Oil and gas companies are facing increasingly complex issues that are disrupting the normal course of business at an accelerated rate, issues like integration of mergers and acquisitions, intricate joint venture arrangements, regulations from multiple jurisdictions and the emergence of breakthrough technologies. The pace of change is such that what once were considered disruptions are now becoming part of business as usual.

To keep up with, understand and process this evolution of the industry, all major oil and gas companies are in the process of implementing enterprise resource planning (ERP) landscapes. Unfortunately, the requirements of these landscapes grow more complicated over time, and the industry is littered with false starts and restarts. Some companies have spent upwards of $50 million, are on their third or fourth iteration and still are not fully deployed.

While most companies have taken appropriate steps hiring top-tier consultants who are considered among the best at major ERP implementations, the incomplete track record across the industry speaks for itself. The missing ingredient is a partner that can bridge the gap between pure ERP consultants and the industry and that understands key processes in the oil field and correct implementation of ERP for operators.

Not only should all aspects of the oil field be thoroughly understood in an ERP implementation, it is critical for success that the parties doing the implementation also possess a deep understanding of both operators and service companies and their integrated supply chains.

The oil and gas industry continues to hire the very best engineers and geoscientists to develop and manage its downhole investments, yet the attention directed at the back office and supply chain pales in comparison. Although not nearly as high-profile, shouldn’t the industry apply the same attention to these areas? After all, they also are critical in the success of overall business goals.

ERP implementation occupies a relatively low priority when the industry is booming; companies direct financial and human capital to business growth. However, given the current market, timing couldn’t be better to put ERP implementation at the forefront. For example, digitizing the supply chain is a key component of successful ERP implementation, and the industry increasingly finds itself buried in paper. In this downturn, internal resources are available to take on this huge digitization process as well as to implement practical e-commerce standards, create best practices and be fully ready to take advantage of the next upturn. As a result, these efforts will create significant value and long-term sustainability.

Operators shouldn’t shoulder the entire load! Service companies must step up and be more engaged with customers’ needs in this digitization initiative. After all, they are partners in the oil field and should be partners throughout the entire supply chain for both to achieve long-term success.

Ideally, collaboration occurs at the onset of the implementation, similar to a major capital project, which can save tens and perhaps hundreds of millions of dollars in false starts and rework. Think of tackling ERP implementation on the front end as cost avoidance vs. cost reduction—a company could be going down the wrong path but not realize it until it is two years in and has to start over. The companies that will get it right, whether it be the first or third time, will engage the correct subject-matter experts in the planning process of ERP implementation.

Working smarter at the front end of the ERP process is similar to planning a well—bringing the right partners to the table and making sure to take full advantage of the investment. One missing ingredient or partner can mean the difference of an investment’s success and return on that investment. Think of a successful ERP implementation the same way: The missing ingredient has been the bridge between consultants, operators and the major suppliers, and filling that gap can mean hitting the payload the first time.

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