Key Energy Services Streamlines Operations with Integrated Field Service and Billing Solution COMPANY PROFILE BENEFIT HIGHLIGHTS Key Energy Services, Inc. Key Energy Services, Inc. is one of the largest rig-based well service companies in the United States. The company provides oilfield services including well servicing, pressure pumping, fishing and rental tools, electric wireline and other oilfield services. Gained company-wide visibility into business performance metrics Accelerated billing cycles Established high-productivity billing hubs Reduced invoice processing costs Simplified pricing and improved customer satisfaction with standardized price book Laid foundation for continuous process improvements Executive Summary HEADQUARTERS: Houston, TX FOUNDED: 1988 INDUSTRY: Oil & Gas REVENUE: More than $1.9B (FY08) EMPLOYEES: Approx. 10,000 Emerging from a holding company with interests in environmental services, Key Energy Services has grown to become one of the largest rig-based well service companies in the world, employing approximately 10,000 people worldwide. 1 Known as a technology innovator, the Houston-based company offers a full range of oil- and gas-field services, including equipment workovers, fluid and logistics services, fishing and rental services, pressure pumping, wireline, and drilling. It operates in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina and Mexico. 2 The company trades on the NYSE under the symbol KEG. As part of a major initiative to more closely integrate field-service operations and gain detailed visibility into business performance, Key invested in an enterprise-wide field service and billing platform running Oracle s Siebel Field Service application. The solution established a single, efficient platform for tracking and pricing the services delivered by field crews, and accelerated billing cycles by enabling staff to quickly convert work tickets into invoices. To boost efficiencies further, the company consolidated invoicing at three regional billing hubs. Since moving to the Siebel service platform, Key s executives said they ve gained valuable insights into operations that are driving a range of benefits and business-process improvements. Today, managers are keeping a closer track on equipment utilization rates, revenue and expenses across every region and redeploying assets and people to optimize revenue. Meanwhile, the system s single nationwide price book is simplifying the way supervisors calculate service charges, increasing customer satisfaction. Down the road, executives plan to leverage the Siebel platform, and other Oracle applications, to drive a number of potential process improvements, from online customer portals to paper-less work tracking. 1. As of December 31, 2008 2. In addition, the company owns a technology development group based in Canada and has ownership interests in a Canadian drilling and production services company and a Russian drilling and workover services and sub-surface engineering modeling company 1
BUSINESS BENEFIT SERIES You ve got to buid the right infrastructure initially, and Siebel is a great foundational product. JOHN HOOD, CHIEF INFORMATION OFFICER, KEY ENERGY SERVICES Oracle Products and Services Oracle Siebel Field Service Oracle Database Oracle E-Business Suite Oracle Business Intelligence Enterprise Edition Responding to Challenges In its journey to top of the well-services industry, Key pursued an aggressive program of acquisitions, joining together a strategic mix of regional oil- and gas-service companies and extending its reach into every major oil and gas region in the United States. In less than 10 years, Key transformed itself from a company with fewer than 50 working rigs into one of the largest land-based well services company in the country. As it propelled Key to the top of the industry, the acquisition program also left the company with an inefficient patchwork of systems for pricing and tracking field-service work and invoicing customers. Critical operational data, such as equipment utilization and billing records, were scattered across hundreds of individual field offices and equipment yards, each running separate computer systems. We didn t have an enterprise system, said John Hood, chief information officer for Key Energy Services. We had 150 locations but didn t have a network, much less an enterprise billing system. To pull together a company-wide view of the business, each field office had to send batches of data over dial-up connections a slow and error-prone procedure. The fragmented data made it hard for executives to see key details about the business as a whole. There was limited visibility into customer data, including where we were sending our bills, what we were charging for things, and how long it took to get a bill out the door, said Hood. Building a Solid Foundation The situation spurred Key to act in 2002, when Hood s team launched a major overhaul of the company s information systems, selecting Oracle s Siebel Field Service software as the foundation for a new centralized system for managing field service operations. Why Siebel? Among other things, Hood said it was because Siebel was one of the few enterprise applications based on customer-centric data model. I liked the fact that everything revolved around the customer, he said. Since late 2003, Key has installed the Siebel-powered field service and billing system at the company s main lines of business, including its rig services, fluids management, pressure pumping and wireline services divisions. We ve been able to expand the system to use it for other lines of business, Hood said. Last year, Key upgraded to the latest version of the Siebel application and moved to a newer release of Oracle Database. In the coming months, it will be implementing enterprise resource planning applications from Oracle for managing finances, supply chain, close and consolidation processes. Hood said the Siebel solution known inside the company as the KeyOps system created a solid technology foundation that is enabling Key to institute a range of process improvements that are preparing the company for continued profitable growth. The improvements include everything from better visibility into operations to more consistent 2
