Abstract
Access to accurate data and information is crucial to oil and gas exploration companies, where high-quality interpretation and analysis are essential requirements to finding valuable hydrocarbons and generating income for business growth. The business analytical community within the Norwegian global oil major Statoil aims to solve this problem by utilizing the power of SharePoint to provide first-stage interpretation of publicly available and bought data to eliminate duplication and provide a stage for collaboration across business areas to drive efficiency and to try and stay one step ahead of its competitors.
Keywords
Information overload
In 2010, Eric Schmidt, CEO of Google, stated that as much information was being created every two days as there had been from the dawn of civilization to the end of 2003 1 – an astonishing statistic given that the World Wide Web had been established for almost two decades and prevalent in academic and commercial institutions for at least one of those. Prior to this online explosion, getting information was a process-driven exercise involving the ordering and collation of hard copy materials. The value was driven by the information professional in understanding the needs of the organization and purchasing what was required (and what they perceived to be of use based on their knowledge of their organization). Today’s challenge for businesses is not barriers to access but how information and data can be effectively analysed and interpreted to spot trends and anomalies to keep their company ahead of the competition in their field.
The task facing any global oil and gas exploration company is managing the huge amount of data, information and knowledge related to technical developments (license areas, oil or gas field, or well) and commercial interests (financial reporting, transactions data, industry trends and analysis). It is crucial that such data and information are thoroughly analysed and interpreted as this is likely to be a key influence on whether to invest in a new project or exactly where to position a rig to drill the first well. Success or failure can be determined by the smallest of margins, as can be seen from the Statoil-operated Johan Sverdrup field in the Norwegian Sea. In 1971, the French company Elf failed to find any oil and abandoned the area; 40 years later, Statoil drilled less than 3 m from that site and found a reservoir that contains possibly as much as 4 billion barrels of oil. 2
About Statoil
Statoil was founded as the Norwegian state oil company in 1972. Whilst its ties to its homeland remain strong, with the majority of its assets located on the Norwegian continental shelf, it is now an international listed company operating in over 30 countries worldwide. It merged with Norsk Hydro in 2007 and now employs over 23,000 people both onshore and offshore. Despite operating in an industry that has a reputation for environmental damage, it is recognized as one of the most innovative and sustainable companies in the world.
Statoil looks to grow as a business by increasing its hydrocarbon reserves by acquiring new assets in areas of strategic interest whilst also developing existing assets to produce and sell oil and gas in order to generate revenue. It is the responsibility of the Global Strategy and Business Development (GSB) business area within Statoil to identify and seek board approval for new ventures that these are aligned with the corporate strategy, that prices and costs are in line with market trends and represent best value for the company and to try and understand competitors’ strategies to predict where they are trying to invest or divest in the global marketplace. This is especially important at Statoil as the company is still majority owned by the Norwegian government and has a moral responsibility to do what is best for Norway, its people and its future.
Competitor intelligence and the need for data
GSB is divided into specialist teams that have to work closely together to share both knowledge and insight in ongoing projects, such as identifying potential acquisitions and divestments, evaluating the economic and geological attributes of such assets and analysing competitor performance and deal history. It is vital that these teams collaborate internally in order to accurately inform the board to make the correct decisions relating to business-critical projects and potential future areas of growth. One of these teams, Competitor Intelligence, analyses competitors’ financial and operational performance through detailed scrutiny of their past quarterly and annual reports and also assesses their future ambitions through their published strategy updates, investor reports and press releases. The team uses these findings to try to anticipate where competitors are looking to invest or divest around the globe. They also look in detail at all open and completed mergers and acquisitions (M&A) transactions to understand where competitors are looking to grow their investments or sell their stakes. These could be related to below-ground difficulties in extracting the hydrocarbons, above-ground risks such as political instability, or simply to raise cash for other projects. Another analyst team tracks industry trends, such as global supply/demand, from official sources such as Organization of Petroleum Exporting Countries and the International Energy Agency. External databases are used to support these analyses as these may provide contrasting opinions on discovered or undiscovered reserves and future production figures. These also provide short- and long-term predictions for future growth based on different future oil price scenarios, allowing analysts to model and try and predict market developments.
Following the Statoil–Hydro merger in 2007, the new company quickly realized that this was an ideal opportunity to put in place effective systems and models for sharing information and knowledge of mutual interest. The intention was to provide a first-level layer of interpretation and analysis that would prevent duplication of effort but would still allow analysts to see a quick snapshot or visual of a particular company attribute, such as total reserves held annually for the last five years, without having to dig into individual annual reports to find the numbers.
