"Oilpatch slow to deal with labour shortage"

In the Calgary Herald yesterday there was an article that notes the following from a survey report by Deloitte Consultants.

"I think the oil and gas companies have largely taken the supply of labour for granted - and that's where the big change is."

and

"Just as revealing said Stephen Diotte, is that less than 40 percent of oil and gas companies have actually identified the critical skills they need to expand their business at a time when the sector is booming. "

Well come September, I'll have the solution for the industry.

Technorati Tags: Deloitte, Survey, Labor, Shortages, Energy

An Apple and Sun merger?

Of all the mergers, this one I can see the logic and the possibilities.

Technorati Tags: Apple, Sun, Merger

Executive Summary

It was in May 2004 that I published the preliminary research report entitled “Plurality should not be assumed without necessity”. (Readers are encouraged to revisit the preliminary report to assist in the context of this report.) The main thrusts of that document were its two primary research findings. The first finding was that the key organizational construct of the oil and gas industry is the joint operating committee. The joint operating committee is the legal, financial, cultural and operational decision-making framework of the industry. If the industry were to move the accountability framework in line with the four frameworks of the joint operating committee it would achieve greater organizational speed and innovativeness. The other research finding was that the software the firm uses defines the organization. Noting “SAP is the bureaucracy” it is apparent that to change the organizational construct requires that systems be developed to support the proposed organizational change.

The preliminary report also contained a project management proposal to build these systems around the joint operating committee. This budget was in the $70 – 85 million range and would require four years to complete. The budget of that system may remain within that scope; however, this final research report recommends that the industry pursue a proof of concept. This proof of concept is to build a Petroleum Lease Market application to start the organizational transition to the joint operating committee. This application’s scope has been budgeted at $2.6 to $3.5 million.

The four cornerstones of a technical vision.
Critical to the success of any prospective software development would be the impact of any future Information Technologies (IT). I am including a technical vision consisting of four key technologies, and describe how the future may be affected by these technical changes.

IPv6 (2 to the power of 128 in terms of addressing space.) enables the elimination of the technological model known as client – server. Replacing it with static IP addresses that can identify anything and everything. Enabling any electronic device that is connected to the Internet to be monitorable and controllable. I believe the engineers and geologists can and will do with this level of static addressing is unlimited.

The second element of the vision involves Java and the incremental nature of typed, object oriented programming languages. Where the predictability and control of systems is achieved through the strong implementation of strict typing.

Java is also enabling the exception handling capabilities and asynchronous process management that is critical to handling intra-partner transactions and interactions.

And finally wireless Internet through Wifi and soon Wimax, enabling electronic devices to be connected at low costs and high speed and in turn eliminating the “last mile” issues of technological access.

These four technologies will be revolutionary when applied over the joint operating committee as the organizational focus. This technical vision provides the industry with the organizational capability to facilitate rapid innovation in a controlled and managed environment.

Partnership Accounting.
I will then go on to discuss "Partnership Accounting" and how an algorithm can capture the unique and demanding accounting and reporting needs of the producers represented in the joint operating committee.

A new accounting dynamic is introduced by using the joint operating committee. This accounting dynamic enables the interactions to be quantified in an algorithm that although complex, addresses the accounting related issues that traditional ERP systems can’t handle.

The Partnership Accounting difficulty comes when all participants of the joint operating committee have been contributing people, financial and technical resources, and direct costs on behalf of themselves, and / or, with other members of the joint account. Through the JOC each producer’s collective resources are pooled to attain the highest level of technical capability, management and tactical deployment, which is sourced from the partner companies.

These costs and resources are being incurred on each producer’s behalf and may not be shared, but may be eligible to offset their obligations to other partners, be distributed equally among the producers interests, or need to be recognized by the joint operating committee irrespective of their source and nature. This is further complicated by the fact that many of the internal charges and overhead allowances that have traditionally been charged to the joint account also become redundant. These overhead styles of costs are replaced by the specific costs that were directly incurred by the producer, as represented in the joint operating committee. The system will capture these components as they are incurred by the employee / worker / investor / consultant / producer in an active job costing state as the user is logged on.

The nature of the oil and gas business is unique in many ways and this Partnership Accounting discussion will capture many of the issues that an oil and gas system needs to address. For example:

• Daily and monthly production volumes.
• Differing currencies of producers.
• Differing currencies of operations.
• Currencies that relate different accounting issues based on the criteria of one being balance sheet vs. income statement accounts.
• Spec vs. raw products and by-products.
• Processing and gathering fees based on (non) ownership,
• Imperial vs. metric reporting standards.
• Nominations and or commingling of gas.

Providing an unlimited set of possible reporting scenarios for each working interest owner. The partnership Accounting module’s algorithm needs to capture and deal with these nuances within this system.

Military Command.
I then by way of analogy, will note the traditional military command structure of corporals to generals as a replacement to the regular hierarchy. It is foolhardy to eliminate the hierarchy and lose some of the attributes of a control structure. I discuss how a similar military command type of structure can be used to enhance and augment the managements’ control apparatus. This also allows the human resources to be deployed in a greater diversity of situations, and have their tasks outlined and issued from a variety of producers as represented by the JOC as their employers.

This military command structure will draw a parallel to the interactions of various military groups interacting under NATO. Where an army major of a branch of the U.S. military may have Canadian, French and / or British soldiers under his direct command. With these military personnel changes happening in a fluid, dynamic and ad-hoc basis.

Linear historical perceptions vs. the logarithmic and exponential future possibilities.
Stanford University Economist Dr. Paul Romer has captured what the future economical progress can be. In a world of limited resources it need not be a zero sum gain. The use of ideas has potentially logarithmic or exponential value creating capabilities. Progress and growth can be better attained through application of intellectual property within an industry.

Innovation is the beginning of this process. And to attain the highest level of innovativeness, the Joint Operating Committee has been proven by this research to be the ideal organizational model for the producers. This will not happen however, until such time as the systems are developed and in place, and the system developers’ capability becomes an inherent part of the capability of the industry.

Genesys value proposition.
In addition to all of these topics of discussion I will reiterate the Genesys value proposition. A value proposition that is similar to Google's, where the costs of development are allocated over a larger base of users. Each user benefiting from the collective users purchasing power, demands and capabilities.

Google is proving this is the nature of software. The value of this proposition is something that I don't believe has been fully implemented or realized by the producers. It is my supposition here that the Oracles and SAPs realize this latent value. It is therefore my assertion that the oil and gas industries overall costs of systems development would decline under this proposed model.

Who would Henry Ford hire?
I also want to ask a question of the people who work within the oil and gas industry. That question is, whom today, would Henry Ford hire? A question that is just as pertinent today as it was 100 years ago.

Just as Ford needed a new "type" of worker for his assembly line invention, so will the prospective oil and gas producer. What type of employee will the producers need in this dynamic networked environment? What type of skills and capabilities should the oil and gas worker obtain to be optimally deployed in the future oil and gas industry?

Calls to action.
Last if not least this proposal will note and discuss the numerous calls to action from:

• Oxford Analytica.
• Harvard University.
• MIT.
• Energy Secretary Bodman.
• McKinsey Consulting.
• SEC Chairman Christopher Cox.
• Sir John Browne of BP.
• John Hagel III and John Seely Brown
• and many others.

These have become predictable in their message and their frequency. Many of these messages noting the time to act is now. And that is this proposal's message to industry.

This proposal is a clean slate proposal. There are no constraints in terms of existing code or client base to deter from the focus of these developments. The attainment of this type of software and software development capability must be built from the start. It is therefore expected that this proposal will be accepted and funded as required.
Technorati Tags: Executive-Summary, genesys, research

A technological vision.

More text back from the editor.

