Enterprise resource planning software—better known as ERP—serves as the centerpiece of any tech stack. In simple terms, ERPs bring all of the important data together in one place while offering functions to complete core business processes. This expansive piece of software has applications in all enterprises, but oil and gas companies can particularly benefit from having a single platform to manage accounting, financials, well production, land and contract management and much more.
An ERP system’s effectiveness can be influenced by its ability to adapt to modern technology. Legacy systems tend to be inflexible and unable to adapt to current technology or industry demands; they end up creating more obstacles than they remove—the polar opposite of an ERP. In such instances, organizations can be intimidated by the learning curve or changes that come with replacing an ERP, but the long-term benefits include increased efficiencies and improved productivity.
For instance, many legacy systems lack remote connectivity options. Now that remote work has become the norm, older ERPs make it harder—and sometimes impossible—to access data without being in the office. Reporting can also be cumbersome, especially when legacy ERPs rely on massive amounts of manual inputs to collect, organize and analyze data. The only options are spending hours on reporting or simply making do with lackluster insights.
Finally, very few legacy ERPs offer the sort of automated tools that come standard today with quick and easy applications that expedite learning curves through familiar interfaces. Consequently, some users waste time on tasks that superior ERPs could handle faster and better.
Oil and gas companies need ERPs, but many of the legacy systems in place are unable to meet users’ needs. Unfortunately, far too many companies saddle themselves with ineffective software and miss out on the strengths of newer, smarter ERP systems.
The Role of ERPs in the Oil and Gas Industry
Events both unexpected and uncontrollable have thrown the oil and gas industry into turmoil: a pandemic, severe storms, shrinking supplies, plummeting prices and the rise of renewables, among other factors. Surviving these disruptions and keeping pace with a rapidly evolving industry requires precision, insights and flexibility.
A modern ERP provides exactly that. Unlike legacy ERPs, which were essentially created as data management tools, newer forms of ERPs empower companies to become data-driven enterprises that use the best information available to inform decisions. Modern ERPs don’t just integrate and organize data—they put that data in users’ hands to optimize everything they do.
Take reporting, for example. When energy sector leaders have robust and flexible reporting capabilities at their disposal, they can start to forecast forthcoming conditions, make preemptive plans and turn looming disruptions into potential opportunities. And when those reports are available with minimal time and effort, managers can focus on applying insights instead of gathering details.
Those insights relate to everything oil and gas companies are trying to master right now: labor utilization, data management, strategic decision-making, process improvement, budget and forecast accuracy, rig scheduling, cost controls and more. It’s not hard to see how an oil and gas company could benefit from having an exceptional ERP.
Key Features of Modern ERPs
Considering the flurry of recent mergers and acquisitions, time is short to replace legacy ERPs with something better. In 2020, there have already been 14 M&A deals. Only one exceeded $1 billion, suggesting that smaller companies are ripe for consolidation. Whether a company wants to attract an offer or fight one, a quality ERP gives it the information and coordination it needs to rise to the occasion; legacy systems don’t.
Companies have plenty of ERP products to choose from, each with expansive lists of features and functions. But some of these features are mere bells and whistles, and not every ERP accommodates the unique needs of oil and gas companies. Replace legacy ERPs with the right software by looking for an option with these qualities:
- The ability to streamline department closing processes and accommodate complex accounting issues.
- Robust reporting around oil and gas regulations as well as federal and state tax obligations. Audit functionality should be mandatory.
- A cloud-based setup that makes it easy to maintain and use the ERP and equally easy to get data in and out while sharing information freely with partners.
- An integrated solution that allows users to enter data into the system once and use it multiple ways across departments.
- Simple methods for entering large volumes of data quickly and accurately.
- Excellent cybersecurity measures.
The benefits of a robust ERP begin before implementation and will continue long into the future. Companies can expect to save time, lower costs, engineer efficiencies and integrate systems (both enterprise IT and company cultures). Can your legacy ERP do that? If not, you’re probably long overdue for a replacement.
Dawnelle Tucker is an experienced business analyst with a demonstrated history of working in the oil & energy industry and currently serves as a business analyst at Enertia Software.
This post appeared first on Hart Energy.