As the Sun sets...

We bid adieu to Sun Microsystems and recognize the Draft Specification is now one year of age.  I can say with out much reservation that it has, and will be, the most difficult thing that I have done in my life. Taking better then a year to write and the result of seven years of university and thirty years of experience in oil and gas, at 50 you know there is not that much gas left in the tank. My father always said that your 40's are the time in which you can do anything. Your are mentally, physically, spiritually and intellectually at your life's peak, and I feel that is the case with me. After a little more then a year since publication, this past year has been more about recovery and recharge then anything else.

I look back on the 17 years in which I started working to develop oil and gas systems; with amazement that I was able to get the job done. For much of that time I was driven to do something that I did not know specifically what it was. Searching and hunting for something to satisfy an unknown. When I originally saw what it was that I could do, it was May 1992. In a flash the idea came to me and I was driven to make it real. 

For many of those days it seemed to me like I was locked in a darken room where I needed to find the exit. Being constantly reminded of the obstacles, dangers and pressures which frustrated the journey. I needed to find the way for those that would follow. Rising above the day to day grind never made any sense. The counter intuitive and seemingly destructive decisions to pursue this project alienated and confused most. But I always knew whatever the result I was reaching for, I could achieve that vision of so many years before. 

Today I look back on these times as the best part of my life. The struggle is the prize and this journey has produced a new "way" for the oil and gas industry. I am pleased with the results of this effort and will continue to make the project real. Writing here about the compelling reasons why the industry should adopt the Draft Specification. Recruiting the people needed to take it to the next level. And joining those people who will solve the problems we face in meeting the demands for energy. 

For people who have similar feelings and opportunities. Those with the desire to do something that they know is above and beyond them. Preparation is the difference between success and failure. It is academic whether you will do it or not. You really have no choice. I think preparation needs two very important ingredients. A Master's level education will help in defining and building the many contradiction and conflicts that arise. Secondly a physical depth brought about by high levels of competition in sports. Your system will be taxed and the stress will kill you. I've suffered 4 bouts of Pneumonia in the past 6 years and I know that if I was not as fit as I once was when I went into this process, let's just say the stress is super human. But more importantly the physical competition shows you that there is nothing but your mind that limits your potential. 

I am honored to lead this project. I am rested and fully recovered and look forward to the next 17 years. When we look at what has been done and compare it to what needs to be done, little has been achieved. I am reminded of Ray Kurzweil's Law of Accelerating Returns about how things get done. Very slowly at first, and then they pick up their own momentum. According to Google, 861 people have looked at the Draft Specification. When we think that People, Ideas & Objects is about obscure oil and gas ERP systems, I think this number shows these ideas have a community of like minded people. Please join us here. 

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99.9986% uptime.

Yesterday I lost the final two hours of work on a post I was writing. Frustrating yes, but that is the first "loss" of work in 2 full years. I'm talking about the use of Google Apps for our domain (www.people-ideas-objects.com). I was writing when suddenly my browser failed and I had to restart it. And as a result, when I logged back in the file did not reflect the last two hours of work. It was the same as I had left it the day before. For whatever reason during that two hours the browser would register my edits, but not write them to the file on Google's servers. Either one of these two technologies, the browser or Google Docs failed for that period of time. 

I am also partially at fault for not doing a hard save on the file during that two hour period. I rely almost exclusively on Google Docs picking up all of my saves and have become overly reliant on these automatic saves. 

Now Google Docs is just one product of the suite of applications that are available. These other applications are used extensively and maybe should be factored in when I determine Google's up-time percentage. Then there is that price. At $50.00 per user per year, this is the deal of the century.

I also have to mention the costs and risks of maintaining our own environment. I don't think in the past two years we would have had the same up-time. Probably not even close. And that doesn't factor in any of the heavy costs of servers, bandwidth and applications. Therefore mark me down as a very satisfied Google Apps user. 

