BPM – Real Life Solutions: Oil & Gas Exploration

How to improve AFE approval turnaround time and increase AFE accuracy and reliability:

As an organisation we have gained significant experience in the Oil and Gas Sector, helping clients to realise real value from the deployment of the XMPro Business Process Management solution.

It is easy to reduce AFE turnaround time. Just make ball park estimates, use some data from a previous project, some quick calls to equipment providers, some high level assumptions and bang out an AFE. Right?  Well…possibly not!

Whilst the above scenario is exaggerated, there is pressure on upstream O&G Exploration and Production operators to fast-track work programs, and get approvals quickly to speed up project execution.

The implications are that the operator will give a less than favourable impression to investors and AFE participants alike if costly overruns are the consequence.

The converse of this is that the O&G operator implements compliance measures on the operations. Although the standardization creates greater accuracy and certainty, it builds pressure within the organisation. AFE approvals are slowed down, decision bottlenecks are created. The consequences are that projects can be cancelled or project costs could increase.

To understand the AFE creation process, we need to consider that the AFE is the final step of many during the estimation process.

The final, most detailed estimate is the AFE estimate. But there are other estimates made first that will inform this. At the top end, we have an Order of Magnitude estimate (50-100%) which is used for project screening. Then Equipment Factored (25-50%), used for feasibility studies, where each of the major equipment components are given numbers and factors such as $/metre drilled . An Economic estimate at around 25%, provides a level of confidence. Contractors are contacted to provide their input and greater equipment detail costing is sought. The final stage is the AFE Estimate which should be the cost control estimate used in reporting internally and to participants. An AFE estimate should be reliable, within 10%.

To get the required AFE estimate accuracy of within 10%, the operator will need a robust policy, compelling workers to follow extensive and complex processes for AFE approvals.

It is easy to see the effect this can have as many AFEs work their way through the layers of the organisation creating decision bottlenecks. Along the way, a variety of word documents, forms, quotations from suppliers and commentary are attached to the AFE before it reaches the CEO’s desk for final approval.

The conundrum then is how does an organisation get reliability and certainty in the process, following policies and procedures, yet at the same time speed up the turnaround time?

Ultimately, it is about being able to manage the process. We have to make the process effective in achieving the goals of time and accuracy and at the same time, easy and user-friendly for operations staff.

This all points to having a workflow solution. Workflow, though, is not just about providing a structured, pre-defined workflow. In a multi-disciplined team, we may need more flexibility to allow more ad hoc, unstructured processes to occur yet still maintain control. This allows for decision making within the process itself, for instance, routing to another department or supplier as project details clearer.

PEOPLE; first, last and everything…

When it comes to BPM we hear a lot about SOA, XML, Web 2.0, EAI, BPMN, ECM…and after a while I am sure all one actually hears is blah, blah, blah, because this is only technology [apologies to the technologists amongst you].

Process may be well conceived, designed and built and the technology may well be great, but the one factor I hear very little mention of in all the BPM ‘chatter’, is the word PEOPLE. I would strongly suggest that the absolute key to a BPM project’s success is understanding, appreciating and considering the very people involved in the process.

It is all well and good to say consider the people…but how?

I would suggest there are a number of practical ways to achieve this:

• Understand how each person in the process operates e.g. how does he or she measure their own success as a part of the process and measure the success of the entire process if that is appropriate to them.

• Involve each a person with a direct [and indirect?] interest, involvement, or investment in the process that will therefore be affected by the process change.

• Ensure that the interface for each user or group of users, is appropriate to their circumstances and requirements; MS Outlook, browser, mobile etc. as well as how the process success is to be measured for or by them; reporting and analytics.

It is my view that PEOPLE beyond everything else should be our primary concern when considering BPM projects. In addition when we say PEOPLE, we not only include employees, management, directors and shareholders; but also suppliers, partners, advisers and last but certainly not least; clients/customers.

We [the team at Professional Advantage] believe that a lot of BPM projects fall short of delivering on their promises, because the implementation project fails to correctly predict the impact of PEOPLE issues…and this is not a mistake we make.

THE FIVE COSTLY MISTAKES OF BPM

My colleagues and I have been witness to a large number of discussions around why BPM projects fail, mistakes of BPM etc.  As with a large number of discussions in and around the BPM space they are just a little too theoretical.

