When the term “ERP” is used, many flavors and functionalities come to mind. Unlike an organization like The American Kennel Club, there are no “breed standards” for an Enterprise Resource Planning system. As a matter of fact, with so much modularity common in the industry today, and with so many extensions, different ERP’s often do very different things. Additionally, some functions lend themselves to specific industries. SAP, for example, tends to be the default choice for Fortune 100 manufacturers like 3M, Owens Corning, and Whirlpool, to name a few. Oracle, while a contender in manufacturing, dominates in healthcare and the high tech environment. As these two behemoths push their marketing efforts downstream to midsize companies (which is why Oracle acquired NetSuite), there’s no assurance that they will be able to improve on their overall 35% – 45% market share in the short term.
Future of Oil and Gas ERPs
When one moves farther down the company revenue flagpole, the market is far more segmented, with names like IFS, MS Dynamics, JD Edwards and PeopleSoft entering the fray. (Note: Both JDE and PeopleSoft are owned by Oracle.) So, for the oil and gas industry, where is ERP headed? Are the mainstays safe, or will industry changes make for increased competition, or perhaps, eliminate the need for the ERP altogether?
Let’s take a look at some of the “must-haves” for the oil and gas industries:
1- The ERP must be flexible enough to handle process changes; rigid hierarchies are out. The ERP must be flexible enough to adapt to the business processes in use by the company, not the other way around. And user-friendliness is compulsory. For these reasons, niche players like IFS will continue to play an important role in industries (like oil and gas exploration) that demand flexibility, customization and ease of use.
2- Changes in the regulatory and compliance landscape are constant in the energy field. Like point one above, the ERP has to be adaptable to incorporating these changes without having to reinvent the wheel every time the EPA or other government agencies (domestic and international) sneeze out a new regulation.
3- Nothing is local in energy production anymore. Everyone is competing on the world stage in every respect. The ERP must be able to handle financial processes in whatever local currencies they might occur, not to mention being able to manage the complex tax systems the company might be subject to. And, the ERP must be able to handle the rapid-fire price and supply volatility that is endemic in today’s global market.
4- It goes without saying that the ERP must be able to seamlessly integrate with whatever other solutions the company employs. For this reason, an ERP with a wide variety of integrated add-ons (for example, Asset Management, Mobility Solutions) is essential.
5- Reporting. The original concept behind the ERP was to eliminate “information silos,” or systems that stored different types of information (e.g., HR and Payroll) in databases that were inaccessible to each other. Besides gumming up inter-departmental processes, these silos made accurate, real-time reporting impossible. The ERP changes that, and great reporting capabilities are an essential part of any ERP.
Given the rapid expansion of cloud-based systems, it’s likely going to get easier and easier to integrate systems from different vendors. In theory, then, the future could auger back to a “best of breed” world. However, this is unlikely given the inherent complexities of working with different interfaces and programs. More likely is the continued ERP migration to the cloud, and the implementation of custom-built solutions that allow mobile enablement. In the drilling world, a lot of the “action” takes place outside of the office, so mobile interface with the ERP system will become a critical piece of the overall technology landscape, not to mention the business itself. Going forward, those companies that take advantage of the mobile evolution/revolution will be best positioned for future prosperity.