Business intelligence web
The result of this was the creation of the business intelligence Web (BIW) in 2008 as a common platform for the collation of data and intelligence on Statoil’s competitors and all M&A deals in the oil and gas sector across the world. Working in partnership with a third-party business information provider, the BIW provides direct access to charts and reports based on two main types of data, individual company reports and databases bought from external companies containing information on all upstream-focused oil and gas M&A transactions worldwide.
Standardizing approaches to gathering and visualization of free and bought data
Annual and quarterly financial and operational data from over a hundred competitors were taken directly from publicly available reports online, with the BIW having a separate page for each company, with charts showing a variety of metrics such as net income per year, total reserves and average daily production. Providing the data in chart form was an effective way of preventing individual analysts going to the competitors’ websites and downloading the reports themselves, extracting the numbers and then creating their own charts.
Although company data are freely available for all publicly listed companies, costs are incurred in collating and processing the numbers via outsourcing the work, and this process is less efficient than using an external supplier and a data feed, but there are two key benefits. Firstly, getting the data from each company’s published reports means the most authoritative source is used. Secondly, there is no danger of compromising any terms and conditions of use of supplier data by making it available in its ‘raw’ form to all employees who do not have a license for the relevant database.
For transactions data, external sources must be used as the figures are not freely available from the companies involved. Deals often involve multiple buyers and sellers on both sides, who may only report their own share of the spoils in official press releases. The charts created in the BIW included breakdowns by deal value and number per region as well as per company, both as buyers and as sellers. This level of manipulation provided some first-stage interpretation and also enabled Statoil to provide added value to analysts outside of the user license without violating any terms of use, as the data are not available in its raw form.
BIW development and enhancement
With hindsight, it is hard to comprehend exactly how revolutionary this solution was when it was first launched. Information services in the oil and gas sector tend to be the domain of the information technology (IT) department rather than the information specialist due to the technical nature of the data. This means that the perception of the value of data and information tends to be concerned with the interpretation of data and access to any related findings, with limited access available on a project by project basis. By providing open access to the interpretation of data to analysts across the company rather than via restricted-access project-related work areas, the BIW changed peoples’ perceptions of the value of shared information, enabling greater cross-departmental collaboration on other projects and exploitation of BIW information outside of analyst teams. It also proved to be a handy resource for the CEO office that used it to prepare executive reports ahead of meetings with senior management from other companies.
As awareness and use of the solution grew across the organization, it became apparent that the HTML-based structure had some restrictions, particularly around the organization and structure of the site, which sometimes led to information or folders being buried several clicks below the surface. Charts were created and uploaded as images with lots of time and effort spent in updating them when new quarterly data for each of the various metrics for all 100 or so companies were released; as this work was outsourced to a third-party data provider, there were concerns about the increasing costs related to this exercise. The analyst teams found themselves spending less time on analysis and more time on administration.
Utilizing the power of SharePoint
The solution was to use the organization’s SharePoint 2010 licence to develop a more dynamic solution that could provide more intuitive access to the same data. With SharePoint already used for the company intranet, it fitted with the existing IT portfolio and had the added benefit of having internal expertise within the development team. The immediate benefit from the old HTML structure was the ability to provide multiple charts, dashboards and visual reports based on a single set of numbers collated and stored in a centralized ‘cube’ as opposed to the manual creation and uploading of several individual graphs in image form. The same numbers could be processed and visualized in many different charts across different sections of the BIW and these would be instantly updated by changing the numbers from a single place in the cube (see Screenshot 1).
Alignment of delivery with contractor agreement
As the changes were based on the existing data, there were no expected cost increases to the process, but some time had to be taken to ensure that the data collection processes used by the outsourcing company were also aligned to the structure of the new data cube. Under the original structure, the provider was engaged to provide services per product for both regular and ad hoc deliveries. These were individually scoped and priced by the company and then approved by the assignment owner. There was no central point of contact within Statoil for managing the process or workflow, leaving significant scope for duplication of effort if different projects requiring the same data were not identified. During the migration of the BIW to SharePoint, the contract was renegotiated with the third-party company to provide a more holistic service based on set hourly rates and with a dedicated team working only for Statoil, with the company receiving one monthly bill for all services rendered. A single point of contact was established in the Competitor Intelligence team in Statoil to oversee all costs and effort and proactively respond to issues and concerns. It was assumed that the contractor had aligned its processes and procedures in accordance with the new working conditions, but this could not be taken for granted and continual close collaboration with the contractor enabled areas of duplication to be removed and work streams improved to drive efficiency gains and reduce cost.
