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Improving Asset
Efficiency for
Productivity
Gains
By Brunson White
Asset management capability within integrated enterprise
solutions are rapidly transforming the ways in which both gas
and water utilities monitor and repair their vast arrays of assets.
Energen Corp. recently revolutionized its business processes and
created valuable new efficiencies by successfully implementing an
enterprise resource planning (ERP) system that features integrated
asset management functionality.
Providing natural gas to more than 460,000 customers statewide,
Alagasco and Energen have experience with periods of sustained
change and a long history of preparing for the future. The company
got its start in 1852 as Montgomery Gas Light. The company has
two major subsidiaries: Alagasco, its natural gas utility, and Energen
Resources, its oil and gas exploration and production company. Through
its two subsidiaries, Energen acquires and develops domestic oil and
gas properties and distributes natural gas throughout Alabama.
Energen’s presence in the upstream as well as the downstream
side of the business enhances the company’s understanding and
appreciation of the entire energy value chain. Operating within two
distinct aspects of the energy industry further serves to emphasize
the importance of an IT solution that can create communications with
a strong information flow between different departments.
In 2002, Energen reevaluated its outdated legacy systems and
numerous manual processes that had become large cost centers,
concentrating primarily on the operations of Alagasco. With approximately
1,200 employees and significant operations in seven states,
Alagasco was outgrowing the cumbersome manual processes it used for
project approval and documentation. Rather than continue underutilizing
the company’s physical assets by manually inputting project information
into legacy systems, delivering documentation through inter-office mail,
and manually reporting for regulatory compliance, management decided
to employ an enterprise technology to manage all assets by aiming to
maximize the return on investment within each asset.
The company first declared the need to make asset-related work
(maintenance, productivity, automation) safer and more efficient. From
an asset management standpoint, there were several other problems
to address as well. Operating expenses were consistently rising due to
44 ENERGYBIZ MAGAZINE July/August 2005
a lack of transparency between different systems and an inadequate
IT infrastructure for alerting managers to equipment requiring repairs
and replacement. Inaccurate data records detailing plant and fleet asset
usage and repairs further stymied the company’s ability to operate
at full production. Having looked at numerous solutions from several
vendors to replace the homegrown systems, the IT staff’s first priority
was a solution with a high level of integration. Not only would an easily
integrated solution allow the company to streamline processes for work
orders and maintenance, but it would also deeply embed within numerous
departments across the enterprise — from accounting to maintenance,
creating large productivity gains for a greater number of employees. As
a company with a strong corporate culture spread throughout the state
of Alabama, reaching a high level of employee buy-in to the implementation
was another important goal.
Energen officials chose the mySAP ERP system with asset management
functionality. Aiming for a launch date of Jan. 1, 2003, the project
team began the implementation phase in March 2002. The greatest
impact of the implementation was within Alagasco’s distribution
system. Consisting of more than 30,000 miles of pipe that deliver
natural gas directly to thousands of customer locations, the distribution
system remains the company’s most important asset. Any defect
in the piping can lead to an immediate revenue and product loss.
Through the ERP system, capital project approvals and materials
management helped expedite the process of expanding and improving the
distribution system. With workflow management, project approval time
decreased from a full work week to within a day. Moreover, materials that
were in shortage are quickly re-routed to projects with the most significant
need. For example, if additional materials and workers are required
for constructing a new border station, both maintenance teams and
materials are quickly dispatched from lower priority projects to provide
maintenance, avoiding job stoppages due to a shortage of materials.
Additional productivity gains are derived from improving the processes
for acquiring and maintaining company assets. All new asset acquisitions
— from facilities to technology to office furnishings — are made within
the system, approved by an internal check of real-time budget figures.
After purchase, depreciation schedules are automatically added into the
system for use by accounting and other departments, eliminating costly
paperwork. For maintenance projects, entering work orders modularly
into the system allows for information to be shared enterprise-wide,
enabling different departments to move forward without having to wait
for a paper trail to reach their desks. For example, while repair crews
evaluate a work order for a fleet vehicle, the purchasing department can
review the costs of replacing the vehicle. When the maintenance team’s
final report is entered into the system, management has the up-to-theminute
information to make an informed decision about replacement.
As with any enterprise software installation, the Alagasco implementation
experienced considerable challenges — the greatest of which
rested in allowing the workforce to adapt to process changes. Through
ongoing demonstrations of the advantages of the new enterprise
system, Energen management was able to emphasize the time-saving
benefits of the new system to end-users. Another obstacle arose from
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