Is Blockchain the Next Disruptor for the Oil & Gas Industry?

By | Energy, Internet of Things

As the energy sector rebounds, oil and gas service companies are looking for competitive advantages where they can invest to grow profitably. Is blockchain the answer?

Understanding blockchain

Blockchain is a distributed ledger system that is secured through the authentication of each transaction. When a block is created, it is timestamped. The block record cannot be modified, and it is publicly visible to all consented parties. The system’s transparent nature and permanency of each transaction makes the system highly secure and the data within it highly reliable.

Blockchain gained public attention through the rise of Bitcoin and cryptocurrency, and since then has been used to authenticate all types of transactions – from medical records to identity management to inventory traceability.

“The business value-add of blockchain will exceed $3.1 Trillion by 2030.”

MARCH 2017

Blockchain for oil & gas companies

While blockchain is not yet a mainstream technology, signs are pointing toward it becoming a major disruptor in the oil and gas industry. Blockchain technology could be used to validate transactions throughout the oil and gas industry supply chain from source to the consumer.

Several leading oil and gas companies have already begun incorporating blockchain technology into their business processes. As the blockchain concept and supporting technologies become more commonplace, blockchain could be used for:

  • Tracking the transport of hydrocarbons and other materials from exploration site to consumer
  • Reliably distinguishing energy sources (solar vs. coal)
  • Securely monitoring changes in contracts, inventory items and equipment maintenance
  • Demonstrating compliance of environmental impact governance rules by providing visibility to regulators in real-time
  • Speeding up transactions by eliminating the need for intermediaries like banks and brokers
  • Reducing theft and fraud through transparency at every step of the process

Because the oil and gas industry is so complex and heavily regulated, it appears ideal to further explore blockchain technology and develop real-world use-cases. Imagine how much administrative and processing time could be eliminated!

Microsoft blockchain technology 

Organizations using Microsoft infrastructure and business solutions such as Microsoft Dynamics 365 will be happy to know that Microsoft is committed to bringing blockchain to the enterprise. In launching the Coco framework, Microsoft leveraged existing open-source blockchain protocols to build an enterprise-ready blockchain framework.

Coco helps organizations remain flexible, as the framework is compatible with any blockchain protocol. However, the framework’s main advantage is its scalability and compatibility with Microsoft’s on-premise, hybrid, and cloud-based applications, including access to the Azure ecosystem. Applications can be built on top of blockchain as a shared data and security layer.

Microsoft recognizes that enterprise customers will have specific needs around scalability, confidentiality and distributed governance. In the video below, you can see how the Coco blockchain distributed ledger can be used to manage contracts and purchase orders across the supply chain.

Exploring blockchain technology

Like any emerging technology, there is a certain amount of hype that surrounds blockchain. Savvy CIOs and business executives will need to research:

  • The realities of what blockchain can (and cannot) do
  • Where blockchain might fit into your business strategy
  • What changes the oil and gas industry can expect when major industry players start embracing blockchain
  • What investments you’ll need to make in IT infrastructure and business process engineering
  • The resources you’ll need to implement blockchain

At MCA Connect, helping energy companies improving business efficiency is our passion.  We would love to help you explore blockchain – and all the possibilities it presents.

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4 Best Practices for Oil and Gas Service Companies

By | Energy, ERP, IoT and Analytics

Now that oil prices are rising and energy companies are renewing exploration operations, it’s time to re-evaluate what you, as an oil and gas service company, can do to get your fair share of the profit.

We’re seeing oil and gas service companies focus their time and energy in 2018 in these 4 areas:

1. Innovation and Differentiation 

The best way to fight the profit squeeze is to offer something your competitors don’t – and can’t easily replicate. Technology, particularly IoT, predictive analytics, machine learning, and dashboard reporting through tools like Power BI, can be used to create unique service offerings and analysis of your business drivers that provide your energy clients with more visibility of their wells, jobs and production equipment. By providing more value and helping your clients increase uptime and lower downtime maintenance costs, you make it harder to displace your services and avoid the low cost provider from taking your business.

