Integrated Operations (IO) is a way to optimize operations developed by the Oil and Gas. It aims is to integrate:
- People from various backgrounds and experience levels
- Work processes
- Information and communication systems
This is done through collaborative work platforms (CSW), which substantially transform the traditional systems of management and control.
The benefits of this triple integration:
- Direct savings of between 15% and 40% in operations
- At least two breakthrough innovations a year
- Significant reduction of industrial accidents and environmental hazards
- Increase both the qualifications of the people and the level of applied knowledge of the organization
- Adjusted and multifunctional workforce • Substantial increase of the in the ratio value provided/cost by worker
- Risk sharing with suppliers in exchange for partnership relations
- Lower IT costs. Reducing dependence on key systems (SAP, Windows)
- Substantial reduction in training costs by intensive knowledge management
- Intensive use of 3D and 4D simulations: reduction of accidents and training costs
As you can see the benefits are very large. This system was created by innovative and open companies as StatoilHydro in Norway in order to connect onshore and offshore work. It is not surprising, given its success, that it extends to both vertical and closed companies like Haliburton. And even to other industries with complex operations such as electricity (classical, nuclear and renewable), aerospace, chemical and defense.
The impact of people
Roland Knopp, CSW responsible for Shell, said during the IO Congress 2009, that at IO the impact on business results of employees is 80%. This far exceeds the impact of approximately one third that has the employee contribution in so-called knowledge industries such as ICT, biotechnology, consulting and shared services.
This means, of every dollar saved by IO, 80 cents are rooted in work with people. While every of euro saved in shared services, only 33% is due to work with people; 66% is owed to systems and processes. What has changed? Basically that between 1995 and 2005 the weight and cost of technology (ERP, Web) was much higher and that this created new and more efficient processes. Today, business processes are long ago reengineered, while technology isabundant and cheaper than a couple of years ago.
ValueCreation in the IO conference 2009
ValueCreation went to the IOCongress 2009 held in Trondheim (Norway) during the last week of September 2009 invited by Vidar Hepsø, one of the head researchers at the R & D Center of StatoilHydro and conference organizer.
We went with great curiosity, but also with some skepticism to the congress. We wondered what we could learn from something as that seemed so technical and focused on oil operations. We feared, being a small and new company, we could be a little out of place among global players. Neither knew we what role to play if we were asked for our business by “thos big guys”.
For ValueCreation it was the best decision to be in Trondheim. First we learned a lot about using technology to innovate in a collaborative way with people. We returned from the trip full of ideas to shake our customers.
But above all, if the expression is allowed, it was like “coming home”. In some ways it was like that, because many of ValueCreation’s approaches and methods (including the name) come from Norwegian Action Research programs.
We met large and serious global players, which ease ‘command and control’ and thus become more efficient and innovative. The key? and breaking down corporate silos ando work in collaborative environments with people. We have seen how they apply anthropology (Vidar Hepsø himself is an anthropologist), open innovation and systems thinking in a positive, interested and systematic way.
ValueCreation has seen how stock market oil companies, which are supposed to be the heart of the capitalist system, value the contribution of people at 80% of their success; and it looks as if their daily activities and investments, at least in the field IO, do not contradict their discourse.
Everyone understood the ValueCreation message without demanding explanations; they have been working that way for the past 15 years. Nobody asked for a proof if our projects work or for many examples: they already have more than enough of them in their day to day.
Several companies want to know more and want to explore opportunities. Nobody looks with irony or with a sense of superiority when they learn about your size: they are used to work with supplier networks and offer fair prices if you share the responsibility and risk. It was nice to meet potential partners who can offer services similar to ours in large projects.
In short, it has been a journey that has shown us that the way we started in 2008 matches the way industries will have to work if they want to survive in the near future. Businesses that pay their employees to fulfill their tasks and to meet or overcome their objectives are losing money. Those that succeed, by making their employees innovate and improve in a breakthrough way, will actually save money and add real economic value (value creation) to work.