Governance Over Self Organizing Groups

The manner in which much of the work is done in the People, Ideas & Objects Preliminary Specification resonates with the ideas of how work will be done in the future. Direct supervision is replaced by self organizing groups who are motivated and directed by the performance of their property. This creates the environment that people aspire to work for; and the governance issues that this creates for the firm. This discussion deals with the governance issues and how the governance areas of the Compliance & Governance module reels in the vision of self organizing groups to something that is more workable and sensible in the commercial environment.

First of all the Military Command & Control Metaphor is not just for the Joint Operating Committee. Although we have discussed it in terms of just the JOC, there is nothing stopping the firm from using the organizational overlay within the firm. This also applies to the Work Order system. These two tools would provide the firm with the ability to ensure that tasks were assigned and completed as budgeted and execution was consistent with the firms expectations. Recall by the use of these systems, it is understood that no other work is undertaken without the ability to charge time or costs to a Work Order. Effectively ensuring that no unauthorized projects are undertaken. The Work Order system would also provide the internal control necessary to ensure that the appropriate people necessary to achieve the governance are assigned to approved projects and are capable of meeting the requirements of the tasks. When “things” go wrong it’s usually at the beginning and having that “governance” information available is the objective of this capability.

When we talk about the firms and Joint Operating Committees internal controls, they seem to me to be a lost art in the tool kit of today’s management. The ability to set up a control to trigger a warning that something is happening that is inconsistent with normal policies, has been used more in the past then they seem to be used today. The power of technology seems to go hand in hand with internal controls. I think they provide a strong method of governance that should be built into the People, Ideas & Objects governance area of the Compliance & Governance module. That is to say that a section be devoted to building database “triggers” and “stored procedures” that are used by the firm to monitor areas of the firms activities. These of course being available to those individuals with the appropriate authority to access the data and information necessary to run the queries, and to fully appreciate the art and science of internal controls.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Compliance for Everyone

In a capital intensive business such as oil and gas, access to capital is a critical capability the producer needs to develop within their operation. In order to have access to the capital you must meet the regulatory requirements and compliance needs of the capital markets. Therefore the Compliance & Governance module of the Preliminary Specification is a critical capability to all those that are dedicated to building an innovative oil and gas producer. That applies equally to ExxonMobil and the start up oil and gas operation.

And it should be a concern of ExxonMobil that the start up oil and gas operation has its compliance and governance in good shape. Why? You can't pick your neighbors and you can't necessarily pick all of your partners. Sometimes you have to deal with partners that you have no history with. You want to make sure that they are capable of operating in a fashion that is at least consistent with standard industry practices. It is those standard industry practices that include high levels of compliance and governance in today’s oil and gas industry operations. What about tomorrow’s environment?

As we have discussed the level of expectation by regulators with respect to the compliance requirements are high. It would appear that there is no sense that any relief will be forthcoming, on the contrary, we should expect the level of requirements to grow. This is the only reasonable expectation, however, I would ask, have we implemented these compliance frameworks correctly? Have the regulations which are submitted in technical frameworks, been “integrated” to the ERP system, or just attached?

We can see the answer to that question when we find that no current ERP system calculates the Gas Cost Allowance for royalty calculations. To conduct these types of calculations you would need to integrate the royalty frameworks deeply within the ERP systems, and that clearly has not been done. So when it comes to the automation of the compliance frameworks, which is the objective of the regulators in publishing these technical frameworks, nothing has been done from the industry side.

I have argued that there is two ways in which to approach the problems that we face in oil and gas. One is to automate the processes to high levels with systems. This requires the high capital costs of software development such as what People, Ideas & Objects have proposed. Or, you can employ the human resources to maintain the compliance requirements on a manual basis. This is the method that industry has chosen to pursue up to this point. I would ask in times where;

• The cost of capital is historically low.
• The demand for human resources is somewhat constrained.
• The regulators have published technical frameworks.

Why wouldn’t the oil and gas producers chose to develop the People, Ideas & Objects applications?

Automation of the compliance frameworks within the People, Ideas & Objects applications would provide many benefits to the innovative oil and gas producer. The costs of doing this engineering work is being amortized over the entire industry. Making these highly engineered software products, incidental in terms of actual cost to each producer. Access to these systems would be to the benefit of all the producers in the industry. Enabling the capability of each individual producer to meet or exceed the minimum standard of industry expectations. In a world of increasing demands, your partner's capabilities could become a critical issue to your operation. There is a compelling argument here in the compliance aspects of the Compliance & Governance module.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Specialization and the Division of Labor

We noted the opportunity of centralizing the software development costs and efforts for Compliance & Governance frameworks under one roof. That is to say that instead of each producer building the in-house capacity to have their software and compliance capabilities maintained, it is preferable to have it centrally managed through People, Ideas & Objects. I want to take that concept a bit further and break down another element of the cost of compliance and discuss how that element could also be done in a centralized manner. That element is of course the accounting and administrative costs incurred in meeting the regulations requirements. The costs of which are incurred in the human resources and associated overhead. These costs are an area where specialization and the division of labor could be applied and build real value for the producer firms.

