Committee user budget category discussion there would be synergies between the budgets allocated here and elsewhere. The Joint Operating Committee user budget category for the Compliance & Governance module has an allocation of its own budget dollars. There is a separate budget allocation to the Accounting Firms totalling 17% of the user budgets. These are to provide for the Accounting Firms to sign off on the compliance and governance elements of the People, Ideas & Objects applications integrity on behalf of their industry. And there are significant resources in the Oracle section of the budget to determine what it is they have done in this category of their applications. Therefore with these resources I feel these tasks can be undertaken by the user community and service providers and provide the producers with the most profitable means of oil and gas operations.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

A Word About Implementations or Integrations

With the decentralized production model the service providers acquire the industry wide administrative and accounting capabilities. Therefore the producer, irrespective of its size, accesses these capabilities from the service providers as needed on a service fee basis. The process management, such as one of the many royalty processes, will be dependent on some data generation or activity that triggers the process. How these processes are implemented and / or integrated into the producer firm or Joint Operating Committee is something that has not been discussed before. And once again we turn to the service providers to do the analysis and preparation of the producer or Joint Operating committees records into the People, Ideas & Objects software.

There will be many processes and the coordination of those processes with the software and the appropriate service provider will be a key part of the integration. As it is today. The fact that there are so many processes under management is not an issue. Additions and amendments to the processes can be made as time goes by. This applies to those start up firms and ExxonMobil equally. It is a necessary act to have the producer or Joint Operating Committees processes loaded on to the software and the service providers actively managing them. Once these are completed the producer will have little if anything to do with the software or service providers other than from a high level reporting point of view.

Note that there will be no training of the producers staff in terms of the specific attributes of the People, Ideas & Objects software. The process management is completed by the service providers and they are operating the processes across the industry with a “state of the art” level of capabilities. Adding additional producers to their client base will be a daily occurrence that they will do with precision and accuracy. With the administrative and accounting capabilities held within the industry, the need to train each individual producer on the nuances of the People, Ideas & Objects software will not be required. The industry wide administrative and accounting capabilities will have those integration skills as part of their capabilities and no additional training of a producer will be required for an integration.

When we commercialize the software we most certainly will have hundreds and possibly thousands of unique oil and gas processes under management by the software. Each with its own unique service provider managing the process on behalf of the industries producer and Joint Operating Committee population. Coordination of this mass of details is the job of the integration. Ensuring that we are managing all of the industries processes is the job of the user community during the developments. Identifying, optimizing and applying the toolset of specialization and the division of labor to more effectively deal with the workload of the industry from an administrative and accounting point of view. This reflects on the importance of the network of people that will be needed to make this work. And why our budgets are the size that they are.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz

A Distinct Competitive Advantage

The user community, service providers and People, Ideas & Objects provide the innovative and profitable oil and gas producers with a distinct competitive advantage. And that is we provide the most profitable means of oil and gas operations. One way in which we do this is through the decentralized production model which is one of the elements of the Preliminary Specification. It enables the producer firm to reduce their footprint to the C class executives, the earth science and engineering resources, some land and legal, and support staff. The remainder have been established into service providers who are now focused on a specific process or subprocess and have the entire oil and gas industry as their client base. This enables them to use the tools of specialization and the division of labor to better service their clients needs and provide efficient services.

The real value of the decentralized production model comes about when the producer, who may be faced with low commodity prices and a property generating a loss situation. Choses to shut-in production to save those reserves for a time when commodity prices are higher and can earn a profit. The service providers for that property will not have any activity for that property and as a result will not generate a billing for their service for that month. Whether that is for production, revenue or royalty accounting or any of the other administrative, accounting or overhead charges that are normally incurred by the producer. The property will therefore report a null operation, no profit and no loss. Only the costs of capital will be left uncovered during times of shut-in production. Achieving the goals of saving the reserves, removing the excess commodity from the marketplace, and increasing the financial performance of the producer firm.

The user community and service providers have this competitive advantage as a key element of their offering. This is what they should be leading the discussion with the industry about. How they are able to offer the $76 billion in 2013 opportunity costs and $170 billion in opportunity costs for the last two calendar years. These opportunity costs are what the decentralized production model could have brought the industry in those two years. And it could only have happened with the configuration of the user community and service providers that are discussed here. As a member of the user community or a service provider you have a sizeable competitive advantage that you can offer the industry. You need to be actively selling these attributes to the oil and gas industry at large. This is what is meant by getting the word out.

Some of us are busy with the 2013 financial information that will be published in the next few months. I don’t expect this to be much better financial information than what has been experienced in the past few years. If not for oil the industry would be bankrupt. And that is an unnecessary situation when the bureaucracy can leave the playing field and we can implement the decentralized production model. And that is the point that we should be trying to make this annual report season. That there is a better way and a group of interested individuals that are concerned about the health of the industry and the manner in which it is managed. A group of individuals with a better way to run the industry for the long term and deal with the kinds of issues that the industry faces and will face in the 21st century.

