The Preliminary Specification Part CCLXXXV (RM Part XXXVIII)

Looking at the Oracle Fusion Applications from the perspective of the Resource Marketplace module it is easy to see where we can start. In the Preliminary Specification so far we have not discussed what is traditionally been called the Human Resource or Human Capital area of the firms needs. This of course would fall under the Resource Marketplace module as these people are part of the Resource Marketplace. Oracle has a number of products that fall under this category in their Oracle Fusion Applications and we will discuss them over the next few days. I noticed this quotation that shows we are consistent with Oracle’s approach to the marketplace in terms of how their Oracle Fusion Applications are to be used.

Oracle Fusion Human Capital Management is part of Oracle Fusion Applications, which are completely open, standards-based enterprise applications that can be easily integrated into a service oriented architecture. Designed as a complete suite of modular applications, Oracle Fusion Applications help you improve performance, lower IT costs, and get better results. Whether you choose one module, a product family, or the entire suite, Oracle enables you to gain the benefits of Oracle Fusion Applications at a pace that matches your business needs.  

I read this as consistent with our intent to use Oracle Fusion Applications in the following manner. That they are open to customization through the Oracle Fusion Middleware layer. They are standards based and can be used as a service oriented architecture which is another term for “cloud” computing. Lastly we are an Oracle customer that fills the gap between the oil and gas industry and the technologies that Oracle provides.

The first document that I want to look at is a brochure that was published by Oracle entitled “Oracle Fusion Human Capital Management: The New Standard for Human Capital Management”. Within it Oracle lists the fifteen applications that fall under the Human Capital Management Suite. It is not my intent to review those individual applications too closely during this fifth pass through the Preliminary Specification as it might be too much too soon in term of detail. This level of detail may be better suited to a sixth pass through.

The first and summarizing paragraph of the brochure shows that we are in the same ball park and playing the same sport as Oracle with respect to the Military Command & Control Metaphor (MCCM). Although our concept has been developed further to include multiple organizations in the Joint Operating Committee and the service industry, they have developed the concept within the standalone organization to a significant level.

Oracle Fusion Human Capital Management (HCM) is a revolutionary step in human resources. The core design principle of Oracle Fusion HCM empowers every role in the organization, connecting all segments of a global workforce. It allows organizations to inform, engage, and collaborate with their workforce in ways never before possible. Organizations will benefit from the ability to personalize the application at organizational, business unit, management, and individual levels. These capabilities are fully configurable; are supported out of the box; and ensure data consistency, security, and compliance globally

Reading their documentation I see this emphasis on role throughout, which is a necessary part of the MCCM, and being a critical part of their application suites. Having that functionality already there will be a strong first step in making the MCCM real.

One area that we had not touched on yet was payroll, after all everyone likes to get paid. And of course the Oracle HCM Suite provides for these services. What will need to be done is to ensure that the earth science and engineering, as well as any other human resources that are being charged to the joint account, are able to be charged and recovered through the payroll system. I would think that this is something that Oracle would have thought would be basic functionality however I have not stumbled upon it yet. Recall that it is necessary, as a part of a producer's value proposition, that they seek revenues from oil and gas sales, and, from the secondment of their technical resources to the Joint Operating Committees, research and industry at large. The demands for earth scientists and engineers being so great, the costs to develop a team will be too onerous without the ability to generate revenues from them. Therefore a payroll or Partnership Accounting module facing system that bills these resources to the joint account and elsewhere at various rates will be necessary for the innovative oil and gas producer.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXXIV (RM Part XXXVII)

We now turn to our fifth or Oracle pass through the Resource Marketplace module of the Preliminary Specification. I thought for today we would review some of the highlights of the Resource Marketplace as it stands so far. The Resource Marketplace module being the first of three marketplace modules incorporates the “Marketplace Interface” that is a key component of how people interact and collaborate within the People, Ideas & Objects applications. We didn’t discuss at any length the “Marketplace Interface” in the Resource Marketplace module in previous passes. I think however that it is well understood how the interactions would come about in the Resource Marketplace module. There are the Petroleum Lease and Financial Marketplace modules that document the “Marketplace Interface” extensively and you should review those posts if you need to source further information on the topic.

The first interface that was introduced was the “Actionable Information Interface”. We spoke briefly about this a few days ago in the Security & Access Control module with respect to reviewing the Oracle product Oracle Internet Directory. The “Actionable Information Interface”  captures the ideas that are generated from the oil & gas and service industries participants in their most basic form. That is to say that “as a firm” they are looking in the next few months to expand, acquire, participate etc in expanding, investing, increasing their capabilities in a certain area... From there this information is searchable from the rest of the industry representatives and are able to determine what they might be able to provide or participate with a firm in a similar situation. With the distance between firms problems and the solutions to those problems being so much harder to find, having this type of information is the very beginning of innovation. It will be the first who sees the problem, whether that is as of a direct request in the “Actionable Information Interface” or as a result of reviewing over 200 individual entries.

The “Supplier Collaborative Interface” enables the producer and supplier to work through the product and service nuances they are having with a supplier in an open forum. Providing the industry a source of learning. Instead of the supplier having to deal with each producer as an individual case through email, they have a public database of information of how their technology is implemented and used within the field. These databases / wikis are able to provide the customers with valuable information about the product before, during and after the sale. It is incumbent on the supplier that they maintain and participate actively in the databases to ensure that the messages are clear and the communication to the customer is being heard. Alternatively producers have a means of ensuring that marketing claims are valid and the service and support are as advertised.

We also started the discussion of making the necessary changes from the “High Throughput Production” model to the “Decentralized Production” model. It is particularly important to the Resource Marketplace module as that is where the suppliers and vendors are located. By adopting the “Decentralized Production” model the production and overhead costs are matched to the production and revenues. Without any production, production and overhead costs are reduced to zero in the Decentralized Production model. These overhead costs include the accounting, production administration and exploration administration costs to name just a few. What this enables us to do is to exploit the full value of the division of labor and standardization. That is by spinning out of the producer firm the production accounting, production administrator and other roles to service providers. These non-core services can be effectively done by entrepreneurial firms organized more efficiently to provide the industry with better service.

