Successful Oilfield Services companies deserve our respect and admiration. Their efforts are vital to our having access to the energy that fuels our quality of life.
Oilfield Services is a tough industry. Though the industry encourages entrepreneurship, there is so much opportunity—and will be for so many years to come—that many have jumped in, and the industry has become hyper-competitive.
Rising to the Top
How do companies succeed? At a high level, the winners follow the strategies that Michael Treacy and Fred Wiersema described in 1995:
- Operational Excellence – Deliver a great balance of quality, price and ease of purchase/use.
- Product/Service Excellence – Deliver the best product or service.
- Customer Intimacy – Deliver exactly what the customer wants.
But if you dig into the details, each of these strategies comes with its costs. Operational Excellence requires comprehensive intelligence on the marketplace and being nimble to adapt the balance of quality, price and ease of purchase/use to the market. Product/Service Excellence requires extensive intelligence gathering on the future needs of the industry and what competitors are doing. And Customer Intimacy demands highly focused intelligence gathering to know where the niche opportunities are, and guidance on how to be very nimble at adapting as the industry inevitably evolves.
There’s a common theme: Success in the Oilfield Services industry requires smart decision making based on the best intelligence.
But, what is intelligence? And how do you get the right intelligence to make the right decision?
Some people mistake data for intelligence. Though data is important, it’s only useful within the context on how to use it. It also requires analysis to figure out what the data tells you.
From Data to Intelligence
So, how do you turn data into valuable intelligence? Many businesses use a process originally developed by Drexel Godfrey and Don Harris for helping police forces. Their process is summarized on page 34 of a report they wrote in 1971 for the Department of Justice. The steps are:
- Collection and Evaluation – Gather just the right data for the decision to be made. Filter out what’s not useful.
- Collation – Organize the data in a way that supports decision making.
- Analysis – Study the data to determine what’s the right thing to do. Determine the risk involved in the choices available.
- Reporting – Report to others what is learned, then decide.
- Dissemination – Direct those that must take action on the decision.
- Reevaluation – Determine how successful was the decision.
- Management – Revise the data gathering and analysis based on what is learned from the outcome of the decision.
Successful oilfield services companies are often great at steps 4 through 7. But collecting the right data and turning it into intelligence, steps 1 through 3, pose the greatest challenge for several reasons.
First, the sheer quantity of data can be overwhelming. Sometimes there’s just too much, and analyzing it becomes a burden. And more often than not, the key data that’s needed is missing. Then, what’s not missing is sometimes too old. In the hyper-competitive services industry, successful companies gather intelligence that’s up-to-the-hour, not up-to-the-week or -month. Therefore, most data sources are still just not up to date enough to support competitive decision making.
In addition to issues around quantity and quality, companies face the struggle to making the data useful. Getting data into a format that makes it easy to understand is a huge challenge. Plus, analytical tools are often costly and difficult to use. This creates bottlenecks around analyzing the data to create intelligence. Being competitive requires really smart choices on often very complex decisions. That requires using data that is tough to connect.
For example, the question, “Where should I deploy this team?” could easily require knowledge of leasing activity in the Unites States or block sales internationally, rig movement, rig activity, drilling processes, completion processes, production processes, production results, estimates of reserves in a reservoir and who’s got what, forecasts of oil and/or gas prices, current contract activity, how competitors have performed in the past in similar circumstances, transportation logistics in the region, regulatory matters, and on and on.
Your Answers – Delivered
Drilling Info has many very loyal Oilfield Services customers. Like our customers in E&P, A&D, Land, G&G, Engineering, Finance and Legal, we’re committed to providing them the very best products to support their intelligence gathering and decision making. Many of the recent products we’ve developed in prior years have been aimed at delivering more comprehensive support to our Oilfield Services customers. DI Rigs is just one such example of this.
This year, we will develop a series of new products, all aimed at providing our customers in Oilfield Services answers—answers to the most important questions they face in making their businesses successful.
We will continue to gather only the right data, clean it up and make it available in ways that make it easy to use and understand. We will then analyze that information to find the valuable nuggets that can support our Oilfield Services client’s decisions.
We’re starting with data and services to support better delivery of warm leads. We believe that regardless of the business strategy our customers use, providing them good intelligence on sales leads will be valued. We will help provide answers to vexing questions, like what areas are becoming active, who are the major players, what services are needed, who are the competitors and, in time, what are prevailing pricing trends?
Ahead of the Curve
Long before joining Drillinginfo, I spent 12 years working with two Oilfield Services companies. A lot has changed since then, but the bottom line is that service companies face many headwinds in today’s environment. However, like any other industry, it is the innovators and early adopters who will reap the greatest benefits and leave their competition in the rear view window. Companies that aren’t afraid to try new things and “fail forward,” as John Maxwell puts it, will always lead their respective industries. The only question that remains is who will be those companies in our field in the coming years?
Now I’d like to hear from you. Who are the true innovators that you see changing the game in Oilfield Services? And what are some of the best practices you have seen to overcome the challenges discussed above? Please, leave a comment below.
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