Are Service Platforms THE Option for Offshore O&G?By Enrique Alfredo González Huitrón | Wed, 12/30/2020 - 09:00
Throughout the history of economics, efficiency has always been a wide and blurry concept frequently included in the visions and missions of every company. The word always appears at C-suite and board meetings as a means to achieve any operational or financial objective previously set. Many corporate strategies are built around efficiency with the eternal promise to achieve it. However, there are few who have achieved efficiency, making it their business model, and even fewer who have turned it into a service by itself.
Different from a Software as a Service (SaaS) in which a software is a tangible product, efficiency is measurable but broad in its meaning. Recently, the energy and power supply industries have developed the concept of “Efficiency as a Service” (EaaS) to describe a business model in which the provider builds (at its cost) whatever infrastructure is required to supply x or y product/service and the customer pays for it based on the performance and the products/services rendered by the said framework, which must be already set and running. This model allows the customer to avoid any upfront capital expenditures and thereafter reducing its operational costs when using an all-inclusive service. This makes a lot of sense under the premise of concentrating solely on your core business activities and makes even more sense when the required infrastructure is quite expensive and has expensive OPEX, like a specialized boat or aircraft.
There is another business model called Platform Economy, which has gained a lot of fame in the last decade since the Top 5 companies in the S&P 500 (Facebook, Google, Amazon, Apple, Microsoft) are platform economies or include this model in their core businesses. So, maybe we can call the mix of these two models Efficiency as a Service Platforms (EaaSP). We have also seen startups based on this model becoming giants in no more than five years. Companies like Uber, ABNB, PayPal, Snapchat, and, of course, the first “Mexican unicorn” Kavak, have successfully transformed markets by adding high value to their respective markets providing efficiency through digitalization. The outcomes are indisputable: Using these platforms and their business models made these industries more dynamic, efficient, and profitable for all their stakeholders.
The offshore oil and gas industry, specifically the crew and cargo logistics among ports, rigs and ships working in the production fields at sea, have always been in the pursuit of efficiency but always running the huge financial and operational risks due to extremely expensive assets and cyclic crisis exposures, which have made this quest unsuccessful. Digitalization attempts have only reached some tiers by using some basic and isolated digital tools in the existing processes with poor outcomes. In many cases, big companies use robust management systems and ERP’s, sometimes integrating basic tools for procurement, administration and even bidding processes. Although some of these systems are licensed from specialized software companies (i.e. SAP), most of their software is tailor-made for the purpose, resulting in lack of flexibility, complex procedures and further need of specialized training for any person using or interacting with it. If every company that hires or provides goods or services in this sector has its own system, inefficiencies will only turn from analog to “digital,” and the friction among them will only escalate, leaving efficiency far ahead.
Due to this, Efficiency as a Service Platforms would be a real and feasible way to transact in the offshore oil and gas segment. A platform that has the customers on one hand and the suppliers on the other, could reduce frictions and make it a lot easier to quote, hire, manage, follow-up, pay and even audit a wide range of services within complete supply chains. Another beauty of this business model is that it could be multi-sided, meaning that in addition to the demand and supply of any goods or services, it would also include authorities to which most of these companies must report (maritime, air, port, coast guard). In a world in which data and real-time information are highly valuable, EaaSP could be a useful and powerful tool for the private and public sectors to add transparency, reliability and finally achieve efficiency.
In a recent poll by Lloyd’s List Maritime Intelligence Informa, maritime industry leaders made it clear that digitalization is the best investment opportunity for 2021. Most of the leaders in the poll were from international companies with presence in Europe, Middle East, Southeast Asia and some in the Americas. The Mexican offshore market, as a key player in this industry and the fifth world fleet supplying oil rigs according to the Mexican Maritime Chamber, with more than 400 vessels and naval devices operating in the Gulf of Mexico in oil Exploration and Production (E&P) activities, is unfortunately absent from the digitalization discussion. With COVID-19 as well as the oil price crisis hitting in 2020, efficiency is not only an option but an obligation for this sector; however, with the lack of financial liquidity, not many companies will be able to invest high amounts in robust software and hardware to fully digitalize their operations. Well, they do not need that anymore. They have a new and smarter alternative.
NautechMX offers a fresh vision to manage maritime and air logistics in offshore oil and gas, through a smart business model based on the Efficiency as a Service and Platform Economy, making easier the transactions among all the players and adding huge value through making the most out of data, analytics, and real-time information. Right now, this platform includes ship and helicopter operators on one side and a broad network of corporate customers on the other; soon it will include authorities and a wide range of other services required along the E&P supply chain. Digitalize, and be smart about it.