ERP Cloud

Power Users

by Alison Weiss

Power Users: Energy Alloys refines upgrade process and business operations to ride oil industry boom.


Energy Alloys

    Location: Houston, Texas

    Industry: Energy/oil field products and services

    Employees: 550

    Revenue: US$410 million in 2011

    Oracle products: JD Edwards EnterpriseOne applications, Oracle Business Intelligence Publisher

James Watson

Chief Process Officer

Length of tenure: Four years

Education: CPA; BS in accounting and MBA, University of Houston–Clear Lake

Personal quote/mantra: “Character is doing what’s right when no one is looking.” —J.C. Watts


It’s a good time to be in the oil business— particularly in the U.S. New extraction technology, high crude oil prices, and improved access to new fields are fueling U.S. petroleum production. In fact, the U.S. Energy Information Administration (EIA) reports that domestic oil production in 2012 will reach an eight-year high, averaging 5.74 million barrels per day, an increase of 170,000 barrels per day compared to 2011. And EIA forecasts 20 percent growth in production over the next 10 years.

Energy Alloys

Launch the Slideshow

However, it’s not just petroleum companies that benefit from this oil boom. Executives at Houston, Texas–based Energy Alloys have also seen a dramatic surge in demand for their company’s oil field metals, services, and solutions for global oil and gas companies. The private company, founded in 1995 with five employees, now has 550 employees in eight countries to deliver oil field–specific inventories of tube, bar, stainless steel, and engineered steel products. Energy Alloys’ services organization also offers made-to-order manufacturing for semifinished components and offers consulting for clients who need assistance choosing materials.

But taking advantage of the oil surge requires executives at Energy Alloys to properly manage inventory and supplier relationships. That means staying in sync with partners in Japan, North and South America, and Europe to ensure the continuity and competitiveness of supply. Keeping pace with such a fast-moving industry means keeping enterprise IT systems operating at optimal levels—and making sure those systems are truly supporting the business.

But that’s a tall order for an IT department that runs lean with a staff of eight full-time and two contract employees. So when it came time for the company to upgrade Oracle’s JD Edwards EnterpriseOne enterprise resource planning (ERP) system, Energy Alloys’ IT staff did a complete review of business operations and worked with an Oracle partner to keep the systems pumping. The results: a complete ERP upgrade in 60 business days with a budget of less than US$15,000.

Pay Now or Pay Later

James Watson, chief process officer at Energy Alloys, attributes the success of the project to a key decision to manage the ERP upgrade in an innovative way. Rather than approach it as a self-contained, lengthy, and high-cost project, Watson and his team used a strategy to “operationalize” the upgrade. “When you purchase software, it’s not a one-time event. You’re making an investment buying all future upgrades, enhancements, and features,” he says. “You build a regular upgrade cycle into your cost structure—it’s a small increment to your normal operating budget. So, we’re not going to the business and saying, ‘We need a million dollars to do this upgrade.’”

Watson believes that scheduling an ERP upgrade every three years as part of regular systems management makes more than just prudent financial sense—it minimizes the time needed to complete an upgrade because fewer changes are required each time. In addition, a regular upgrade schedule ensures that the system is as full-featured and agile as possible to help Energy Alloys keep pace in a booming industry. “Companies that keep pushing off upgrades are faced with humongous challenges implementing a new ERP system or reimplementing their current ERP system,” observes Watson. “Or they spend a ton of time getting the system current. It’s a misnomer about upgrade costs. You either pay now or you pay later.”

According to D. Eric Maikranz, director of the JD Edwards Upgrade Programs and Technology Office at Oracle, the older, traditional paradigms around upgrading ERP systems have dictated hefty investments of time and money—averaging between 12 and 36 months long and costing anywhere from seven to nine figures. It’s no wonder when surveyed by industry experts that respondents often cite concerns about costs and disruptions to business as the main reasons they avoid upgrades. But the experience at Energy Alloys clearly illustrates the real possibility of managing an upgrade project economically and in a workable time frame.