A lot has happened in the past decade. Information technology has had its ups and downs and has provided some significant changes in the manner in which business is conducted. This research report is dedicated to the changes that information technologies are having on the business landscape in the energy industry. The level of change within IT is accelerating at an unprecedented rate. More fundamental change is around the corner which involves a handful of technologies that will be revolutionary to those that embrace them.

The oil and gas industry has the opportunity to benefit from the prospective changes. And I would suggest the way these IT changes impact oil and gas maybe the most dramatic to date. The 4 major components of the Genesys technical vision are of significant simplicity, are currently being implemented globally, and are only waiting for a final integration to occur. Many technologies need to be learned first hand before they are understood. These technologies share what I suspect may be the largest impact by building and leveraging onto the comprehensive architecture of the technological environment that exists today.

The four components are as follows:

1. IPv6.
2. Object Oriented Programming (OOP) with particular emphasis and focus on Java.
3. Asynchronous Process management.
4. WiMax.


IPv6 Internet Protocol Version 6

IPv6 is a key and enabling component of the four elements of the vision. IPv6 will replace IPv4, which is in use today. The key difference is that IPv4 is 2 to the power of 32 vs. IPv6 being 2 to the power of 128. IPv4 provides 4.3 billion unique addresses; IPv6 provides 3.4 trillion, trillion, trillion, trillion (340 undecillion) unique addresses.

IPv6 will enable anything of importance or value to be monitored and controlled, anything and everything. The ability to have unlimited static IP addressing eliminates the client / server model of computing. In oil and gas, I foresee a variety of devices that will be installed at production facilities to monitor and control activities at the finest levels of detail. Considering the oil and gas industry is primarily chemically driven, heat and pressure are two aspects of what engineers and earth scientists concern themselves with. In other words application of IPv6 opens up the entire spectrum of the sciences for exploitation.

Currently Korea and China have implemented IPv6 as their network infrastructure. Most cellular phones use IPv6 addressing. Computers from Apple and Sun have been IPv6 capable for many years. It is therefore only a matter of time before the world can and will switch.

In Formula One the cars have 1,000's of sensors actively collecting data at all times. This data was then able to make modifications to the vehicle while racing. Although the ability to change settings was eventually banned during racing, the information collected was able to eliminate most engine failures. Engineers that have data and control can begin to solve larger and more complex problems with greater insight.

The ability to function in this environment is going to require some unique technological skills on behalf of the average users. The point I want to make is that the tidal wave of information is going to saturate workers, exponentially more so than today. Therefore each user needs to better understand the information technologies and how best to manage them. The challenge for users is to realize the unlimited application of their imaginations. These technologies are quickly providing firms with the ability to monitor and control their assets and resources. Nothing that we currently experience in today’s client server model comes close to the impact of this technology.

In many ways the roll out of IPv6 networks is the culmination of all the Internet technologies to date. It is the culmination of what networks were designed to do from the beginning.

IPv6 can be implemented today. In "Command Information," a web site that is designed to "leverage the change" to IPv6, the use of the protocol is now available in North America. This is significant news to this research’s development in that there is now no technology, of the Genesys technical vision, that is not available today. The market for technology is moving so fast that these software developments are now possible with today's commercial technologies.

According to this website (downloading the two .pdf's is very valuable) President George W. Bush in his state of the union address on January 26, 2006 launched the American Competitiveness Initiative. Within this initiative it was noted that the majority of the east Asian countries have already implemented IPv6 in their network backbones. For America to compete it will require the rapid implementation of IPv6 in their networks.

This paper emphasizes that American organizations must adopt IPv6 today. The paper describes what value IPv6 provides as:

• Accommodating more devices.
• Faster speeds.
• Greater mobility.
• Enhanced connectivity.
• Integrated security.
• Enforceable privacy.
• Easier management.

The .pdf's files also provide an understanding of the key impact areas such as:

• Mobility. Maintaining constant fixed point (static IP address) no matter where you are or move to.
• Security from better architecture and limited ability for viruses.
• Real time / peer to peer, or as I call it "the elimination of the client server model".
• Providing a faster broadband with less cost by removing the need for NAT boxes. (Network Address Translation).

IPv6 is available in operating systems from Apple, Microsoft, CISCO, HP and Sun. Your ISP will be linking to root servers this summer. The good news is that the entire IPv6 infrastructure is available today. Genesys only needs to purchase Internet service from a tier 1 telecom provider in order to begin developments and operational use of IPv6 within its software developments for oil and gas.

The author of this .pdf, Tom Patterson, refers to a recent government report that states the move to IPv6 will cost $1 billion per year for the next 25 years. The returns will be over $10 billion / year in savings. The costs are mostly borne by software developers, such as Genesys, in reprogramming to use the enhanced feature and capabilities.

Is IPv6 big? Bill Gates thinks so. He is quoted in the article that "Enterprise Applications will be the "Killer Application" that makes IPv6 necessary."

Object Oriented Programming (OOP) and particularly Java.

Java is the second component of the Genesys technical vision. I would encourage most people to begin learning to understand the concepts in the Java programming language. The ability to function in the work environment may require a strong understanding of the underlying concepts and technologies. Just as Microsoft Office is mandatory today, Java may become mandatory in the near future.

As I indicated previously essentially what the technical vision points to is the elimination of the client server model Which is the standard model that is the foundation of the Internet today. With IPv6 replacing client server, the ability to manage and control any and all electronic devices becomes possible. So what this element of the Genesys technical vision, Java, provides is a "programming language" to deal with this new prospective world. And when we think of Java it is best to frame it in the context of a "programming environment".

Several of the critical components of Java are well known. The ability to write once and deploy anywhere is largely in place. What may not be fully appreciated is Java's strict typing, polymorphism, inheritance and object implementation. Simply Google “Dick Baldwin's online tutorials” on how these components can be used to make such a difference. I highly recommend reviewing his site. Dick Baldwin operates one of the better websites providing quality Java development education.

At this point in time the introduction of these four elements of Java are all that need to be introduced. What I want to achieve in this summary is to bring together why Java, wireless, IPv6 and Asynchronous Process Management are so very important in the very near future.

Imagine a world where everything electronic is reporting, being monitored and controlled, in a wireless environment. Imagine how things don't need to get confused as to which device is which. Sudden system failure due to unseen events is a common theme in Hollywood and systems in general. This problem is what Java sets out to solve by requiring the typing of language so precisely. I see Java as providing the ability to make an environment where any and all devices are operating, and predictable. There is no area for ambiguity in many of these systems. How do you know you used the correct encryption algorithm to decode the production volume, from the right well? Java typing can differentiate anything and everything and that is why it is included in this technical vision. No other language is as strict in its interpretation of typing as Java.

Lastly I will note the value of inheritance in Java. Inheritance is the ability to build off many other excellent frameworks and works of others. An excellent example of this is the GlassFish server Genesys is using as its base, or Java Enterprise Server (v. 5.0). Testing and development was done from many different perspectives, and although it has little to do with oil and gas or accounting, it covers off many of the basic services that must be provided first. Once we write to a specification and achieve certification, then the evolution of the application will be managed with fewer glitches.


Wireless Internet connections through Wifi and WiMax

The third element of the Genesys technical vision is the wireless connectivity that is available today. The simple loss of wiring has a liberating effect on the entire information technology architecture. The ability to broadcast and receive a signal to the Internet at anytime and anywhere has a liberating capability. If we think back it wasn't too long ago that we just started using the Internet on an "always on" basis. What this technical vision attempts to point out is the ability for communication between devices that are statically addressed, mobile and presents a fundamentally new paradigm to the business environment.

Wireless is a fairly straightforward technology that exists today. A broader scope of reception (WiMax) will bring wireless into being more of a common and necessary tool for the people who work in oil and gas. It is my assumption here that wireless will enable working from anywhere at anytime. This will increase the time requirements of the average worker in oil and gas to 24 hours of being on call. Some of the personal benefits include reducing the demands for time and fuel by the average commuter who only needs to go to the office occasionally. This enables the employee to more effectively manage their day to meet their needs.