Consistent with the need to increase the division of labor and specialization we have developed within the Resource Marketplace module the “Gap Filling Interface”. As we have learned the division of labor is expanded by a process of “gap” filling. Therefore having an interface where producers and service industry representative can both identify and resolve each other's “gaps” then the beginnings of the division of labor is identified.

It was during the Preliminary Research Report that I coined the phrase that “SAP is the bureaucracy.” Nothing turns your organization into cement like a good old fashioned SAP install. What the innovative oil and gas producer needs is an organization that will remain open and flexible to innovation, and that demands a software development capability like that proposed here by People, Ideas & Objects. If we want an innovative oil and gas industry then the first thing we should do is ensure that we have the capability to maintain that organizational flexibility. The flexibility necessary to ensure that we do not constrain ourselves unnecessarily, and define and support the behavior that we desire. This is the role of software in the 21st century.

What we expect to gain from the review of the Oracle products in the Resource Marketplace module and the rest of the Preliminary Specification is simple. To put some substance to the Preliminary Specification from the point of view of the generic ERP systems requirements. Using the Oracle Database, Oracle Fusion Middleware and Oracle Fusion Applications will provide a strong foundation for the innovative oil and gas industry.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXXIII (S&AC Part XIII)

We now step down from the Oracle Fusion Middleware layer to the actual Oracle Database for some of the security features that we seek. The first product in this stack is Oracle Advanced Security. It provides the authentication, and encryption of both the database and the network activity. It is possible, and I highly recommend that all the data and information that is used in the People, Ideas & Objects application modules is encrypted in the database and on the network. This increases the load on the systems and will require additional effort in terms of key management, however, I think the nature of the data and information and the manner in which the applications are provided, a “cloud based” solution, this level of security is necessary.

Oracle Audit Vault is another product that I would recommend for the Preliminary Specification. It provides a central location and management of the audit information for compliance purposes. Giving our users the ability to manage the data, information, privacy policies and security. Oracle Audit Vault is also Sarbanes Oxley compliant.

This next Oracle product is a definite addition to the Preliminary Specification. Oracle Label Security will work in many different ways within the modules however here is how I see just two examples. What the application does is designate certain individuals with higher level security clearances. It also designates certain data fields with certain levels of security clearances. Those with high enough security clearances and appropriate authorizations are then able to read these database fields. Within the People, Ideas & Objects application we want to make sure that the reserves, accounting information and strategy discussions of each producer firm remain confidential to a select group of individuals within that firm. With Oracle Label Security that is possible. We also want to ensure that the appropriate people within the chain of command in the Military Command & Control Metaphor have access to the appropriate materials to make the appropriate decisions. This will allow those individuals to have access to these materials without making it available to everyone in the chain of command.

Although not that pertinent to the users of the People, Ideas & Objects applications we have also included Oracle Configuration Management, Oracle Database Firewall and Oracle Database Vault as part of the Preliminary Specification. These will help to keep the applications and the Oracle Database running as they should. Oracle Configuration Management will determine if there is a change in the configuration, either a patch, or if something has gone wrong it will correct itself back to the specified configuration. Ensuring that what is promised to the users of People, Ideas & Objects is what is provided. Oracle Database Firewall ensures no SQL statements that are inconsistent with the users or applications are passed through to the database. And Oracle Database Vault provides the ability to have only certain IP addresses or users to run certain SQL commands and to lock databases from having any operations being conducted on them.

Backing up your data and information are two of Oracle’s strengths. They provide excellent tools for this in Oracle Secure Backup. With the database being encrypted it is interesting that the backup is of the encrypted database. What we will need to do in the Preliminary Specification is to determine in great detail what precisely will be the backup strategy that will be used for the People, Ideas & Objects application.

Lastly there is Oracle Total Recall. A product that helps in accessing historical data. Oracle Fusion Applications provides some interesting solutions with respect to how they handle legacy applications and we will get into those as we proceed through the Preliminary Specification. Let us leave the discussion at this point with the addition of Oracle Total Recall in the Preliminary Specification and note that tomorrow we will begin the fifth or Oracle pass through the Resource Marketplace module.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXXII (S&AC Part XII)

Today we look into Oracle Identity Analytics as part of the Security & Access Control module of the Preliminary Specification. The primary purpose of this application is to provide governance over the access privileges granted to the users of the People, Ideas & Objects application modules. Many of the functions and processes that are provided in Oracle Identity Analytics are either necessary or of significant value that it has been included in the Preliminary Specification.

The first area is the “why and how” of the users access. Providing documentation of what information was accessed by what users and if any of the access violates any of the established policies. Ensuring that data access by users is compliant with the corporate and application policies, that users are not unnecessarily being abused by overtly secure systems and overall good corporate governance is achieved. All of the data that is collected during data access, that is the “why and how” of the users access. Is compiled in a “Data Warehouse” for further analytical analysis and querying. This will help to show trends and usage patterns that will form new policies and procedures and security provisions.

Another useful function within the Oracle Identity Analytics application is the Segregation of Duties feature. In many areas of a corporation, certain process functions must be undertaken by specific individuals and in some cases different individuals. This feature provides for that assurance. It is also Sarbanes-Oxley compliant. This is important when the Joint Operating Committee is small, as we mentioned the other day. And we have to assign many roles to a few individuals. This application will ensure that the processes provide the appropriate governance is maintained by segregating the roles that need to be kept apart for compliance purposes.

There is a comprehensive and customizable dashboard interface for the users of the Oracle Identity Analytics software to analyze the data and particularly the data warehouse. Filled with reports and data that an effective user can use to determine where and how the People, Ideas & Object producer client might be susceptible to access control violations.

The last feature that I want to highlight is what Oracle calls their Role Lifecycle Management. This provides the Oracle Identity Analytics user with the ability to do “what if” analysis in terms of the implications to identities and roles within the People, Ideas & Objects application. It also contains a role change approval process, role versioning and a role rollback feature. These will be needed in determining and maintaining the Military Command & Control Metaphor.

