Technology and process optimization are critical - but don't overlook the importance of the people
I was fortunate enough to be invited to speak about Business Intelligence at the 2nd Energy Process Excellence Conference in Aberdeen, Scotland. The two days were an excellent opportunity to meet with technology vendors, training organisations, businesses working in the energy sector and more importantly to hear some great speakers (myself included)! There was a clear theme to the conference around embracing business transformation and improvement by using continuous improvement tools and technology to drive better utilisation of resource, delivery of higher quality outcomes and improved data management.
Bjarte Bogsnes, Vice President Performance Management Development of Statoil kicked off the conference with a really thought provoking presentation on 'Beyond Budgeting'. Statoil have adopted an approach to budget management that challenges traditional thinking. Bjarte made an interesting comparison between X and Y management / leadership styles and its links to the control of the budgeting process:
- X - Represented a style of rigid, detailed, rules based, micro management, centralised command & control, secrecy and sticks & carrots approach.
- Y - Represented a style of values based, autonomy, transparency and internal motivation approach.
By making a shift in the business towards the Y style approach businesses are then in a much stronger position to move towards a world where traditional budgets are no longer set on an annual basis, constrained by calendar years with tight controls and checks in place. They are reviewed on an ongoing basis with elements such as forecasts based upon expected outcomes rather than figures needed to achieve a set turnover.
One example used demonstrated the power of transparency as a tool to bring about self regulation without the need of rigid controls. In this example the transparency of individuals travel expenses was used within the company to drive down the overall costs. This was achieved without the need of rigorous checks and validations in place.
As the values of the employees in the business were right, the visibility of the costs empowered people to take action and do the right thing for themselves. Many of the concepts explained within Beyond Budget (www.brt.org) seem like common sense and the question came to my mind was 'Why aren't we doing this already?'
I think the answer probably be 'We've always done it this way?'
SAS presented an interesting outlook on the importance of integrated planning processes to become the Operator of the Future. Frank Mollerop, Vice President of Global Oil & Gas Practice at SAS shared a wealth of knowledge and experience from within the energy sector, where a quote he made stuck with me:
"Today most work is done after it should have been done and that removes all chances of optimisation".
I was interested to hear some of the challenges the industry faces and thought how these are likely to be prevalent in many other sectors:
- Fragmented plans
- Inconsistent plans
- Sub optimisation
I was amazed to learn about the system integration project SAS had completed for one of their clients where over a two month period they were able to integrate 80+ data sources. The data integration project delivered one single plan of activity for their client, within a single data set, displayed in a single reporting tool. Consolidation of data into a single set enabled historical analysis of programme performance across all areas of the business. Subsequently by creating a prediction model based upon this historic data changes future plans were adjusted accordingly to make a 20% production efficiency increase.
Finally it was great to hear the innovative approaches to business improvement being adopted during decommissioning activity at the Sellafield Capenhurst site. By taking a proactive approach to learning from other industries such as the petrochemical and automotive to find new ways and tools to make efficiency savings significant improvements were made in time, cost and safety.
Craig Brannigan, Head of Business Improvement said the key leaning for him was:
"Go and see! Learn from other organisations"
Going away from the conference I was left with the final thought that you must include the people in your initiatives. You can only achieve success with senior management buy-in!