Schlumberger Information Systems has just released a white paper on its new software and service offering the ‘Living Business Plan.’ The paper begins with a distinctly ‘dot-com’ era analysis of oil company finances – claiming anachronistically that oils have ‘historically produced a consistently low rate of return.’ The investment community still has seemingly ‘high expectations’ of oil companies and expects them to ‘manage risk and minimize revenue fluctuations.’ Heck, in the old days investors expected oils to take risks and maximize revenue!
The white paper makes a strong case for a holistic approach to the management of oil company data and financial information. The idea is to have one-time data entry or capture, and an efficient distribution system that ‘manufactures’ financial data in near real-time, ready for roll-up into a corporate financial plan, and offering the ability to try out scenarios such as acquisition opportunities.
Same old suite?
What new software underpins the Living Business Plan (LBP)? The LBP is not a new ‘killer app.’ Any company that already has the Merak suite, along with Finder, FieldView, OilField Manager and maybe DecisionPoint has all the building bricks for an LBP implementation. If you don’t have all these, no problem, you can build your own virtual software portfolio using Schlumberger’s LiveQuest Application Service Provision.
The potential of this new way of working is well illustrated in a fictitious scenario in the white paper. Houston-based ‘Bravo Oil’ used the LBP to evaluate the financial impact of a deepwater gas acquisition opportunity. The LBP allowed Bravo to go way beyond the traditional NPV and cash flow analysis by integrating future cost and revenue streams within pro-forma accounting and capital requirements.
The key to the LBP is described as a ‘shift in the way business is done.’ Rather than maintaining separate economics and asset-focused teams and data sets, the LBP offers the corporation dynamic sharing of information. Each group understands corporate goals and can see how its own contribution can affect them. The focus thus moves to a consistent treatment of high-value projects.