It comes down to the question of where is the compliance work done, at the Joint Operating Committee, or the firm? It has to be done at the firm as all the variables are unique to each producer. Within the Preliminary Specification we use the decentralized production model. This sees the prototypical producer firm reduced to the C class executives, the earth science and engineering resources, some land and legal and support staff. In the case of compliance and governance resources they are provided to the producer firms through industry based service providers. This moves the producers compliance and governance to be relied upon through the industries compliance and governance capabilities of service providers.

If we were to approach the accounting and compliance reporting requirements on an industry wide capability and used specialization and division of labor we could add significant value to the industry. Taking the organization of the accounting across the industry and building the accounting and compliance needs for all of the producers would provide that value at lower costs and better service because of the efficiencies from the division of labor and specialization. Where each individual accounting and administration service provider were specialized in one and only one compliance requirement. Particularly in the area of compliance reporting, especially royalty, where the knowledge of the people who were employed in the compliance service would be so specialized that they are able to ensure that their clients royalty obligations were the lowest possible. With royalties being the largest cost component of a producer this would certainly be of value but there are greater efficiencies than these available. There would also be the ability to manage the process with the most efficient team available.

These are the two elements of the costs of compliance. First, as we noted the cost of maintaining the software in compliance to the regulations. And two, the accounting and administration that is done in keeping the firm up to date by service providers. If the software can be maintained on a global basis on behalf of the industry by People, Ideas & Objects then the one time costs of the software can be amortized over the industry as a whole. And if the accounting and administration costs can be managed by also centralizing the accounting and administration function within an industry wide capability within service providers, and as a result, specialization and the division of labor coming into play. Then the industry is benefiting by reducing their costs by reducing the two largest components of the costs of compliance in the most cost effective way. Yet, they have also done so in the manner where their compliance quality is higher.

Another element of quality also comes into play as a result of the proposal from People, Ideas & Objects. That element is time. If the timeliness of the information that is provided is within the guidelines, or is earlier, than the quality of that information is much higher. I think that what is proposed here with the high levels of software automation, specialization and the division of labor provide an assurance that the timeliness of the information that the systems we are building will be better than the deadlines imposed by the regulators. This timeliness doesn’t appear to come at the expense of accuracy either.

Lastly when we discuss moving the compliance and governance frameworks of the hierarchy into alignment with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. We state that this provides an increased speed, innovativeness, accountability and profitability. For when you align compliance and governance with operational decision making, accountability is the result.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Introduction to Compliance & Governance

Compliance & Governance, the module everyone loves to hate. It is my hypothesis that it is here, at compliance and governance, that everything went wrong. What I mean by that is in the 1960’s when the first computers were being introduced into oil and gas companies. The question was asked what will we do with them? And of course the answer was accounting. Then as they became ever more powerful and more capable they began to add more tasks to their duties and added the natural follow on concerns of tax, royalty and compliance. Soon the culture became focused on those “compliance” requirements of the “firm” and the Joint Operating Committee became something that was used over there. Soon after this engineers and geologists began speaking a different language to the “business” types. Divisions grew and the business of the business was focused on the corporation and its need to file the appropriate paperwork to the appropriate agency in the appropriate time frame on the appropriate colored form.

Anyway the real business of the business, the Joint Operating Committee somehow survived. When we align the compliance and governance frameworks of the hierarchy to the Joint Operating Committees legal, financial, operational decision making, cultural, communication, strategic and innovation frameworks everyone can start speaking the same language as the engineers and geologists and start to get some real business done. And as People, Ideas & Objects research has shown this would provide the oil and gas producer with greater speed, innovation, accountability and profitability.

Compliance & Governance is the eleventh module in the eleven module Preliminary Specification. It’s also no accident that I added Compliance & Governance last, as the question that should be asked is. How are we going to ensure compliance to all the regulations for all the module specifications that we have discussed so far? And I would assert that is why these are user based developments. One thing governments seem to be fond of today is regulations on oil and gas companies. With Information Technology enabling various governments to issue technical business rules, technical specifications, XBRL syntax’s and other technological frameworks for these regulations. The ability to write these “frameworks” only seems to have encouraged governments to write even more regulations. The larger point is that these frameworks do provide software developers with distinct advantages in enabling the regulations within the software.