Customization and presentation of the same data to different audiences
The presentation of the same data in different formats has improved cross-departmental collaboration by analysts with different needs, experiences and backgrounds. The structure of the old HTML version was focused on the requirements of a team looking at exploration and development on a company by company basis, and this was not particularly helpful for those with an interest only in a particular region or product – for example, natural gas extraction and related markets. Analysts looking for production and development data relating to North America would have needed to drill down to each company page and then go to the relevant subsection, collate all the charts and reports and then carry out their own analysis based on this; the alternative would have been to raise an ad hoc request with the third-party data provider to provide a deliverable tailored to the requirements using the same data, at extra cost to the business.
For the European gas analysts, the IT developers were able to create a customized front page using the existing SharePoint and Performance Point functionality that only showed the gas-related data and reports from the cube and folder structures visualized and presented in the required format. The company intranet incorporates employee details from SAP and the SharePoint My Site tool to tailor news feeds based on the individual’s location and area of work, and the developers were able to utilize this functionality to ensure that the customized European gas front page was set as the BIW home page for all employees working in that team (see Screenshot 2).
The move to a dedicated SharePoint platform also encouraged teams to share their internal reports, research and presentations such as the Competitor Intelligence team’s quarterly peer-group performance monitor and M&A activity reports. A dedicated knowledge bank was established, incorporating an integrated full-text search functionality and security to control access to any sensitive information, with each team or product having its own folder. The BIW also includes a database of news stories of importance to Statoil and its business taken from a daily alerts service emailed to over 10,000 employees each morning. The latest news is displayed in ticker form on the BIW home page and over two years’ worth of news items are searchable from the back-end database. Users can search this archive and get instant access to the headlines and links to the full text.
Developing the collaborative mindset
The next challenge is for the BIW to become the forum for debate and interaction across the business on discussions relating to company and deal activity. Prior to the SharePoint migration a bespoke tool was developed on the HTML site using Adobe Flash to capture the thoughts of senior analysts and management of any issues or ‘weak signals’ that could potentially impact Statoil and its business. This ‘Strategy Radar’ captures these intangible thoughts and views in list form but also allows analysts to manage the perceived impact on Statoil, an estimation of its likelihood and whether this is an event that Statoil is able to exert any influence. These are then visualized in a grid or a ‘funnel’ view which allows analysts to quickly grasp the most business-critical or important issues on the minds of the key decision-makers; from this a list of research topics are defined for the analysts teams to dive more deeply into. The radar is a catalyst for debate, with analysts able to add more information and thoughts to existing ideas and to generate tangible deliveries and research projects based on initial opinion and perception (see Screenshot 3).
Further collaboration and interaction is being developed for the individual company profile pages which, in line with the company’s internal guidelines for ‘out-of-the-box’ functionality, will utilize existing SharePoint 2010 content. The relative success of a number of community sites in specialized areas within Statoil has proved that colleagues with specific experience are very willing to share their knowledge, provided there is a simple and effective way of doing so. This is especially valuable in a relatively young company in a highly specialized industry, where innovative solutions directly influence profitability and where employees will often only spend two years in a particular role or location. The Norwegian culture naturally dominates the company and its management structure and this is reflected in the way that employees openly discuss issues with their colleagues and leaders. This has been demonstrated very effectively with the launch of the CEO microblog on the home page of the company intranet. The most interesting discussions have come from technology-based comments where the CEO has challenged the business to find alternative ways of solving issues such as improving oil recovery rates from mature fields.
The BIW development team wants to see whether the same level of interaction can be achieved with discussions based on particular companies and are currently looking into incorporating the NewsGator functionality on the profile pages of all companies in Statoil’s peer group to initiate and capture thoughts and opinion based on recent company activity, whether it be the most recent quarterly results or breaking news. This will give analysts from all parts of the business an open forum to discuss pertinent issues and develop their internal professional networks rather than restricting this opinion to a smaller audience via email or a restricted working area. Utilizing the existing subscriptions and software in this way provides a cost-conscious solution that has the added advantage of being in a format that is familiar to the user, which makes initial take up easier for the first-time user and does not leave the business exposed to taking on additional cost for new products that may have a limited life expectancy due to lack of use.