2. Developing a Digital Transformation Roadmap

There’s no question – the future is digital. The pervasiveness and ease of cloud computing, software as a service (Saas) solutions, and mobile apps have made digital transformation initiatives a priority across many industries, but especially in oil and gas services.

Because your business model is complex and your resources are spread across remote regions of the country, you may have found it challenging to collaborate effectively. Where do you invest? In field services software? In expanding your ERP software? You have a lot of choices – and challenges.

As a first step, we recommend building a digital transformation roadmap. You can’t do it all today, but with a solid strategy in place, at least you’ll keep moving in the right direction towards your business goals.  Along the way you can invest in hiring and developing a digitally-savvy workforce who can help your business grow in this direction.

3. Invest in IT Assets that Provide Agility

The oil and gas companies who survived the plummet in oil prices either had enough reserve cash to keep operations going or were agile enough to change their business as needed. Although we’re on the other side of that dip, you never know when another economic change is coming. Agile IT assets like Dynamics 365 for Finance and Operations provide you with the flexibility to:

  • Change business processes without custom programming
  • Add/remove/change job roles & software licensing as needed
  • Add or remove functionality to support multiple lines of business
  • Gain greater insight into your business to become more proactive in changing market dynamics
  • Easily absorb an acquisition or parse out a divestiture from your business.

4. Strengthen Your Relationships

At the end of the day, business-to-business is really human-to-human. Strengthening your relationships with employees, vendors, partners and clients keeps your business healthy, both culturally and financially. By providing personalized customer experiences, like sending clients texts about job statuses, or providing unique customer dashboards, you increase customer loyalty. By improving collaboration with suppliers, you can gain greater flexibility in delivery and credit terms.  Tools like improved oilfield rental billing and tracking and field service software can help with the mechanics, but it begins with the leadership team embracing a relationship-centric philosophy.

Learn the 5 Ways Energy Companies Unlock Strategic Value from Software Implementations

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Author: David Huether, VP- Engagement & Alliance Management

How Oilfield Service Companies Combat the Profit Margin Squeeze

By | Energy, ERP

Are you one of the “lucky” oilfield service companies who survived the downturn? Whether you sailed through thanks to saving ahead, or you barely survived, thanks to downsizing and scrimping wherever you could, congratulations! You made it. Oilfield service companies are once again in growth mode.

While growth is certainly good news, margins remain tight. If you’re like most of the oilfield service companies we work with, you’re still stuck in a profit margin squeeze for a few reasons.

1. Energy companies are investing in exploration and fracking operations again. However, well operators still expect to pay the low rates you negotiated when times were tough. Meanwhile, overhead costs keep climbing. Yes, oil prices have improved, but budgets remain tight as everyone is trying to make up what they lost during the downturn.

2. With a large fleet of equipment to maintain, high labor costs, and larger overhead, large oilfield service providers have a tough time competing with their smaller, more nimble competitors.

3. The combination of high customer expectations and a highly competitive industry environment creates challenges in determining the best way to compete and win business you normally would have been assured to win.

How Oilfield Service Companies Are Responding

You haven’t made it this far only to stop now! You can no longer rely on being able to upcycle to increase profits through higher oil prices. For large oilfield service companies to compete effectively, you need to think about:

1. How can you differentiate? What services can you offer that your competition can’t? How can you add more value without adding more cost? Some companies are using IoT remote sensors and predictive analytics to anticipate equipment and resource needs in advance, which improves responsiveness and ensures production uptime.

2. Where can you adjust operations to meet contract commitments, but optimize margins to ensure continuity? Field service software and mobility can help the oilfield services team stay connected to corporate, and have instant access to contracts and service level agreements with electronic processing of delivery tickets through to invoicing.

3. How can you operate overall with greater efficiency? EnergyCONNECT, built on Dynamics 365 for Finance and Operations, helps control costs through improved operations, including industry must-haves like AFE Management, and Equipment Rental Management. Managing the cradle to grave lifecycle of your equipment will help you run more efficiently and improve your margins.

