OITJ—Where is OFS Portal at today?
Le Sage—Our mission is to work with oils and suppliers to facilitate e-commerce. One big step for us is support for transaction routing—hence our deal with GSX (see Oil IT J Vol. 10 N° 3). This technology allows buyers and suppliers to communicate regardless of backend systems—leveraging PIDX standards.
OITJ—Are you referring to PIDX EDI or the newer XML protocols?
Le Sage—I’m talking about the new ComproServ specification. PIDX is unusual in that the new XML-based specification got quick take-up from buyers and suppliers and with strong support from PIDX in the EU with Shell’s John Boardman at helm.
OITJ—And your transaction volumes?
Le Sage—Actually, we don’t refer to ‘transacting!’ We are the wire between parties.
OITJ—Do OFS Portal buyers see sellers’ catalogs?
Le Sage—We do send e-catalogs to buyers. But because we are in the domain of complex services, these are not really catalog purchases. A frac job is not like assembling a computer—or even like buying oil products.
OITJ—So how does a buyer initiate a frac job?
Le Sage—The catalog gives the pricing and contractual terms and conditions—which are broken down into simple and complex pricing: ‘catalogable’ and dynamic pricing. Oils can plug all this into their back ends and do their own spend analysis—benchmarking to validate pricing etc. It can be very costly to get disparate ERP systems to interoperate—taking native ERP documents, transforming them to industry standards—or transforming PIDX to non standard documents.
OITJ—Do companies issue multiple RFQs through OFSP?
Le Sage—Let’s go through the process of e-commerce—from sourcing, contract terms, ordering, delivery, invoicing and payment. While the e-sourcing/procurement process works in commodity-oriented businesses, it has not been successful in the upstream—where sourcing is a more collaborative process. Many suppliers may even have a desk engineer inside their client’s offices. There is ongoing collaboration of well services procurement. Once a contract has been signed—the time sheets, purchase orders go out and invoicing processing can begin—this is where the e-commerce has proved extremely beneficial, with e-field tickets etc. Where e-commerce has blossomed is in fulfillment—not in sourcing. E-commerce has cut day sales outstanding in half (bringing average DSO in line with contract terms!). Oils get great spend visibility. Last week Segment 71 (oil industry) of the UNSPC Code was approved—underscoring the internationalization of oil and gas e-commerce.
OITJ—How does the GXS deal fit in?
Le Sage—GXS (which used to be the GE Transaction Hub)—offers 24x7 monitoring of transactions—a very high service level.
OITJ—Are you live now?
Le Sage—Yes, we are now open for transactions. We used to offer just catalogs.
OITJ—Who are your main clients?
Le Sage—Digital Oilfield customers (in Canada), ChevronTexaco and we have an interoperating agreement with BHP Billiton. There will be more in a couple of months. E-commerce is also very big for suppliers as buyers. Another breakthrough is the new PIDX envelope with non repudiation—to prove an invoice was received.
OITJ—What happened to Trade Ranger?
Le Sage—I don’t believe that much of its technology will be used by Hubwoo – which has more of an MRO focus. The management has mostly left or is leaving. The shareholders got $1.4 million cash. Not a great return on a $200 million investment!
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