The JD Edwards applications team at Oracle has adopted the lessons learned by Energy Alloys and other customers who have completed their upgrades quickly and economically into an accelerated upgrade methodology. This methodology enables JD Edwards EnterpriseOne customers to upgrade their systems in 100 days or less (details at

Not Repeating History
Companies that keep pushing off upgrades are faced with humongous challenges implementing a new ERP system or reimplementing their current ERP system—or they spend a ton of time getting the system current. It’s a misnomer about upgrade costs. You either pay now or you pay later.”

To be sure, it hasn’t always been smooth sailing at Energy Alloys. Jimmy Livingston, inventory integrity manager at Energy Alloys, began working at the company more than a decade ago and clearly remembers the challenges the IT department faced managing previous upgrade projects. Several years ago, he was part of the team that provided extensive training to help brand-new users migrate from a DOS-based system to JD Edwards EnterpriseOne 8.11. “It was like going from the Stone Age to the twenty-first century for them,” he says.

Watson joined Energy Alloys during the 8.11 migration project. It was costly and time consuming because the IT team had to reimplement the application due to the way the development, customizations, and upgrades had been managed. “From Day One, when I got on board, besides wrapping up the current project, I focused on building a new structure so that we never had to deal with the same issues again,” he says.

In 2011, Watson knew it was time to test his operationalize upgrade strategy. Management was eager to upgrade to the latest release, JD Edwards EnterpriseOne 9.0, to take advantage of new functionality, better ease of use, and middleware enhancements. However, time was of the essence to complete the upgrade in less than three months to accommodate several huge projects that needed to make use of the expected new features.

Such strict time constraints could have derailed the project from the start, but Watson and his team also had to contend with another potential project curveball. Because upgrade costs are managed as a small increment to the regular operating budget, there would be almost no additional funds available for upgrading. The team would need to find a way to operationalize at zero cost to the company.

For some, these obstacles would have been insurmountable, but Kaushik Ray, director of business process management (BPM) applications at Energy Alloys, was up for the challenge. “I’d done JD Edwards upgrades in the past, and so had some of my team members, but this time we needed to be innovative. We laid out a high-level diagram and realized that everything boiled down to reducing the scope,” he says.

Upgrade with a Twist
It’s no longer IT and the business. . . . IT is part of the business and is accountable for the same goals.”

Ray and the team agreed that the upgrade would need to be a technical upgrade—but with a twist. They decided to use an agile project management method where requirements gathering, analysis, development, and testing would occur simultaneously to meet the tight project deadline. Then, the focus morphed from a purely technical to a functional discussion. The team decided to look at every business process in the organization—procurement, order management, accounts payable, and more—and review every customization developers had created over the previous five years to see which ones still made sense. If there was no longer a business purpose for a modification, it would be eliminated.

This review is absolutely consistent with enterprise IT best practices. According to Larry Bonfante, author of the 2011 book Lessons in IT Transformation, because enterprise technology plays such a prominent role in modern business it is critical for IT personnel to understand business processes and to align with real business operations. “Businesses, no matter the size or the industry, depend on technology to engage with stakeholders. IT staff need to understand the processes in a business and the customers that a business services,” Bonfante says. “By leveraging technology, you can totally transform the way you do business and the way you engage with people.”

Indeed, Livingston was impressed that Ray and his team were so hands-on during the due diligence process. The IT team actually came down to the shop floor to learn firsthand about JD Edwards EnterpriseOne and specific work processes. “They talked to the people who are doing their jobs day in and day out and are the real experts, and it opened up the lines of communication,” observes Livingston. “It started the conversation about ways to do something quicker by using JD Edwards instead of doing things outside the system.”

For Watson, the team’s approach to validating processes helped cement a new BPM focus he wanted to implement across the IT organization (see “Business Process Upgrade”). He was encouraged that his staff went beyond simply gathering user requirements and instead worked to gain knowledge so they could support and improve processes in the future.

“We realized that we didn’t know the company that well, and the JD Edwards system had all these developments and modifications that had been done by others over the years,” says Ray. “But it was an opportunity for my team to take ownership of the implementation.”

