By Alan Marshall, Michael Rouse & Yaroslav Volkov
IT GOES without saying that LNG operations are complex – and arguably more complex than most other natural resource extraction and energy businesses.
This complexity is multi-faceted – from coordinating massive major capital projects that often make headlines and are characterised as ‘the biggest ever’ or ‘the first of its kind’, to the sheer complexity of engineering required to lift natural gas from under the sea, and managing health and safety in construction and operations.
Running an operation as complex as this requires full command over the organisation’s information, from every department and division, at various levels of detail and based on at different time horizons.
This is what business intelligence (BI) is all about – extracting, integrating and making sense of raw data and turn it into information and, ultimately, actionable insight.
BI is above and beyond reporting (the kind produced by human resources or operational systems). More accurately, it’s not just about reporting – it’s about using technology, processes and people to bring together information that supports management decisions and gives a business a competitive advantage.
The question then is: How does an LNG business address its BI needs?
Technology in itself is not an issue. Multiple software and hardware tools serve just about any integration, reporting, analysis and data visualisation needs an organisation may have. The challenge is where to begin? Or, as a BI professional might say, how does one slice and dice a BI implementation program?
One approach is to build business intelligence along functional or departmental lines. This might involve starting by developing HR reports and dashboards, proceeding to integrating finance data, moving on to operations, and so on. Another solution is to take a slice by geography or location.
But the problem with these approaches is that they are prone to creating silos. The real power of BI is in integrating data for insight. A ‘Cost to Produce $/BOE’ KPI is much more powerful than a ‘Total OPEX’ KPI, but the former requires the ability to integrate financials with production figures across all locations.
Looking at the LNG value production chain might offer a better solution – one that would create an integrated view of the enterprise while tying it to the core business of the organisation. We call this the asset-centric approach to BI.
With this approach, aligning design, development and ongoing enhancement of reporting and analytics to key engineering assets in the production chain helps make BI real to stakeholders and keeps efforts focused.
For green field LNG operations this approach offers a natural way to prioritise BI development efforts – simply align the BI roadmap to the project roadmap, ensuring reports and analytics required to support asset operations are available at asset go-live.
This might involve starting with on-shore LNG facilities, moving on to floating production, storage and off loading (FPSO) and other offshore assets, and so on.
For established operations looking to build out BI capability, the sequencing might reflect asset criticality or the organisation’s perceived ‘information blind spot’ areas.
Developing reports, dashboards and analytics for each asset inherently requires integration – an LNG plant summary report needs to combine production, HR, and HSE data to support plant manager’s decision making. Then, as common information and data assets are developed and brought onto the integrated BI platform, they can be re-used and built upon as the scope of BI broadens to include the rest of the production chain.
Understand core business to design effective BI
Good business intelligence solutions respond to users’ information needs – what data, measures and KPIs does a business stakeholder look at before making a decision?
Many organisations start their BI projects by developing KPI trees and frameworks. Too often this exercise is seen by the business as an unnecessarily rigid, scientific approach to getting to something quite simple at its core?
With the asset-centric approach, there are three key steps to developing effective BI which may offer an alternative to the KPI-based process:
-First, understand the nature of the asset and its key operational drivers. For example, for an LNG plant, cost per British Thermal Unit and plant efficiency are major gauges of performance.
-Second, understand the operational model and organisational structure required to run the asset.
-Third, understand information needs at each level in the organisational structure based on decisions made and challenges faced.
Following this simple framework allows an organisation to design business intelligence solutions that resonate with the users and ultimately have a better chance of achieving the ‘holy grail of BI’ – generating real insight that deliver competitive advantage.
Based in Melbourne, Michael Rouse is a Deloitte Consulting partner.
Deloitte Consulting partner Alan Marshall and Consulting Manager Yaroslav Volkov are both based in Perth.