www.energybizmag.com ENERGYBIZ MAGAZINE 43
Improving Asset Efficiency for Productivity Gains By Brunson White Asset <strong>management</strong> capability within integrated enterprise solutions are rapidly transforming the ways in which both gas and water utilities monitor and repair their vast arrays of <strong>asset</strong>s. Energen Corp. recently revolutionized its business processes and created valuable new efficiencies by successfully implementing an enterprise resource planning (ERP) system that features integrated <strong>asset</strong> <strong>management</strong> 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 In 2002, Energen reevaluated its outdated legacy systems and numerous manual processes that had become large cost centers, concentrating primarily on the operations of Alagasco.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 <strong>asset</strong>s by manually inputting project information into legacy systems, delivering documentation through inter-office mail, and manually reporting for regulatory compliance, <strong>management</strong> decided to employ an enterprise technology to manage all <strong>asset</strong>s by aiming to maximize the return on investment within each <strong>asset</strong>. The company first declared the need to make <strong>asset</strong>-related work (maintenance, productivity, automation) safer and more efficient. From an <strong>asset</strong> <strong>management</strong> 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 <strong>asset</strong> 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 <strong>asset</strong> <strong>management</strong> 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 <strong>asset</strong>. Any defect in the piping can lead to an immediate revenue and product loss. Through the ERP system, capital project approvals and materials <strong>management</strong> helped expedite the process of expanding and improving the distribution system. With workflow <strong>management</strong>, 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 <strong>asset</strong>s. All new <strong>asset</strong> 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, <strong>management</strong> 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 <strong>management</strong> was able to emphasize the time-saving benefits of the new system to end-users. Another obstacle arose from ���������������������������������������������������������������������������������� �������������������� ebiz_banner1.indd 1 6/28/05 4:22:29 PM