Over the past few weeks, we’ve covered six key sins that otherwise well run oilfield service companies commit again and again. We’ve discussed:
- Lack of sales process
- Asset underutilization
- Item mismanagement
- Poor billing practices
- Lack of internal financial controls
- Management by crisis
And now, just before the holiday break we’re going to cover the seventh and final sin – which in our experience has proven to be just as critical as the first six.
The 7th Deadly Sin: Disparate Systems
Some companies use multiple software systems that require multiple entry of the same information. Very often, these companies run on a combination of paper, Excel®, a desktop accounting system and potentially a homegrown database of parts and equipment. There is no central repository for information and no single point of data entry.
Almost every company VistaVu has worked with has a combination of paper, excel®, some desktop accounting system and potentially a home-grown database of parts and equipment. It’s a recipe for confusion and potential disaster.
In a company’s early years, it’s possible to manage reasonably well with disparate systems. Jory Lamb, President & CEO of Vistavu recalls working with a client to get their management system up and running. Lamb says "It wasn’t easy and the front-end staff didn’t embrace or enjoy the change. But the owner persevered and the system went live."
Jory remembers walking into that same client about three months later and on the administrator’s desk was plaque and it read “If it looks like I’m not doing anything, it’s because I did it right the first time.”
Why are disparate systems a sin?
#1: Because it causes extra effort and has the potential for errors.
#2: Because searching for information is a poor use of management time.
#3: No one wants a business that’s inside your head – no documentation is risky.
Having mix-and-match systems can cost Energy Services companies in a variety of ways. Companies with poor documentation and disparate systems lose bids because they can’t provide proper records of their success stories. They can’t fix problems and errors occur in billing and ordering. Finally, no documentation means no exit strategy for the owners.
“For larger companies subject to Sarbanes-Oxley compliance, there is also no control or auditability on the transfer of the information from one system to another,” says Lamb. “Spreadsheets get overwritten, paper gets lost and nothing talks to the accounting system.”