The primary advantage, however, of having an always-on work environment is the ability to do the work when the individual can. Although the user will be available 24 hours a day, the "other" activities in their life can take priority in terms of being addressed. Work is more a natural outflow of the day-to-day activities. The work being predominately asynchronous in nature enables the individual to address the issue after careful thought and interaction based on the user's time and availability.

These comments reflect on the "how" this system will operate in a wireless environment. The "what" that the user accesses wirelessly is all manner of reports, accounting information, journal entries, ledgers and financial statements. These reports are prepared for the monthly accounting of the joint operating committees to which the employees are affiliated. The overall scope of information would also include the engineering and geological data that the producer’s staff would need.

A method to deal with the tidal wave of information is needed today. The four cornerstones of the technical vision provide an understanding of “what” and “how” these issues can be addressed today.


Asynchronous Process Management, or how the real world works.

Asynchronous vs. Synchronous communications can best be reflected in the differences between a letter vs. a telephone conversation. Synchronous communications and activities have an unpredictable nature to them. They are able to accommodate the unpredictability of the situation by both parties being there to rectify issues as they happen.

Asynchronous communications and actions have the tendency of not being predictable due to the nature of things never going like they should, or that the reply / response isn't necessarily what was expected.

Here is where the Java language can implement the asynchronous communications and actions with the objects so that they can deal with life's little problems. Asynchronous actions can be replicated in the Java language and over time acquire any and all possible characteristics or behaviors. This is through the developer’s ability to write methods of exception handling and explicitly in an asynchronous manner.

Looking forward it is fair to assume the volumes of data that an individual will be exposed to on a daily basis will increase relentlessly in volume and importance. The manner of dealing with data overload by safely ignoring it will soon be over. Whether it is because of your competitor, litigation or a failure that is a direct result of "missing" some data, the ability to "miss" data and proceed safely is a luxury that is expiring as we speak.

In the asynchronous environment, the speed and ability to deal with all the processes of one individual will require significant automation. Automation that is necessary in order to fulfill the requirements of employee’s jobs. Those that expect to respond on a one to one basis will have difficulty in co-ordination of the resources necessary to complete their responsibilities. Having employees that were productive generating $4 million per year in revenue will lose their competitive advantages to employees that are capable at $20 - 30 million per year.

For example, how much time is wasted in preparing for, arranging and attending meetings? In addition to the waste, there is the "lag time". I define the lag time as the period of time that is consumed in order that everyone schedules the something "urgent" meeting for next week. It is the "lag time" that provides the asynchronous worker with their time frame for completion. The ability to discuss things asynchronously is augmented by video to mitigate the time losses and lags. When transactional processing is included as we have discussed, the complexity of the system increases in risk and exposure.

This technical vision is provided as a means to understand the underlying changes that are available and being implemented.
Technorati Tags: Technology-Vision, Genesys, IPv6, Java, Asynchronous, Wireless

Military Command.

Again more text of the proposal.

This proposal is dedicated to ensuring that the optimal organizational structure is provided for the oil and gas industry. In the May 2004 Plurality preliminary research report I noted, naively, that by using the joint operating committee the hierarchy would be redundant. Naïve - in that the organization begs for a replacement to the traditional command and control structure. It is recommended in this final research report that a military command type or style of structure is necessary to replace the hierarchy.

One critical area that was not discussed in the preliminary research report was how organizational command and control is achieved. This is a particularly important framework, and one that touches on each of the five other frameworks namely legal, financial, operational decision making, cultural and accountability that were noted in the preliminary report.

Without the hierarchy to define who is responsible, accountable and authorized, little if anything will or can be achieved. Individuals are how organizations achieve their tasks. The question of who represents the organization, their validity, security and authorization can all be encapsulated in the software. But how do the people organize themselves?

Military styled command and control is the alternate method proposed in this final research report. By layering a matrix of military structure over the joint operating committee, the how and who that is sourced, tasked and monitored is achieved.

Military Command vs. Project Management.

Project management fares poorly in comparison to the global scope of accomplishment of military command and control. This military analogy and metaphor needs to be implemented within oil and gas in order to facilitate a method and a means of getting things accomplished. Since, as we have discussed, software defines the organizational constructs, this command styled implementation is an element of this Genesys system, and specifically the technology will be built to superimpose the military command and control framework on to the joint operating committee structure.

Project management is limited in its application as a means of operating a going concern. Project management violates its basic premise, which is that it is temporary. We are discussing the viable going concern of a joint operating committee. Other problems in attempting to retrofit a project management structure to manage oil and gas assets include the diversity, depth and scope of communications.

The implementation here is not dissimilar to the military metaphor, with "orders" being simply replaced in the "work order" system within Genesys. All tasks, equipment, human and other resources are to be managed through the system to provide a means to assert command and control ensuring tasks are accomplished and objectives are attained. This system will also be built to provide the encryption, authentication and authority of each transaction. Since we are talking about the commercial elements of an oil and gas concern then "role" and "rank" of the human resources also need to be implemented to provide a seamless manner ensuring work will be accomplished.

Project Management teams do not have the diversity of resources necessary to effectively manage assets. Consider for a moment how many people it takes to drill a well. I am talking about the billing clerk at the water trucking company to the chairman of the joint operating committee. Project management cannot facilitate the scope and diversity of the 100's and possibly thousands of people that are involved in getting tasks completed.

Another area where Project management is deficient is in its depth of resources. In oil and gas it is generally considered, as it is with anything complex, that the quality of the well drilled will be as good as the least experienced individual on the platform. Mistakes happen and the reduction of mistakes takes on a greater role than risk management. The active participation of several producers’ representatives in activities can broaden the scope of the problem solving capability. It is my belief that the more eyeballs that reviews a situation the better. The virtual environment can marshal more resources in this fashion than the physical world can.

The last deficiency of project management that I will point out is that it is generally limited to human resources. I have noted and discussed the types of communication being asynchronous and synchronous. We have also discussed the four methods of those communications being person to person, person to process, process to person and process-to-process. We cannot limit the scope of the organizational construct of the joint operating committee to just human resources. The physical assets and capabilities of vendors, suppliers, or anyone and anything involved in oil and gas must be managed with the utmost efficiency. If we preclude certain resources at this point then we preclude the holistic solution this system will be. And if we preclude the methods and modes of communication (asynchronous vs. synchronous and Person to person etc.) then we will certainly have limited the potential for this new way of working.

Military command as a metaphor.

In using the military command metaphor “Allies = other producers”, or members of the joint operating committee, or service based organizations. Each army can be parsed into further classifications such as Navy, Marine, Army and Air Force. Each participant in the joint operating committee may have several roles, several tasks and several "superiors" and / or underlings reporting to them from various organizations. Many military commands expand beyond the scope of the current army. In WWII the entire allied forces were under the command of General Eisenhower. The English and Canadian militaries, although separate from the Americans, were engaged in similar exercises and were coordinated as one. This is the type of application that I think is needed to solve the current and prospective energy issues. While working for a company you may be seconded to work for several different joint operating committees that your company has an interest in. This military analogy is only a more formal method of recognizing the loosely coupled nature of the missions, tasks, physical resources, and personnel.

Secondly separate tasks or specialty roles are segregated between certain military disciplines. In this analogy the Navy, Air force, Marines and Army are replaced by the Geological, Engineering, Administrative and Field disciplines. As with the individual disciplines the military chain of command remains in tact through the various disciplines. As an Army Captain would have superior rank to a Navy Private, the Senior Geologist would also have a recognized authority and superior rank over a junior Engineer.

Each worker within the oil and gas industry is therefore tasked in many different situations with different ranks and roles. The producer that is his / her employer will have the opportunity and latitude to second each individual to work in any capacity and area that they are authorized in. Each worker in turn may have several different producers, which is almost a given, to be assigned tasks from.