Smart Support

In just three weeks, Ray and his team accomplished the task of identifying and reviewing 600 customized objects—reducing the number to 150 that needed to be brought over as part of the upgrade. But the team knew it would need help if it hoped to stay on track to finish the upgrade in 90 days. Fortunately, Energy Alloys could rely on support from Oracle partner Smartbridge.

Based in Houston, Texas, Smartbridge specializes in offering solutions and lifecycle management services spanning the JD Edwards EnterpriseOne product suite. In February 2011, Smartbridge began providing configurable network computing (CNC) managed services for Energy Alloys’ JD Edwards EnterpriseOne implementation under a multiyear support contract. What makes the contract unique is that the monthly fee covers the cost of upgrading—at no additional charge at the time of the upgrade. It’s a very cost-effective arrangement for Energy Alloys, but more importantly, it enabled Watson and his team to tap into Smartbridge’s deep expertise with JD Edwards EnterpriseOne upgrades to ensure the project would finish on time and on budget.

When Energy Alloys management notified Smartbridge that they wanted to begin the upgrade process, Smartbridge assigned them a project manager for client coordination work, as well as an offshore project team based in India—whose members, as official Smartbridge employees, were already familiar with all the Energy Alloys staff, processes, and technology.

“Leveraging our offshore team was one of the key drivers of how we kept costs down,” says Jeremy Shearer, director of enterprise technologies at Smartbridge. “It actually accelerated the timeline of the project because we’d coordinate during the day, and our very competent offshore technical development and CNC team would get the work done overnight.”

To keep the project development work on the 150 customized objects on track, Energy Alloys leadership decided to spend approximately US$15,000 to delegate to the offshore Smartbridge team the work needed to make high-volume cosmetic changes to objects, while Ray and his team worked on the more-complex changes.

So the Energy Alloys team tackled modifications to a sales order entry object and an invoice print object that required custom retrofitting for steel industry–specific calculations. At the same time, the Smartbridge team focused on objects targeting packing lists and purchase orders. Overall, it was a very collaborative effort.

And to Shearer’s mind, other companies upgrading JD Edwards EnterpriseOne applications can achieve similar cost-effective results. Over the past nine years, Smartbridge has effectively leveraged global teams to deliver value with successful JD Edwards EnterpriseOne projects for several clients. “One of the things unique to Energy Alloys is the limited customization they did,” he says. “It made the upgrade easier to swallow because they didn’t have to go through extended retrofitting and the associated testing.”

Upgrade? What Upgrade?

Ray and his team worked diligently to keep a tight rein on the scope of the JD Edwards EnterpriseOne upgrade. So when it came time to go live over the Fourth of July weekend in 2011, things went smoothly—to the point of being anticlimactic. Users were pleased to find that while few changes were actually visible to them (which was by design), they experienced benefits such as faster system response time and a simplification of purchase order creation. The team received a similar reception at the executive level. “It didn’t even register,” says Watson. “One of our executives said, ‘Oh, you had an upgrade this weekend?’”

But Ray and his team have not been idle since the completion of the upgrade. They’ve added a variety of new modules to the JD Edwards EnterpriseOne system, including JD Edwards EnterpriseOne Manufacturing Management and JD Edwards EnterpriseOne Project Costing, and they are in the process of implementing JD Edwards EnterpriseOne Configurator, in conjunction with the JD Edwards EnterpriseOne Sales Order Management module.

Management is definitely seeing a payoff in terms of keeping the company streamlined and agile in the fast-paced petroleum services industry. “We believe that the technology we have invested in, along with our talent, will enable us to achieve efficiencies,” says Fran Bobb, senior vice president and COO at Energy Alloys. “We were able to dedicate the resources to truly support JD Edwards internally, limit our consulting fees, and operationalize upgrades to ensure our return on investment.”

And while Watson knows that not every IT staff will be able to upgrade their JD Edwards EnterpriseOne systems so economically—particularly if an organization is on an older release—he has strong words of advice: stop thinking of upgrades as projects. “Start building the upgrades into your support and maintenance of the operation,” he says. “And begin to recognize that upgrades are part of the value of the purchase.”

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