HOUSTON, Feb. 15�Collaboration across traditional business boundaries through internet technology is reshaping the energy industry in ways that few participants yet comprehend, said Robert P. Peebler, vice-president of e-business strategy at Halliburton Co.
Few energy executives fully understand how radically their business landscape is shifting or how to gauge their positions in a global marketplace increasingly dominated by the internet, he said Thursday at an e-business workshop in Houston sponsored by the Society of Petroleum Engineers.
When a business �discontinuity� occurs, such as the emergence of the internet, investors begin �looking across that fault line and trying to guess which companies have �got it��which will change their business models to take advantage of emerging technology to renew shareholder value,� said Peebler. �Shareholder value is about people�s belief in your future cash flow.�
The internet is at the center of a shift in business evaluation from assets to information. That shift �is really problematic for our industry, which is capital asset intensive,� said Peebler. In the new economy, he said, �It is now more profitable to own information about oil than to own the oil.�
The new ability to share information and conduct business across industry lines via the internet is replacing vertical integration of energy operations with a more collaborative strategy of virtual integration of several companies, said Peebler.
Vertical integration was based on the idea that a company can get a competitive advantage by doing everything itself. That concept of �hoarding the value chain� is difficult for many in the oil and gas industry to break, Peebler said.
�Core is what you do to create future shareholder value. Context is everything else,� he said. �The question is, �How do you get 80% of what you do focused on your core operations and get rid of everything else?��
His answer is the collaborative virtual integration of a variety of companies, with each making its own contribution toward the common goal. �What�s context for you is core for someone else,� Peebler said. �This is where the power comes in of the collaboration tools, of the internet tools.�
But virtual integration goes far beyond traditional outsourcing, with virtual partners and remote service providers becoming an integral part of an exploration and production company�s �value proposition.�
Those virtual partners �must be economically aligned and effectively integrated with the company�s internal systems, including its information technology. The �virtual IT� system of the future, therefore, must extend far beyond the corporation�s firewall,� Peebler said.
Moreover, there will not be a central command structure controlling that cooperative effort, as in current �master-slave� relationships. Instead, the system will be self-organizing that voluntarily aligns into a true collaboration, with each component contributing its own specialized work, Peebler said.
�Our industry has not got that idea yet,� he said. �The industry of the future will not be the service sector and the oil companies. Some day the oil company will be everything, and you won�t be able to figure out which is what.�
That concept, he claimed, �is right at the epicenter of what the new economy model will be like. And it�s one that people don�t like, because it says the way we are now is not the way we will be in the future.