Just having a unified view of the information has made a huge impact on the business. You couldn t do anything unless you did that. JOHN HOOD CHIEF INFORMATION OFFICER KEY ENERGY SERVICES pricing to faster billing. You ve got to build the right infrastructure initially, and Seibel is a great foundation product, he said. Unifying the Enterprise As part of the Siebel project, Key consolidated its field offices onto a single IT platform, paving the way for the establishment of several regional billing hubs where employees focus on turning work tickets into customer invoices. The company s field service operations generate approximately 100,000 work tickets a month, representing the delivery of a portfolio of services such as well workovers, horizontal drilling, hauling fluids to and from well sites, and performing specialized operations like pressure pumping to optimize well production and wire-line services to gather data deep below the surface. A ticket gets started when a customer requests a service usually over the phone, but increasingly through an electronic data interface. Dispatchers at the company s trucking, or liquids management operation, match up employees with available trucks and deploy crews to the customer s site. They also key in basic service details into the Siebel system, which is later used to issue invoices to customers. Returning from the job, workers send a scanned image of the work ticket to a regional billing hub for final processing. Calculating the charge for each service call is easier and more consistent now that supervisors have access to the Siebel-powered KeyOps system, which draws on a central database of standard nationwide prices and service codes. Supervisors no longer have to price out the ticket, Hood says. The system does it for him based on a national price book and agreed-to discounts. Moreover, the Siebel application connects seamlessly to the company s payroll system so that the crew labor associated with each job is accurately accounted for. According to Tommy Pipes, senior vice president of Key Energy s rig services business, the simplified pricing model has been a hit with customers. We used to have 10 ways of describing one piece of equipment, he said. It drove some our big customers crazy. Today, Pipes said the company maintains a list of about 160 equipment descriptions, down from 2,300, and a much smaller list of standard service codes. When Key rolled out the new system, our customers were ecstatic, he said. Faster, More Accurate Billing After implementing the Siebel system, Key moved forward with a plan to consolidate billing operations at three hubs in Bakersfield, Calif., Midland, Tex., and Shreveport, La. Staffed with billing specialists who create invoices from scanned copies of work tickets, the hubs removed the data-entry burden from workers at local work sites, and introduced 3
Our sales tax capture and remittance process is light years better. MARSHALL DODSON VP AND CHIEF ACCOUNTING OFFICER KEY ENERGY SERVICES greater consistency, transparency and efficiency into the billing function. We drove a lot of the inconsistencies out of our data capture and billing practices said Marshall Dodson, vice president and chief accounting officer at Key, adding that the centralized hubs also help the company flexibly scale its administrative workforce to match transaction volumes. Since implementing the integrated field service platform, Dodson says Key pushes invoices out the door faster and at a lower average cost than before. Billing accuracy also has gone up. Moreover, executives said that it s easier to pull together financial data using the unified system because its fully integrated with Key s financial software. The improvement is helping the company comply with increasingly complex financial regulations. Our sales tax capture and remittance process is light years better, Dodson said. Enterprise Visibility Perhaps the most important gain, executives said, has been better visibility into operations. Just having a unified view of the information has made a huge impact on the business, said Hood. You couldn t do anything unless you did that. To build a complete picture of its business, Key Energy loads information from its field-service operations into an Oracle-based data warehouse, then runs a daily operations report known as the DOR that monitors key performance metrics such as revenue, expenses, and asset utilization. Pipes, the rig services senior vice president, said the report has become an indispensible management tool. We live and die by the DOR, he said. Among other insights, the daily reports tell managers which rigs are generating revenue, and which ones aren t, and helps the company take advantage of emerging business opportunities. For instance, to generate more revenue and speed service, the company could decide to move underutilized pieces of equipment closer to areas where demand is higher. Better visibility could also help the company adjust prices and discounts to match shifting demand across different markets. More Opportunities A recent upgrade of the Siebel application will offer Key more chances for streamlining operations. Currently the company plans to launch an online portal where customers can go to approve work tickets when their representative isn t on site to sign off on a job. The move is expected to raise efficiencies on the fluids management side of the business, where tracking down a company rep and getting sign-off can sometimes delay billing cycles by more than a week. 4
This year, Key plans to phase out its aging enterprise resource planning and business intelligence applications in favor of Oracle E-Business Suite and Oracle Business Intelligence Enterprise Edition. The new applications, which integrate seamlessly with the Siebel system, are expected to bring even more business-process efficiencies to the company and add sophisticated new analytics capabilities. Down the road, Key is looking at a range of potential projects that would leverage the Siebel platform. One idea would be to phase out paper work tickets and have dispatchers enter service delivery details directly into the system, enabling invoices to go out as soon as the job is finished. Research and analysis was conducted by Mainstay Partners, the leading provider of IT value assessments to Enterprise IT Organizations and High Tech Solution Providers. Mainstay does not warrant any results derived from this study. Copyright 2009 Mainstay Partners, LLC. 5