The analogy to the military has unfortunate connotations. However, it is by far the best manner of layering a component of command and control over the joint operating committee. The systems that we develop here are best suited for these interactions. So much of what we discussed here would be transparent and seamless to the user.
Technorati Tags: Research, Final+Report, Genesys, Military+Command

Who would Henry Ford hire?

As copy is returned from my editor I will publish it here first. I would expect that the remaining entries for the rest of August will consist of edited copy that will form the proposal in September.

One topic of discussion is the effect that information technology and innovation have on the various roles of society, organizations and people. According to Dr. Anthony Giddens Structuration theory, society, organizations and people all move in lock step with one another. Any distortion in the progress of one over the others will lead to a failure. Dr. Wanda Orlikowski further advanced this theory with her application of Structuration to information technologies whereby she noted that technology was an element of society.

The progress of society, based on the influence of information technologies, will be faster than organizations or people. However, I think the progress of society, as dictated by the various technologies will not exceed the speed at which the people can accept it. The critical motivating force in people accepting technology will be the demands of their employer. The hours worked and the productivity of "some" countries is creating pressure on people to respond and thus require technology to keep pace. This leaves the organization as the odd man out in the troika that Giddens and Orlikowski have defined.

This research report is dedicated to innovation and the application of technology in support of the oil and gas industry standard Joint Operating Committee. Today organizations such as Harvard University and McKinsey Consulting have joined the debate regarding organizational structure. They state that collaborative tools are available to eliminate the hierarchy, (my interpretation of their words) and that these technologies need to be used in order to sustain any competitive advantage large organizations have, which is the final evidence needed to prove this application of Giddens theory of Structuration.

With this preamble regarding Structuration, I want to ask, what effect did Henry Ford have on society, organizations and people? Clearly the type of worker that Ford employed after the invention of the assembly line was fundamentally different than what he needed before. The role of the organization was changed with such explicit and radical thinking as paying his workers better wages, which increased the number of people that were capable of purchasing a car.

The optimization of work around the assembly line took the better part of the last century to unfold. A century to develop information technology related innovations would seem like a luxury today as the pace of change accelerates and a century of innovations are likely to be compressed into what I suspect would be a decade.

What kind of worker is needed in this networked, virtual world of information technology and innovation? Ideas are not 9 to 5. Just as Ford today is challenged by its competitors’ more effective use of the assembly line, and is in jeopardy of facing its own demise, what roles need to change, and how will people act and react?

Therefore it is reasonable to ask whom would Henry Ford hire today, and what would these people do?
Technorati Tags: Research, Final+Report, Genesys, Henry+Ford

The SEC is building its system.

The SEC has now released an RFP (Request for Proposal) for the system that I discussed here. A copy of the press release can be seen by clicking on the title of this entry. If the old SEC can change it's stripes, maybe, just maybe the oil and gas industry can move forward as well. We'll find out in September when the proposal is delivered.

Technorati Tags: Christopher+Cox, Call-to-action, Genesys, XML

The plan

With the 200+ entries into this blog, I see that a theme has developed. Two articles that I read last week were the trigger to realizing this theme, and now a plan has emerged. Senator John McCain in Fast Company wrote on the subject of courage. Stanford Economist Paul Romer writing on the topic of economic growth. It is clear to me now, the time in which the oil and gas industry builds these systems is now.

In the next month I will be writing a new proposal that incorporates the plurality document as its appendix. This new proposal will take a number of themes that I have written in the past six months, relate them all and publish them for distribution to the industry to consider and act upon.

This proposal will of course focus on the joint operating committee as the central organizational focus of the software. This is a theory that deserves to be fully tested through its adoption by industry. It is an idea that provides a sound foundation for the effective management of oil and gas assets. An idea that is based on facilitating the earth science and engineering disciplines greater innovativeness. An idea that can augment a producers capability and speed in this difficult time for oil and gas.

I will also be including the four cornerstones of the technical vision. How the impact of these technologies will affect the oil and gas market. IPv6 enabling the elimination of client - server and replacing it with static IP addresses for everything including your toothbrush. What I believe the engineers and geologists can and will do with this level of static addressing is unlimited. The incremental nature of typed, object oriented programming languages like Java, our chosen language. Java enabling the exception handling capabilities and asynchronous process management that is critical to handling the intra-partner interactions. And finally, Wifi enabling everything to be connected at low costs and high speed. These four technologies will be revolutionary in the oil and gas industry when layered over the joint operating committee as the organizational focus.

With this technical vision layered over the joint operating committee, I will then go on to discuss this blogs entries regarding "Partnership Accounting". How an algorithm can capture the unique and demanding accounting and reporting needs of the producers as represented in the joint operating committee.

I will then note the military command structure as a replacement to the regular hierarchy. It is probably foolhardy to eliminate the hierarchy and to loose some of the attributes of a control structure. In this blog I have discussed the military command type of structure to augment the managements control apparatus. This also allows the human resources to be deployed in a greater diversity of situations, and have their tasks outlined and issued from a variety of producers as their employers. This military command structure will draw a parallel to the interactions of various military groups interacting under NATO.

I will then want to highlight the historical perception of linear thinking and contrast it to the logarithmic and exponential futures. Stanford University Economist Paul Romer has captured what the future economical progress can be. In a world of limited resources it need not be a zero sum gain. That the use of ideas have potentially logarithmic or exponential value creating capabilities.

In addition to all of these topics of discussion I will reiterate the Genesys value proposition. A value proposition that is not dissimilar to Google's. Where the costs of development are allocated over a larger base of users. Where each user is able to benefit from the purchasing power and capabilities of the entire population of users. This is the nature of software and the value of its proposition is something that I don't believe has been fully implemented or realized by the producers.

I also want to ask one of my favorite questions of the people within the oil and gas industry. That question is, who would Henry Ford hire? A question that is just as pertinent today as it was 100 years ago. Just as Ford needed a new "type" of worker, so will the prospective oil and gas producer. What type of employee will the producers need in this dynamic networked environment. What type of skills and capabilities should the oil and gas worker obtain to be optimally deployed in the future oil and gas industry?

Today's news that BP has shut in their Alaskan production due to pipeline leaks is evidence of the tight balance between supply and demand. The market demands for energy can not sustain too many large fields being shut in. Companies are already being questioned by the cynics and those that can least afford the higher prices.

Last if not least this proposal will note the 12 + calls to action. Oxford, Harvard, MIT, Energy Secretary Bodman, McKinsey Consulting, SEC Chairman Christopher Cox, Sir John Browne of BP, John Hagel III and John Seely Brown and others. These have become predictable in their message and their frequency. Many noting the time to act is now. And that will be the proposal's message to industry.

technorati tags: Genesys, proposal, call-to-action,

The future...

I've come up with some new thinking that was more or less prompted by two articles I read today. These articles have put the final parts of the foundation and context of where I stand personally on this software development project. As may have been noted in my previous entries the fight with the industry is over to a large extent. I am willing to let what has happened pass into history with no remorse on my behalf. It may very well be time to move on and as such, this blog has served its purpose in securing and publicizing my intellectual property.

The first article "In Search of Courage" is from Fast Company and was written in 2004 by Senator John McCain. The second set of articles were written by Stanford Economist Paul Romer entitled "Economic Growth" and I'll start here and then move to the McCain article with a summary at the end.

When I was thinking as much as I could about the competitive nature of the software industry, I kept thinking what an enduring competitive advantage might be in such a fast moving business. It seemed that by the time you have adapted to the new requirements, more fundamental changes were necessary to be implemented. A never ending chasing your tail type of scenario. The only sustainable competitive advantage that I could determine was intellectual property. It was therefore in this area that I set out to establish my competitive advantage. And it is there that I was able to create the plurality document that establishes the copyright for these developments.

