Is it Essential to Change the way we buy Digital Oilfield Capabilities to get the Benefits we Want?  How do these Capabilities affect Relationships with Service Providers?

A R Edwards, M C Popham (BAE Systems)

Abstract

Many benefits of Digital Oilfield (DOF) initiatives come from improved organisational integration.  To date, much emphasis has been placed on integrating different functions within a company. However, experience from the defence sector suggests that significant gains can be realised by integrating across the supply chain. In this paper, we look at how these benefits were captured in defence and explore how this knowledge can be utilised in DOF improvement programmes. We also demonstrate that procurement models encouraging organisational integration proved essential to deliver Network Enabled Capability (NEC), the Defence sector equivalent of DOF.

Areas examined include: –

– What different procurement methods were adopted to deliver NEC initiatives? Why were these novel approaches required? How did they affect the capabilities that were delivered?

– What business models are being used in defence which are not seen in Upstream Oil & Gas? Are these models likely to succeed in our industry? Examples explored include “Contracting for Availability?? and “Through Life Capability Management??, where customers are guaranteed specific outcomes and benefits over many years for a fixed, known whole life cost.

– How do the roles and responsibilities of customer, Systems Integrator and supply chain vary in different business models? Who benefits in each scenario?

– How does the availability of real time data between customers and suppliers change the way we procure capabilities and services?

– What are the benefits of partnering with the supply chain?

– The criticality of building relationships of trust and mutual benefit between customer and supplier. When a customer becomes critically dependent on a service, how does this relationship evolve?

– Balancing long term benefits of coordinated procurement with short term delivery needs.

The paper concludes by exploring to what extent a similar story is unfolding with DOF and asking how can defence experience be leveraged?

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