5 Biggest Mistakes Made by Oil & Gas COOs

Blog_11.07.17_graphic1Oil & Gas COOs have a complex job in one of the most demanding industries. COOs must figure out how to manage fluctuating production costs, uncertain energy prices, rugged conditions, globalization, and ever-changing regulations. They are perpetually challenged to balance management of current operations, while focusing on building capabilities for the future.

COOs are challenged to juggle it all. We’ve asked our oil and gas clients what mistakes they’ve made along their career path, and this is what they told us.

1. Being hyper-focused on cutting costs instead of driving value.
When oil prices plunge, it’s tempting (and can be necessary) to cut all non-critical expenses. But oil and gas companies can cut too deep, and stay too lean for too long, which results in losing valuable employees, thus impacting customers.

For example, proper maintenance of oilfield equipment can extend its life significantly. Cutting maintenance costs is a short-term strategy. To minimize negative consequences, you can look for a middle ground, like investing in inexpensive IoT devices to monitor remote oilfield equipment or gaining efficiencies through Field Service Software. These tools allow you to stay vigilant, while remaining cost-conscious.

When you’re in a budget freeze, use that time to plan for future value-add investments.

2. Waiting too long to move to the cloud.
Because we sell Microsoft Dynamics 365 (a cloud solution) to the Oil & Gas industry, this is one of the most common mistakes we see from our clients. The oil and gas supply chain is global. Your organization needs near real-time visibility of employees, equipment, job sites, and vendors. That level of visibility is only possible with a modern, mobile, cloud-based platform. The Microsoft Cloud is stable, secure, and enables nearly endless opportunities to innovate and add efficiencies.

3. Not capitalizing on data.
Digital oilfields gather vast quantities of data, but that alone doesn’t translate into delivering important actionable insights in a timely manner. In fact, too much data can impede insight. COOs tell us that one of their biggest game-changers was when they got crystal clear about their key performance indicators (KPIs) and became vigilant about monitoring their metrics. Because systems aren’t all completely integrated, they felt it was critical to invest in a data warehouse that synthesizes information into “one source of truth.” Without a data warehouse, too much time is spent seeking out, manipulating and validating the data. Once you have the right raw data, Power BI and other business analytics tools can be used to distribute data broadly in near real-time to the right people.

4. Not investing enough in modernizing.
Not only are oil and gas technology platforms aging, but its workforce is aging too. The industry faces fierce competition to attract younger workers to replace those who are retiring. This generation grew up with cell phones and computers. They expect speed, transparency and empowerment. Modernizing your technology platforms go hand-in-hand with recruiting top talent.

5. Not placing enough emphasis on customer loyalty.
What do your customers value? While the answer will vary widely, and you should ask your customers directly, three trends are emerging across all industries.

  1. Speed – Do you respond quickly? Can you get quotes out quickly? Can you dispatch a technician quickly? Tolerance for waiting has declined.
  2. Transparency – Can clients validate actual mileage and expenses? How can you prove the work was done correctly?
  3. Value and Convenience – How can you make your customers job easier?

COOs can’t leave customer loyalty to be handled by other departments. When customer loyalty becomes a core organizational guiding principle, it becomes a strategic differentiator. As an example, some oil and gas equipment manufacturers have created a new revenue stream by adding Connected Field Service capabilities, where they provide an ongoing maintenance services in return for recurring revenue. Our COOs have found innovating around customer loyalty to be a great way to combat shrinking profit margins.

Are you an Oil & Gas COO?

What’s the biggest mistake you made along the way? What do you see as problems in the industry that your peers should focus on resolving? If you’d like to talk to one of digital transformation experts about how you can avoid these mistakes, contact us. We’d be happy to chat.

Author: Travis Pullen, Customer Engagement Specialist

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