My colleague Jonathan Marcer, the head of our XMPro Business Process Improvement Team in Sydney, has published a blog entry where he has put together his thoughts on the ’5 Mistakes of BPM’ based upon real life experience ’in the field’.

I recommend you read the post at http://linkd.in/maLKUD

BPM is just Workflow, isn’t it…?

I am often faced with the question; “What is the difference Business Process Management and Workflow?” or I am faced with “BPM is just another name for Workflow, isn’t it…?”

The confusion often arises because misleadingly, these two terms are used interchangeably by individuals and organisations in the BPM space, that should really know better.

In short Business Process Management (BPM) is about managing a business problem or issue or a ‘pain’, whereas workflow is simple a subset of BPM, it is an enabler, a technology. BPM uses workflow as one of its key dimensions, in order to manage business processes.

These six BPM dimensions include:

1. A human workflow (WF) dimension;
2. A rules engine (RE) dimension;
3. An enterprise application integration (EAI) dimension;
4. A service oriented architecture (SOA) dimension;
5. A content management (CM) dimension; and
6. A business intelligence (BI) dimension.

Additionally a BPM Solution/Suite (BPMS) should allow for the configuration of all of the dimensions from one interface or product suite. A true BPMS such as XMPro iBOS provides the ability to create Composite Process Solutions (CPS) with all of these elements from a single toolset.

IN SHORT: BPM is NOT just Workflow and if you speak to an individual or organisation that confuses the two terms, then my advice… RUN and don’t look back!

I’m lovin’ it…or am I?

My wife has, for almost all of my 16 years in the industry, questioned me about the TLA’s [three letter acronyms] my colleagues and I use.  Earlier this month she gave in to her curiosity and asked me what BPM is, and then asked me to give her an example of a business process.

Before I could think of an appropriate answer, a perfect opportunity arose, which did the job of answering her question and providing her with a perfect example of both a business process and how processes can ‘go wrong’.

Whilst in the car with the family, I pulled out of a retail park when the cry came from my two children, “Can we have a milkshake from…” I pulled up to the ‘first window’ to place my order and pay for the two shakes.  What I had not done, was go through the drive through channel properly and place my order via the speaker and screen at the remote order station.

The staff member was not expecting me to arrive at her window unannounced. She was shocked to see me pull up: ‘How did I get there without ordering at the proper point in the process?  What was she to do now?  I saw panic written all over her face because her daily routine [i.e. the order/payment/sale process] had broken down.  She turned to her colleague, “What do I do now?”  Her supervisor also seemed flustered at this occurrence and they both referred to their computer screen, as if that was going to provide them with the answer to this problem.

The process did not allow for this ‘exception’ or perhaps, the staff members were not trained to process the order in a different way’, I am not sure which.  But what I do know is that the answer came back; “You will need to drive round the building and place your order via the drive through channel, we cannot take your order here”

Had the process designer not foreseen a customer being able to drive up to a payment window without going through the drive through channel?  The process was a standard organisational process, had it not been adapted for this particular site with a different layout? Had the process designer seen the exception, and judged it to be so rare an occurrence, that it was not cost effective to implement a one off process for this site?

I am not sure how this happened, but suffice to say, the staff was embarrassed at having to provide such a ridiculous solution and we, as customers, simply drove away to another vendor just 50 yards away.

In this very brief incident we witnessed a business process in action, and witnessed how business process issues [untested assumptions, and/or poor design, and/or poor staff training, and/or lack of adaptability and/or a poor cost benefit analysis], lead to a loss of revenue.

Now I accept that a the loss of a £4 drinks order hardly constitutes a disaster…but as we drove away another vehicle, a people carrier this time, pulled up to the window, without going via the drive-through channel – PANIC!

This is hardly an empirical test, but it seems as though ‘the exception’ to the standard process is not so rare, and the potential loss of income is significant when driving to a competitor is easier than driving round the building, placing the order to a disembodied voice via a speaker to then proceed, through the channel.

PEOPLE, processes and products…

When it comes to BPM I hear a lot about SOA, XML, Web 2.0, EAI, BPMN, ECM…and after a while I am sure all I actually hear is blah, blah, blah, because this is only technology [apologies to the technologists amongst you].

