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June 01, 2016
Upstream oil and gas: Bridging the data chasm separating front- and back-office operations
By: Deepak Manoharan

While oil and gas companies may have the latest systems and technology tools, data quality is undervalued as a business asset. Access to reliable data enables business leaders to harvest information rapidly for smarter decisions.

Today the upstream sector is hampered by a lack of information integrity, intensified by the shale gas boom and the flurry of data created by thousands of wells and royalty owners. Enterprise resource planning (ERP) systems do a good job streamlining back-end functions such as finance, procurement and human resources, but fall short in functionality for the front office (i.e., field operations). Consequently, there’s a data gap that needs to be bridged.

Some of the consequences include reporting inaccuracies that requires rework and prior-period adjustments, along with a lack of transparency into business issues in real time.

Many users struggle to understand data flows between multiple siloed systems, which leads to processing mistakes and time-consuming corrections. I have seen organizations where governance processes are applied first to handling data within core ERP systems but only much later, as an afterthought, extended to information residing outside of such systems.

Data integrity helps to boost operational efficiency, which is critical for upstream companies in this challenging oil and gas pricing environment.

For reliable data across the entire business, companies need to apply shared governance for ERP and non-ERP information. Here is guidance for developing a strong framework:

  • Establish a corporate-wide data model for key data objects.

  • Build in flexibility. Allow for the classifications of data based on usage (global vs. local).

  • Clarify data ownership. Who owns a particular data object? Does the ownership change when data flows from one system to another?

  • Front-end load data quality and governance. In other words, tackle the problem in upstream applications before the data reaches an ERP system.

  • Educate users. Explain data flows, as well as the governance framework, and communicate regularly with a broad range of users in front- and back-office functions.

Improved technology solutions are likely to bring more data into ERP systems. For example, SAP and Accenture are co-innovating upstream operations management to bring in more upstream data into SAP. However, even if an all-encompassing solution could significantly close the gap, data integrity would still be the bedrock supporting accuracy, efficiency and decisions to improve competitive position.

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