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China's energy consumption

Rebecca Wilder has one of the most interesting blogs on the Internet. Her passion for economics, writing and prolific chart production provide unique insight and perspectives on the economy. She recently published this graph that I think identifies one of the most difficult issues we will face in the next few years.

The problem of course is the future demand for energy. China's consumption is already amongst the highest in the world. This is evidence demand will continue on a rather aggressive trajectory for the next few decades.

The energy industry is ill prepared to meet this challenge. That is what this software development project is about. Preparing, by first organizing, the producers to address this challenge. Organizing around the Joint Operating Committee, the legal, financial, cultural, communicative, and operational decision making framework of the global oil and gas industry. Building the software to define, align and support the People, Ideas & Objects of an innovative energy industry.  

If we leave the problem in the hands of the bureaucracy we will continue to fail. Please join us here. 

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Google O/S and NeatX

This announcement almost went under the radar. Sometimes the complexity of the technologies make it difficult to see the whole picture. Information about Google's recently announced Operating System (Google Chrome) received significant attention, not so for Neatx. Which is interesting because the two applications combine to introduce a new product architecture. I'll leave it to the MSM to provide the information on the O/S. Neatx is the real jewel in this new product / architectural offering. To me this product offering shows Google is serious about both the consumer and enterprise marketplace in terms of offerings.

We need to go back to the last two Google related posts I've written about. Google Wave is a revolutionary communication related product. The second technology I recently wrote about was Google Chrome (The Browser), their open source browser. Recall I thought that the technology would enable the user to have a constant browser experience available from any public or private terminal. 

In a networked world the users needs are unquantifiable. They can and will include every possible permutation and combination. The other known attribute of the users demands is that the volume of data and information will continue to grow exponentially. Having this environment available all the time and anywhere becomes a challenge for the technology. As I wrote about in the Google Chrome (Browser) post; the constant, consistent web browser interface, complete with all the users unique and authenticated access available by simply logging into the users account through a Google Chrome browser. 

This feature may not seem to be a strong feature to the average web consumer. However, in my opinion, from an enterprise point of view it is a necessity. The problem with this implementation is that it is relegated to the browser. If Cloud Computing does take off it will need a more robust operating environment in which to ensure its users and companies are able to rely upon. That is where Google Chrome the O/S and Google Neatx come in to play. 

Neatx is an open source product that Google has in development and will be offering. Based on the "old" X Windows architectural model of computing, Neatx leverages Google Chrome the O/S in ways noted in my Google Chrome (Browser) post. The difference is the level of security and control, unlimited application access, file systems, any and all compiler access, and the single sign on environment available anywhere on any machine. In other words the entire network capability, unlimited and unconstrained by any hardware, software or network related issue. The fact that Google is calling both the browser and the O/S "Chrome" is probably indicative of the disappearance of the "Browser" metaphor. And, this environment becoming systemic or embedded within the O/S with the classic Google / Apple ease of use. 

People, Ideas & Objects is founded on a Technical Vision that includes four cornerstone technologies. I see these technologies Java, Asynchronous Process Management, Wireless and IPv6 changing the technical landscape in the next few years. The scenario I see developing for Users of People, Ideas & Objects. (And yes this imputes that Google Chrome (the O/S) and Neatx will be added to the Draft Specification.) Is a User has at their disposal all manner of computing resources necessary to complete their work supporting the innovative oil and gas producer. Users making their clients the most profitable in terms of their commercial operations. 

Logging into their systems the User will have at their disposal the complete People, Ideas & Objects applications. Applications that they have influenced in terms of what they need and want from an ERP system. In addition, the software development capability that is a core competitive advantage of People, Ideas & Objects offerings. A software development capability where the applications will evolve based on User input. 

Once the user is logged in, they will be able to see their session presented just as it was when they last logged out. No matter what machine they have logged in from. From there they may be logged into a variety of network resources that provide the full scope of functionality needed to do their job. If they need a monthly report they like to run for their clients they can run it from any machine they may be on. The fact that it takes 15 hours of processing time is irrelevant to the Netbook they are using. Access to People, Ideas & Objects provides the processing power that will complete the 15 hour job in the next 15 seconds, and the User can continue to provide their producer client with the innovative and valuable report that they developed. This architecture is designed to provide a better understanding of the opportunities and issues the producers have at each Joint Operating Committee. 