Process may be well conceived, designed and built and the technology may well be great, but the one factor I hear very little mention of in all the BPM ‘chatter’, is the word PEOPLE.  I would strongly suggest that the absolute key to a BPM project’s success is understanding, appreciating and considering the very people involved in the process.

It is all well and good to say consider the people…but how?

I would suggest there are a number of practical ways to achieve this:

• Understand how each person in the process operates e.g. how does he or she measure their own success as a part of the process and measure the success of the entire process if that is appropriate to them.

• Involve each a person with a direct [and indirect?] interest, involvement, or investment in the process that will therefore be affected by the process change.

• Ensure that the interface for each user or group of users, is appropriate to their circumstances and requirements; MS Outlook, browser, mobile etc. as well as how the process success is to be measured for or by them; reporting and analytics.

As a vendor of BPM and P2P solutions, we have had an application in our portfolio [for many years now] called 3P, which delivers additional workflow capabilities beyond standard industry P2P requirements.

Why 3P I hear you ask…?  3P stands for People, Processes, Products.

The reason PEOPLE comes first in the list, is that it is people beyond everything else that we consider as being critical to any and all BPM projects.  In addition when we say PEOPLE we not only include employees, management, directors and shareholders; but also suppliers, partners, advisors and clients.

We [the team at Professional Advantage] believe that a lot of BPM projects fall short of delivering on their promises, because the implementation project fails to correctly predict the impact of people issues…and this is not a mistake we make!

Turn your social media “listening” into actionable business…

Could responding to the social media chatter, in a timely and managed way, save you costs and drive new revenue?

I think one of the goals of a CIO is to be ready and waiting to answer questions about new technology, and the resulting changes in customer behaviour,of adopting such new technology.

The almost overnight ramp up in social media is a classic example of how hard this can be.

What is this social media thing? Do we use it? How do we use it? Why do we use it? Do our suppliers use it? How can we benefit from that? Do our customers use it? And what do they say about us? And what do we do about that? Can we save costs or drive revenue with it?

That’s the problem with social media – it impacts on so many areas of the business; internal, external, PR, marketing, sales, query management, performance quality, customer service, complaint management, crisis management, shareholders…the list never ends.

And there are so many channels, Facebook, MySpace, Twitter, LinkedIn, YouTube, Google Alerts, Foursquare, Socialcast, Yammer etc etc.

This all becomes the CIO’s problem when the business decides that they need to do something systemic and meaningful about this ‘new fangled’ technology. Listening to the social chatter is usually the first toe that goes in the water and that can be an eye-popping experience. But what then? How can you sort the wheat from the chaff, so that a sensible and aggregated stream of content is offered to the business for review? And what then?

How do you build a consistent and sustainable service to respond appropriately where response is demanded and maintain a view of the outcomes?

Sooner or later you will want to turn your social “listening” into “action”

XMPro4Social: http://bit.ly/ysBiqD

Originally authored by my colleague Neil Richardson http://linkd.in/Aac6UF

“Not everything that counts can be counted, and not everything that can be counted, counts.”

Apparently these were the words written on a sign that had hung on Albert Einstein’s office wall.

Now I am no Albert Einstein and that is self evident from reading my blog posts, but it occurred to me that Albert was on to something.

Put another way [and I do not know who said this];

You cannot manage what you cannot Measure!

Five to ten years ago all one could hear and read about was Business Intelligence, Analytics etc. and for some reason that I have been unable to fathom, ‘it’ seemed to have fallen off most people’s radar.

A number of surveys over the last few months however has highlighted the fact  that the single highest priority item for senior executives is ANALYTICS; in all its forms and in all areas of the ‘business’.

In an earlier post I made the case for BPM providing the critical link between an organisations goals and objectives [its reason for existing] with the daily activities the organisation undertakes to achieve their specific goals and objectives.

In addition many organisations invest significant effort in measuring the transactions flowing through those processes; spend on X, costs of Y, profit on Z etc. It amazes me however that so many organisations [the largest majority] continue to look in the wrong place for the answers about Analytics.

So where am I going with this? Excellent question!

In numerous conversations with executives and senior management it occurs to me that they significantly under-estimate the importance of process and the view seems to be, that Analytics and Process exist in totally separate worlds; whereas I would argue they are intimately connected.

