White paper. Drilling Companies. Investment

Transcription

1 White paper How Offshore Drilling Companies Realize ROI on an EAM Software Investment

2 Content Serious about serialization... 2 The importance of inventory management... 2 Cash and contract management... 3 AIM, Risk Management and Permitting... 5 Support for industry standards... 6 Usability and ease of implementation... 7 Document management and the asset lifecycle... 8 Offshore/Onshore Data Replication... 8 Conclusion... 9 About IFS... 12

3 How Offshore Drilling Companies Realize ROI on an EAM Software Investment By Patrick Zirnhelt Director for Energy and Asset Management IFS North America The offshore industry is struggling right now to deal with growth and an increased focus on asset integrity management (AIM) and risk management. That is why more rig owners and operators are reassessing their investments in enterprise asset manage ment (EAM) software to ensure they have applications in place that are properly implemented and functional, help them ensure compliance with regulations and adopt AIM best practices. But simply licensing an EAM software application is not enough. Care must be taken to ensure that the enterprise software selected can meet the unique demands of the industry. A quality, thoughtful, implementation is also required to ensure a return on investment (ROI) on EAM software. In this whitepaper, we will discuss the EAM software features that can play a role in software project ROI for drilling contractors as well as specific, discrete steps to take during implementation. We will draw on our experiences with the offshore drilling industry across the world, which have taught us that the following concerns ought to be addressed by EAM software in this industry: Serialization Inventory Management Cash and Contract Management AIM and Risk Management Support for Industry Standards Document Management for the Asset Lifecycle Usability and Ease of Implementation Offshore/Onshore Replication 1

4 Serious about serialization Traceability and equipment histories are important in any number of industries where asset integrity is critical. IFS got its start in the nuclear power industry, and has dominant positions in aerospace and defense as well as oil and gas. These industries have in common the regulatory and frankly common sense requirement to track individual pieces of equipment over their lifespans at a very granular level. As each one is deployed, a comprehensive record of service, repair, overhaul and other work performed upon it is necessary. Oftentimes the origin of parts, how long they have been on the shelf and even the materials they are made of must be in the record. This requires the equipment be issued a serial number that the various work orders and project documents can be attached to. Consider the level of documentation that is required for a key component like a blowout preventer (BOP). Imagine that BOP being deployed on a rig for eight months before being moved to shore based storage. A year later, if it is redeployed on another rig, managers must be able to see the traceability/serialization record of that BOP. It is crucial that before the BOP goes into operation, there be a full history of inspections, work history, transport orders, preventive maintenance orders and even parts replaced over its lifecycle. Only then can management make intelligent decisions on the actual level of asset integrity of assets in the field. And that, all by itself, can contribute to ROI from the standpoint of risk management. The importance of inventory management EAM is a broad and sometimes all-encompassing enterprise software option, and this is how it differs from software that only handles maintenance tasks and work orders. Selecting EAM that offers strong functionality beyond maintenance specifically in the area of advanced inventory management will drive more rapid ROI on the software investment. EAM with strong purchasing functionality can help an offshore drilling platform owner improve procurement processes and strike a balance between having excess safety stock on the rig and experiencing downtime when a part is needed but not available. An EAM application that is a good fit for the offshore industry will offer a streamlined workflow for purchase orders that allows for spare part stock level optimization. Establishing this balance is critical when considering the isolated nature of drilling rigs and vessels, which would tend to indicate that more stock is better than less. Conversely, the physical real estate to keep spare parts is limited, and as is the case with inventory in any business environment, too much inventory ties up operating capital that could be used to address other priorities in the organization. Herein lies the inventory management challenge of the offshore industry. 2