What I didn't know at the time was that ideas had consequences. The consequences of this particular idea was the repeated slamming of doors of opportunity in the oil and gas industry. Naively I believed that many of the industry leaders would see the value behind using the joint operating committee as the organizational focus and we could rally the troops around the development of the software. Since I had wrote the research I earned the copyright and the rest was history. Little was I aware of how the entire document would be perceived as a threat from the management of the industry. I know now what the consequences of good ideas are, as I have lived them for the last 30 months. I also now know that it was not personal, it was and should have been the expected reaction to such a forceful idea.

Paul Romer is an economist at Stanford University and is cited as having a significant influence in the study of economics from the point of view of growth and value. He concluded in the mid 1980's that the real value in the future was intellectual property (IP). Noting that IP was capable of multiplying the economies output and growth. That this multiplication had long term effects of making significant growth impacts on all economies. That ideas have consequences and those consequences were exponential growth capabilities.

Anyone with a limited working knowledge of oil and gas knows that the joint operating committee as the organizational focus is exponentially better then the hierarchies. Most if not all the problems in oil and gas melt away from the perspective of using this organizational focus and software tools of today. For the industry to achieve "Compound Rates of Growth" as Romer suggests will only be based on intellectual property.

Now a funny thing happened on the way to the researching of this theory. I published my proposal to industry in September 2003 on the basis that if they financed the research they would earn the copyright. Unfortunately for them they laughed at the prospect of a local company doing research and the door slamming started its now familiar tone. Since I did the research, I earned the copyright and now that is mine to do with as I please. Believing that the industry would be wise to the plurality document I continued on, by myself at great cost and personal sacrifice. The last thirty months would have been hard for anyone, but particularly for someone my age. This is where Senator McCain comes in with his article on courage.

Firstly I highly recommend that everyone read, print and keep a copy handy for what may be an economically rough ride for all in the next few years. I want to list the really pertinent points of the article and then conclude this posting.

"Courage is like a muscle. The more we exercise it, the stronger it gets."

"That means trouble for us all, because courage is the enforcing virtue, the one that makes possible all the other virtues common to exceptional leaders: honesty, integrity, confidence, compassion, and humility. In short, leaders who lack courage aren't leaders."

"The same holds true for the business world. Corporate America has taken significant blows to its reputation, because too many executives don't have the courage to stand up for what they know is right. The perception among many is that corporate leaders are committed only to their own self-enrichment. "

"Very few of us are called upon to test our courage in the crucible of fear and hard moral choices. And yet courage still matters -- more than we think."

"Winston Churchill called courage "the first of human qualities... Because it guarantees all the others." That's what we mean by the courage of our convictions. If we lack the courage to hold on to our beliefs in the moment of their testing, not just when they accord with those of others but also when they go against threatening opposition, then they're superficial, vain things that add nothing to our self respect or our society's respect for the virtues we profess. We can admire virtue and abhor corruption sincerely, but without courage we are corruptible."

"As courage demands great sacrifice so does it demand great economy in its definition. General William Tecumseh Sherman defined courage as a "perfect sensibility of the measure of danger and a mental willingness to endure it."

"Courage is the highest quality of life attainable by human beings. Its the moment however brief or singular -- when we are our complete, best self, when we know with an almost metaphysical certainty that we are right."

"You must be afraid to have courage. By fear, I mean the kind that entails serious harm to ourselves, physical or otherwise, the kind that wars with our need to take action but which we overcome because we value something or someone more than our own well being. Courage is not the absence of fear, but the capacity to act despite our fears. You can live with pain. You can live with embarrassment. Remorse is an awful companion."

I have lived with the consequences of my ideas. I have sacrificed everything that I have in the support of this software project. Believing fundamentally in the need for this to be done, to be done in a manner that did not consider my needs. I am a small issue in comparison to the issues of the oil and gas business and the community of its users.

So the point of this posting is... Simple, the time has come to call an end to the sacrifice and effort on my behalf. I have not stood on this intellectual property and become a troll just waiting to pounce. I have been active and pushing this theory and opportunity as hard as I could for the past thirty months and the time to call an end is complete. With 12 to 13 calls to action, all sounding the same call I noted in May 2004 the industries time to display the necessary courage is now. As I said mine is complete.

I think when everything that you can think to do has been done. When the personal sacrifice is complete and their is nothing to prove, particularly to myself, I know I am not the source of the problems. In the next few months I will be preparing a revised proposal looking for a few courageous oil and gas firms. Firms that can see and read the writing on the wall with respect to the long term prospects of the hierarchy, and have the moral courage to act. For it is time for action.

technorati tags: Genesys, Project-Management, Courage, Economics

July Business Report.

Marketing

A change in our marketing approach. The more I think of it the more the old one seems to have been conceived in a nightmare. The number one objective in the next 3 months will be to find a project sponsor. The more I read the book we are reviewing "Don't Park Your Brain Outside" the clearer it is that the failing in making this project "real" is due to this blogs author. Instead of thinking that I am outside where my brain has been parked, our marketing will bring us back inside.

More on the marketing activities in this next month. Time for reflection and planning for the next 31 days.

Content

The pace that I had set out last month has slowed due I think to the summer months. The heat and the successful nature of the oil and gas industry seem to have permitted a few more relaxing hours then in the past. During September we will re-establish our objective of putting the 8 posts per week back into play.

This also seems to have had an effect on our technorati ranking. Sliding backwards a bit is reflective of the summer doldrums.

Technical Architecture

No changes to the overall technical architecture were made in July 2006. I will be reviewing the architecture in the month of August in line with and for the sponsor marketing search.

Budget

Revenue to the end of July: $0.00

Consistent with the marketing program changes I will be re-costing and reviewing the objectives for the sponsorship program. These will be comprehensive in nature and will involve the entire reconfiguration of the budget and goals that are to be set out.

Technorati Tags: Business-Report, Genesys

Petro Canada Q2 Earnings.

Petro Canada have published their second quarter earnings report and I have to admit that I was wrong in terms of the position I was taking on this blog. My inability to convince the industry of the needs of this type of solution had lead me to being convinced that conflict was a means to the end. In retrospect my frustration got the better part of discretion and I pursued the theme to the extreme. There is nothing more to do than to apologize to Petro Canada in the same manner the analysis was raised. I trust they will forgive me.

technorati tags: Genesys, Petro-Canada, Earnings

North American and European stock exchanges.

There has been some discussion on the cooling effect that Sarbane's Oxely (SOX) legislation has had on companies listed on the New York Stock Exchange and NASDAQ. The discussion lately has focused more on the impact that the additional regulations are having on companies, and the easier or less stringent London and European exchanges. Noting in some articles that American based companies would establish their listings in Europe as their stock markets are easier to comply with.

If I am not mistaken isn't this backwards. Isn't the perception in the investment community that the legislation is seen as being positive? Isn't it a benefit from the investor point of view, as opposed to the company? An additional check and balance on the activities of management? I would be leery of any management that wanted to move from the NYSE or NASDAQ to the London exchange. I would questions their motives and find out why they were thinking that would be a positive.

But this brings up another point. Recall that SEC Chairman Christopher Cox is implementing the compliance regulations in a number of XML based XBRL Tag Libraries. Enabling the power of the technologies to replace much of the compliance bull work. This is an important consideration. If the metadata or semantic web is able to monitor compliance through the transactions and interactions then the load that the management has to take on would be limited to the high end compliance activities. Rules and regulations are what technology has been able to provide a solution for a significant period of time.

The other concern is that their is no power in the universe that would ever try to approach repealing of Sarbane's Oxely legislation. Passed by a congress that was eager to prove to the world that the Enron's and WorldCom's are not acceptable. The message of any subsequent legislation that may lessen the impact of Sarbane's Oxely compliance would be still born. The U.S. Congress passed the legislation almost unanimously and would need to find some extremely critical data to motivate it to even consider any alternative.

