Oil price roller-coaster ride presages change for industry professionals, including attitudes toward information technology After rising in the last six months to near $150 a barrel, the price of oil by mid-October has fallen below $70 a barrel, for the first time in 16 months. While recent news coverage has pointed to declining oil prices as the one “bright spot” for American consumers in fear of the tightening grip of recession, for oil industry professionals the picture is not near so clear. “The precipitous drop undermines the elusive quest for stability that both oil producers and petroleum executives say they need to invest over the long term,” wrote Jad Mouawad recently in the International Herald Tribune. What’s clear is that the petroleum industry here in the US can’t afford another price collapse induced shake-out like that of the 1980s. Besides delaying investments that will need to percolate three to five years before delivering value, a severe contraction might have a human cost even more difficult to recover from. Facing these challenges also may lead to a fundamental shift in the industry’s attitude toward information technology. Already, the petroleum industry in the US suffers from a fairly severe shortage of qualified professionals. Commonly referred to as the “skills gap,” it features a generation of older managers having vast experience, but who must eventually retire from the global stage upon which they’ve spent their honorable careers. Recently, and to now, many of them have been kept active by deals they couldn’t refuse. Perversely, it’s possible to theorize that the power of these highly recruited individuals to influence decision making – and especially decision execution – is what’s keeping the petroleum industry from pervasively adopting the kinds of performance management systems used elsewhere to address skills shortages. While measuring the impact of these systems on productivity is complex, they do seem to have positive impacts on performance in utilities, manufacturing, chemical, and other industries, primarily by providing software support to highly skilled and trained individuals. Too often in the petroleum industries, these enterprise systems are seen as the pet projects of executive-suite and boardroom dwelling individuals out of touch with production realities, and as expending precious capital that could be devoted directly to, for example, well or field remediation. So it’s not surprising to hear that IT projects struggle to gain user acceptance, or that Excel remains the number-one management tool. Any social psychologist will tell you that management decrees are all well and good, but peer pressure will always be the greatest determinant of behavior. So when IT vendors say, as they often do, that the next generation of petroleum industry professionals expect to be fully equipped with the latest software tools, to some extent they’re being disingenuous. It’s not that the present generation of professionals is technology-adverse or even agnostic; many of them hold advanced engineering degrees. Perhaps enterprise system deployment has been slowed because this present generation of professionals is so highly sought after that they retain the power to push back on attempts to implement systems perceived as having the potential to impinge on their relative autonomy. Any IT professional will tell you, however, that the time to bring in new systems is when work is slow, and regardless of the reason, IT will be used more and more pervasively, to reduce labor costs, improve productivity, and to the extent possible, hedge against the roller coaster ride in petroleum prices. Let me know what you think: Are attitudes toward IT different in the petroleum industry than in others? And if so, why?
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