When you have your nose close to the ground, you are always in danger of missing the big picture. So it was illuminating to read two long articles on IT in the oil industry by Robert Corzine in the Financial Times June World Energy Survey*. Of course, the fact that the contributed opinions came mainly from consultants and vendors such as IBM and Oracle tends to make you think "they would say that wouldnt they". But I do not think that many in upstream IT would take great issue with the premise that things need improving. Furthermore, the FT is broadly read by executives (at least in Europe) and is therfore a precious vehicle for consultants and the like to bend the ear of the top brass. By the same token, these articles give those on the shop floor an unusual opportunity to hear what Oracle and IBM are telling our bosses on the golf course, executive board room or wherever they normally do this sort of thing.
The thesis of the review article is that Information technology has the potential to alter the way oil companies organize and view their upstream exploration and production activities and assets. But few companies appear willing to embrace that potential". This opinion was voiced by "IT experts from outside the industry" - notably from Oracles Andrew Lloyd. There were further "deep misgivings about the appropriateness of some of the technology, and "inflexible corporate cultures and deep-seated resistance to change are undermining efforts to link technology more directly to business objectives". On a more prosaic level, the criticisms leveled at E&P IT were of lost data and inadequate standards. True non doubt, but rather old hat, this was the state of the art around a decade ago.
It is tempting to observe that IBMs attempts to solve upstream IT were not terribly successful for IBM at least, and as for Oracle, how much of a market share of the upstream do these guys want! But the criticisms merit more than such a dismissal.
Apart from the general message which is leave it all to the consultants, the recommendations fall broadly into two camps. One involves more knowledge-based IT, the other electronic commerce. The argument is a common one, a purveyor of a new technology goes all out to suggest that the new snake oil has revolutionized everyone elses business (especially your competitors) and is going to revolutionize yours too. An excellent presentation by IBMs Kristine Moore at the spring POSC member meeting outlined the possible benefits of e-commerce to the upstream. Or rather, didnt. This entertaining string of anecdotes failed to even sketch out a single killer application that e-commerce could enable, and it is tempting to take the stance that here at least, it is the new technology that might be "inappropriate".
As for the knowledge-based IT, our experience of oil companies, based on a survey* of 11 international majors found them to be extremely interested in such technologies. For instance Lotus Notes databases were proliferating and no less than 8 different products were deployed for document management. So why is it possible to claim that we have not yet taken on board the technology that will solve all our IT woes? If the philosophers stone is there, why dont we chip a bit off and have a peek at it through the hand lens?
Well in my humble opinion, and I am afraid that, yes you did see me coming, the premise is flawed. It is flawed because a) the upstream oil industry is far too complex for any boilerplate solution from outside the industry to have a major impact, and b) those who work in E&P IT have consistently sought salvation in just about every piece of technology that has ever seen the light of day! It is not so much that we fail to take account of new technology, but perhaps more that we take account of too much!
more next month!
As for standards, yes, they would be nice, but the prevailing paradigm is that of the marketplace, not of the standards organization. Fortunately, the marketplace is doing pretty well at the moment, with a big sale for a relative newcomer this month, and a major (and we mean big) sale that we will be talking about next month make sure your subs are paid up!
*Financial Times - "IT: Bad energy pervades. Anarchic attitudes to IT are hampering the potential for common advance"www.ft.com/ftsurveys/q650a.htm
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