Tomorrow we will be taking a step down from the Fusion Middleware layer, where all of the access control applications have been residing, to the Oracle Database itself to review the specific security provisions.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification. 

The Preliminary Specification Part CCLXXXI (S&AC Part XI)

Some people may be wondering with the co-mingling of Oracle products within the Preliminary Specification what the implications are with respect to Intellectual Property (IP). The answer is simple, what is Oracle’s is clearly Oracle’s and what is the IP of the Preliminary Specification is clearly the Preliminary Specifications. In my dealings with Oracle in the past they have not been difficult in this area. As a matter of fact I would state that they have been very generous. Giving us very valuable technology that was provided matter of fact at no cost and with no expectations of any future revenues. All of our agreements with them renounced the IP to our firm. There are however cost implications in having the Oracle products as part of the Preliminary Specification.

Therefore I expect that a user in the People, Ideas & Objects application modules will seamlessly be alternating between some Oracle products, some Oracle products that have been heavily modified by People, Ideas & Objects and areas where only People, Ideas & Objects developers have worked. This will be less “violent” to the user then it initially sounds. All of these products will have the same look and feel and will be subject to the same user interface guidelines.

Today we want to discuss the Oracle Internet Directory and Oracle Virtual Directory product offerings in the Security & Access Control module. A little off topic but Oracle Internet Directory is a relational database derived directory server. That Oracle is providing the marketplace a directory server based on relational database technology speaks to the power of their relational database. They claim they have the performance for two billion users. I see advantages of using this product over their traditional directory server and have therefore selected it for the Preliminary Specification. It will provide us with some flexibility when we ask some of the comprehensive and demanding questions of the technologies.

Oracle Internet Directory could be deployed as an industry wide, and by that I mean oil and gas and service industry wide directory server. There it can integrate with the information that is held in other Oracle products, such as Oracle Identity Manager which would be deployed at the producer firm, Joint Operating Committee and service industry representative level. I think we could provide large volumes of information consisting of everything that exists in the industry. The producers, service industry, Joint Operating Committees, the people who work within the industry, etc. Because this is a database we have some interesting opportunities here.

And Oracle Virtual Directory may be the beginning of optimizing the relational database opportunities. So what we will have is a global database of names within the Oracle Internet Directory and these will relate to the information contained with Oracle Identity Manager and other applications. What Oracle Virtual Directory will provide us with is a seamless way in which to browse, and for applications to see, these datastores as one.

Within the Preliminary Specification we want to access the contact information of the people or firm that provide services or products to the producers or Joint Operating Committees. As we indicated we want the individuals and service industry providers to maintain their own contact and basic data. These will be maintained in the Oracle Internet Directory for each and every producer or Joint Operating Committee to access the most recent and up to date information. That is assuming the individual or company providing the service keeps their address and telephone numbers up to date in the directory. This will save an immense amount of time on behalf of the producers and Joint Operating Committees, as well as the individuals and service industry providers. When looking for someone the search capabilities will be significant as we have added the “Vendor / Supplier Contact Database” and the “Actionable Information Interface” to this base data in the Resource Marketplace module.

Having the Oracle Internet Directory reference the Oracle Identity Manager through a Primary Key constraint on the individual's name attribute would be an ideal situation. Then the two databases would be in harmony; and I’m dreaming in technicolor and therefore will stop here.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXX (S&AC Part X)

It is important to remember here in the Security & Access Control module of the Preliminary Specification. That the role and identity based Military Command & Control Metaphor (MCCM) as has been conceived here has not been implemented, developed or conceived of anywhere else before. We are taking the concept and technology of role and identity based management to the next level with the MCCM.

Why are we bothering with the MCCM and the pooling of the resources in the Joint Operating Committee anyways? The issue that we are resolving is the finite number of earth science and engineering resources that are available to the industry. With the anticipated retirement levels in the next 20 years. With the time requirements to bring on new levels of resources. And most importantly with the demands for more energy, and the demands for more earth science and engineering in each barrel of oil equivalent produced. We face a long term shortage of these critical resources. The need to organize the industry to exploit the specialization and division of labor are therefore necessary to expand the output from the same number of resources. That begins with the Joint Operating Committee. And that imputes that we have contributions of earth scientists and engineers from multiple producers working together to meet the objectives of the Joint Operating Committee. Therefore we need a means in which they can organize themselves and that is the Military Command & Control Metaphor.

How the MCCM will be implemented will be determined by the user community. However, I can speculate that the Joint Operating Committee will have standard roles and identities that are used throughout the industry. This standardization will probably be necessary for the purposes of making the technology work. The need to have the various areas “covered off” in terms of compliance and other requirements will require a standard template be used by everyone. Then everyone will know that that position is responsible for that role and responsibility. When Joint Operating Committees are small and have only a few people assigned, then multiple roles can be assigned to one individual.

Today we want to discuss Oracle Identity Manager which will be used as the base product for role and identity management. It will also be the base of the Military Command & Control Metaphor for the People, Ideas & Objects Preliminary Specification. It is part of the Oracle Fusion Middleware product offering and as such is part of their Java Enterprise Server. Therefore we are able to build off the functionality that exists and enhance it with the user community's needs. Building off of the functionality will be somewhat limited as many of the concepts that are inherent in the MCCM are already captured in the Oracle Identity Manager.