Physical location will become irrelevant in this virtual environment. And due to the Asynchronous Process Management that is a cornerstone of the Technical Vision, time will be of less significance then it is today. Gone will be the pressures of deadlines and 9 to 5. In its place will be an active and innovative member of the Joint Operating Committee providing the commercial transaction processing, analysis and evaluation of the issues of that JOC. An individual who is trained in their craft of Geology, Engineering, Accounting or Administration and is proactive and innovative. 

In this scenario People, Ideas & Objects becomes more then just an application. And more the cornerstone of a loose grouping of modules that create the Users commercial environment. A commercial environment that provides the User with access to the People they need to do their job. An environment in which they apply their skills and earn their income. 

Please join us here in making this vision real. 

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"Industry in a box."

It's 1992 all over again. I find myself in the position where I have a good handle on the needs and understanding of the energy industry. And I stumble into the previously unfavorable position where Oracle Corp is making statements and announcing product architectures that resonate with me. And that is the bad part. Not that Oracle technology is not the best, it is, and I find they are sailing closest to the wind in terms of the market offerings and future architectures. 

The problem for me is that Oracle and I have had business dealings before. In early 1997 Oracle executed a coup against its global Independent Service Providers that was of questionable strategic and tactical value. It is doubtful in my mind that Oracle has changed its way's. With their pending acquisition of Sun Microsystems they seem to be an imposing figure on our horizon. We need to decide how to capture the best value for our clients, the oil and gas producers.

The comment "Industry in a Box" is attributed to Larry Ellison who is the founder, Chairman and majority owner of Oracle. The comment was made in a Forbes article "Questioning Oracle's Cloud" where it is asked if Oracle's commitment to cloud computing is consistent with its current application offerings. 

Irrespective of Oracle's application offerings, People, Ideas & Objects Draft Specification details the needs of an innovative oil and gas producer. None of the current Oracle application offerings are needed to augment the software development capability that People, Ideas & Objects offers the oil and gas producer. Leading one to realize that Oracle is as much of a direct competitor as it is a technology provider. I think it was this same conflict that lead Oracle to make the decision to become an application provider at the expense of its Independent Software Vendors in 1997. 

The point of the article is Ellison's comment. It accurately captures the value proposition that People, Ideas & Objects offers the oil and gas producer. A value proposition based on the understanding that the innovative producer will have it's asset base, geological and engineering capabilities as its primary competitive advantage. Owning and operating computer hardware and software that provides the back office functions does not provide any competitive value. 

Go through an energy companies career listings and see the detailed description of an IT job they are looking to fill. Painful. The "Industry in a box" for oil and gas is consistent with the competitive advantages and value proposition noted here. A centralized, secure, virtual capability providing the producer with the most profitable means of oil and gas operations. Please join us here.

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McKinsey, Bryan and Rumelt Part lll

This is the third and final installment of the McKinsey Quarterlies podcasts from Lowell Bryan and Richard Rumelt. I have taken the two previous podcasts and applied them to the work that is being done in People, Ideas & Objects. In Part l the authors noted the current tendency to think that clear sailing is the normal or optimal operating environment. As they were able to clearly communicate, clear sailing avoids the risks and dangers that need to be addressed in the economy. In Part ll they relate to the "markets" magic healing powers that preclude anyone or company from taking any action or responsibility. Noting the tendency for people to suggest that the bigger problems are not their responsibility, and the market will take care of it.

Part lll takes the conversation to the operating strategies that people can use to optimize their future. Change is happening at a remarkable rate. Much of the change is being forced upon us as a result of the failures brought on by too much clear sailing. Information Technology plays a big part of how I see we rebuild our economy.