5 One factor of inventory management that is important for the offshore industry is the ability to share inventory across multiple locations in a given region. Whether it is the Gulf of Mexico or the North Sea, platform operators and owners are often involved with multiple drilling projects in a region. This really amounts to a multisite arrangement, which some EAM applications can handle more easily than others. It also requires a unique master ID for part identification. If each location is using a different language to refer to parts, true visibility and effectiveness is compromised. EAM for this industry must include standardized part ID, and IFS has been on the forefront of identifying a universal standard. Why is this important from an EAM standpoint? Because it allows management to reduce the ongoing investment required to manage the asset. If you look at a fleet of ships or jack-up drilling rigs, there might be 100,000 different parts or objects in that asset environment. You might have 50,000 different spare parts in your inventory and all of these are named in a very localized way. That is because the part naming convention was likely developed on each shorebase or rig over a period of years, and the problem may be a lot worse if the company has grown by acquisition a common thing in the drilling industry. Therefore, it is impossible to know that a motor in company A, called Alpha, is the same motor as company B is storing under the name Beta. With enterprise part standardization, you can suddenly start to treat stock levels at different sites with a higher degree of transparency because you understand that this motor is stored in all of the five sites in your group. And the expected level that you need to have on the shelf is maybe 0.2 of this motor, which means you need to store at least one. But if you suddenly treat these five sites as one common unit with different inventory locations for this motor, you would in theory be able to store just one motor to service all five sites and you would still be able to ensure coverage. Standard EAM packages will have some inventory management functionality, but EAM truly designed for the offshore industry will offer full supply chain, logistics and purchasing all the way through to fulfillment. This offers vastly superior inventory control and makes for easier integrations to a financial package, if the EAM package is implemented without its own financials. Once inventory is received on a rig, EAM software for the offshore industry must also be configured to deal with the logistics including all manifests necessary to transfer the containers and other load carriers with equipment and spare parts on- and offshore. This will result in reduced cost for shipping and reduced downtime, increasing ROI from an EAM project. Cash and contract management Potentially reducing cash tied up in parts is one way the EAM can deliver an ROI for the drilling industry. But real-time cash management in general ought to be a top priority. Even when an asset is delivering a positive return in the intermediate term, 3

6 business still operates on a month-by-month, quarter-by-quarter basis. Real-time information on what it costs to operate an individual offshore asset or an entire fleet allows an executive to manage the present rather than adjust for the past. A significant portion of the variable cost of offshore operations consists of the cost of contracts for supporting services and materials. EAM that is truly optimized for the offshore industry will take this into consideration and offer integrated contract management. Cash outlays necessary under each contract will be planned as the contract is finalized so cash flow decisions can be made accordingly. This can be the difference between a profitable quarter and a quarter in the red. EAM for the offshore industry must offer the ability to open portals to suppliers like engineering firms and maintenance contractors. As you plan maintenance work for the weeks ahead, if your contractors have visibility of your plans through your EAM system, they can be informed of the upcoming work, schedule their people and ensure that they have the right tools and materials available. If they are seeing that rolling schedule, they can be more responsive to your needs. This also reduces the amount of time necessary to manage those outside contractors by phone and . The lifecycle of a contract with a supplier should be encompassed entirely within the EAM application, starting with call for bids on the project, acceptance of the bid and then the projected cash outlays and associated work performed by the contractor. This has benefits far beyond cash and contract management. Moreover, if the contractor can report their work activities directly into your system, you are getting real-time updates of work completed. That eliminates the delay that results when the contractor enters the data in their own system, and the data flows through reporting mechanisms within that contractor environment and back to the maintenance team, which then has to enter that record of work back into the EAM, enterprise resources planning (ERP) or computerized maintenance management (CMMS) software. That repeated entry is wasteful and increases the likelihood of mistakes. Real-time data can also allow for tighter coordination between the contractor and internal maintenance staff or with other contractors working on that asset. Moreover, that real time data could allow for more efficient use of the asset, as in the resumption of a production schedule immediately after a contractor finishes work. It can also give management notification of when various milestones in a contracted project are completed milestones that may constitute liquidity events where the contractor is paid. The ability to track these liquidity events is crucial from a cash management standpoint, and contributes to ROI. Truly effective contract management is one way EAM can deliver to a company in the offshore industry a consistent view of all asset information one version of the truth insuring policies, plans, and actions are based on an accurate understanding of the history and current status of your asset infrastructure. In order to accomplish this, an EAM software product must actually address all phases of the asset lifecycle, 4

7 and not many do. It must also provide portals or other methods for outside parties like engineering firms and maintenance contractors to use the system so that everyone touching that asset data is interacting with a single database in real time. AIM, Risk Management and Permitting That one version of the truth particularly as it relates to the centralization of data about the asset is another way that EAM software can deliver ROI to drilling contractors. AIM is important to any company that relies on heavy assets to achieve business results, but for the offshore drilling industry, where asset failure has an impact far beyond business productivity, it is positively critical. Drilling contractors and rig owners can experience asset failures when they make decisions without complete visibility of the condition, status or current configuration of their assets. Most managers instinctively know that an as-designed drawing of an asset is different than the as-built drawing. Changes are made during construction, and those changes need to be reflected in the asset management system. An EAM software application for the offshore industry should ideally be used to support asset design and construction, enabling the asset data to flow directly into the systems that will be used to sustain, maintain and operate the asset. This approach, known as Design, Operate, Maintain, really involves a single asset management system that supports the asset over its entire lifecycle, cradle to grave. asset lifecycle management ASSET LIFECYCLE MANAGEMENT 5