I think the shoe is on the other foot. The legislation is a benefit to those investors who invest in the U.S.. Companies that are not interested in complying can certainly move to the foreign exchanges, but I would think this may not be in their best interests. After all the investor is the customer. Soon the compliance tag library will be available for all companies to implement. (Certainly within the next 5 years.) And at that time the companies will be able to purchase some extra large servers to manage their compliance requirements.

technorati tags: Genesys, SOX, Christopher+Cox, XBRL

McKinsey Strategy Series Part III, Tacit Interactions.

"Tacit interactions are becoming central to economic activity. Making those who undertake them more effective isn't like tweaking a production line."

This article states that tacit interactions, consisting of collaborative and complex problem solving, are the primary means of future economic value. The majority of these interactions are found in western based economies and are conducted by those that earn higher salaries. The article goes on to say;

"During the next decade, companies that make these activities - and the employees most involved in them - more productive will not only raise the top and bottom lines but also build talent based competitive advantages that rivals will find hard to match."

"But building these advantages won't be easy: companies must alter the way they craft strategies, design organizations, manage talent and leverage technology."

I particularly like that "Design Organizations" bit. It implies that the need and value of the hierarchy are last century. Today the technology exists to collaborate at a basic level. In the next ten years the development of collaborative applications will enable those firms that choose to increase these tacit interactions, with "competitive advantages that rivals will find hard to match."

McKinsey goes on to better define what is meant by tacit interactions noting "the searching, coordinating and monitoring activities required to exchange goods, services and information". The developed economies are finding the volume of tacit interactions are growing faster then in any other category or job description. Making up almost half of the resources in certain industries. The developing world is not far behind and have opportunities that could match the developed worlds pace in a very short period of time.

Automation of the business process, or transactional activities, does not augment the performance of tacit interactions. How a firm may increase those tacit interactions and increase performance is not well known or defined at this point.

"But that must now change. Executives will have to learn to innovate, and manage in era when tacit interactions dominate and drive performance."

Facilitating the people within your organization to increase tacit interactions requires the management to provide the tools for their people to do their jobs. In oil and gas, I would suggest that direct participation of all members of the joint operating committee, collaborating in a virtual environment is how I see the Genesys application being developed. Each engineer, geologist, administrator and developer are there to represent their companies interest in the area. Collectively the groups are able to collaborate and have the software support their thinking and decisions with tools that handle the business end of these interactions. For example, if it is determined that a sand frac is to be used on the well the following processes would be invoked;

• the contracting firm is chosen
• a purchase order is created
• a contract is made
• the invoicing and payment for those services are completed

all as a result of the decisions made by the joint operating committee (JOC). This frees them to conduct greater volumes of interactions and innovations that are necessary to meet the market demands for energy.

"Workers engage in a larger number of higher quality tacit interactions when organizational boundaries (such as hierarchies and silos) don't get in the way, when people trust each other and have the confidence to organize themselves, and when they have the tools to make better decisions and communicate quickly and easily."

McKinsey has conducted a survey of 8,000 companies and determined that certain sectors had higher levels of tacit interactions. Within each industry the number of tacit interactions was widely variable and appears to have a direct correlation to the overall performance of the firm! McKinsey goes on to say;

"The need to move forward is both substantial and urgent."

High levels of tacit interactions were consistently show to have built substantial competitive advantages. These advantages were difficult to be replicated by competitors as their "power lies in the collective company specific knowledge that emerges over time."

McKinsey goes on further to state that these require a;

"New Management Science" and "require changes in every facet of business, from hatching strategies, to organization, to managing talent, and leveraging IT."

Readers are encouraged to read the 200+ articles in the archives of this blog to see the manner in which this McKinsey Strategy Series dovetails with what has been suggested here for the oil and gas industry. The Genesys systems that will be developed with the joint operating committee as the organizational focus. Will enable high levels of tacit interactions and collaboration throughout the enterprise, the partnership in which the JOC is represented, and the industry as a whole. The what and how this is proposed to be done is documented in this blogs archives.

Consistent with the need to revisit all aspects of the firm, McKinsey believes the role and purpose of strategy and its development take on a higher importance then they do now. This becomes the critical task of senior management to provide the overall scope of interactions and their derivative innovations. This implying that innovations occur at the front lines of the business, not in the management ranks. The means that companies use to enhance the volume and value of tacit interactions is captured in the following;

"Tacit interactions reduce the importance of structure and elevate the importance of people and collaboration. Some of these changes are already underway. In many companies people now come together in project teams, address an issue, and disassemble to start the process again by joining other informal teams. In fact this approach is common in certain professional services and engineering firms, so their organizational charts rarely reflect what is really happening in them. Hierarchy busting has been a theme in the business press for years, but the pace of change has been slow and its effectiveness questionable."

The technology that companies will need to employ is fundamentally different from those used today. In addition to the enhanced communications, these technologies needs to be brought into context for the next ten years that McKinsey suggests these changes will occur. At this point I would assert the Genesys technical vision that I have documented here, here, here and here. This technical vision is necessary for these interactions to grow in predictable ways. Key will be the asynchronous process management and its ability to mirror the unpredictability of events as they occur. This is the real key of the entire discussion of these systems.

technorati tags: Plurality, Genesys, Petro-Canada, McKinsey,

McKinsey Strategy Series Part II, The Adaptable Corporation

"To survive corporations must execute in the present and adapt to the future."

This according to the author of this McKinsey article Eric D. Beinhocker. Click on the title to access this article, I highly recommend it's review. The author notes through research that two types of companies have evolved over the past century. High performance companies, which historically are unable to sustain their success vs. long term adaptors, companies that survive for long periods but do not perform well. The author provides research data that only a handful of organizations are able to achieve high performance and long term adaptation.

I have suggested this performance paradox is in play in the oil and gas industry today. And the solution to it is the hypothesis of the Plurality thesis underlying these blog entries. This solution involves identifying and supporting the joint operating committee. Building software that is consistent with the joint operating committee as the organizational focus. It is also my contention that this theory is the main point of conflict within the energy industry. To have McKinsey state explicit support for this type of thinking makes me realize that I have not pursued these ideas in vain.

The adaptability of a firm is dependent on three barriers, People, Structure and Resources.

"People, the price of experience"
The author notes that the "bias of over optimism can make organizational change efforts seem less urgent." I would add the confirmation bias, and as I noted in my Plurality thesis, both the motivational and cognitive paradox's. The confirmation bias enables people to see what they would like to see. The motivational paradox suggests that users lack the time and effort needed to learn new applications due to the overwhelming concern for though put. And the cognitive paradox notes that people tend to apply what they already know in coping with new situations.

Nonetheless each of these bias' and paradox point to the same issue. The installed base of management becomes a facilitator of execution, but also an albatross to adaptation to new situations.

"Structure, the risk of complexity catastrophe"
"As an organizations size and complexity grow, its degrees of freedom drop. The complexity of execution inevitably leads to inter-dependencies and organizational complexity, which in turn create the potential for gridlock."

I suggest that this implies that the performance of the firm would seriously degrade prior to the onset of gridlock. Is this what is occurring in oil and gas? Is the industry being challenged with new pricing and value metrics, facing an insurmountable change paradigm that management is unable to approach? If so it would be reasonable to assume that gridlock is right around the corner. It appears the majority of energy users demands are not being addressed or even recognized. If gridlock is the inevitable outcome as the author suggests, does this assume that we have to await its arrival before we take effective action? Or alternatively, will these software developments be driven by the users needs for a more effective and hence less timely way to do their jobs.

"Resources, the path to dependency."
"As managers search for complementary business processes and plans, over time those constrain the organization in its ability to expand its horizons."

"Creating an adaptive social architecture."