It is also interesting to note the level of discussion that is taking place regarding the role of government in the economy. Some interesting points of view are here, here and here. I would also turn your attention to Professor Carlota Perez' earlier work this decade. She was instrumental in predicting the scope and scale of our economic collapse. And how this period of economic renewal is a constant in our economy for over the past 300 years. One of her very pertinent points was the role of government would need to be "redefined" in an innovative and creative manner. 

I have thought about her point of a new role for government for the past number of years. Particularly from the point of view of this software development project. Software defines and supports the organization. We currently see social networks coming into play with the power of connecting like minded people. Software defines and supports not just organizations, but society as well. Just as roads, bridges, communications and infrastructure fall in the jurisdiction of the government. Software as infrastructure provides value to all that live within the society by reducing the shared costs of living in that society, and enabling access for personal and commercial purposes. I think governments need to realize this enhanced role in the new economy.

With that preamble in mind I turn to the document at hand. Bryan and Rumelt note;

If we look ahead a bit, you can see the health care system we have, if we extend it to a larger group of the population, or everybody lets say, its going to bankrupt us, so something is going to give. The strategist is someone who has an idea about what is going to give or about reshaping it. That's how your going to create value. 

This project is about a strategy of how to rebuild the oil and gas industry. An industry which is beginning to show the failures of clear sailing. The current motivation and ability to approach the new science and engineering basis of the innovative oil and gas producer is in question. I am not predicting the future, only suggesting that research shows the Joint Operating Committee provides the appropriate posture for an innovative organization. We must move to the JOC as our opportunity for the future. 

The future lies in the collective hands of the user group that defines, uses and controls this software development. User driven software development is the only method that can assure what the authors say should be the proper posture.

How to prepare to be resilient and flexible no matter how this environment turns out. 

and

Fortune favors the prepared mind.

Soon the economy will force the hands of the people who are now working in the oil and gas industry. People, Ideas & Objects will be here for those people who know the bureaucracies days are over. It doesn't require a lot of vision to see the bureaucracy can't and won't make the transition to the future.

You have to find a wave of change that you can exploit and ride it with skill. Its not about having lockstep plans, its about figuring out which forces we can harness or ride to our benefit. 

Please join us here.

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McKinsey Bryan and Rumelt Part ll

In the second audio installment of this series. Bryan and Rumelt discuss the U.S. government's approach to the economic crisis. Their discussion provides a sound basis of looking at the situation we are in, and provides an understanding of the problems and solutions. The final three paragraph of this discussion captures the issue better then I have seen anywhere else.

Milton Friedman, when he studied the Great Depression, had a very interesting take. Everyone thinks of Milton Friedman as this big free-markets guy. But his explanation of the Great Depression was that the Federal Reserve didn’t do its job.

And his explanation of why the Federal Reserve didn’t do its job is interesting. What he says is, the New York banks used to self-regulate themselves when there were credit crunches and runs on the banks. They would get together, and they would more or less agree, “Here are the rules. Here’s how we’re going to handle this crisis.” He said once the Federal Reserve came into being, they stopped doing that. They sort of expected that the Federal Reserve would do it.

And so the institutions and the habits, the whole structure of that self-regulation went into disrepair. Then when the crisis hit in 1929, 1930, that institutional framework didn’t exist, and then the Federal Reserve sat on its hands. And I think something like that is also a way of looking at what’s happened recently. Wall Street could have self-regulated, but it chose not to. And Washington chose not to. And so no sober adult was in charge of these things.

Coming at this problem at a slightly different angle, so much is expected of the "market" to solve these bigger problems. When regulators think that it is their role to avoid the problems. It eliminates the need for the companies to involve themselves of the larger issues. Ask an oil and gas company today what responsibility they have in meeting the market demands for energy? Or, should they allow the service industry to deal with the complete cut-off of funds and force them to cannibalize their operations again? The answer you'll get back is that these are not my problems, the market will figure it out. And as a result we go through another period where we will have to rebuild the service industries to meet the needs of the producers. 

