Ongoing Q&As with IT and business leaders focused on best practices, thinking, and tips for data integration success
John Streeter is the Director of Credit and Collections at Superior Energy Services, a company that provides products and services to help oil and gas companies with their drilling, completion and production-related needs. With over 21 years of management experience in the oil & gas industry, John has worked on the upstream and downstream sides of this dynamic industry. In his current role, he has focused on improving working capital through reduction in days sales outstanding or DSO. John is using this experience in the oil and gas industry to tackle new challenges and to integrate data to improve business processes for his company. In the following discussion, John shares key insights he gained from the data integration project he led at Superior Energy Services and points out the ways companies can get a head start on doing integration right to impact the bottom line.
Q: Why did you choose to take on a data integration project?
A: The overall driving force behind our project was to reduce DSO or days sales outstanding, a measure of how long it takes you to collect your invoice once it’s been generated. The C-suite wanted us to reduce this to the shortest time possible as it affects cash flows and our working capital. To accomplish this mandate, we had to look at different ways to attack the problem from a business standpoint. The main issue for us was our extremely decentralized environment. At one point, we had well over 100 different product and service lines that basically operated autonomously. Many of them dealt with the same customers, so we wanted to identify some of our larger customers with higher volumes and integrate our billing and invoicing cycle with their payables and procurement groups to create operational efficiency. Within these different product and service lines, multiple ERP systems existed and multiple versions within those ERP systems, so there was no silver bullet for us to reduce DSO at the corporate level. We felt the best course of action was to attack operational efficiency at the divisional level and found that creating gains there provided benefits throughout the business. A key part of this was gaining efficiency from mundane tasks, like paper shuffling and filing, to allow people to spend more value-added time in building relationships with their accounts payable contacts. This also helped to begin moving the needle across our business in other ways.
John Streeter • Director of Credit and Collections
Superior Energy Services
“We’ve seen a tremendous increase and improvement in working capital, and in our business and industry, cash is everything.”
Q: Have you seen any better than expected results because of your integration or onboarding efforts?
A: We saw a tremendous increase and improvement in working capital, and in our business and industry, cash is everything. Over a period of four years, DSO came down roughly 18-19%. This put us in the position of having a healthy cash balance going into the oil and gas downturn which helped us stay ahead of our competitors and not be as negatively impacted during the commodity price slump. We’re definitely in as good or better position than our competitors due in part to the gains in DSO from our integration project. I think that speaks volumes.
Q: What were some of the issues you encountered during your integration projects?
A: Some of the issues we ran into had to do with our corporate culture. The executives promote a decentralized environment because it allows us to divest business units and do merger and acquisition type activity. Although we couldn’t centralize back offices, we discovered that we could reduce multiple vendor contracts and single source a vendor which made sense to the executive team. Even without formal support of standardization from the executive team, standardization became one of the by-products from the implementation. We didn’t centralize any functions or ERP systems, but we did begin to standardize data sets for the business units during the integration because we found many business units were doing things on their own using unique processes. Finding and leveraging this was a pleasant by-product that is beneficial to our business.
With over 21 years of management experience in the oil & gas industry, John has worked on the upstream and downstream sides of this dynamic industry. In his current role, he has focused on improving working capital through reduction in days sales outstanding or DSO.
Q: Were there any new things or processes that you or your team started doing for the first time in order to be successful with this project?
A: Our culture has always been defined as an entrepreneurial culture. Each business unit is encouraged to chase their own work. We have a decentralized corporate structure with oversight versus micromanagement from the corporate level. Basically, we have a whole bunch of different business units that all have their own way of doing things but are involved in the same industry and deal with the same customers. There are no mandates that the business units do things a certain way so we had to show them that the new process was going to save them time and money. When we first started, most began putting up walls and showing some resistance. So we knew we had to handle each business unit individually and get the message out to them the right way. But ultimately, the lights started to come on. It took a while, but when they saw the results things took a a huge turn to the good from where we started. People jumped on the bandwagon and actually helped promote the venture for us. This was great as a lot of these divisions talk to each other. This meant we were not continually selling the project and actually started having people come and ask for it. You’d have somebody call up who was one of the biggest resisters in the beginning asking to be put at the front of the line.
Q: How did people’s attitudes change after the project?
A: People are excited about the results that come with a more streamlined process. The folks actually doing the billing and invoicing have a lot more time as they can save between 7 and 12 days of labor per month implementing this process versus continuing with their old process, which is a huge benefit. The by-product of data integration is the significant reduction in DSO. Now people aren’t sitting there pushing paper all day; they spend their limited time working on value-added tasks. Success typically changes attitudes. The old axiom “Don’t tell me what you can do, show me” rings true here. Some of the toughest critics and resistors at the divisional level now ask to be pushed to the front of the line and boast about having the highest number of connections. When naysayers became evangelists, their testimonials drew in others. It was truly a remarkable reversal over a compressed period of time.
“If the integration will be rolled out in phases, find some quick wins to build momentum and support and then use them to validate your strategy.”
Q: During the integration, were there any processes you had to stop doing in order to make this project happen to meet your needs and deadlines?
A: We first started to look at the customer level within the business units. Our larger customers have the ability to integrate so we looked at divisions that had the highest volume and started rolling it out with them. Initially, it was pretty challenging, but we were able to eventually get people connected once they started seeing the benefits. Within a year divisions went from saying “We want nothing to do with this project” to “Hey, we need to go next.” We would then go back to the executive team and allow them to reshuffle the batting order. The process was initially done on a first-come, first-served basis, but then it made more sense to integrate divisions with higher volumes because we would be getting the most bang for our buck. We reshuffled the order a couple of times to take advantage of some higher volume divisions that wanted to come on board with the project.
