Bender Consulting Predicst Oil & Gas Trends for 2011

Bender Consulting Predicts Key Trends For The Oil & Gas Sector In 2011

Natural Gas will Continue to Emerge as the Most Important Fuel in the U.S.; $100 Oil Will Force the U.S. Government into Action;International Powers Become Less Bold as U.S. Increases Usable Domestic Reserves

AUSTIN, Texas – January 11, 2011 – Bender Consulting, a premier boutique consulting firm with deep expertise in the oil and gas industry, today announced its predictions for key trends that will have the biggest impact on the sector for 2011.

“There is a definite change on the horizon in the oil and gas sector that mirrors the larger economy,” said Jonathan Dison, managing director and Oil & Gas Practice lead for Bender Consulting. “We will see an increase in spending across the sector as companies look to either acquire strategic assets to bolster their portfolio or extend their reach into previously untapped markets. Hydraulic fracturing will continue to play a revolutionary role in the sector, changing the economics for upstream companies involved in the extraction of oil and gas from shale plays, and services companies that support these markets.”

Key Trends for the Oil and Gas Sector in 2011:

Natural Gas:

• Natural gas will increase in importance and will claim a larger piece of the “energy pie” in the U.S., driven primarily by the supermajors’ appetite for stable, proven reserves and the U.S. Government’s push for greater energy independence.
• The U.S. Government will incentivize infrastructure technology that leverages natural gas as a transportation and energy fuel source.
• Natural gas prices will stabilize toward the second half of the year, but remain on the lower price curve, driven by excess supply.
• Natural gas will put extreme economic pressure on alternative energies.  Wind and solar will survive, but algae will become unviable.

Crude:

• Crude prices will hover between $80-$100 in 2011. There will be some spikes that exceed $100, but the market will react unfavorably as the economy continues to slowly recover.
• Government intervention will occur if prices consistently exceed $100 a barrel. Commodity traders will be the first targets, along with pressure on OPEC to increase supply.
• Domestic offshore permitting will increase and drilling will commence.

Foreign Oil Superpowers:

• Foreign oil superpowers, such as Russia, China and Venezuela, will become less and less bold due to an increased focus on energy independence from the U.S.
• The U.S. will leverage increased emphasis on energy independence in the geopolitical arena for broader political gain.
• The “graying effect” and 2010 downsizing by the supermajors will provide National Oil Companies a unique opportunity to acquire talent in an ongoing effort to close the knowledge gap.

Supermajors:

• Revenues and margins at the supermajors will continue to trend upward.
• Supermajors will continue to keep organizational and overhead structures low, spending on key acquisitions and assets versus hiring (a key metric to watch is revenue per employee, which will increase).
• Supermajors will continue to acquire mid-sized producers with proven domestic natural gas reserves.

Shale Plays:

• The Eagle Ford shale will make headlines in 2011 due to the prolific strike rate.
• Many of the shale plays will continue to be attractive acquisition targets for upstream companies.
• Smaller production and services companies in the shale plays will consolidate.

About Bender Consulting

Bender Consulting is a specialized management consulting firm helping High Tech, Energy and Bio Tech clients efficiently complete complex business transformations involving strategy, organizations, processes and systems.  Their unique business model gives clients access to experienced CxO’s, E/VPs, and directors—along with some of industry’s best consulting resources—for less cost than other firms.  The company was founded in 2004 and has offices in Austin, Houston and the Bay Area.  For more information, visit: www.bendercon.com

Bender Consulting Predicts Key IT Trends For 2011

Bender Consulting Predicts Key IT Trends For 2011

Mobile Computing and Cloud Computing Continue to Play Major Roles

SAN FRANCISO – January 6, 2011 – Bender Consulting, a premier boutique consulting firm with deep expertise in the IT sector, today announced its predictions for key trends that will have the biggest impact on IT for 2011.

“We expect much of what we saw toward the end of 2010 continue in full force in 2011 in regards to mobile computing and Cloud Computing,” said Scott Archibald, managing director and IT Transformation Practice leader for Bender Consulting. “Mobile and Cloud will continue to shape, reshape and define the IT sector as many organizations will both struggle and flourish when it comes to implementing mobile and Cloud technologies in the enterprise.”

Key IT Trends for 2011:

Mobility and Cloud Computing will continue to be the hot topics in 2011, and will continue to drive behavior and decision making across both IT departments and entire organizations. The below trends are all impacted by mobility and Cloud Computing:

• The Consumerization of IT will continue to accelerate: Smartphones and cloud computing will be the key driver for this trend. Personal smartphones will inevitably continue to find their way into the business world — activity that will need to be addressed by IT departments and organizations. Departments and individuals will continue to engage in shadow IT projects or individual projects outsourced to the Cloud due to low price points and accessibility.

• A shift from CapEx to OpEx will occur: Although companies are cash rich at the moment, there will be a continued reluctance to invest dollars in fixed costs and physical assets when companies can outsource services to address key IT needs. Variable costs and the ability to turn the spigot on and off will rule the day as a way to control costs and maintain a cash-rich position.

• Security for Mobile Devices will boom: Companies will look to solve the device-independent security challenge. Considering close to half of PDAs/Smartphones get lost or stolen, the need for better security will be key — remote wipe, tracking devices, etc.

• Tablets will change the laptop landscape: Tablet computers will find their way more and more in the enterprise space, being used for business-specific purposes. Specific business applications and uses will emerge, and in some instances become the compute device of choice — particularly for executives.

“Security for increased integration of Cloud Computing will get a lot of attention in 2011 as well, but don’t expect to see major progress on that front for large enterprises until 2012 or later,” added Archibald.

About Bender Consulting

Bender Consulting, Inc. is a premier management consulting firm that helps the world’s leading companies and institutions achieve success through transformation. Bender Consulting partners with business leaders to make actionable, lasting and measurable improvements to their businesses and organizations. Bender Consulting provides independent, thoughtful, data-driven guidance coupled with hands-on execution and support to clients when they are under pressure to show results. Bender delivers success to transformation initiatives that impact strategy, employees, culture, business operations and systems. The company was founded in 2004 and has offices in Austin, Houston and the Bay Area.  For more information, visit: www.bendercon.con

Move Your IT Organization Up The Scale

In many companies IT is not used as a strategic asset:

• Most companies spend 60% – 80% of their total IT dollars on maintenance rather than innovation.
• IT investment decision-making processes are immature for many companies.
• IT financials typically look like a “black box.”
• IT value is not understood in business terms within many organizations.

When IT is used strategically it can help facilitate innovation and change the rules for business. Many times IT leaders know they have a problem, but they can’t get to the root of it.  Rather than fixing the organization they just muddle through it.  An organization can be in chaos and still get great things done; however, it’s a chaotic process that consumes unnecessary energy and is simply not a sustainable model.

After 20 years in the IT industry it finally occurred to me that we need some way to assess an organization’s status and then be able to create a path to improvement. Folks, this may be IT we are talking about here — but we are NOT talking about technology.  This is all about people and process and has little to do with technology. Let’s face it – the technology will evolve and change over time.

As much as I would like to personally take credit for developing our IT Assessment tool, I can’t.  One of my colleagues at Bender Consulting has been using this tool with clients for the past few years with great success.

After a 2-4 week interview and data analysis process we score the organization’s current state on a scale from chaotic to adaptive.  Most organizations wind up in the middle to lower end of the scale for a variety of reasons.  The important fact is not where your organization is currently, but rather why it is there? After creating a realistic idea of where you want your organization to be, we can then start plotting a course to move from current to desired state.

I strongly encourage you to find a tool and methodology that you are comfortable with to evaluate your organization. Make sure that your Plan of Record includes efforts around effective business processes and employee satisfaction/morale (this coming from a guy who used to think, and say, “if employees don’t like it they know where the door is”).

For more information on our IT Assessment Tool, click here.

Scott Archibald is a Managing Director at Bender Consulting.  You can follow Scott on Twitter at http://twitter.com/Scott_Archibald

Did HP overpay for 3PAR? John Bender doesn’t think so. What are your thoughts?

Computerworld – “Few, if any, expected Dell to win the weeks-long bidding battle for 3Par after HP slammed down a $2 billion bid for the company, trumping Dell’s previous bid by almost $400 million.
…
John Bender, who once ran HP’s mergers and acquisitions group and led the HP-Compaq merger in 2002, said his former company did not overpay for 3Par, and in fact, it needed a win after the contentious departure of CEO Mark Hurd…”

Read the full article and let us know your thoughts.

Consumerization of IT Services

One area of focus we are seeing today is the Consumerization of IT.   Many IT services are becoming a commodity in the consumer marketplace.  Most of these services can be purchased online with a credit card (if they aren’t free) and are readily available to the general public.  Mobility products (Blackberry, iPhone and Droid) and Cloud Computing (most notably SaaS) have helped spur the Consumerization of IT over the past few years, and now.  IT departments are trying to determine how these technologies fit into their strategic roadmaps and service offerings.  And this is just the tip of the iceberg.

Within the next three years more companies will start to move to a model where they provide information workers with a stipend for IT commodity tools. Tools such as PC’s, PDA’s, and connectivity (for remote or teleworkers) will be left up to the employee to choose and purchase with a preset financial amount provided by the company. As work and life roles continues to blur so will the tools that information workers use. This will mean that employees will be willing to purchase their own products so that they can use the device to stay connected with what is important to them.