In the Resource Marketplace, and Research & Capabilities Modules of the Draft Specification. I attempt to resolve this situation. By providing the producers, represented in the JOC, with a window on the service industries. Giving the producers a means in which to have the innovations and developments of the earth science and engineering disciplines be extended through to the service industries. Extending the producers organization in a manner that could eliminate the feast or famine cycle they induce in the service industry. Just because the producer receives 100% of the proceeds from oil and gas sales. Does not entitle them to expect the service industry will source all of their capital and ideas from elsewhere. They form too critical a part of the industry to hold them ransom each time their is problem at the producer level. 

In a recent article in the Financial Post that reflects the final resolution of ignoring the larger issues. Henry Sykes, President of MGM Energy Corp in Calgary talking about the delays in the Mackenzie Valley Pipeline says;

"This is an embarrassment to the country -- this project, the regulatory system … and yet nothing is happening," Mr. Sykes said in an interview."While I remain optimistic that there will eventually be a pipeline, I have given up predicting timing. Between the regulatory process and the fiscal negotiations, I think this has taken far too long.

If you agree the industry needs to begin to deal with these types of issues. That there are larger unaddressed issues to be resolved, please join us here.

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McKinsey: Bryan and Rumelt, Part l

It is astonishing to me the pace and depth of research and articles that McKinsey are producing in this current economic crisis. And in suggesting that the scope is limited to the current crisis would be short selling the leadership that McKinsey have provided since at least 2005. I began writing this blog at the end of that year and have published 54 other McKinsey article reviews since. All of these being of the highest quality of input that I have been able to find.  

UCLA Professor Lowell Bryan and McKinsey Director Richard Rumelt talk about the strategies needed to address these financial difficulties. And in the introduction it is noted as to how we found ourselves in this financial crisis. 

Factors that lead executives to take huge unsecured risks. Including the separation of risk and rewards and too much managing by the numbers. 

Definitely on topic, and when an article starts off with the comment;

Dramatic failure of management and governance. 

I'm sold. The commentators introduce a metaphor for what they see today by drawing on experiences in the development and operation of the Hindenburg. One of the authors had the opportunity to discuss with an individual who rode across the Atlantic on the Hindenburg. Noting the individual marvelled at the smooth nature of the ride. Which of course it did until it crashed. The point being that the viewing of irrelevant statistics, such as the Hindenburg's smooth ride, miss the level and type of risks of that mode of transportation being inherently dangerous. Management at the manufacturer of the Hindenburg noted that the crash would be someone else's problem. 

In oil and gas I have written about the disjointed nature of the industry in this blog. Running the Pig series which highlights 4 local producers who have declining reserves and production, yet at the height of their folly they had assigned themselves $3.6 billion "in the money" stock options. 

Yet there is a larger issue at play in the industry, and this article is directly on point when it mentions the Hindenburg's management suggesting the crash was someone else's problem. Oil and gas production in the world is not growing. We've known that since 2005, and may indeed be in the early years of an advanced decline. Energy is the oxygen used to power our economies, without it we are all dead. Yet my daily interaction with oil and gas managers reflects that this is not deemed as their fault. That is someone else's problem. 

Asking difficult question like "what are we doing" vs reflecting on irrelevant results are some of the points made in the McKinsey article. They also point out the disconnect between management and ownership and reference Adam Smith's agency theory. These points are exactly why I believe the two sources of revenues for this software development project are the oil and gas investors themselves and the governments that have royalties as part of their income. 

The last point I want to make in this first edition of the McKinsey article is around the 8:10 point in the audio. A comment is made that people don't know where they are going

... and they haven't got a business model and strategy for where they are going, they have a strategy and business model for smooth sailing. 

I believe the future successful producer will have to move from the banking mentality of predictable returns to an innovative stance based on the underlying science and engineering of the industry. My research shows that using the Joint Operating Committee provides the appropriate stance for the innovation and science to iterate within the commercial environment of an oil and gas producer. These are some of the attributes that are captured in the Draft Specification. 

