E-business in the upstream oil and gas industry is becoming increasingly strategic. While E&P companies are not yet buying a large percentage of their goods online, momentum to do so is building as E&P companies move beyond simple Web-based self-service applications toward Internet-aided information gathering and participation in true collaborative electronic interaction and relationships with service companies. Concomitantly, service companies are designing interrelated e-business strategies that focus on customer relationships, resource planning, order management, and supply chains.
Rather than a totally different, more complex way of doing business, as some fear, e-business is a more effective way of doing business as usual. E-business integrates and extends conventional business process strategies through the convergence of computing, networking, and communications technologies. It enables new and more efficient models of business interaction and streamlined enterprise operations. Like any technological enhancement, its goal is to improve business processes to benefit the bottom line.
This paper will discuss the rationale and benefits of online communication and collaboration via Internet implementation. It will also highlight some of the latest developments and trends going forward and address what the future holds for e-business in the oil industry.
Looking beyond the fundamental implementations, such as setting up a web site to market products, we will discuss a working model for launching far-reaching e-business initiatives that deliver products and services to the E&P arena.
Can e-business benefit older, established companies? Absolutely! Applied appropriately, the Internet and its associated connectivity and bandwidth are proving valuable for both old economy and new economy companies. However, the dot.com fall-out is a reminder that we must be mindful about the importance of business fundamentals and avoid the temptation simply to wrap current processes in an "e" front end. There are many e-business models being implemented today with the overall business structure and process in mind going forward. In the short term, the most significant benefits are communication and collaboration.
Internet-based solutions increase communication and collaboration among companies. These solutions accelerate the delivery of revenue, cost and production data, and enable companies to more effectively manage their day-to-day operations and improve strategic decision-making while collapsing cycle time. Equally important, utilizing a secure Internet-based connection to collaborate with the service companies also allows smaller independent oil companies to participate in e-business without huge outlays of capital.
Where Did it All Start?
Many businesses and governments were involved in e-business for years before the Internet boom. These organizations used expensive, private networks which applied standard procedures and formats to process their data exchange. Electronic Data Interchange (EDI) worked well for order and payment exchange but offered little or nothing to support product selection queries or just-in-time customer relationship management and maintenance resource operation systems. Also, because of the expense involved, smaller companies could not participate in business transactions where EDI was a requirement. EDI was supposed to help collaboration between companies. However, file transfers through several different communications protocols inevitably led to a Tower of Babel for connectivity.