The bureaucracy has done nothing about the situation in the natural gas business. The decentralized production model deals with low commodity prices. With over 200 years of natural gas reserves as a result of the shale gas situation, selling at a loss in perpetuity is the bureaucracies answer to the marketplace. It doesn’t have to be that way. What is necessary is the decentralized production model that restricts production based on profitability. And we have this solution. So lets get the word out.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Our Communications Network

Wikipedia states that Metcalfes law relates to telecommunication networks and states that its “value is proportional to the square of the number of connected users of the system (n2).” Now that was how the law was written at the time that Robert Metcalfe wrote it in the early 1970’s. As the inventor of Ethernet and founder of 3Com Robert Metcalfe was focused on telecommunications at the time. If you follow his writings and thinking at this time, his definition of a network would include anything that involves people connected through the Internet. Therefore the value of the People, Ideas & Objects user community will be more valuable the more members of the user community join our network. First we need a network.

What our network will need to do will be for people to join in and participate in the conversations that are taking place here at People, Ideas & Objects. A place where people can communicate with one another with direct messages and find one another. A place where people can keep up with what is going on in the community around People, Ideas & Objects. FaceBook is used by everyone for their personal social networks. To add this community to FaceBook would be adding a component that is inconsistent with the makeup of what the users use FaceBook for. Twitter on the other hand is something that is used more by business related networks and less as social networks. In most cases people within our community will have not used Twitter before and therefore will have an expressed purpose to use it that will not interfere with anything else that they are doing. So we have chosen Twitter to be the network that we use to enable the communications and development of the user community of People, Ideas & Objects.

People wishing to join the network need to follow me @piobiz its that simple. From there you can see who else follows @piobiz and who we follow. You will also see the tweets that are sent out from myself and any of those that are sent out from people within the network who include @piobiz within the text of the tweet itself. You can put some information in your profile including an url to a website of yours for further information. There is a mechanism for which you can send private messages between members of the community. Other advantages of using Twitter include that it is deployable immediately and its cost is nothing. It will be here that we can begin to build the community that generates the momentum to move the industry.

As we start off the numbers may be small but we need to start somewhere. We will build this brick by brick, and stick by stick over the term of the remaining time in our ten year plan. That is how we will see this become real. That is how the opportunities for everyone will materialize. Our goal for 2014 is to get the word out. And that is how we can change the oil and gas industry into the dynamic, innovative, proactive and profitable industry that we need it to be.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Plotting a Coup

That’s right a coup. Viva la revolution. The bureaucracy have shown that they are not interested in dealing constructively with People, Ideas & Objects therefore we need to throw the bums out of power. I have frequently mentioned that people should not openly discuss People, Ideas & Objects or the Preliminary Specification due to the consequences that may have to their careers. The bureaucracy sees us as a threat and they will overreact and the consequences to you would have been unnecessary and unfortunate. That warning is now being lifted and I would encourage everyone to openly engage in discussion of this project. Our second year objective is to get the word out and with a number of people openly discussing the initiative there will be a strength that the bureaucracy can’t act against. Besides you could always challenge the bureaucracy with the fact that you provide the oil and gas producers with the most profitable means of oil and gas operations. I would be interested in their response to that, seeing their current track record.

We are not working on the basis of someone's approval. We are authorized by our own self interest. People should be taking a long term perspective of how we can change the industry to the dynamic, innovative, proactive and profitable industry we desire. Engaging the bureaucracy at key times when they appear at their weakest will show them to be unable to compete with the community that is being generated here around People, Ideas & Objects and the Preliminary Specification. A like minded group of independent business people who are focused on bringing the oil and gas industry into the 21st century, despite the bureaucracy. That is our mission, and our posture should be aggressive and in your face in a polite and courteous, confident manner.

Due to the nature of our posture and our facts we may find that when we engage the bureaucracy there may be more conversions than there are confrontations. The long term perspective leaves something for everyone, even the bureaucrats. Remember in terms of annual G&A dollars spent in oil and gas today. The gross amount is in the $40 to 60 billion per year range for the North American producers. A large portion of that G&A will be reallocated to the service providers as revenues in the businesses that you will be developing in the next few years. Even bureaucrats have calculators these days. There is a substantial opportunity waiting for those that have the capabilities to provide the oil and gas producers with the most profitable means of oil and gas operations in this community.

We are about making this happen. We are not about knocking on doors asking for approval. The money will begin to flow when we have the situation under our control. It is within our power to seek and obtain the power to control the industry. For that is what we are after. To make the industry a dynamic, innovative, proactive and profitable oil and gas industry. This is a coup. It starts here in our second year with getting the word out about the Preliminary Specification. Organizing ourselves for the long run. Thinking about how the producer can achieve the most profitable means of oil and gas operations and maybe enjoying our work at the same time.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz