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AVEVA adds production accounting toolset

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AVEVA adds production accounting toolset

Mar 26, 2020 | Hot Topics

AVEVA just announced that it has acquired accounting software from MES Enter to, as the company puts it, “complete AVEVA’s value chain optimization solution”.

The new AVEVA Production Accounting (fka MES ENTER ErrorSolver) becomes part of AVEVA’s Value Chain Optimization offering, to help customers integrate business processes across their operations. I saw the Value Chain Optimization tools at AVEVA World Summit last year — the idea is that one can make better decisions by knowing all of the knowable bits of information beforehand, to mitigate the risk inherent in the unknowable. So, for example, say an integrated oil producer believes it needs x gallons/day of heating oil to satisfy demand in the Northeastern US in March 2020. Backing off from that forecast, what can it buy at what price on the spot market in December 2019? Alternatively, what can it produce in October 2019? where can it best refine that crude into heating oil, given utilization rates at its various facilities? Which is cheaper, including transportation costs? What should the risk multiple be in any of these scenarios? Answering these questions could lead to a giant Excel spreadsheet, with dozens of sensitivity analyses, formulas, data sources and the individual quirks of each planner — or you could use a commercial solution like AVEVAs.

ExxonMobil, as just one concrete example, spoke about using advanced planning tools across its operations (aka value chain) –planning, scheduling, operations (including IoT data to provide a real-time, as-is view)– using in-house developed tools as well as commercial tools from vendors like AVEVA. AVEVA says this acquisition can help customers improve the accuracy of planning models, and I can see how that could be true.

What’s interesting, to me, is that this specific addition to the value chain tools is about production accounting, not accounting accounting. Of course, it all comes down to money, but production accounting is about mass balances: we have this much raw material in our tanks and draw it down at a specific rate (as shown by gauges) and then we turn it into output products, as measured by these other gauges. What happens in between, adding catalysts or heat or pressure or other feedstocks, affects the mass balance of the equation. If a plant knows what its inputs and outputs are, and how quickly it is using up its stock of raw materials, it can better plan. And it can do all of the ancillary things, too, like look for pilfering, leaks, suppliers overstating what they deliver. Better visibility leads to all sorts of benefits. (I suppose this fascinated me because it’s physics meets finance. Hmm.)

Anyway, the deal appears to be done and no financial details were announced. It’s another sign that AVEVA is expanding outwards from the legacy AVEVA’s engineering domain to serve its customers with the solutions they need to efficiently run their businesses.

 

The first version of this was incorrectly headlined “project accounting”. Naveen Kumar over on LinkedIn pointed out the error.

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