"Companies have two ways of overcoming these barriers. One is what Jack Welch called the "hardware" of an organization (its structure and processes), the other the "software" (norms and culture). The two sides must be consistent and mutually reinforcing to create a coherent social architecture."

It is suggested 3 approaches to overcome the gridlock and constraints:

1. Reduce the hierarchy.
   
2. Increase autonomy.
3. Encourage diversity.

However, addressing these hardware concerns provides only half the solution, you must also align the "software" of the organization.

"Organizational Software"
"Flatness, autonomy and diversity are diametrically opposed to the control, coordination and consistency that successful execution require. But the software of norms and culture can help organizations have their cake and execute it too."

The author notes the following 3 attributes are consistently seen in all high performing and adaptable organizations. These are as follows.

Co-operating norms.
As opposed to having the hierarchy enforce norms of trust, reciprocity and shared purpose. In this proposed solution, the joint operating committee operates at a level where the participants have control over these metrics. The focus is jointly shared by the participants collective motivation to optimize the investment.

Performing norms.
Replacing the role that senior management plays in pacing and setting performance requirements "by instilling norms that create strong expectations for individual performance." To offset senior managements centralized role of performance, individuals can be motivated to go the extra mile knowing success will be rewarded.

Innovating norms.
"Facts matter more that hierarchy" and "good ideas can come from anywhere." This blog is dedicated to the innovative producer. It is my assertion that the prices of energy commodities is a reallocation of the financial resources to support innovation. Innovation being a subset and mutually reinforcing cycle based on these underlying earth science and engineering disciplines.

Back to the original point that the author states. Companies need to execute in the present and adapt for, and to, the future. With the pace of change in the business community those that are able to effectively adapt will have the ongoing strategic capability to essentially continue on. Those that are unable to adapt are pursuing strategies of gridlock and quickly eroding competitive advantages.

I have stated many times in this blog that I do not see the structured hierarchy as being the means for the industry to adapt to these new realities. These realities are playing out and are addressed in this fine article. An article that provides an explicit solution that senior management must relieve some of their concerns for performance and place it in the hands of the front line. In the case of the oil and gas industry, the joint operating committee.

Part of the conflict that is prevalent in oil and gas companies is attributable to the "hardware" structure and processes of the organization are not aligned with the "software" components. The "software" being the culture and the norms of the organization are clearly based on the joint operating committee. Is it the legal, financial, operational decision making and cultural frameworks of the global oil and gas industry. Yet no company explicitly addresses this key organization method. This point is the source of the conflict in the industry and the source of its future adaptability.

If a user is faced with the change paradigm in this software development proposal, because it is consistent with the norms and culture of the industry the solution is very evident. The lack of cooperation between the joint operating committee and the hierarchy is the issue. The methods of management for the hierarchy have always conflicted with the joint operating committee. And over time no one questioned if this was the right direction. In other words, to adopt the joint operating committee will eliminate the majority of the conflict that is present in oil and gas administration and management.

Not pursuing this opportunity to develop these systems leaves the industry further behind where it should be in it's transition to adaptability. I can only assume at this point that the reason that these software developments are not being started is that the industry has attained that lofty point of gridlock.

technorati tags: Genesys, Plurality, McKinsey, Adaptability

A new McKinsey Strategy Series, Part I

The title of this entry will lead you to a series of McKinsey articles that provide some pertinent material for this blog. The majority of the focus of these articles is the transition from the technology induced forces that are active in business today. Within this series is a copy of the John Seely Brown and John Hagel III article "Creation Nets". I would point the key reason for this entry is to highlight how the article relates to this blog, as in this quote;

"Change is a constant in today's global business environment: new consumer preferences, innovative attackers, and technological discontinuities can challenge current leaders suddenly. This issue of McKinsey on Strategy examines three ways for companies to embrace the challenge of continual change. One is to reconcile the conflict between executing in the present and adapting to the future. Another is to embrace new knowledge and information trends that can make talented workers more effective and to look outside corporate boundaries for ideas, knowledge, and technology. The third is to counteract the common psychological biases that make executive hang on to failing businesses and products."

I can't think of a better summary of this blogs purpose and role. I have introduced significant change paradigms to the way that oil and gas companies are structured. I have noted that to change the structure requires that systems be built to define and support the new organizations, or as I have noted, SAP is the bureaucracy. And I have attracted significant resistance and as have stated before, and McKinsey is saying in this series, resistance is futile.

I will take each article and break them down into separate entries over the next few days. The first is the results of a Survey McKinsey conducted and their 10 trends.

An executive take on the global business concerns. A McKinsey Survey.

"Macroeconomics Trends"

"1) Centers of Economic activity will shift profoundly not just globally but also regionally."

Clearly China and India are having significant influence in the globalized economy. This trend will continue and bring with it the increase overall demands of energy. Underestimating the overall demand for energy is a fault of the energy producers. Thinking that prices are temporarily high is based more on past events then the globalized economy.

McKinsey notes that these trends are going to be with us for 20 years. The overall changes will be in concert with regional changes that are as dramatic. Noting that Europe and Asia may equalize in their economic size and influence.

"2) Public sector activities will balloon, making productivity gains essential."

This trend notes the demands in health care and other areas of the government will increase in the near future, and that increase has to be met through the enhanced productivity of the public sector. There simply won't be enough people to deal with the demand.

However, this trend is also in play in the oil and gas industry. Retirement of the brain trust will occur in the next 20 years. Methods of sustaining the reserve base requires more active science and engineering. These will have to be done as the fields get older and the targets smaller with less people then what are involved today.

"3) The consumer landscape will change and expand significantly."

Possibly intimating that the west will be the only one market of consumers, when India and China's middle classes continue to expand, the market for all products will be much stronger then the west is accustomed too. The energy sector is also directly affected by the consumer markets.

"Social and Environmental Trends"

"4) Technological connectivity will transform the way people live and interact."

Offices need to be designed to accommodate the new methods of completing work. The ability to conduct business anywhere, anytime is quickly becoming a reality. Telecommuting I think is a bad example of how this change will occur. Contact with a much larger population of workers and their regions will demand that the traditional methods of working needs to be considered.

"5) The battlefield for talent will shift. (Global labor and talent strategies)"

Dove-tailing with the technological connectivity trend, having people scattered in various regions will become commonplace. The ability to conduct operations where ever they are required is augmented by the capability to seek and source talent from remote areas.

"6) The roles and behavior of big business will come under increasingly sharp scrutiny."

Particularly in the energy industry. The Kyoto, CO2 emissions and general nature of the energy industry attracts those that have a strong environmental focus. Big business is also known to hog the lions share of consideration. The competitive and strategic advantages of size may become oriented to the smaller firms.

"7) Demand for natural resources will grow, as will the strain on the environment."

Well stated. McKinsey suggests that energy demand may grow by 50% in the next two decades. For me this certainly puts in perspective the scope and size of the problem in energy. Without energy, there is nothing. It is the lifeblood of an economy. If we intend to continue to develop these energy demands must be met. High energy prices are not a temporary pricing aberration from the conflict in the Middle East.

"Business and Industry Trends"

"8) New global industry structures are emerging."

Due to the proliferation of technologies and regulation like Sarbanes Oxeley, new business models are emerging. Here in Canada the development of private capital and trust conversions have dominated the energy sector. These business models were of limited use as little as 6 years ago.

"9) Management will go from art to science."

This trend is suggested as big businesses savior. The ability to continue on with size requires that the firm employ technologies throughout the organizations. Such that automated decision making replaces the current management structure of organizations. Read the McKinsey article if you have difficulty believing this.

"10) Ubiquitous access to information is changing the economics of knowledge."

This trend indicates to me that the real value in the future is intellectual property. Knowing is one thing, have access and authority to use many of the innovations in the future will be based on a completely different structure in industry. Who knew what and when will be more the deciding factor in creating value. Making licensing and publication more important elements of all businesses, but particularly energy.

