Oil prices are a far cry from what they were a year ago. Alberta’s unemployment rate surpassed the national average for the first time in two decades, and costs are being cut everywhere. So why are oil and gas firms in Alberta choosing to spend on software projects? It seems counter-intuitive. To understand, we have to go back to when times were a little less tough.
Let’s Hit Rewind
Until lately, oil prices have been quite agreeable. With the exception of the great recession, times have been good. Oil & gas firms were growing, and costs weren’t necessarily being tightly controlled. As a software provider, the Oil & Gas industry has been a very lucrative segment to be involved in.
Large budgets meant that Oil & Gas firms were paying big capital for big software projects, and why shouldn’t they? Large systems are objectively more functional than smaller systems, and they score well in feature-function evaluations. At the time, they were what was needed to be competitive.
But these big systems had one flaw: they cost a mint to support. We’re talking multiple employees, in-house or outsourced, earning somewhere in the neighbourhood of six figures each. In addition, this software was bound to age like any other system. I think you can see where I’m going with this.
So what happens when it’s time to cut costs? That big, expensive-to-support system starts to look like a good target. And that’s what we’ve been seeing. Deloitte has noted that oil & gas companies are now in the “acceptance” stage of grief, and that the prevalent attitude is: “I guess we’d better prepare to ride this out for as long as it takes”. With that sort of outlook, a lean capital project that saves operating expenses well into the future (i.e. replacing those old software systems with something more sustainable) is starting to look like a good idea.
So, What Kind of Software is Being Implemented?
Oil & Gas companies are finding sanctuary in two places: (1) the cloud, and (2) CRM. Faced with a choice between high support and infrastructure costs (current picture on-premise) vs predictable and scalable cloud pricing, the cloud is winning out when it comes to hosting options. And Microsoft Dynamics CRM has turned out to be an excellent system for oil & gas firms to consolidate operations in areas such as health/safety management and field service. That’s not to mention the fact that Dynamics CRM is relatively affordable to implement and to support.
Now is the time to find efficiencies in the Oil & Gas industry. We’re starting to see Oil & Gas companies becoming leaner and stronger, and ready to take full advantage of any opportunities that come their way in the future. Likewise, Encore has learned a lot from this downturn; from ensuring quick ROI to making sure projects are completed as efficiently as possible.
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