Learn How EnergyCONNECT Improved Business Operations for Rubicon Oilfield International

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Author: David Huether, VP- Engagement and Alliance Management

Priorities During the Oil and Gas Rebound

By | Energy, ERP

Why Oil and Gas Companies Should Prioritize ERP and Technology Infrastructure Projects

Oil and gas companies have had to make difficult decisions in order to survive the last few years of low prices and weak demand. Cost cutting measures included spin off’s, layoffs, asset liquidation, consolidation of operations and a hold on most non-essential projects.

As the oil and gas industry begins to recover, companies that made it through those tough years need to start thinking about how they will compete and thrive in the next upcycle in addition to the next 5, 10, 20 years.

Companies who have held off on investing in new ERP systems and new technology infrastructure may actually be handsomely rewarded by waiting, because ‘the perfect storm’ exists right now to seize an advantage.

Why are Oil and Gas ERP systems a smart investment right now?

The Microsoft Cloud has changed the game. Not just Dynamics 365 for Operations, which is a flexible, cloud-based ERP software solution, but also:

  • Productivity apps like Office 365
  • Business analytics software like PowerBI and Cortana Analytics
  • Microsoft Azure hosting

Disruptive digital innovation is happening 100X faster than physical disruption ever did. Companies are using technology to:

1. Lower costs. Cloud computing has made ERP information widely available at substantially lower cost. As a Microsoft Partner who specializes in implementing and supporting Microsoft Dynamics 365 for oil and gas companies, we can tell you endless stories about how much the game has changed. Rather than investing in servers and having to do your own maintenance, ERP systems can be setup quickly with a much lower capital investment. When you run the numbers, you find that the savings continue to add up over time.

2. Improve operational efficiency.  ERP software was specifically developed to improve operational efficiency. Technology makes it truly possible to do more with less.

1. Predictive analytics can reduce downtime by predicting equipment breakdown.

2. Inexpensive IoT sensors can relay information from remote locations.

3. Complex, repetitive tasks like AFE ManagementJoint Venture Accounting, and Oilfield Rental Management can be managed and automated.

3. Use insight to innovate. How can you make more money? Can you add new products or services? What can you do to get more oil and gas out of the ground and into the marketplace faster? Leverage big data, machine learning, and predictive analytics to sharpen your competitive edge.  Give employees tools and nearly real-time information so they can better manage their own job functions, and understand their role in meeting enterprise goals.

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Author: David Huether, VP- Engagement & Alliance Management

Why the Oil and Gas industry is Buzzing about Rental Management Software

By | Energy, ERP

The main thing about the heavy industrial equipment needed for oil and gas exploration is that it’s HEAVY – expensive to manufacture, expensive to move, expensive to maintain and work can’t get done without it. Without software, the accounting is complicated and it’s easy to miss out on revenue opportunities.

Have you experienced any of these problems?

  • Can’t see which equipment and orders are still unbilled
  • Equipment isn’t available to be rented because it’s being maintained or in the wrong geography
  • You don’t account for when equipment was actually returned, and bill properly for usage
  • Income and expenses aren’t applied to the fixed asset to get a full picture of asset value

That’s where Oil and Gas Rental Management Software is making life a whole lot easier. Instead of using scrambled spreadsheets and crumpled rental agreements, rental management software enables companies to:

  • Price each rental asset – by daily, weekly or hourly rate as well as by utilization
  • Measure rental use – how much time each asset has been rented, on standby or in operation
  • Link rental assets to fixed assets for a full accounting picture
  • Manage rental agreements
  • Track rented assets by location, usage and availability
  • Link to Project Accounting (optionally) so you can manage asset movement and scheduling

Adding EnergyCONNECT Rental Management Software to Dynamics 365 for Finance and Operations gives you a complete end-to-end picture of your business operations.  Stop the revenue leaks. Take control of your rental equipment.

Energy companies are choosing EnergyCONNECT to better manage their equipment.

From allowing you to better negotiate rental rates to providing feedback to vendors on equipment performance; EnergyCONNECT helps you control the costs associated with renting industrial oilfield equipment.

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Author: David Huether, VP – Engagement & Alliance Management

5 Reasons Oil & Gas Companies Choose EnergyCONNECT

By | Energy, ERP

With all the name changes around Microsoft Dynamics 365, plus all the Microsoft Partner-developed solutions, it can be difficult to understand all the solution offerings and how they are built and delivered. In this article, let’s break down the components of EnergyCONNECT.