Q: What would you say are the key things colleagues should know about data integration?
A: You’ve got to be able to think about and share the vision for how the project is going to look down the road. Ultimately, any project requiring limited resources, be it cash or man-hours, will be judged on the results. We knew both the goal and benefits we were after, so our marching orders were clear: reduce DSO and improve working capital. While the goal is clear, knowing the strategic path forward from the corporate culture, operational and systems perspective is paramount. At the time we started this, we had a pretty large organization with 15,000 plus employees scattered across many divisions. Our business is like a large cargo or tanker ship, manned with a crew skilled at their individual crafts. The weakness of a large vessel, however, is maneuverability. Course changes require corrections of minor degrees at the helm to reach the desired coordinates. You can’t just spin the wheel and expect to turn it around 180 degrees. You have to bite it off in little chunks of minor course corrections, which is how we tackled our integration process.
“To be successful, you must continually adapt to the market while balancing risk and shareholder interests. Strategies developed must be flexible within this dynamic environment and provide value at each phase as the business evolves.”
Q: What are the key questions people should ask before tackling data integration?
A: As I mentioned, starting an integration project requires that you define both your short- and long-term goals. But you really have to ask the tough questions:
– Where is this integration project going to add value?
– How is it going to deliver value?
– How are we going to measure value?
– What sort of metrics are we going to use to track the value it adds?
– Do the fiscal and bandwidth resources exist within the organization?
– Do you have the right people on the integration project team?
– How are we going to handle disruptions to operations while rolling it out?
It may seem like a lot, but these are questions the project team and management group have to lock in with the same vision to be successful. If you have some folks leaning one way and some leaning another, you might drive yourself into this project without adequate support from the different levels of the organization. Even worse, you could just be working towards a false assumption that would send you down a rabbit hole and cause you to waste a lot of money and resources. Another big thing to keep in mind is that many only focus on the macro goal of the project. You really have to do a deep dive into the process at the user level. Although our macro goal was reducing DSO, we really had to focus on the individual processes at the business unit level where operational efficiency could be realized. The individual processes were ultimately where we found all the little gains that added up to a big reduction in DSO.
It’s easy to sit up in the office and play traffic cop, but you’ve really got to get down in the trenches with the folks who deal with the data every day to understand what they’re doing—where you can save them time and help them be more efficient. In terms of corporate culture, you need to know who you are and who you’re not. You must engage stakeholders on multiple levels within the organization and secure support from key executives. Be prepared to share and defend the project vision and value proposition with the C-suite. If the integration will be rolled out in phases, find some quick wins to build momentum and support and then use them to validate your strategy. Finding champions at these quick-win phases will carry momentum forward. Hearing the benefits of integration from a project team leader doesn’t carry the same weight as hearing it from a colleague who has seen the results firsthand. Also, it’s incredibly beneficial to find out and understand what peers in your industry are doing with similar issues and see what does and doesn’t work for them.
Q: What were the challenges, behaviors, technologies and interactions that were tough to overcome?
A: We made some mistakes at the outset and some of that was on me. When we initially started the project, we chose the wrong vendor, which was a major mistake. Although we did our due diligence and felt good about our research, things weren’t working because of turnover on the vendor side and what we considered to be some bait-and-switch tactics. I had to go back to both the executive and project team and convince them to move forward with another vendor. The executive team didn’t have an issue with that and gave their support. However, the project team was leery because we had put in a lot of work with the initial vendor. The team was dead set about not switching even though they were extremely unhappy with the current situation. We had a heart-to-heart and decided to step back and regroup. In the long run, it was time well spent. Once the whole project team was on board and we started working with the new vendor, we knew we had made the right decision within a few weeks. It was pretty clear, and we ended up far exceeding our expectations with the new vendor in place. Although there was some pain involved in the transition, it was ultimately the right decision to take a step back, regroup and move forward in a new direction. That’s what really got the integration project off the ground and delivering results.
Q: What has been the biggest thing you’ve learned from the data integration project?
A: The number one thing I’ve learned is to not be afraid to admit to yourself, to others and even to your bosses that you made the wrong decision. It’s a hit to your pride and none of us like that, but it’s in the best interest of the business and the decision has to be made. It was definitely a big learning experience for me. Ultimately, by making the tough decision, changing course when it wasn’t popular and then seeing the result of the decision afterwards, you build credibility within the organization. People know they can trust you with the resources and the talent, so the next project you roll out is easier because you already have people on your side and you don’t have to go through the whole sales process again to get people on board. Also, while you may feel that your due diligence is adequate, you really need to reach out to peers within your space that you trust and value. Figure out what they’re doing, how they’re doing it, and get a good sense of what’s going on in the market. It really helps to make sure you’re moving your data integration project in the right direction.
Q: What kind of challenges should leaders be thinking about now and in the future with their integration projects?
A: The biggest challenge is the dynamic nature of the business. To be successful, you must continually adapt to the market while balancing risk and shareholder interests. Strategies developed must be flexible within this dynamic environment and provide value at each phase as the business evolves. Referring back to the large ship analogy, there will be many minor course corrections required to find or maintain our target. In this environment, vendor systems must be compatible, flexible and scalable. We must also recognize their impact on the daily user and not disrupt operations.