Oil and Gas Company: Transform Exploration and Production Supply Chains

Subject: Human Resources Management; Change Management

Although the project is ongoing, the initiative has already yielded significant gains, and is positioning the company to achieve high performance over the long term. The client is a large oil and gas company that operates more than 70 oil and gas fields.

The oil and gas business is extremely challenging and is fraught with considerable risk. Oil companies routinely must place major bets on new oil fields without knowing the precise amount of oil that lies beneath the surface or how much it will ultimately cost to extract the crude, refine it and turn it into products customers will buy. Given such uncertainty, it is critical for an oil company to have superior processes, especially in core areas of its business.

Recognizing the need to continually upgrade its operations, this oil and gas company embarked on a major initiative in 2005 to determine how the company could improve the quality of the business processes through which its people conducted their daily work. The initiative revealed that the company needed to completely redesign its core operational processes.

To help with such a massive effort, the company turned to Accenture, which it had a trusted relationship with for more than 10 years when Accenture helped it make the transition from a state-owned enterprise to a private company. Since then, Accenture has worked with the company on a series of transformational consulting and outsourcing projects involving nearly every area of the company.

To execute the complex and challenging project, Accenture formed a team of professionals drawn from our Supply Chain Management and Talent and Organization Performance service lines, as well as professionals from its Energy industry group.

The project—a four-year effort—began with an in-depth assessment of how the company’s core processes were performing, how that performance compared with leading practices in the oil and gas industry, and the changes required to close that gap. A critical guide in this work was the Accenture High Performance Business model for energy companies. Accenture also identified the organization structure and the information technology that would be key to efficiently executing the new processes.

The Accenture assessment revealed a number of improvement opportunities, the most significant of which related to achieving tighter integration between people, processes and functions across the company. Although the company employed highly skilled and knowledgeable people, a lack of integration caused complications and inefficiencies that had potentially serious consequences for the company’s overall corporate performance.

With the results of the assessment in hand, the Accenture team—working closely with the company’s key people—determined which critical processes would be redesigned and identified which key performance indicators would provide the most important measures of improvement. Also during this time, Accenture spent considerable effort on change management—working to secure the necessary sponsorship from senior executives and getting the appropriate employees involved in the initiative.

In the next two phases of the project, design and detailed development of the new operational processes took center stage. As part of the preparation for new process rollout, Accenture is helping the company design a comprehensive training program targeting the employees affected by the operational changes.

In the challenging and complex world that is the oil and gas industry, high performance is dependent on a number of factors. One such factor, as Accenture’s ongoing High Performance Business research has found, is distinctive capabilities that enable a company to outperform its competitors. For oil companies like this one, superior processes governing core areas of the business are one example of distinctive capabilities.

While the company has yet to fully roll out its new core processes, its operative maintenance department expects it will be able to reduce annual maintenance expenditure by up to 3 percent and the engineering and construction department expects capital investment optimization up to 6 percent. Additionally, the company expects to have access to higher quality information as the new capital project teams begin working in a more integrated fashion. Overall, the company intends for these improvements to translate into increased productivity, on-time achievement of project objectives and milestones, and a better work environment for employees.

An important side benefit of the project is the effect it had on other departments at the oil and gas company. As the project unfolded, executives in the refining and logistics, knowledge management and data management departments saw the type of benefits the project was generating for the company’s core processes and anticipated how such an effort would help their organizations. As a result, the company decided to extend the original initiative to include these departments.