As we had indicated earlier regarding the user communities determination of the scope of the People, Ideas & Objects application. Part of that determination of scope will include which regulations it will need to be in compliance too. With so many jurisdictions requiring compliance, each transaction may need to be assured to be in compliance with multiple jurisdictions. Add to that the transaction may be generated through a Joint Operating Committee owned by a variety of producers. Who may be composed from an international background and the Compliance & Governance module takes on an enhanced importance.

From the point of view of a producer maintaining the database and applications for all of the compliance frameworks that you have to be concerned with is a difficult task. The number of people you need to have to keep your applications up to date is significant. However, People, Ideas & Objects, as one software developer acting on behalf of the industry as a whole, the job becomes much more specialized and therefore manageable. Then again if we were building these applications with the purpose of serving an industry we will use the division of labor and specialization to manage these tasks in a way that would significantly lower the costs of compliance, and increase the quality of the producers compliance.

I foresee just the royalty compliance requirements of these applications including dozens of different jurisdictions. To approach this from a software engineering point of view as a sole producer is not cost effective. To consider these costs are replicated within each producer firm, then we begin to see the costs of compliance escalating to the levels that they are today. There is another way, and that is we move away from the individual producer compliance and governance capabilities and rely on an industry wide capability. That is what is being proposed here in People, Ideas & Objects, along with the many other innovative ways we are proposing to deal with the issues of the oil and gas industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Conclusion to Performance Evaluation and Analytics & Statistics

Work in the 21st Century will be different. The tools that people will use will need to be different as well. The Performance Evaluation and Analytics & Statistics modules are the beginning of these new era tools for the way in which people need to work. We frequently speak of specialization and the division of labor in the Preliminary Specification. There is also a specialization and division of labor between what the people and computers will be doing and that is reflected here in these two modules. Computers will be responsible for the storage and processing, and people will be responsible for the thinking, the ideas, the decisions, the creating, the collaborating, the innovation and the many other things we do well. Much of these things being generated based on the facts that are determined through the Performance Evaluation and Analytics & Statistics modules.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Focused on Changing Capabilities

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

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

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

The types of these costs will be varied and not necessarily the same in all instances. Within the Partnership Accounting and Accounting Voucher modules is the ability to tag a transaction. This tagging is irrespective of the account classification and has no accounting significance. It is for the user to aggregate types of costs for further analysis. In these instances these costs of change, the Dynamic Transaction Costs, will be tagged as such and therefore will be able to be aggregated for subsequent review. Having the ability to further analyse these costs when the time comes, from the Performance Evaluation and Analytics & Statistics modules could lead to further insight and learning into the organizational changes that might, or should, be occurring.

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

and

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

We will need to have a page or screen in each of these two modules dedicated to breaking down these costs. Then a producer or Joint Operating Committee will have some point of reference to determine the state of change and its impact in terms of the costs, and types of costs, to the organization. How the transition in the firm or Joint Operating Committees capabilities is being managed.

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

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Dynamic Data and Information

How the innovative producer attains a higher factor of innovation is through a constant search for more production, higher prices, lower costs and more effective management of their oil and gas assets. This search in many instances will begin with a query in either the Performance Evaluation module for the Joint Operating Committee or the Analytics & Statistics module for the producer firm itself. Having access to the data and information of the respective domain provides the user with the ability to formulate queries on the basis of different scenarios, what if’s, and other mathematical calculations. Big deal, something that most people can do with a day of training on a spreadsheet. And that would be part of the situation, however there is more.

If we go back to earlier parts of this module we find that performance is a key motivating principle behind the use of the module. People are using these modules to find the next increment in value. To determine where that value resides requires these specialized tools to find it. Recall that these are subject to the Security & Access Control module, therefore the data and information that they can access will be limited to the domain of the users authority. And the application modules will be collaborative, therefore they are able to interact with others.

Running a query is a fairly basic operation that is static in its output. The result just sits in the spreadsheet for the user to act upon. Within the Performance Evaluation and Analytics & Statistics modules we can invoke the messaging services which include the following processes: person to person, person to process, process to person and process to process, on any of the system processes. Therefore if you had a process that was running, and at any time that process attained a point in time of which you wanted to know, then you could have the system text you. Or if the same process attained its completion, then you could have it invoke another process to initiate some other action, or you could have the option of texting the system to invoke a number of different scenarios. Adding these messaging processes brings the power of the ERP system into play from the point of view of using these calculations to carry out some action.