Oracle Identity Manager is a highly flexible and scalable enterprise identity administration system that provides operational and business efficiency by providing centralized administration & complete automation of identity and user provisioning events across enterprise as well as extranet applications. It manages the entire identity and role lifecycle to meet changing business and regulatory requirements and provides essential reporting and compliance functionalities. By applying the business rules, roles, and audit policies, it ensures consistent enforcement of identity based controls and reduces ongoing operational and compliance costs

Needless to say the Oracle Identity Manager will need to be a necessary part of the Preliminary Specification. There is an element of governance within this application, however, we will be talking about that in a few days, tomorrow we will be talking about Directory Services.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXIX (S&AC Part IX)

Today we look into the Oracle product classification of Access Management. This is part of our review of Oracle products for the Security & Access Control module of the Preliminary Specification. Included in the Access Management classification are the following products; Oracle Access Manager, Oracle Adaptive Access Manager, Oracle Entitlements Server, Oracle Identity Federation and Oracle Enterprise Single Sign-On Suite. Each of these products will be included in the Preliminary Specification as they have components that are required for the day to day use by the users, producers and Joint Operating Committees.

One area that I was surprised to learn that Oracle had been working on was in the area of working with partners, vendors and suppliers. Within the Oracle Access Manager it is noted that they are able to provide “Building federated user communities that span company boundaries”. These are the beginning of both the pooling and Military Command & Control Metaphor (MCCM) that are critical to resolving so many of the big issues that the oil and gas industry faces.

On the heels of Oracle Access Manager is their Oracle Adaptive Access Manager which takes the concept of intra partner interactions further with “Oracle Adaptive Access Manager makes exposing sensitive data, transactions and business processes to consumers, remote employees or partners via your intranet and extranet safer.” This is the nature of business in the future. Working with your partners, as is done in the Joint Operating Committee, is an effective means of reducing costs and increasing innovation in any industry. It’s only reasonable that the technologies are beginning to emulate these needs. In addition Oracle Adaptive Access Manager takes the level of security and authentication to a higher level. As a result our demands regarding the pooling concept and the MCCM, I feel, will be less of a technical risk for the People, Ideas & Objects Preliminary Specification.

The next application is the Oracle Entitlement Server which provides a dynamic access control element to the applications that use the server. Instead of hard wiring access control privileges into each application and user you can dynamically generate them using the Oracle Entitlement Server. “The solution can manage complex entitlement policies with a standalone server or with a distributed approach that embeds information at the application level.” So when it needs to be determined if user x has access to Joint Operating Committee y, a decision from the entitlement server, based on criteria within the application, can be made. If this information changes then the user would be denied access. This provides greater security based on policies and reduces the amount of detailed specific software development that is difficult, time consuming, and costly to maintain.

Federated Identities are also a major part of how the pooling concept and MCCM are implemented in the Preliminary Specification. Oracle Identity Federation provides high levels (attribute federation) to the applications that use it. We have specified in many of the modules, such as the Resource Marketplace module, the use of Federated Identities. Situations like where the contact and other information is maintained by the vendor. That information is comprehensive in nature and includes key organizational contacts, calendars and scheduling information. Working with the partners in the Joint Operating Committee and the representatives of the service industry in this way will effectively mitigate many of the technical software development issues we have.

One area that we will continue to have difficulty however is in the Work Order. The ability to dynamically put together a working group to study some earth science or engineering research subject is critical to the innovative oil and gas producer. These are ad-hoc and made with partners that you may have no history with. Federated Identities will provide you with some of the information you need to form the partnership and grant application access, however, there is still the pooling of and sourcing of costs, and budgets which is the bureaucratic nightmare that mitigates and destroys the motivation for these working groups to form. We need to make sure these roadblocks do not get in the way.

The last thing we want our users to be involved in is some form of security access hell. Oracle Enterprise Single Sign-On Suite Plus promises to keep this from happening. Logging onto and off of systems as the user proceeds through the various modules and components of the applications is a must have. This product also promises the ability to provide this level of service on a remote basis. Much needed.

As we can see the technical risk associated with the Preliminary Specification dropped a few points today. I’m sure it will continue to do so. Tomorrow we will move onto the Oracle Identity Administration product.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXVIII (S&AC Part VIII)

And now we begin our fifth pass through the Preliminary Specification. Starting with the Security & Access Control module we find that Oracle Corporation have a comprehensive suite of applications that provide for the security and access control that we are looking for. Falling under the Oracle Identity Management brand name. These products include tools for Access Management, Identity Administration, Directory Services and Governance. These product classifications come in a variety of different products and are configured in some specialty industry and management suites.

What will need to be done in the Preliminary Specification is to breakdown in detail the requirements of the user community. Starting with the determination of the scope of the application, that is what is the geographic, scope and scale of the People, Ideas & Objects application modules needs here in the Preliminary Specification. From there we will know what the user will need in terms of the actual security and access control requirements. Matching those specific needs with those detailed in the Oracle product categories we will be able to sit down with the Oracle people and draw up a development plan on how to meet the users requirements for the Security & Access Control module. Remember the producers, Joint Operating Committees, service industry representatives are all critical members of the user community.

Two areas that we are going to have difficulties are going to be the Military Command & Control Metaphor (MCCM) and the inter-relatedness of the Joint Operating Committee and service industry representatives. Early on in the specification we noted a number of research areas that were needed to be conducted. These are two areas that will take some research dollars to resolve. To have the MCCM recognize members of different organizations will not be the difficulty. To engage them and have them interact in the manner that we expect them to when we expect them to, will. With respect to the access control of who has access to a Joint Operating Committee. Each user may have to have an encrypted “access control list” of Joint Operating Committees they have authorized access to. And they are only authorized to access JOC’s on that list. These user access control lists being part of the authorization by the chairman of the Joint Operating Committee.

Oracle Identity Management resides within the Oracle Fusion Middleware product. As we indicated earlier in the Preliminary Specification this is Oracle’s Java Enterprise Server. Therefore these applications are open to be tailored to the user’s needs. So when we do sit down with Oracle and define the Security & Access Control module based on the user needs. These needs can be accommodated by the technologies that we have selected.

And it is through the efforts of the user community that we will resolve these issues. It is also one of the reasons that the budgets of People, Ideas & Objects software developments are where they are. We have issues to resolve in delivering these innovative systems to the industry. I would also remind producers that our value proposition sees the one time costs of these developments amortized over our subscribing base of producers. Yet each one of those producers receives the full scope of that development effort in terms of the software application.