What’s EnergyCONNECT?

EnergyCONNECT is a set of solutions that extend the functionality of Dynamics 365 for the Oil & Gas Industry. EnergyCONNECT is designed for oil and gas companies involved in:

  • Oilfield Exploration and Production
  • Oilfield Services
  • Midstream Operations

What do the EnergyCONNECT applications do?

Why choose EnergyCONNECT?

Companies choose EnergyCONNECT over other oil and gas ERP solutions on the market today for these 5 main reasons.

1. The Microsoft Platform.  With EnergyCONNECT, you get all the standardization and availability of a Microsoft solution. It’s built to work with the Microsoft Azure cloud, Office 365, SQL Server, Power BI and all the other Dynamics 365 and Microsoft productivity applications.

2. The Microsoft Eco-System. In addition to the solutions available from Microsoft itself, a multitude of ISV software solutions are available to extend Microsoft Dynamics functionality.

3. Standardized and Supported Software.  With EnergyCONNECT, you get industry functionality without paying to build and maintain custom code.

4. Access to MCA Connect’s Energy Experts. We’ve worked with nearly all the major oil & gas companies, and many of their subsidiaries, partners and suppliers.

5. Full Spectrum of Dynamics Services.  MCA Connect is a Microsoft Gold Certified Partner with a wide array of services – from developing your business strategy, to understanding metrics with business analytics, to outsourcing your Dynamics 365 application support, we’re a technology partner you can depend on long-term.

If you’ve been looking for a better Oil & Gas ERP solution, we encourage you to take a closer look at Dynamics 365 and EnergyCONNECT.

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Author: David Huether, VP Engagement & Alliance Management

5 Pillars of a Joint Venture Accounting Solution for the Oil & Gas Industry

By | Energy, ERP

The oil and gas industry has unique accounting needs. When you evaluate new ERP solutions, how easily the system manages joint venture accounting is going to be an important consideration.

The 5 Pillars of a Joint Venture Accounting system give you the ability to:

1. Comply with IFRS or GAAP Accounting Rules

Whether your organization follows IFRS or GAAP joint venture accounting rules, a sound JVA solution needs to manage different methods of Joint Venture asset accounting; full cost and successful efforts including acquisitions, DD&A, transfers, impairments, and asset retirement obligations.

Joint interest billing should be able to account for and allocate expenses for all stages of the exploration, drilling and production process, based on owner shares. When the exploration is successful, the system should also manage the payout of royalties.

2. Manage Budgeting and Authorizations for Expenditure (AFE)

To control costs and manage investor expectations, budgets have to be created, managed and adhered to. Authorizations for Expenditure (AFEs) ensure proper authorization has been obtained before drilling begins or expenses are incurred. The AFE typically estimates project expenses including the costs of equipment rental, fuel, drilling, well testing, and labor – plus it sets limits on how long or how deep the exploration will go before the well exploration project is pursued or abandoned.

Oil exploration projects must be authorized before drilling begins – and again when the well goes into operation.

3. Track Owner Shares, Land Interests and Other Agreements

Tracking landowner and mineral lease rights is a complicated process. A Joint Venture Accounting system can help you manage these contracts, and comply with your obligations. Over time these contracts may be transferred through sale or inheritance. Your JVA system should have processes to manage the transfer of rights and be able to handle the over-lift or under-lift that may occur due to production schedules.

4. Generate and Track Owner Communications

Related to tracking Mineral Rights Leases and landowner interests is maintaining records of your communications. Oil and gas companies are obligated to notify and/or request permission from interested parties about production schedules, damages, mineral excavation results and all expense / royalty information.

5. Spot Insights and Trends

The ability to use your ERP and Joint Venture Accounting data in a meaningful way is critical. You want to be able to drill down to find root causes and zoom out to find big picture trends.

Looking for a Joint Venture Accounting Solution?

If you’re in the oil and gas industry and are looking for new ERP software with strong Joint Venture Accounting features, we encourage you to look at Dynamics 365 for Finance and Operations with our EnergyCONNECT Joint Venture Accounting package.

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Author: David Huether, VP – Engagement & Alliance Management