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Resistance to change, a PLM tale from Oil & Gas

4/21/2015

8 Comments

 
Recently I've been reading quite a lot regarding resistance to change both on personal level and organizational level:
Individuals don't like the unknown, it might pose a risk therefore they resist change.
The same principle seems to apply to organizations as well. 
Nobody would argue that the world is changing however. So what is driving all the changes around us?
In my view there has to be some external incentives to change. Either the changes are related to making life more comfortable
Picture
or they are a necessity to meet some external threat.

15 years ago I was part of an initiative called VisiWorld. The vision was using a PLM platform as a means to manage all data regarding a Facility from early planning through engineering, construction, operations and maintenance. Our Virtual Reality technology was used to visualize the vast amount of data through all lifecycle stages. The idea was that VisiWorld would integrate to a number of engineering and planning tools to create an information backbone where technical information could be consolidated, visualized and managed in a 3D world as well as structured data in 2D object structures.
To ensure full interoperability the data model and integrations were based on POSC/CAESAR (Later merged into ISO 15926)

The main objective was to reduce cost by making information consolidation and traceability easier, and to eliminate all the costly information handovers between EPC (Engineering Procurement and Construction) companies, product companies and ultimately Owner/Operator in capital projects. This would be achieved by working in a fully integrated environment. 

Picture
So what happened? VisiWorld never took off.

I think our project manager said it best when asked by a reporter actually months before we went under. The reporter asked: “What if this product does not become a success, what would the inscription on its tombstone be?” Our project manager thought for a while before responding: “Too much, too early”.

That was of course a sad ending to VisiWorld,  but not to this story.
I moved on to work with PLM in many different industries, but could never really forget about the concepts and ideas.

10 years later I again found myself building a “Plant/Facility Lifecycle Management” solution on top of a PLM system. It was nowhere near as ambitious as VisiWorld, but most of the concepts were there. This time the visualization engine was based on XMpLant and ISO 15926. What I found really interesting was that the ideas from 10 years before were still considered innovative and new by the industry. The oil&gas companies we approached with this solution were interested and agreed that this was the necessary way forward, but I still got the feeling that it was “Too much, too early”. 

The incentives to change were just not strong enough.

Now 15 years after our initial Facility Lifecycle Management project I find myself having helped two organizations implement some of the thoughts and concepts. Ironically, neither is in the Oil & Gas industry.

Why is that?
Change happens very slowly, unless there are very strong incentives. Those incentives have not been there before in the Oil & Gas industry. However they could very well be coming now, if the oil price stays as low as it is currently or even lower for years to come….
Other industries have been forced to change the way they act and operate due to shrinking margins and competition from others. 
Oh and when I say shrinking margins it is as in shrinking so much it means that either the company finds a better way of managing projects/products or die

Some points to ponder

Bjorn Fidjeland


Advanced Control – Drilling & Well AS has copyright to the images used in this post, but has graciously allowed me to use them.



8 Comments
Bharath Balasubramanian
4/26/2015 10:36:22 am

The article is interesting and I have to agree with the 'Too Much Too Early', at least in my part of the world(India). I hope, as you say, this changes soon enough and may very well be driven by the decreasing oil prices..

Reply
Bjorn Fidjeland
4/26/2015 01:10:31 pm

Thanks a lot for your comment. Yes I think the decreasing oil price will be a very strong incentive to take a closer look at all processes that are inefficient, time consuming and costly. From my part of the world (Norway) I've seen some EPC's starting to think along these lines to meet competition from for instance Korean yards. The added pressure from low oil prices might push it forward a bit faster.

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Jos Voskuil link
4/26/2015 04:43:26 pm

Bjorn as we discussed this topic several times and it is one of my favorite topics PLM and business change.

I think your conclusion is too optimistic. In times of lower margins still companies will not change. They will reduce costs as that is what they know to do.

A business change is an investment in the future which requires trust through the whole organization that the change will work. This will not work if the management is lead by investors that want to see short term revenue and benefits.

I believe a new generation of workforce will come who without resistance understand the power of sharing data. When the management supports and operates in the same modern mode, these companies will crush old markets - my estimation potential 10 years - max 20 years from now old businesses will be retired

Reply
Bjorn Fidjeland
4/27/2015 02:52:58 am

Hi Jos, and thank you very much for your comment.
I fear that you are right, but still, stubbornly takes a more optimistic view ;-)
However my first draft to this article contained a similar warning:

" The thesis was that the upcoming generation, the gaming generation, would not accept the user interfaces and old ways of working we had back in 2000. I’m not sure why we (I was part of that generation) were called the gaming generation, but I suspect it was because we were the first generation to grow up with computer games…. On computers like Commodore 64, Amiga and the likes of those. It still makes me chuckle when I compare that with online gaming of today. "

Then:

" So where am I going with this story?
1. The gaming generation ended up accepting the crappy tools and user interfaces as they were swallowed up in corporate culture and work procedures. I’m not at all impressed with what is used in the industry when I know what technology was available 15 years ago. Beware, this can very well happen with the next wave of “social youth’s as well”

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Juergen Voellinger
5/5/2015 04:42:13 am

Thanks a lot for sharing this article here.

Based on my experience in the IT industry, I completely share your perspective.
Unfortunately I also have to agree to Jos's comments.
Large companies who have to show excellent business results every quarter stay away from significant investments which don't provide short term business benefits.
So, the rule- too many to early- applies here as well.
Just recently we created a plan which supports a phased approach over a few years which includes 10 roll-outs.
So less change at a time and users can slowly adjust, and see the benefit or incentive of the new, integrated environment.
I'll let you know in two or three years how successful our approach was.

Bjorn Fidjeland
5/6/2015 04:57:25 am

Hi Juergen, and thank you very much for sharing your perspective.
I agree with both You and Jos that the first thing they do is to cut costs. We see that very clearly in Norwegian oil&gas industry right now. Everything centers around making the shareholders happy, but what will be interesting to see is what happens if this is a lasting down turn. Then cost cutting alone will not be enough. It has been discussed for years by some of the bigger owner/operators that we need an industrialization on the Norwegian Continental Shelf, so my hope is that the downturn might provide some strong incentives to also look at the way we work and execute projects when cost cutting programs no longer are sufficient.
Hopefully.....

On your phased approach I agree fully.
There's only one way to eat an elephant, one bite at the time. It will allow for better organizational roll out, and as you say, gives the users time to adjust and understand.

I would definitely be very grateful if you shared the results of your approach in two or three years

Reinaldo Gonzalez link
5/7/2015 01:40:10 am

Hi everybody,

Difficult to swallow but the integration is the way to go. PLM is a powerful tool, but it does not convince the Oil and Gas industry due to lack of differentiation from any other "IT/Software project" in the market (Most of them identified as failures in over budget and time schedules). The way to go is to give precise examples of cost reduction in actual currency to each major O&G company and we all see the change sooner than expected. I am not an IT expert, but I have been recently in contact with people who works systematically to find those reduction cost values.

The shortest version of the way to go is the thinking on "No Cure, No Pay" (by Tom Gilb, gilb.com).

Reply
Bjorn Fidjeland
5/17/2015 02:00:08 pm

Hi Reinaldo
I agree that from a PLM vendor perspective this is important, and I've seen some very specific examples of benefits over the years. However, PLM is in my view even more about the corporate culture, and a mindset. Without a willingness to change from a silo oriented business to a model where information is consolidated, shared and re-used, it will not help to purchase a PLM platform.

Reply



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