Tomorrow we’ll look a little closer at the Oracle Access Management tool.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXVII (S&AC Part VII)

It has been a while since we wrote anything specific about the Security & Access Control module of the Preliminary Specification. It is maybe a generic module that has a fixed level of functionality and process management in comparison to the other modules. Our review to date has been about innovation and organizational change. And these topics have not necessarily been consistent with what Security & Access Control are all about.

In reviewing the posts to this point I want to highlight a few of the things that have to be the important features of the module. We are providing the Security & Access Control to the right people, who have the right access to the right information with the right authority at the right time and at the right place. What we know about relational databases, that they are based on predicate calculus and set theory, makes them ideal for enabling this access in the context of the Joint Operating Committee.

It is in the Security & Access Control module that the Military Command & Control Metaphor is established. That is the chain of command between the individuals from within the producer firm, the Joint Operating Committee and the service industry representatives. Each individual is provided with a rank level of “command” and is provided with established authority and responsibilities as a result. Lower ranks are also within the chain of command of higher ranks. This ranking and command structure provides the ability to have the pooling of the earth science and engineering, as well as other, resources pooled between members of the Joint Operating Committees.

We noted that the types of data that the producer firm and the Joint Operating Committee were dealing with were different in terms of their security requirements. Joint Operating Committees were dealing in data that was shared amongst the partnership and was not necessarily proprietary in nature. On the other hand the producer firm is where most of the proprietary information is held. The reserve reports, accounting information and strategy, and internal communications. This provides a separation of data from the domains of operation.

Authentication, and having the ubiquitous availability of anywhere and anytime access are issues that are needed to be addressed by advanced ERP systems. Secure access through iPad’s and phones brings about new challenges for producers and Joint Operating Committees. Encryption of all network traffic, and storage of data are necessary in this day and age. For compliance purposes a proposed ownership structure of the “cloud computing” infrastructure that meets the needs of the producers SEC requirements has been provided.

The Security & Access Control module will provide an interface that provides the appropriate governance requirements are met by the organization. If you have a requirement that a process is reviewed by certain individuals within your organization then they can be mapped within the organization. Any gaps could be filled and the process could then proceed. There is also the ability to have the delegation of authority and responsibilities assigned during absences.

This is a quick summary of the content of the Security & Access Control module of the Preliminary Specification. Now that we are reviewing the Oracle technologies, strategies and architectures we will be able to blend these requirements into their products and services and give users a better understanding of how these technologies will be implemented. The one area that will be unique is going to be the Military Command & Control Metaphor. However, as we will see that may not be technically too difficult to do.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXVI (General Part V)

Before we begin our fifth pass through the modules of the Preliminary Specification I wanted to discuss the overall technological architecture that People, Ideas & Objects will be using the Oracle products for. There are also some other points of discussion that I wanted to raise in this post.

The first point of discussion is the fact that People, Ideas & Objects does not currently have a relationship with Oracle. I have had comprehensive development agreements with Oracle before and will not be going down that road again. Oracle does not have the patience necessary for this marketplace. Theirs is to book quarterly revenues, not to convince industries for the need for change. When we do establish a relationship with Oracle it will be when People, Ideas & Objects have achieved revenues and Oracle will look upon us as a customer.

With the recent acquisition of Sun Microsystems Oracle is now the owner of the Java Programming Language. This in combination with their industry leading Database, they provide us with the base tools to implement the Preliminary Specification. No other technologies can provide the scale and scope of performance and reliability that the oil and gas producer and Joint Operating Committee need to operate their business. Add to these base technologies is Oracle’s hardware engineering and integration for database and Java technologies, and we will have the least concerns possible in terms of what the technological marketplace can offer.

Recently Oracle conducted a comprehensive investment to update and integrate their ERP offerings under one solution. These come under the Oracle “Fusion” brand of offerings. The first and possibly the most important, especially from the point of view of the Preliminary Specification is the Oracle Fusion Middleware. This is their Java Enterprise Server technology. All of their Fusion ERP application are derivative of the Oracle Fusion Middleware technologies. That is an important consideration for us as will be noted later. What the Oracle Fusion Middleware provides People, Ideas & Objects is access to the base layer of Java to build the Preliminary Specification function, process and applications. Modules of the Preliminary Specification could be complete stand alone components without any of the Oracle code from the Fusion ERP applications. That being stated, they can also be fully integrated into the Oracle code of the Fusion ERP applications. So when we need to include an accounting general ledger we can include the Oracle Fusion Accounting Hub as the key component of the Partnership Accounting module and build the unique oil and gas elements within that base Oracle technology. This level of integration marries the best of the technology with the best of the understanding of the oil and gas industry.

The Oracle Fusion Applications are the result of a significant investment by Oracle. They came to market in 2010 and are based on the same base technologies we are using, Java and the Oracle Database. As time passes this new breed of technologies will begin to outperform those technologies that have been in the marketplace for several generations. They are also the technologies that will be best positioned for the so called “cloud” computing model. Something that is a fundamental aspect of the People, Ideas & Objects offering.

One thing that I think will show as a result of this fifth pass through the Preliminary Specification. Is that specialization and the division of labor has created large gaps between the oil and gas industry and Oracle. Gaps that need to be filled by People, Ideas & Objects. Tomorrow we will begin with a look at the Security & Access Control module.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXV (General Part IV)

Four full passes through the Preliminary Specification have provided some substantial codification of the way this software will operate. From the eleven modules there is an overall vision of how the innovative oil and gas producer, and the Joint Operating Committee would function in the insatiable energy demand era. I had two comments made to me when I wrote the Preliminary Research Report. The comments were that “this solves every administrative issue in oil and gas for the past fifty years” and “it's an entire new discipline”. Both were related to the significance of using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. What I think that we can say as a result of completing the four passes through the Preliminary Specification is that both of these comments underestimate the significance of using the Joint Operating Committee.