IT services will continue to move towards a consumer model due to lowering price points, increased commoditization and increased time to market from external vendors. This trend will strain many IT organizations if they try to control the environment which is contradictory to a commodity market driven approach. These are just a few examples of what we are currently seeing, but the trend looks to be a permanent one.

Do you think the Consumerization of IT services is a long-lasting trend?

Scott Archibald is a Managing Director at Bender Consulting.  You can follow Scott on Twitter at http://twitter.com/Scott_Archibald

Dell/HP 3PAR negotiations heat up. Where do we go from here?

August 27 -Computerworld Article: “In less than two weeks, the bids for grid-storage vendor 3Par have nearly doubled, from $1.15 billion to $2 billion with Hewlett-Packard’s latest tit-for-tat bid against Dell.

The two technology behemoths are fighting for what is arguably the last independent vendor of enterprise-class data storage on the market. But when do the offers become too outrageous? Or can they? 3Par, an 11-year-old company that sells a high-end, highly scalable storage platform, had sales of about $200 million last year, so the latest bid represents a tenfold premium over the revenue 3Par generates.”

Read the full Computerworld Article

5 Reasons IT Pros Should Be Paranoid

Dan Tynan - InfoWorld (US)

IT organizations have a lot on their plates, and keeping the data center humming is only part of the equation. Factor in the threats coming at IT from every direction, and you can see why IT pros have ample reason to be paranoid. The invasion of consumer devices into the workplace, the rush toward cloud computing, the constant vigilance to prevent data spills, all while managing a meager budget in an era when your career can be cut short at any time can cause even the most level-headed IT pro to start looking over his shoulder…

…What can go wrong? Devices containing sensitive data can be lost, stolen, or compromised by malware. As with infected PCs or laptops, the entire network can be at risk.

“The app store is the best hostile code delivery system ever invented,” says Schwartau.

Your options aren’t pretty. Banning consumer devices in the work place? Good luck with that, says Scott Archibald, a managing director for Bender Consulting.

“Like it or not, mobile is a reality — in both our personal and professional lives,” says Archibald. “Many companies are still trying to implement policies and regulations that keep personal devices off the enterprise network. That’s a dead end. Gen Y doesn’t make a distinction between using a smartphone for personal reasons or professional reasons. The sooner policies are created and frameworks are implemented to positively integrate mobile technologies into the enterprise, the better.”

Read the full Computerworld article.

“China And India’s Competition For Resources Causing a Rise in Cross-Border Acquisitions”

CORPORATE FINANCE FOCUS

By Gordon Platt

Mergers and acquisitions in emerging markets are heating up, and China and India are at the center of a bidding war for global resources, especially energy and metals, that is boosting cross-border deals. M&A transactions involving companies based in emerging markets more than doubled in the first quarter of 2010 compared to the same period a year earlier, according to Thomson Reuters.

Africa has been one of the major battlefields in the quest for resources, and it remains so, but the competition for hydrocarbons is global. It spread deeper into North America in April when Sinopec, the international arm of China Petroleum & Chemical, snared a $4.65 billion stake in the Syncrude Canada oil-sands project from Houston-based ConocoPhillips. Meanwhile, India-based Reliance Industries agreed to pay $1.7 billion for a 40% stake in a joint venture with Pittsburgh-based Atlas Energy that will extract natural gas from one of the larger shale formations in the northeastern United States, known as the Marcellus Shale.

Two of the three largest M&A transactions in the Americas in March involved state-owned oil companies from China and India buying into energy properties in South America. The Indian government approved an investment of $2.2 billion over the next five years by three state-run oil companies in Venezuela’s Carabobo oil-field acreage. Meanwhile, CNOOC, China’s national offshore oil company, agreed to pay $3.1 billion to buy a 50% stake in Argentina-based oil-producer Bridas, in CNOOC’s biggest overseas acquisition to date.

Click here to read the full Global Finance article

Bender Consulting Shares Perspective On Current M&A Landscape

Bender Consulting Shares Perspective On Current M&A Landscape

Flurry of M&A attributed to key trends and drivers

SAN FRANCISCO – May 6, 2010 – Bender Consulting, a premier management consulting firm, offers perspective on the key trends and drivers for increased M&A activity on 2010. Energy and high-tech industries see a flurry of activity in the first quarter of 2010 that looks to continue.

“It’s really quite an exciting time in the post-financial crisis world,” said John Bender, founder and managing director of Bender Consulting. “The next few years will see merger and acquisition activity increase for a variety of reasons: as companies pursue deals to achieve scale and efficiency, as cash-rich companies seek distressed assets for purchase at attractive valuations, as firms strike strategic alliances to ensure their survival, and as businesses acquire key technologies and IP to ensure continued growth or stave off competitors.”

