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CONTENT
THE PRICE OF OIL......................................................................................................... 1
ROLE OF TECHNOLOGY................................................................................................. 2
CONCLUSION............................................................................................................... 5
SELECTING ERP FOR OIL AND GAS INDUSTRY CONTRACTORS AND VENDORS
SELECTING ERP FOR OIL AND GAS INDUSTRY CONTRACTORS AND VENDORS
Deadlines are missed, cost over- runs have become more frequent, and specifications
are not met or are not communicated adequately between the different disciplines
involved in these asset-intensive projects. Even though the blame for these problems
probably lies jointly with the operator and the contractor, the oil company/operator
is the customer, and they are demanding more accountability and greater control of
their contractors and vendors.
This demand for accountability is one reason project owners/operators are
moving over to an engineer, procure, construct (EPC) business model. With separate
engineering, fabrication and construction, there is a lot of room for finger-pointing
and blame-throwing when projects go wrong. To ensure that EPC contractors and
other vendors have the capabilities necessary to meet budgets and timelines, operators
are paying more attention to the IT infrastructure their suppliers are using. Technology
is seen as the key to vendors ability to collaborate better internally, as well as with
customers and sub-contractors. And this technology- enabled collaboration is the
way to ensure that an EPC contractor, equipment vendor or other partner can plan,
communicate and execute effectively enough to meet project deliverables.
ROLE OF TECHNOLOGY
Suppliers to this industryequipment fabricators, maintenance and operations service
companies and EPC contractors or those on their way to becoming EPC contractors
have slightly different technology needs. But they have one thing in common. They
are being asked to do more with less, are being asked to take on more risk and need
to collaborate more effectively internally and with trading partners and customers.
Moreover, as industry needs and the type of project available change, suppliers
need to prepare for these new projectswhich might have more to do with extending
the life of existing assets than building new ones. Economic pressures may also drive
many industry vendors toward new revenue streams, including aftermarket service
and warranty work.
All of these changes place new demands on an IT infrastructure. In order to
succeed in the industry now, oil and gas industry suppliers need enterprise
applications that:
Harmonize the working processes across disciplines, including engineering,
fabrication, on-site construction, aftermarket service management and project
management.
Standardize processes to better secure quality, including work performed
internally as well as work performed by outside contractors and subcontractors.
Provide a complete overview of project risk, along with tools to manage risk
pro- actively and in real time.
SELECTING ERP FOR OIL AND GAS INDUSTRY CONTRACTORS AND VENDORS
Given the multi-disciplined nature of EPC contractors and their need to manage
often large and far-flung teams of contractors and subcontractors in a deadlinesensitive environment, their needs are perhaps the most extreme. But as more and
more engineering, fabrication and contracting outfits are pressed into EPC contracts,
they ought to consider the full EPC scope when selecting an enterprise application
to ensure that all of these areas are supported.
Following is a breakdown of the specific needs of the various oil and gas industry
suppliers, starting with the EPC contractors whose needs are, perhaps, the most
complex.
EPC contractors need to pay attention to four essential elements:
1. Project-driven materials management. Instead of letting a product structure
and traditional manufacturing resources (MRP) planning system drive
functions like demand, fabrication and testing, an EPC contractor needs to
ensure that its enterprise application provides robust project resources
planning tools. This allows it to better schedule tasks in parallel rather than
in sequence. In an EPC environment, for instance, fabrication starts long
before drawings and product structures are completed.
2. Multidiscipline engineering register. Integration between engineering and
purchasing/fabrication and other disciplines is beneficial for any industry,
but is absolutely essential for an EPC contractor. Engineering functionality
and a centralized engineering register deliver what is in essence a combined
ERP and PLM solution. For companies that are involved in both engineering/
design and purchasing/material managementand maybe even fabrication/
installationthis central repository for engineering data that is shared
throughout the enterprise allows for efficient and error-free handover of data
between functions. It facilitates handover from engineering to purchasing,
between fabrication and installation and maybe even, in the case of lastminute changes to the design, between engineering and installation. This level
of integration delivers detailed tracking of those difficult and unexpected
project changes. These changes are often difficult to manage because when
there are design changes, it is not the part numbers that change, but rather
the attributes of those part numbers, the documents attached to the part
number and the tagged information. These details are lost if communication
from engineering consists of a simple list of part numbers released to a fabrication department, hindering the ability to handle changes and increasing
project risk.
SELECTING ERP FOR OIL AND GAS INDUSTRY CONTRACTORS AND VENDORS
SELECTING ERP FOR OIL AND GAS INDUSTRY CONTRACTORS AND VENDORS
CONCLUSION
Many suppliers to the oil and gas industry went through a software selection prior
to the turn of the century in an effort to avoid problems associated with Y2K.
Unfortunately, in 1998 or 1999, application suites designed to meet the specific
SELECTING ERP FOR OIL AND GAS INDUSTRY CONTRACTORS AND VENDORS
needs of the industry did not exist. Many companies chose and implemented
traditional manufacturing solutions that were a poor fit for their complex project
business processes, or opted for an assortment of point solutions that result in a
fragmented IT infrastructure and disjointed business processes. Others developed
their own homegrown solutions that lack the reliability, 24-7 support and flexibility
of modern, SOA-driven technology. The lack of industry-appropriate enterprise
project software has reduced the efficiency of these companies over the years. It is
hurting them now as they try to adapt to a more competitive market and it will
prevent them from pursuing new revenue streams in the future. Fortunately, today,
project-enabled offerings are available that cater to the specific needs of the industry.
The above points should help executives in these companies understand how these
offerings can help them adjust to current market demands and identify the best
enterprise application for their business.
Magne Halvorsen is Senior Business Analyst with IFS AB, the global enterprise software company.
In this capacity, Halvorsen helps companies involved in engineer, procure construct (EPC) and
other complex business models meet their enterprise software needs with IFS Applications.
He has deep experience in Shipbuilding and Oil & Gas industries. He has held multiple advisory
positions with IFS global and Scandinavian operations. Halvorsen holds a Master of Science
Degree in Production Engineering from Narvik University College, Norway. He has previously
worked as Manager of IT Planning for Kongsberg Maritime, a supplier of electronics to the
shipping, offshore, oil & gas, subsea, navy, coastal marine and fisheries, maritime training,
port and harbor surveillance industries.
ABOUT IFS
IFS is a public company (OMX STO: IFS) founded in 1983 that develops,
supplies, and implements IFS Applications, a component-based
extended ERP suite built on SOA technology. IFS focuses on agile
businesses where any of four core processes are strategic: service
& asset management, manufacturing, supply chain and projects.
The company has more than 2,000 customers and is represented
in some 60 countries with 2,800 employees in total.
More details can be found at www.IFSWORLD.com.
For further information, e-mail to info@ifsworld.com
www.IFSWORLD.com
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A N D S H O U L D N O T B E I N T E R P R E T E D A S A N Y C O M M I T M E N T O R R E P R E S E N TAT I O N . I F S A N D A L L I F S P R O D U C T
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M AY B E T H E T R A D E M A R K S O F T H E I R R E S P EC T I V E O W N E R S .
IFS AB 2013