What we have discovered is that it certainly resolves the administrative issues when the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks are aligned with the compliance and governance frameworks. However, when it comes to the operational concerns of the oil and gas industry, it also provides the frameworks and means to solve those problems as well. Whether it is the ability to agree amongst the partnership and reduce the production during price declines, or moving the industry to a decentralized production model, where the costs more accurately match the revenues. Or where the innovation is generated through the two major processes in the Preliminary Specification, which do not directly conflict with tight operational control. Or how the division of labor and specialization are enabled, defined and supported through the software to provide for the industry to expand its output of the limited resource base of earth scientists and engineers. These are just some of the features of the Preliminary Specification that impact the operations and enable the producers to enhance their organizations. And although they have been used to highlight today's issues they will also provide for tomorrow's problems.

Bold statements and evidence to prove that I am one of two possible things, as people would say. But the fact that the Joint Operating Committee supported in the fashion that is identified in the Preliminary Specification also provides us with this opportunity to build these systems. This vision needs to be acted upon and the forces that are aligned against it are as determined not to see it exist. They have a vested interest in the status-quo and will continue to fight to ensure theirs is the only alternative.

We turn now to the fifth pass through the Preliminary Specification. And this will continue on with the module by module review, however this time it will be from the basis of Oracle Corporation’s technology. If you read or review any of their material it has a decidedly technological focus. If you mention the Joint Operating Committee within their organization you can hear it echo for a week and a half. They really have no fundamental understanding of oil and gas, and only a basic understanding of business. They have become very specialized in what they do and the products they sell. Such is the nature of the division of labor and specialization. What People, Ideas & Objects are therefore doing is filling a “gap” in providing the business understanding of the oil and gas industry to the technology. This “gap” between the oil and gas industry and Oracle is something that is needed because the two are unable to speak coherently to each other, they need an interpreter, and that’s People, Ideas & Objects and the Preliminary Specification.

So tomorrow we’ll begin with the Oracle technologies in general and build out from there.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXIV (C&G Part XXIII)

We have been concerned with the governance over operations in the last number of posts. And today we look into the governance over the two major processes of innovation in the Preliminary Specification. The first process of innovation is the development of the innovation within the producer firm and is a result of the earth science and engineering capabilities being developed. The second process is as a result of the field level innovations that are developed by the service industry and are either product or service related in terms of their offering to the producer or Joint Operating Committee during some operation. Either way it is important that the producer firm have a measure of governance over the developments of innovation for a variety of reasons. These governance elements will again be captured in the “Operational Review & Governance Interface” of the Compliance & Governance module. Quotes are from Professor Richard Langlois paper “Innovation Process and Industrial Districts”.

What is it that the innovative oil and gas producer and Joint Operating Committee will be doing when they are “innovating”. That seems to be a fairly reasonable question and one that would be the founding principle in which the governance over the innovating processes should be based on. It's here that Professor Langlois provides us with a very good summary for our purposes.

Innovation is based on the generation, diffusion, and use of new knowledge. p. 1

The source of this new knowledge, and all of the knowledge is the “Dynamic Capabilities Interface” in the Research & Capabilities and Knowledge & Learning modules. Recall that “knowledge begets capabilities, and capabilities begets action”. The capabilities that are contained within the “Dynamic Capabilities Interface” are comprehensive and are designed to serve the needs of all of the people that are required for that particular operation.

While it is possible to conceive of a firm that is so hermetic in its use of knowledge that all stages of innovation, including the combination of old and new knowledge, rely exclusively on internal sources, in practice most innovations involving products or processes of even modest complexity entail combining knowledge that derives, directly or indirectly, from several sources. Knowledge generation, therefore, must be accompanied by effective mechanisms for knowledge diffusion and for "indigenizing" knowledge originally developed in other contexts and for other purposes so that it meets a new need. p. 1

and

Relationships within industrial districts therefore lead to diffusion but also to the creation of new knowledge through shared preoccupations. Because many people or firms can work on a problem simultaneously, a number of different solutions may be found (Bellandi, 2003b). The results is a larger and stronger "gene pool" within the sector (Loasby, 1990, 117), with the further advantage that solutions that are originally regarded as competing may turn out to be complementary and well-suited to different niches within the district.  p. 7

I could go on for ever reciting the elements of the Preliminary Specification as the reasons for the governance requirements in the “Operational Review & Governance Interface”. The point that needs to be made is that the two major processes of innovation need to be reviewed from a high level within the firm. There are so many interactions between the firm and the Joint Operating Committee and the larger service industry that the possibility that all of the valuable knowledge is not all codified is high. That is just one of the risks. Another is that the “Lessons Learned Interface” doesn’t capture the failures accurately for further learning. These are all necessary to have someone review to ensure that the knowledge and capabilities, as well as the innovations are built upon for the future.

And with this final post on Professor Richard Langlois we move on to our fifth pass through the Preliminary Specification. I'll have a few general things to say tomorrow to wrap where we are and where we are heading.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXXIII (C&G Part XXII)

Within the Preliminary Specification there is a conflict or contradiction that needs to be managed through the Compliance & Governance module. That is the posture that needs to be presented by the people who are members of the Joint Operating Committee towards the service industry representatives. At two different times and two different places during the ongoing operation of the properties the approach towards the service industry will be fundamentally different. At one time the approach will be to have the service industry operate as a free wheeling marketplace where the innovation and ideas are flowing at the fastest possible rate. And then there will be the times when the operations are being conducted and the need for military precision is expected and required to ensure the operations are completed successfully. This Dr. Jekyll and Mr. Hyde routine would give most people in both the Joint Operating Committee and the service industry a second look.

We have discussed this contrast in the Preliminary Specification before. On the one hand we have a marketplace and on the other we have operational control. And for many reasons the two may be comprised of the same people operating in different capacities at different times. The governance issue is; how do we ensure that the operating mode, marketplace or operational control, is the appropriate mode that everyone is operating under. This is of particular concern to the service industry representatives, as so much of the operational control and success of the operation is dependent on their full attention.