I will continue on tomorrow with the next section of this series "The Adaptable Corporation."

technorati tags: Genesys, McKinsey, Trends, Energy, Change

Vaporware vs. Clean Slate

It could be argued that the focus of this blog is a software product that falls within the classification of vaporware. It could be argued this because that's what it is, vaporware. I would put some spin on the classic definition of vaporware and call this a clean slate approach to oil and gas systems. The situation that this "product" is in is difficult to define and therefore difficult to build without the express support of the oil and gas industry. This blog is communicating these concept far and wide and is finding its audience.

I am articulating a vision of what a new approach could do in the systems area. It certainly is vaporware as no group or company has ever approached the joint operating committee as the central organizational focus. How can I, as I am reduced to one individual, do all this work in order to make a viable system for the producers? The clean slate approach has to be communicated in the way that it could and should be built in order to accurately describe the features.

Two points that present the future difficulties I see in oil and gas systems. Partnership accounting and the Genesys technical vision that are the foundation of this solution. All these aspects of software systems have to be addressed and neither SAP, Oracle or IBM have a solution or vision for it.

To be more specific, the perspective of using the joint operating committee brings new and better ways of managing an oil and gas enterprise. From a systems point of view oil and gas has ignored and avoided the joint operating committee as it conflicts with the underlying purpose of the bureaucracy.

This project was originally proposed to the industry in 2004 as an $85 million software development project. As a producer I have to ask, isn't it more appropriate to keep your options open. What if SAP and Oracle continue to provide their current offerings, will those be adequate in the future?

Is there an expectation or belief that the bureaucracy and its use of last centuries technologies can hold a candle to this vision? These technologies and the forces of change in all areas of the economy have to be addressed. Oil prices are up almost 300% reallocating the financial resources to support innovation. Organizations are constrained in their speed and innovativeness due to the bureaucracy and its refusal to accept the joint operating committee as the explicit form of organization.

We have consistently seen successful companies that were able to integrate technology into their strategy and form strong competitive advantages. Companies such as HSBC. Homogenization on SAP is not a competitive strategy. I have now counted 12 calls to action that Harvard, Oxford Analytica, MIT, McKinsey, John Hagel III and John Seely Brown, Secretary Bodman, SEC Chairman Christopher Cox and a variety of others. Add to these calls the demands of the consumers. The time to act and put these software developments into play is now.

technorati tags: Call-to-Action, Vaporware, Technical-Vision, Genesys,

Sir John Browne On MIT Video.

The title to this entry will take you to the MIT video of Sir John Browne, Group Chief Executive BP p.l.c. An excellent speech entitled "The Purpose of Business".

Sir Browne developed his meaning or purpose of business as:

"We are fulfilling our purpose by supplying goods and services at a price people can afford and in a manner in which makes the activity sustainable."

Which is a fundamentally different then we are here to make money. In his speech Sir Browne documents the long lead times in oil and gas operations. Providing an understanding of the time and difficulties it takes to accomplish the development of oil and gas resources. Although it took 15 years to develop these assets, BP probably would not have been able to accomplish what they did in Azerbaijan in North America any easier! The scope and scale of this business is such that the lead times are ridiculously long.

Sir Browne talks at length about the time in which BP went into Azerbaijan in the early 1990's and developed their offshore resources. Offshore resources that probably would have still been untapped if it wasn't for the perseverance of Sir Browne and BP. To invest $15 billion over 15 years without seeing any revenue, to have the investment risked due to the political instability of the region shows the lengths that producers are having to take in order to access the commercial fields. As he notes, the supplies of oil and gas are concentrated in Russia, The Middle East and Africa.

Sir Browne talks about the things that he has to do for the future.

"And perhaps most important of all we need new ideas and knowledge, we need the advances in sciences which we as engineers can apply."

This is 100% consistent with the objectives of this blog and the use of the joint operating committee as the organizational focus. How can it be expected that the bureaucracies will be able to keep up to the demands of the changes in sciences. Layer on the political risks and operational difficulties and one can see the complexity of the business is systemic in all areas of operation. The bureaucracies are doing the job today, but at what speed. Is it fast enough to provide the market with their demands for energy?

The head of one of the largest oil and gas companies suggesting the same objective as discussed here. This has to be considered a call to action, and if we were counting that would make it 12.

technorati tags: Call-to-Action, Genesys, MIT, BP, Browne

A visit to the tarsands.

U.S. Energy Secretary Samuel Bodman was in Calgary over the weekend. After a quick tour of the heavy oil facilities in Fort McMurray Secretary Bodman stated that;

"The U.S. is ready to work with Canada to remove roadblocks facing Alberta's oilsands sector."

and

"Suppliers of oil in the world have really lost control of the market."

Recall MIT highlighted a video of Secretary Bodman that I reviewed here. The question that seems to be answered by Secretary Bodman's visit is that yes the oil sands are a critical part of the U.S. energy security. Declaring the oil sands a "world resource" certainly puts the energy issues into context, and puts their development on a higher priority.

If it was only so easy. The problem comes in the area of infrastructure. There is not the basic necessities to support the current $100 billion in investment being made in Fort McMurray. The mayor of Fort McMurray has stated that the ability to sustain the current pace of development is in jeopardy. There are not enough people, 75,000 in Fort McMurray, to assess as a tax base to begin to even address the current issues, let alone the future oil sands developments. A pretty serious situation for any city to handle.

What we need Secretary Bodman is help with our problems here. There were indications that the kind of help that may be provided from the U.S. was the U.S. based refineries and pipelines be upgraded to handle the oilsands output. First that is not the problem, and secondly Alberta, irrespective of our leaders opinions of the situation, is not a hewer of wood and drawer of water. A few weeks ago I wrote how our leaders had hired a Texas based consultant to review why Alberta was unable to support the development of a $10 billion super refinery. Now is not the time for our leaders to suggest that foreign groups develop the infrastructure necessary for heavy oil development. Invest here in Alberta where the problems exist. Don't move the raw material into the final market, essentially ignoring Alberta as a second class citizen.

The areas that we need help is in the development of the appropriate civic infrastructure in Fort McMurray. What we need is engineering and knowledge on how to build the super refineries, pipelines and associated infrastructure for full development. Lets work together to solve the energy needs of the continent. That is what is possible and that is what we are ready to do with our very good friends, the U.S.

technorati tags: Call-to-Action, Secretary-Bodman, Heavy-Oil, Genesys

"SAP misses forecasts"

In a "surprise" announcement SAP's second quarter results were not as projected. Growth in revenues were down to 8% as opposed to the usual 15 - 17%. Market share was lost to Oracle.

All and all bad news from the number one business software maker. I would point out that they were scheduled to release their results next week, yet chose to slide them in under the door on Friday.

SAP was off in all analysts estimates. This indicating to me that something happened that was unexpectedly. I would like to think that something was companies beginning to turn away from the large software packages towards more natural forms of organization, and much more focused software.

technorati tags: Genesys, SAP, Quarterly

Idiots, a.k.a. Petro Canada shareholders.

What our favorite company is up to is a mystery even to themselves. As a shareholder I will be rabid when on July 27th this company issues its quarterly report. I thought that Petro Canada may surprise the market with an early release yesterday. An early release who's impact would be lessened by the lack of attention over the weekend. This is a particular vile and spineless tactic that only cowards would do. Maybe there is some hope for them yet?

On the topic of a July 27th release date. Does this late of date postpone the bad news to the absolute latest available date? After the full volume of the second quarter reports has died down, then we will hear the extent of the losses of Petro Canada.

When the noise of all the surprise announcements from all the other industries is in full song, Petro Canada will sneak a loosing quarterly under the door. This also on a day before the August long weekend. There is no hope what-so-ever for this firm.

technorati tags: Petro-Canada, Cowards, Genesys, Quarterly