8 The contract management tools referred to in the section above have a role in true cradle to grave support because they ensure that the same enterprise system and data set is used regardless of who is making alterations to the asset. This means that at any given time, management has direct visibility into whether the sub who performed work for the engineering, procurement, construction contractor in fact used the correct flexible jumpers as specified in the plan, whether maintenance contractors have altered the specification of equipment as constructed or whether internal technicians have in fact performed the pressure test on the BOP every 14 days. EAM software for the offshore industry must also include configured workbenches for the offshore drilling industry with integrated permit and incident tracking built into the work order system. For a typical maintenance technician, this level of integration expedites the work that needs to be done and pulls information directly from the EAM system that is necessary to complete the permit. Many EAM applications might not have such a tightly integrated permitting process, forcing technicians to take the time to use a separate system and creating a silo of data that is not reflected in your enterprise application. Furthermore someone may forget to get that permit go into an enclosed area where there may have been a gas leak that was already reported. That is one way people can get injured or killed, and eliminating problems like that is certainly one more way EAM software can deliver ROI. Indeed, more companies in the industry are realizing that in today s environment, drilling without a truly effective EAM application that can document their main tenance activities and give them full visibility of the asset is just not responsible. Support for industry standards In an industry where asset failures can have safety and environmental implications, the amount of pressure to document compliance to safety standards is expected to increase. The most rigorous of these standards is NORSOK, which was developed by the Norwegian petroleum industry to ensure adequate safety and cost-effective operations in the petroleum industry. NORSOK was based on the ISO standard for the petroleum and natural gas industries. The standards are created and published by OLF (The Norwegian Oil Industry Association), TBL (Federation of Norwegian Manufacturing Industries) and NTS (Norwegian Technology Center). So from a compliance standpoint, support for NORSOK ought to be seen as a gold standard that is to be sought after in EAM software for the offshore drilling industry. The extent to which an EAM application offers a NORSOK compliance function ought to be key selection criteria. Across all asset-intensive industries, another standard that is being taken seriously by more and more stakeholders is PAS-55 and the associated ISO This standard is specifically intended to cover the lifecycle of assets and in particular assets that are mission critical to the organization. 6

9 While the specification is really about harmonizing organizational mission/goals with your asset management policies, business processes, and best practices, PAS-55 does contain some direct and indirect requirements for EAM software. In Section 4.1, for instance, the specification states that organizations must establish, document, implement, maintain, and continually improve their asset management system. While this requirement is not designed to address software systems directly, it does have implications for the software used to manage internal and outsourced activities having to do with the assets. So what the standard really does is require full cradle-to-grave asset management software, which is important for other reasons relating to asset integrity management in the offshore industry. The ability to use your EAM application to demonstrate to stockholders, regulators, risk managers and management that you are in compliance with standards like NORSOK and PAS-55 is one more way EAM can drive ROI in the offshore industry. Usability and ease of implementation In the offshore oil and gas industry as well as other industries, technicians and other front line employees will not use a system that is confusing or presents functional barriers to their individual jobs. And there is no way that anyone can use a system until it has been implemented, so EAM software products that have a history of years-long or failed implementations are to be avoided. In many manufacturing environments, EAM software is a secondary or tertiary priority. In the offshore industry, it is a top priority because you cannot operate assets in a mission-critical environment without absolute control over asset integrity. In this industry, tracking maintenance work is not only about cost or even maximizing asset profitability. You need to be able to mitigate risks by preventing asset failures that could cost lives or cause environmental impacts. Maintenance is critical, and ensuring that the system used to manage and record maintenance work is just as critical. If it is too convoluted and byzantine, maintenance technicians will not use it, which will present challenges as you will not have visibility into the state of the asset and may not complete essential scheduled maintenance projects. For the drilling industry, an EAM application that allows a phased approach to implementation may be ideal. There are mission critical elements like work orders, document management to track the specifications of the asset as it is maintained and inventory that can be implemented immediately, allowing safe asset operation. Once that functionality is familiar and absorbed by the operation, additional functionality including permitting, health and safety and even full-blown reliability centered maintenance (RCM) functionality can be implemented. Implementation and usability are both potential barriers to a drilling contractor to realize ROI on an EAM software investment. 7