Finally, the 1700's in England saw 6 million people living in poverty and sickness. In 1850 England had 24 million people living in prosperity. This contrast is the effect that the industrial revolution had on the quality of life. Recall that Professor Ludwig von Mises says the industrial revolution was the solution to the problems of society. I think it is reasonable to assume that today's problems, and particularly the problems that McKinsey notes in this article, will be the problems that are solved through the Information Technology revolution. Please join us here. 

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Hagel & Brown, Shift Index.

Tonight I am in possession of an interesting paper that I'll evaluate in a future post. I felt it best that I point out this new paper so that others could get an early view of it as well. John Seely Brown and John Hagel are two authors that I covered in the Preliminary Research Report. There work is in the area of Web Services and its impact on business. 

The topic of the paper is the development of an index called the "Shift Index". I'll leave you with a quotation from Professor Scott Page who wrote the Forward.  

The Shift Index can be thought of as a new economy analog of the Composite Index of Leading Indicators, an old economy index that considers hours worked, unemployment applications, orders for capital goods, new building permits and the like. The Composite Index has its place, but its indicators don’t respond until months if not years into a shift. Walk through an innovation sequence: Bandwidth increases creating space for new social media. Entrepreneurs formulate ideas. Venture capitalists finance projects. Proposals prove viable. Finally, mezzanine funding spurs a ramp up in employment. Only then, in this last stage, does the Composite Index identify the shift. Using the Composite Index to track shifts is like driving a car by staring into the rear-view mirror. In contrast, the Shift Index lets us look out the front windshield. 

As important as the index may prove for strategic applications, it may have more impact in how it changes our conception of the economy. Interpreted through the lens of neoclassical economics, the Shift Index captures shifts in fundamentals, particularly on the cost side where technological changes allow firms to do more with less. But, the Shift Index, by name alone, calls into question the neoclassical mindset that focuses on re-equilibration.

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Jeroen van der Veer

We stand at the early dawn of a new energy future.

Comments such as this coming from the retiring CEO of Royal Dutch Shell are welcome and refreshing news to this community. We have a job to do and as van der Veer mentions a difficult one. Approaching these types of problems based on the way we do business today is going to leave us disappointed. Energy is reputed to be the second most complex industry to the space industry. As we increase the level of complexity and risk it is reasonable to assume the organizational methods should change. Particularly when we have Information Technologies as advanced and as mature as they are today. 

Indeed, fossil fuels, coal, oil and natural gas, will continue to provide more than half the world’s energy in 2050. 

This fact alone will require a tremendous volume of capital to discover, develop and produce these oil and gas resources. I don't think capital of this magnitude can be sourced from the traditional capital or debt markets. The resources necessary to fuel the industry will have to come from the prices these resources command in the marketplace. Price will therefore be the mechanism for rewarding innovative oil and gas producers.

Therefore we are challenged in transforming the oil and gas infrastructure and operations to a new competitive footing. One in which innovation is the key method of developing value. From the bureaucracies that have served us well in the past century, I can not foresee this challenge being met. I would argue that today's prices are reflecting that we are falling behind as a result of the organizational performance of the bureaucracy.

To help make this transition, interested people are invited to join this community. People who are working within the industry that know there is a better way in which to do their jobs. Taking the Draft Specification and adding to it the detail that is necessary for the global oil and gas industry to operate on the People, Ideas & Objects system. The community that forms here will be the beginnings of how the software gets built. And more importantly the Community of Independent Service Providers will provide the innovative oil and gas producer with the most profitable means to manage their operations.

Nonetheless, whatever the reality of our industry will look like. More energy will be needed to fuel the future. Energy is critical to our economic survival. And van der Veer reflects on the challenge ahead.

A growing population and higher standards of living for billions of people in the developing world will mean that we need all available sources of energy to keep the world’s economies humming. So, while the world races to build up alternative fuels, it must also find new sources of fossil fuels, including unconventional ones, such as oil sands.

Please join us here.

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