Coordinating human resource (HR) functions across several departments and geographic locations can pose challenges for any company. In the oil and gas industry these general challenges – such as calculating payroll and tracking employees’ whereabouts and hours – can become amplified when industry-specific HR characteristics are factored in. Some operators are turning to SAP Human Capital Management (HCM) software systems to better integrate and manage HR functions in-house.

When Vantage Drilling, an international offshore drilling contractor employing nearly 1,000 personnel, began experiencing increased growth, it decided to use SAP HCM to better track its personnel, streamline HR tasks, and set in place a foundation for continued expansion. The company now manages its large global work force entirely from its headquarters in Houston. “When we started working with Vantage, its employee population was a fraction of what it is now, but [the company] did the right thing to set that structure in place and put the foundation down there,” said Kevin Koser, president of sales at Exaserv, a global consulting organization specializing in SAP HCM solutions that implemented the software for Vantage.

Coordinating resources in a central system

An enterprise resource planning (ERP) system, SAP is a component software that can virtually run most aspects of a company’s business, coordinating anything from finance to logistics to sales and distribution to HR and payroll. “The benefit of a solution such as SAP is that everything is connected,” Koser said. “It’s one application; it all talks; it’s all integrated.”

Before switching to the new system, Vantage experienced many of the same HR hurdles that similar operators were facing in the industry. From an HR perspective the company’s processes, rules, and regulations were not clearly defined. The company’s specific needs, including defining benefits, the compensation process, and the payroll structure and maintaining payment plans, were either ideas or mapped out in a series of spreadsheets. SAP gave the company a central repository to store all information on all employees to run all processes. “That’s what was missing,” Koser said. “So from an SAP perspective, that’s the immediate benefit they got.”

Managing employee rotations on offshore rigs posed a major logistical challenge for Vantage as well as many oil and gas operators.

Often without an automated system in place companies manage employee rotations through a paper trail involving spreadsheets and emails – as well as a lot of mistakes and time spent coordinating information. One of the first solutions that Exaserv wanted to devise for Vantage was to help automate the transition of an employee on and off the rig throughout the year, keeping the consistency of his or her benefits, payroll, goals, and performance. “The way you don’t want to do that is by having to individually manage John Smith’s transition and then finish and go to Ralph Smith,” Koser said. “One of the things we did was to help automate that component using SAP as the solution. En masse we can take a group of employees and move them on the rigs properly, quickly, and securely.”

Another unique HR need faced by oil and gas companies involves the offshore nature of rigs and their movement in international waters. Many global companies have an expatriate process for moving employees from one country to another, but usually these processes involve the move of a single executive. “But when you’ve got a bunch of guys on a rig, and it moves from the US to Mexico, there are huge implications from an HR perspective on managing where they are, how the pay is handled, and the flow and nature of where they fall from a US to Mexico perspective,” Koser said.

Managing the movement of rigs and employees internationally without an integrated system can either require a lot of work or a lot of expense toward a third party that will manage the process for the oil and gas company. “It’s either costing you a lot in time and labor, or it’s costing you a lot in outsourcing that work in order to make sure that it gets handled correctly,” Koser said. “What we wanted to do was ensure the ownership stays within Vantage, the processes are owned by Vantage, and [the company] can be 100% secure that everything it is doing is correct, proper, and legal. The most important thing is making sure we’re doing everything correctly and also making sure that we’re doing everything quickly while eliminating process, overhead, bottlenecks, and extra work.”

Improved efficiency, reduced cost and risk

Since implementing the SAP HCM system, Vantage has seen improvements in efficiency and accuracy, savings in time, lower labor costs, and reduced risk in inputting data by using a single point of entry. “With Exaserv’s SAP implementation, we now have a single point that controls the database, so all the work can be done by one person in Houston rather than allowing everyone on the planet who wants to input [data] allowed to input,” Dave Boutelle, HR manager for Vantage Drilling, said in a case study.

The company also has seen the benefits of having a single, up-to-date, accurate database. Analytics is becoming key in the oil and gas industry, with companies seeking programs that can calculate comprehensive datasets for rational, correct decision-making in all areas of business, including the increasingly important area of HR. “One of the major issues that the industry is going to be faced with in the coming years is recruiting and getting the right set of skills and the right people in their companies and onto their rigs,” Koser said.

Running analytics will allow companies to look at the work force and see who is skilled in what, who is close to retirement age, and what types of skilled employees the company will need in the future to replenish lost talent due to baby boomers leaving the work force in coming years. “Analytics is going to be a huge component of that – getting the right data to the right person at the right time where it’s easily understood,” Koser said. “And you really can’t do that unless you have a solid foundation of the system itself. The data are only going to be as good as what’s in the system to begin with. If you don’t have the right foundation in there, you can have the greatest analytical system in the world, but it’s going to spew out bad data.”

Integrated, real-time data

By using an ERP system like SAP companies are able to input data easily, quickly, and accurately from a secure input point. Installation of the first phase of the system for Vantage took between four and five months, with technical support offered afterward by Exaserv as needed. “It’s not extremely long, especially for companies that are looking to do this early on before the growth,” Koser said. Before implementing the system companies should examine their needs and goals and create a timeline for both as a guide. “Most companies are different in their phases. There’s no cookie-cutter approach to what you need other than you must start with a foundation.”

Once the system had been installed, Vantage Drilling made few changes. “Quite honestly, once we finished implementation and the system was up and running, we’ve hardly tweaked it at all,” Boutelle said in the case study.

That ease of use oftentimes translates into a return on investment within a few years of using an ERP system due to eliminating outsource providers. “It’s easily making the industry much more efficient and much more streamlined,” Koser said. “Any time you can get access to real-time data that are integrated, it’s a benefit for any company, no matter what the industry.”