The answer to this question comes from the “Operational Review & Governance Interface”. If there is an operation that is currently being conducted by the Joint Operating Committee. And there has been no corners cut or short cuts taken then there will be the explicit knowledge contained in the “Dynamic Capabilities Interface”, the “Planning & Deployment Interface”, assignments under the Military Command & Control Metaphor which will include representatives of the service industry, the AFE, and Job Order. Whereas none of these are required in the marketplace. Therefore the onus is on the Joint Operating Committee to ensure that these tools are used to ensure that the contrast from a freewheeling marketplace is imposed. And it will be in the “Operational Review & Governance Interface” that the governance over the members of the Joint Operating Committee is imposed to ensure they are using these tools appropriately during their operations.

Operational control and innovation are on two opposite ends of the same spectrum. That however does not mean that they can’t be attained by the same organization. The innovative oil and gas producer must have both. One without the other is not worth pursuing. The conflict and contradiction will show up in the organization at some point and the need to deal with it becomes a governance issue. The user of the “Operational Review & Governance Interface” will have the tools necessary to ensure that the Joint Operating Committee is able to discern the difference between innovative markets and tight operational control.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification. 

The Preliminary Specification Part CCLXXII (C&G Part XXI)

We have asserted and I am certain that it is generally agreed that the oil & gas industry is moving towards its scientific basis as its primary form of competitive advantage. The days in which financiers or lawyers could build viable producers based on their skills are numbered if not nonexistent. There is also a perception that is developed through the Preliminary Specification that the producer is a firm that maintains financial interests in a variety of Joint Operating Committees. That the producer will deploy their capabilities to these assets when and where they are needed and as the capabilities are developed. These processes are under constant levels of change and innovation in the innovative producer which causes “Dynamic Transaction Costs” to be incurred, and for people to question the direction of the changes. What is needed is a method of governance in the Compliance & Governance module over the overall process of change to ensure that the ship maintains its course and the costs remain in line. Quotations are from Professor Richard Langlois “Transaction Costs in Real Time” paper.

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-verse. 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 other day we introduced the “Operational Review & Governance Interface” and today’s post will continue with its discussion. In our previous post we had the ability to mentor the Project Manager and oversee or supervise the operation if required. What we need to discuss today is broader and more global in scope. An interface that encapsulates the entire firm's operations so that the user can see that the direction the firm has taken in terms of capabilities development is being optimized in its Joint Operating Committees, etc. It would be of little value if the firm was expending valuable resources on developing its capabilities on fracing when none of the Joint Operating Committees were deploying, or able to deploy the technologies.

With the “Operational Review & Governance Interface” the user would be able to review the entire operation as it happened. From the “Dynamic Capabilities Interface” to the “Planning & Deployment Interface”, AFE, Job Order and “Lessons Learned Interface”. Review all of the actions taken and the documentation that was generated during the operation to determine what was the critical cause of the success or failure of the operation. This could be done in fine detail or in summary form to oversee the many operations that may have been conducted.

Another variable that is being captured by the Preliminary Specification is the “Dynamic Transaction Costs” themselves. These are the costs associated with change. When people run into these costs then they will know to code them to the Dynamic Transaction Costs account in the chart of accounts. This will be a red flag in the “Operation Review & Governance Interface” for the user to trigger on. When they see high levels of “Dynamic Transaction Costs” then they know the operation ran in to high levels of change and / or innovation. Therefore they will be able to see the implications of these costs in the knowledge and information in the interface. And know that either some significant change or innovation was the result.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification. 

The Preliminary Specification Part CCLXXI (C&G Part XX)

We are discussing the operational governance of the firm and Joint Operating Committee. An important element of this discussion is the capabilities that these organizations have access to. Capabilities are documented in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. And are one of the key competitive advantages of the innovative oil and gas producer. Therefore from a governance point of view these capabilities need to be safeguarded and ensure that they are kept for your firms eyes only. Nothing could be further from the truth. The use of these capabilities will cause their leakage to outside firms. And it is imperative that the firm consider the use of their capabilities as having the right information deployed by the right people at the right time. The Compliance & Governance module will therefore be more concerned with the appropriate use of the capabilities, rather than the hoarding of information. From Professor Richard Langlois “Organizing the Electronic Century”.

"This is the basic modularization of the market economy. It accords well with the modularization G. B. Richardson (1972) suggested in offering the concept of economic capabilities. By capabilities Richardson means "knowledge, experience, and skills" (1972, p. 888), a notion related to what Jensen and Meckling (1992) call "specific knowledge and to what Hayek (1945) called "knowledge of the particular circumstances of time and place." For the most part, Richardson argues, firms will tend to specialize in activities requiring similar capabilities, that is, "in activities for which their capabilities offer some comparative advantage" (Richardson 1972, p. 888)." p. 27

What is it that we are trying to achieve in employing these capabilities. It is of course to generate value. But more importantly to generate value on behalf of the owners represented in the Joint Operating Committee. In economic terms this value is called “externalities”. After the operation, after the deployment of the right capabilities at the right time by the right people the value should have been gained by the members of the Joint Operating Committee.

So why don't we observe everywhere a perfectly atomistic modularization according to comparative advantage in capabilities - with no organizations of any significance, just workers wielding tools and trading in anonymous markets? We have already seen the outlines of several answers. The older property rights literature, we saw, would insist that the reason is externalities, notably the externalities of team work arising from the nature of the technology of production itself. The mainstream economics of organization is fixated on another possibility: because of highly specific assets, parties can threaten one another with pecuniary externalities ex post in a way that has real ex ante effects on efficiency (Klein, Crawford, and Alchian 1978; Williamson 1985). Richardson offers a somewhat different, and perhaps more fertile, alternative. Firms seek to specialize in activities for which their capabilities are similar: but production requires the coordination of complementary activities. Especially in a world of change, such coordination requires the transmission of information beyond what can be sent through the interface of the price system. As a consequence, qualitative coordination is necessary, and that need brings with it not only the organizational structure called the firm but also a variety of inter-firm relationships and interconnections as well." pp. 27 - 28