Professor Giovanni Dosi (1988) states that profit motivated agents must involve both “the perception of some sort of opportunity and an effective set of incentives.” (p. 1135) Professor Dosi introduces the theory of Schmookler (1966) and asked “are the observed inter-sectoral differences in innovative investment the outcome of different incentive structures, different opportunities or both”? (p. 1135) Schmookler believed in differing degrees of economic activity derived from the same innovate inputs. The incentive to find the innovation, and the opportunity to find it are both contained within the Performance Evaluation and Analytics & Statistics modules.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

Collaborations Risks and Rewards

Working in isolation we can achieve a lot of what we set out to do. When we collaborate with others then the possibilities grow exponentially. Setting about to review a mountain of data seems like a fun task, for a few people I’m sure that might ring true. However, for most people the possibility that they will find joy in the task is somewhat limited. As a team however, the task becomes something of an adventure with the findings being a multiple of what one individual might discover. A collaborative capability needs to be a necessary part of the Performance Evaluation and Analytics & Statistics modules.

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

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

Collaborating and sharing knowledge in the Performance Evaluation and Analytics & Statistics modules, as well as the other modules of the Preliminary Specification, will fuel innovation. Whether that collaboration is within a producer firm, a Joint Operating Committee or a working group that has recently been established through a Work Order. Access to these two modules should enable the participants to evaluate the data with the toolset provided in the modules. The only limitation that I would hope to impose on the use of these tools is a reasonable amount of free computer time.

Making these two modules collaborative will turn them into well used applications that will be used by many. Not the obscure applications used by the data obsessed. Remember Professor Dosi says that “In very general terms, technological innovation involves or is the solution to problems.” Discovery of those problems can be collaboratively done here in the Performance Evaluation and Analytics & Statistics modules.

What we do know is that “things” happen fast. Except in organizations. Providing the people with the appropriate knowledge and information for them to act in a fast changing environment is difficult. Some of the difficulty in getting the knowledge and information to the right people was to ensure the integrity of the information was not breached by those that were not part of the organization. And don’t get me wrong I’m not recommending an open information policy. The Security & Access Control module imposes high levels of integrity on all the communications and storage of data and information. The collaborations however between firms being open is where there may be some perceived leakage of proprietary losses of knowledge. And it is here in these open communications that I am asking if any information losses impose any risk to the innovative oil and gas producers competitive advantages of their land and asset base, or earth science and engineering capabilities, or innovativeness. No they don’t. As we have learned in fact the collaborations enhance the innovativeness and the capabilities of the firm.

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

Collaborations in the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification will provide greater value in getting new and innovative ideas and information to the right people in the right place at the right time. These are the attributes the firm should be pursuing rather than any concern for any risks of losing any proprietary data or information. We noted that innovation involved the discovery of problems. It also includes change which Professor Dosi notes in the following.

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

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

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

A World of Data

Turning once again to Professor Giovanni Dosi for the determination of the three key factors of innovation. He notes that they are the result of the “search, development and adoption of new processes and products in market economies and are the outcomes of the interaction between:”

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

While in the Performance Evaluation and Analytics & Statistics modules the user would be searching for information or some insight into the data. This is the beginning of the innovation process and the tools provided in these modules would be part of the capabilities necessary for innovation to be developed within the innovative oil and gas producer. This is clearly evident by Professor Dosi’s three key factors. With the growth in data expected to continue. Users of these tools would find a rich resource to develop a perspective of looking at the data from an innovative point of view.

Lately we have heard about a new field of data that is growing in importance. Unstructured data. Data that isn't managed by a database and has no implied meaning to its structure. The marketplace modules of the Preliminary Specification, the Resource, Petroleum Lease and Financial Marketplace modules and to a lesser extent the Research & Capabilities module all have “marketplaces” within them. These marketplaces would have substantial unstructured data that would be of use to those potential users of the Performance Evaluation and Analytics & Statistics modules.

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

For example, Professor Giovanni Dosi states “In very general terms, technological innovation involves or is the solution to problems.” Dosi goes on to further define this as “In other words, an innovative solution to a certain problem involves “discovery” (of the problem) and “creation” since no general algorithm can be derived from the information about the problems. Solutions to technological problems involve the use of information derived from experience and formal knowledge. It is the specific and un-codified capabilities, or tacit-ness” as Professor Dosi describes “on the part of the inventors who discover the creative solution.”

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

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

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

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.

User Focused Development Tools

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

The point is that when it comes to having the user enhance the system. People, Ideas & Objects business is motivated from a business perspective to do so. That’s how we earn our revenue. Our point of view is that the software is in a state of constant improvement, driven by its users imagination and needs.

So when the time comes for a user to think that if they had “this, that and the other thing.” They will have a means to effect that change and have it fulfilled through the user community. But this isn't about that process of change specifically. Its about the stop gap measure that they may want to implement in the short term while they wait for the user community to implement their idea.

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

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

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy.