How Enverus Source-to-Pay innovation is helping operators make big leaps toward total operating efficiency
Colin Westmoreland, Enverus’ chief innovation officer, spoke at our SPARK 2022 conference in August.
During his “Innovation Acceleration: Source-to-Pay” keynote, Westmoreland discussed how the complexity of the energy industry requires a comprehensive, connected Source-to-Pay platform — and how Enverus is bringing it to life.
Below is a transcript of Westmoreland’s keynote, which has been edited for length and clarity, and an update on the Source-to-Pay vision and roadmap.
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Colin Westmoreland here, hi! I’ve worked at Enverus for 19 years in various roles, supporting product innovation strategy — both for oilfield service companies and operators.
The world has changed
Like you all, I’ve experienced the ups and downs of our industry. But the last two years, we’ve seen highs and lows that are more extreme and more frequent.
This change — along with a world that is more connected and moves faster now, thanks to technology — makes it more critical than ever for the energy industry to not just keep up but stay ahead, anticipate and plan for change.
Investing in technology for greater efficiencies — whether it’s more time savings, lower operating expenses or better well designs — is a proven way to insulate your business from this volatility.
OpenInvoice — then and now
There is an opportunity that many energy companies haven’t fully tapped into that could and would have a profound positive impact on your operating efficiency and bottom line — digitalizing the entire source-to-pay process. I’d like to talk about exactly where we currently are in that process, but first I’d like to share the results of the quick poll we did during the session.
When asked how many of you at the session recognized the name OpenInvoice, most raised their hand. It made sense. OpenInvoice has been around now for 21 years.
OpenInvoice was originally intended to create a marketplace for the industry. But after listening to our clients’ immediate needs, it became a powerful digital invoicing platform designed specifically for the unique needs of oil and gas.
The oil and gas industry in itself is unique because operators outsource almost everything to their suppliers. In fact, 80% of industry spend is on services.
Another unique fact is drilling rigs run like small factories that move around every 30 days.
Invoices are the common instrument between operators and suppliers, and so we focused on digitalizing the invoicing process. Every time a supplier joined the network, any operator that worked with them on OpenInvoice could immediately begin receiving digital invoices.
Today, after 21 years, the OpenInvoice network is huge. We currently have 35,000 suppliers submitting their invoices to more than 400 operators for payment, capturing over 80% of industry digital spend.
How we are addressing industry needs
Another benefit to digital platforms is capturing valuable data. Because so many companies submit their invoices for payment using OpenInvoice, we capture around $200 billion in industry spend each year.
Like OpenInvoice, over the last 20 years, the industry has been on a journey of its own. A few years ago, we saw the industry shift from the shale boom with rampant M&A activity and heavy investment — to investors that were much more focused on free cash flow and returns.
In response to this, we started to see a much stronger emphasis on spend optimization and efficiency gains through more strategic sourcing, contracting and procurement between supply chain and field operations teams.
To meet this growing need for efficiency across the source-to-pay process, IT teams looked to reduce costs by employing more all-in-one solutions that they don’t need to separately integrate and maintain.
This was the point where we realized we had the ingredients to provide exactly what our industry needs — a single platform to manage an energy company’s entire source-to-pay process from beginning to end.
Now it’s not just making the AP teams jobs easier but really providing all teams working together — starting with supply chain and procurement, then to operations and then to finance and accounting — a faster, more efficient way to manage this entire process.
Having all these teams on a single platform does a few important things:
Each of these teams rely on spend data in their role, but they each look at it through a different lens.They need a single source of truth. This means everyone needs to speak the same common language.Uniform coding on one platform is a giant leap toward making full automation possible.
Over the last three years, we’ve invested $400 million in product development to support each stage of the source-to-pay process going beyond the OpenInvoice solution. By connecting this workflow to one platform, you can now eliminate much of the manual work involved in price compliance and contract management and automate order tracking, deliveries and payment on services and materials.
You can now get much better visibility into spend in almost real time for much better strategic sourcing and budgeting for operations. This allows for better collaboration among supply chain, account and operations.
And we don’t want to forget our friends in IT — now there is a single platform to manage — with updates and support included in the cost.
Source-to-pay roadmap update
So where exactly are we in this innovation journey? We’ve made a lot of progress since SPARK 2021 last October.
We launched our market price indices — real price indices of goods and services based on real spend captured in OpenInvoice and aggregated so you can see where the market trends compared to the pricing you’re receiving. We continue to add more categories. In the last year, we’ve gone from around 200 to more than 500 indices updated every month.
For the last 18 months, we’ve worked in collaboration with Marathon Oil to create a pricing contract management solution that aligns with the needs of category managers and supplier account managers. It allows them to quickly collaborate with the supplier network, automate compliance and monitor performance of pricing agreements.
Now let’s talk about ordering. When we launched our new ordering module, OpenOrder, we received feedback that took us in two new directions.
The first is around inventory management and material transfers — it is essential for some of you to gain better visibility into the availability and value of items and equipment you have on hand. You want to facilitate the physical and financial transfer to and from the well site.
The second direction was around job management and dispatch — that workflow supports operations groups efficiently managing the call out of services.
And finally — work validation at unmanned sites is much more straightforward.
Our OpenTicket mobile app that uses GPS tracking and geofence technology to track routes, hours and location makes work validation much easier. Now ops teams can spend less time figuring out what their suppliers have done and more time actually running their operations.
Applying source-to-pay to a real-world workflow
Now that I’ve had the opportunity to discuss these new solutions, I’m going to close out our time by walking you through a real scenario that includes all these solutions I just discussed — all of which really came to life just in the last 18 months.
An operator discovers a pump is underperforming and is likely close to completely failing on a well. The ops manager checks the system and sees right away there is a replacement pump in inventory, but stock is getting low, so it will need to be backfilled. The worker calls out the service order for a rig, tubing tester and vacuum truck to three of their suppliers that are needed to complete the replacement. The asset location of the pump is moved from the warehouse to the well site.
The tester and vacuum truck both use the mobile tracking app on their cell phones to show details of the work done. This is done using a combination of geofencing and time stamps along the route and at the site.
Since the job information is shown on the work ticket and the ticket is already pre-coded, the field supervisor easily validates and approves the ticket. Then the supplier flips the approved ticket into an invoice with no additional data entry required.
The invoice is submitted and the system checks the price against the existing price book. The pricing is correct and since the scope and quantity of the work performed were already approved by the field supervisor, there is no need for an operations manager to approve the invoice. It gets auto-approved.
It’s been more than a year since the operator needed to source a pump and the supply chain team decides its probably time to see what price the market supports.
Looking at the market index in the Permian and they see that the current price on pumps has lowered over the last year. They take the current market price and analyze this against what their suppliers are currently charging them.
They notice one of the suppliers is charging them a price that matches the current index and there is very little variation on that price compared to the other suppliers, so they issue the PO to that supplier for the replacement. When the pump is received, the inventory is updated and the goods receipt is approved, so the PO is flipped into an invoice that matches the approved goods receipt. Because these documents match, the invoice is auto-approved without manual intervention.
If this workflow sounds like a vision, it’s not. We have clients doing it. And I hope it gets you excited about the possibilities for the future as we partner with you on your source-to-pay journey.
Note: We have this conference once a year, and this was the first time since 2019 we were able to come together in person. So, you can only imagine the interesting conversations that transpired.
Catch all 2022 SPARK keynotes On-Demand now.
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