How can one ever know if a process is working without smart metrics?  Or put another way, how can one know if the mechanisms one has put in place to achieve the business goals and objectives are moving us in the right direction, as effectively and efficiently as possible?

I would also ask what the point of a metric is if it does not measure the performance of some aspect of a process, and provide me with intelligence about how to improve it?

I would strongly suggest that an organisation would be well advised to start with a view of the ‘end-to-end’ operational business process and then define the right metrics by asking the right questions.  These ‘right’ questions I would suggest would include:

How would we know if we were being successful?  

What would be the critical indicator that warns us if we are going off track?

So simply put, I strongly believe and hence advise clients, to always ‘connect’ Analytics to Business Processes.  Failure to do so, I would suggest, leaves organisations ‘blind’ when they go ‘off-track’.

AND REMEMBER: Always keep count and always make sure you count what is worth counting!

CHANGE MANAGEMENT, it’s all about PERSPECTIVE…

I have been following, and at times contributing to, a number of discussion groups which have, in one way or another, been focusing upon the reason for BPM project failure.

In these discussions, I have made the point that each person’s perspective [i.e. a particular evaluation of a situation or facts, from one person's point of view] of the project; it terms of its importance, relevance, scope, objectives etc. would have a significant impact on the real [and perceived] success of that project.

“So what!” I hear you say, isn’t that the same for all projects, and to some extent I would agree.

I would however suggest, that business processes go to the heart of how a business operates, the activities individuals undertake on a daily basis, and ultimately has an impact on how successful a business or organisation is, in achieving its goals and objectives.

Process based projects therefore require executives, management, employees and project/solution partners to understand, that not everyone sees things the same way!

Effective change management and hence the success of the project I would suggest comes down to understanding and acknowledging the different perspective people have, and accommodating these differences in the project.

Thank you to David Macdonald for this image

Social Listening – Get Control Of The Conversation

Gartner’s Jim Sinur posted an interesting blog post entitled “The Big Oops: Forget About Social Networking” where he describes 3 scenarios where the feedback from the collective was ignored and caused severe customer backlash, loss of brand credibility and a negative financial impact.

We recently saw the world-wide grounding of the whole Qantas fleet as a result of a breakdown in negotiations between the company and unions. This stranded around 68,000 passengers world-wide. The socialsphere was in meltdown and Twitter was in a tweet tsunami. Qantas responded well under the circumstance and even though there was definite anger and frustration they seemed to be on tweet alert.

The challenge is not just monitoring the socialsphere in crisis times like the Qantas example, but to do it consistently and have the ability to manage the dynamic and unstructured work real time with decision trails and tracking.

It is about creating social intelligence and adaptive processes that can learn from previous experience to improve customer experience, brand and ultimately retaining customers. Not everyone has the luxury of designated social media monitoring and response teams like Qantas, and more than often internal marketing teams monitor social media stream in an ad-hoc and inconsistent manner. Responses are not coordinated, tracked or reviewed and often nothing is done at all.

As Jim points out in ‘The Big Oops’, businesses can’t ignore the impact of social anymore. Mark Zuckerberg, CEO of Facebook, pointed out at their recent 2011 f8 Developer conference that, according to Facebook data, the information shared per person on Facebook, doubles every 2 years. It is the Moore’s law of social media. Social conversations about organisations will increase exponentially in the foreseeable future.

How will you manage with the increasing number of social media (channels), the increased conversations (content) and corresponding response (contact)?

XMPro for Social [https://www.box.net/shared/nmgh5zgegxkb6x9xp6nn] is a new breed of social management processes that harness XMPro’s ability to ‘listen’ to social networks such as Twitter, Facebook, Google Alerts, Digg, LinkedIn to name a few, for specific words or phrases.

If these conversations are found, XMPro will create a process activity and the business rules and logic can benefit from XMPro’s dynamic, unstructured work approach. Conversations become activities, each with their own tracking and decision trails, business rules and escalation paths. Each can be dealt with differently to suit the specific goals of the business at that point in time. Response teams can be scaled at the click of a button at peak times, such as the Qantas situation, and switched back to normal processes if the conditions change. Combined with XMPro’s agile approach to BPM, i.e. intelligent experimentation and the use of historical process data, organisations can now improve their social management processes and customer service.

Originally published by PIETER VAN SCHALKWYK Tuesday 8th November 2011