If the Joint Operating Committee coordinates these capabilities in the appropriate manner then the externalities will flow to the producers represented there. That is what the governance of the operation is most concerned about. That there was leakage of some documentation of these capabilities during the operation is immaterial to the externalities and the competitive position of the firm. Recall during our review of Professor Giovanni Dosi for the Preliminary Specification. His research showed that it took an equal and sometimes greater effort to copy another firm's capabilities then it did to generate the capabilities themselves. It is therefore more effective for a firm to focus on their key competitive advantages of their land and asset base, and their earth science and engineering capabilities. And the effective and efficient deployment of these competitive advantages on a “just in time” basis.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXX (C&G Part XIX)

What I am seeing develop with our review of Professor Richard Langlois writings. Is that there will be an element of the Preliminary Specifications Compliance & Governance module that will be devoted to what we would call “operational governance”. Today’s post will discuss the incentives vs. coordination issue of any operation that a Joint Operating Committee undertakes. This deals with the current conflict between the producers and service industry and the high costs associated with any field operation. Producers feel that the costs are out of control in the field and are imposing cost controls in an effort to manage them. People, Ideas & Objects feel that coordination of the field operations will provide the appropriate means to control costs and will also provide for better outcomes. The coordination coming about through the modules in the Preliminary Specification, specifically the Research & Capabilities and Knowledge & Learning. In his paper “Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization” Professor Richard Langlois states.

More generally, we are worried that conceptualizing all problems of economic organization as problems of aligning incentives not only misrepresents important phenomena but also hinders understanding other phenomena, such as the role of production costs in determining the boundaries of the firm. As we will argue, in fact, it may well pay off intellectually to pursue a research strategy that is essentially the flip-side of the coin, namely to assume that all incentive problems can be eliminated by assumption and concentrate on coordination (including communication) and production cost issues only. p.17

Let's assume for a moment that the People, Ideas & Objects Preliminary Specification is operational in your firm. You have the Military Command & Control Metaphor, the Planning & Deployment Interface, the AFE and Job Order systems operational as expected however your results continue to disappoint and the cost overruns are tragic. How do we ensure that the performance expectations are met and these poor performing situations are identified quickly and dealt with.

Either way it boils down to the same common-sense recognition, namely that individuals - and organizations - are necessarily limited in what they know how to do well. Indeed, the main interest of capabilities view is to understand what is distinctive about firms as unitary, historical organizations of co-operating individuals. p. 17

We should have an interface in the Compliance & Governance module that provides a user with the ability to oversee the operations being conducted in the Research & Capabilities and Knowledge & Learning modules. This interface should be called the “Operational Review & Governance Interface” and give its user access to the operational information that is being undertaken. There they can interact, if desired, and supervise or mentor the project manager to ensure that the objectives are met and the costs are maintained. All with the understanding of how these objectives can be achieved. And that is through enhanced coordination, not through incentives.

In saying this, it's more about governance then about supervision. You want to be able to effect change when things go wrong, and you want to identify when things go wrong quickly, however, you also don’t want to interrupt the day to day operations.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification Part CCLXIX (C&G Part XVIII)

One of the key changes that is made in the Preliminary Specification is the move away from the “high throughput production” model to the “decentralized production” model. We have discussed this throughout the various modules and now we want to discuss the governance aspect of producing oil or gas when it is known to be unprofitable. Through the changes that we have made in the Preliminary Specification. Shutting in of production causes the production and overhead costs to drop in line with the revenues from the well so that a lack of production does not create a loss. Producing at low price scenarios does however a create a loss. Therefore the firm should have in the Compliance & Governance module a strong governance model that enforces a discipline to ensure that production is curtailed when pricing drops below the margin. Professor Richard Langlois defines the two models in his book “The Dynamic of Industrial Capitalism: Schumpeter, Chandler and the New Economy.”

In a world of decentralized production, most costs are variable costs; so, when variations or interruptions in product flow interfere with output, costs decline more or less in line with revenues. But when high-throughput production is accomplished by means of high-fixed-cost machinery and organization, variations and interruptions leave significant overheads uncovered. p.58

The amount of value that is destroyed during times when the natural gas or oil prices decline is significant. The response of the North American producers to this “phenomenon” is both amusing and startling. They have within their power to fix the situation, yet do absolutely nothing to mitigate the source of the problem or the severity of it. They are natural gas producers, don’t bother them with prices or pipelines or customers, or for that matter the business of the business. This is management’s way of listening to the market and acting accordingly.

What is needed is a new method to deal with the volatility in the oil and gas marketplace. This is only the beginning of price variances. The producers need the ability to curtail production when the prices drop below the margin as is proposed in the Preliminary Specification. This may run against the best interests of those that are charged with operating the firm. And therefore the decision may need to be made by those that are responsible for the governance of the firm. If you can limit the losses. Save the reserves for the day in which the prices will return a profit. The periods in which losses will occur will be less frequent and of less intensity.

But let's look at the larger picture. If everyone in the industry adopted this new discipline then there would be no downward spikes in pricing. If all of the marginal production was removed from the market, the prices would respond to the upside almost immediately. Placing a floor on prices at the higher costs of production. Producers like to think they have employed a high level of capital discipline in terms of their spending. What if they employed a high level of production discipline as well. Then they could assert that they were not reckless in incinerating capital through operating losses in the fashion the capital markets have come accustomed to.

In the Petroleum Lease Marketplace module we have the “Marginal Production Threshold Interface” which indicates which production is at the threshold of becoming marginal or is not earning a profit. In addition this is a collaborative interface that allows the producer to interact with the other participants in the Joint Operating Committee who collectively hold the decision rights to suspend production. It is there that the decision will be made. We will also establish an interface in the Compliance & Governance module and also call it the “Marginal Production Threshold Interface”. It will include a section where the CEO or COO has the authority, in cooperation with the partners in the Joint Operating Committee, to shut-in some production. Taking the decision out of those in operations and placing it in the executive is probably how most of the decisions will have to be made. It certainly isn’t being done in any form or fashion today is it.

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

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.