10 Document management and the asset lifecycle For any number of reasons, including standards compliance and risk management, it is critical to have all of your asset data in a single repository. EAM software for the offshore industry needs to have integrated document management so as assets are set up in the system, all of the relevant CAD drawings, contracts, maintenance schedules, testing reports and other documents are stored in a central repository. These individual documents must also be linked to the asset object in the EAM system, which frankly not every EAM application will be capable of. In a perfect EAM world, as new drill ships or other assets are commissioned, a drilling company would be able to take the CAD serialized assets from the builder and pull them directly into their own EAM and document management system. Some EAM packages may be able to import the asset data, but lack the hooks into CAD and 3D CAD systems necessary to fully build those assets out into the system. This allows the EAM application to be the repository for all asset information over the asset lifecycle. Without that CAD integration, there is still a separate silo for a lot of key asset data that will hamper visibility and decision making. This really is not in the true spirit of asset lifecycle management, which would keep all asset information together in an organized asset structure. So apart from ensuring adequate AIM and compliance measures are in place, integrated document management delivers an ROI by reducing the time it takes to find, manage and update documents relating to the asset. Offshore/Onshore Data Replication Any enterprise with multiple locations can benefit from an enterprise solution that can run all of the locations, divisions or subsidiaries on a single database and a single installation of the software. In the offshore industry, this is still important, but achieving this goal is more difficult given the great distances involved and the unstable nature of satellite communications between drilling platforms or ships and a corporate office. That is why EAM vendors with a focus on the offshore industry offer a built-in data replication solution. While many offshore operators may run software that relies on a third party replication solution, EAM software with its own offshore replication functionality offers ROI benefits originating from both reduced cost and increased utility. Replication involves one or more application databases onshore and one application database located on each offshore vessel or oil rig. Each vessel will be represented in the enterprise environment in the enterprise application data onshore and within enterprise application data on the vessel itself. Replication will keep business critical and transactional data at these sites more or less identical. 8

11 When the EAM vendor themselves offers the replication functionality, it is much easier for that data to be replicated at the application level instead of directly within the database. This means that data exchanged between systems goes through the data integrity controls built into the software. Replication generally supports basic data like parts and suppliers, but other types of basic data may be defined for replication as well. At a minimum, bidirectional replication of purchase requisitions and order arrival data and onshore-to-vessel replication of purchase orders is required. Relocation of parts can also be covered, including relocation within a site (moving parts from one location on the vessel to another location on the vessel), between vessels and from shore to vessel. Serial structures like BOPs can be relocated like other parts, and a replication solution will need to support relocation of such structures. InQueue InQueue Onshore db OutQueue (1 per vessel) Satcom OutQueue Vessel Message log Most data replication functionality focuses on transactional data rather than data objects because CAD drawings and other documents can be quite large. But the transactional data itself must in fact be replicated, and EAM software with built-in replication functionality will offer greater data integrity and cost less to license and implement than a third party solution that must be configured, integrated and then tested, hence, increasing ROI. 9

12 Conclusion The offshore industry is perhaps the single most demanding environment for assets and asset management software. Exposure to the elements, the remote nature of drilling equipment, limited space, a volatile project-oriented environment and risk management concerns all need to be addressed by EAM. The right EAM application can, however, meet the needs of companies in this space, reducing cost, increasing productivity and mitigating risk. We hope this whitepaper has started you down the path to identifying, selecting and implementing the EAM application that is right for your offshore drilling organization. Patrick Zirnhelt is the director of sales for asset-intensive industries for IFS North America. He has almost 20 years of experience working with enterprise systems, which includes software development, implementation and sales. He is a professional engineer registered in Ontario and holds an MBA specializing in management information systems from the York University Schulich School of Business in Toronto and a B.S. degree in mechanical engineering from Queens University, Kingston, Ontario. Learn more about IFS here: 10

13 About IFS IFS is a public company (OMX STO: IFS) founded in 1983 that develops, supplies, and implements IFS Applications, a component-based extended ERP suite built on SOA technology. IFS focuses on agile businesses where any of four core processes are strategic: service & asset management, manufacturing, supply chain and projects. The company has more than 2,000 customers and is present in 50+ countries with 2,800 employees in total. More details can be found at For further information, to info@ifsworld.com Americas Argentina, Brazil, Canada, Mexico, United States Asia Pacific Australia, Indonesia, Japan, Malaysia, new Zealand, Philippines, PR China, Singapore, Thailand Europe east and central asia BALKANS, Czech Republic, GEORGIA, Hungary, Israel, KAZAKHSTAN, Poland, RUSSIA and cis, Slovakia, Turkey, UKRAINE Europe Central AUSTRIA, Belgium, GERMANY, ITALY, netherlands, SWITZERLAND Europe West France, Ireland, Portugal, Spain, United Kingdom Middle East and africa India, South Africa, Sri Lanka, United Arab Emirates Nordic Denmark, Norway, Sweden Finland and the Baltic area Estonia, Finland, Latvia, Lithuania This document may contain statements of possible future functionality for IFS software products and technology. Such statements of future functionality are for information purposes only and should not be interpreted as any commitment or representation. IFS and all IFS product names are trademarks of IFS. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. IFS AB 2013 En Production: IFS Corporate Marketing, January 2013.