Tech Talk: Energy Co. Gains Efficiency with BPM

By Elizabeth Wasserman

A Canadian oil and natural gas company found it could streamline time sheets processing and operating expense accrual with the help of business process management software.

Harvest Energy, a Calgary-based integrated oil and gas company, was hampered by manual time sheet processing for employees when it switched last year to an automated solution. The labor and time savings that resulted convinced the company to deploy a second automation process in operating expense accrual, Darryle Hawkings, IT manager, tells IncTechnology.

Elizabeth Wasserman: What has your experience been with business process management solutions?

Darryle Hawkings: The first process we actually started with was a timesheet/attendance tracking system for employees in January 2007 using Ultimus' BPM solution. It replaced a paper-based system that we had in place. It was taking us a month or two months to collect simple timesheets tracking employee attendance, vacation days, and sick days. First, employees would fill in their days. Then it would go to a manager to sign off on it. Then it would go to HR. HR would make sure it was filled in and approved and then they would record it manually into their HR system. It wasn't a timely system. If anyone wanted to know their vacation balance they had to contact HR and HR had to track it down.  This was a very inefficient process.

Wasserman: What were your results?

Hawkings: It's been really, really positive. Now it takes us less than two weeks to go through the whole cycle. It doesn't take any tracking. Nothing ever gets lost in the process.

Wasserman: What project did you move to next?

Hawkings: After that experience, we looked at the other business cases for other processes. The one that the business was having the biggest problem was our operating expense accrual process. Basically, what we do is estimate our operating expenses on a month to month basis, prior to getting invoices. We often don't receive invoices until a month or two down the road. But on a monthly basis, we need to estimate how much we're spending. We had been using a spreadsheet that would break down expenses by cost driver and geographic area. We had 100 different geographic areas that we track and we track about 15 different cost drivers, for example; trucking, chemicals, well servicing and environmental health and safety.

The problem with a spreadsheet is that only one person can be in there at a time. We have about 20 people responsible for those 100 geographic areas. In a span of about three days each month, we had to get 20 people in and out of that spreadsheet to input their numbers. Even once we had the numbers it was tough for accounting to work with this. The format would change all the time. Accounting would have to go through and calculate the accrual, by estimating the operating expenses minus invoices we've already received. It was taking about three days for the guys to enter the numbers and three weeks for accounting to do the estimates.

Wasserman: How did you change this system?

Hawkings: What we did in Ultimus was create a process that sent out one incident for each geographical area. We show them three prior months of estimates, their estimated volumes they were producing, and give them a template to fill in. Instead of a spreadsheet, we developed an online system using Ultimus. From our standpoint, we'd know that they were putting in data in a standardized format. After they approve it, it goes to their supervisor and then to the VP of Operations before it goes to accounting to create the accrual.

The key for us is entering the numbers in a standardized format. We developed a simple little program that can automatically calculate the accrual. It has taken a 3-4 week process down to a 3 or 4 day process. They don't collide with one another in the spreadsheet. And it's easy for them to use. On the accounting side is where we get the big savings. Now it only takes about three hours to do the accrual.

Wasserman: What kind of results have you seen?

Hawkings: The key is now we're able to do a better analysis of our numbers. We now have more time to make sure the estimates are accurate. This allows us to focus more on lowering our costs, instead of being a caught up in a big process that takes up all our time. The second piece of the project involved creating a reporting solution including variance analysis, forecasting, and trending. We can make sure the budget and year end targets are achievable rather than getting stuck in processes. The labor savings is huge. But the focus on the analysis is where we really see the savings.