Key M&A perspectives include:

• M&A activity is picking up: Deals being completed are strategic in nature, and hurdle rates for approval are high. Improvement in the capital markets make larger deals more likely for 2010. Deals aligned with corporate strategy, initiated by companies within the same industry seeking complementary businesses and/or entries into market adjacencies to achieve dominant number one or number two positioning in their business category are getting done. Similarly, deals extending IP, or enabling entry into new geographies or markets are getting approval. All others are still in a holding pattern. Deal scrutiny by company boards is very high, and teams are undergoing substantially more analysis that was not requested prior to 2008/2009.

• China & Asia: After nearly 150 years, developing markets will be at purchasing parity with the developed markets of Europe and North America. During the last 15 years, emerging markets outperformed developing markets nearly three-to-one in terms of total shareholder return. The underlying economic fundamentals of emerging markets–including reserves, public debt levels, and external debt—look better than those of the developed markets. M&A activity is up 18 percent in Q1 in 2010, compared to Q1 2009, driven in large part by emerging market deals. Asian M&A deals out-paced European-targeted activity for only the second time on record. China continues to emerge as a world powerhouse.

• Energy: In the energy sector, the number of deals are at five-year lows in the upstream, midstream, downstream and oilfield equipment and services sectors. In 2009, this was driven primarily by instability in financial markets, a weakening global economy, and extreme oil and gas price volatility. Last year’s Exxon / XTO and Baker Hughes / BJ Services deals, and this year’s $12.2B Schlumberger / Smith deal portends an uptick. The Schlumberger deal, and other energy and power deals, resulted in this sector leading global M&A, weighing in at 21 percent of total deal activity. Uncertainty regarding carbon legislation, distressed assets, and the emerging renewables sector will all have companies looking to either acquire assets that will be strategic for the future or divest assets that are dead weight.

• Venture-Backed M&A Exits, IPO’s and PE deals on the rise: The pent-up demand created from the stagnation of all the deals made in the last two to three years is beginning to loosen. Q1 2010 ended with more than 110 venture-backed M&A transactions, and the best quarterly total for venture-backed IPOs since Q4 of 2007. While the volume of these deals is not enough to claim that a full recovery is in place, it is a positive sign. Expect additional ramping of deal-making in the 2nd half of 2010.

• M&A weighing on a jobless recovery in the U.S. and Europe: An unfortunate consequence of M&A activity will be a negative impact on the jobless recovery in the United States. Strategic M&A, combining complementary businesses, can significantly increase competitiveness but requires realization of efficiencies and cost cutting. As companies integrate, jobs will be lost to achieve synergy targets. Given the macro-economic environment of 2009, most of today’s companies have trimmed the fat from their ranks. Consequently, a net, real-job loss will be driven by M&A actions in 2010. Duplicative functions such as HR, Finance, IT, Legal and other support functions will be under integration stress as cuts are made to enable merger business cases. Growth from the combined companies will not be sufficient to retain full employee bases of the merged companies.

“M&A activity will also be a way for many companies to take that first step into emerging markets, or for emerging market companies to take a global step into developed markets. Whatever the reason, one trend is clear—the deals that will get done will be strategic in nature,” Bender added.

About Bender Consulting
Bender Consulting, Inc. is a premier management consulting firm that helps the world’s leading companies and institutions achieve success through transformation. Bender partners with business leaders to make actionable, lasting and measurable improvements to their businesses and organizations. Bender Consulting provides independent, thoughtful, data-driven guidance coupled with hands-on execution and support to clients when they are under pressure to show results. Bender delivers success to transformation initiatives that impact strategy, employees, culture, business operations and systems. The company was founded in 2004 and has offices in Austin, Houston and the Bay Area. For more information, visit: www.bendercon.com

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What Does HP’s Acquisition of Palm Mean?

What does HP’s acquisition of Palm mean?

Yesterday, HP acquired Palm for $1.2 billion. So, what does it all mean? Interestingly, Todd Bradley is an executive vice president in charge of the personal systems group at HP, and a former Palm employee. If anyone knows how to integrate Palm into the HP fold, it will be Todd.

The key asset HP will acquire is the Web OS, and this will help revitalize any strategy they have around mobility. While there isn’t a strong list of apps for the Web OS platform currently, HP has the money and resources to do something positive with the Web OS and to take mobility seriously. This will also help HP go head-to-head with Cisco. Cisco currently has no real mobility play, and this will be a key differentiator for HP.

Additionally, HP can consider going the Apple route as well and introduce a closed system similar to the iPhone. While conventional logic suggests that might not be the best approach, we’ve seen how well it works for Apple. I don’t believe HP will go with a complete closed system similar to Apple, but possibly a hybrid of an open, portable system and something more akin to the iPhone platform.

Overall, this is a very positive move for HP and will make them a serious player in the mobile market – both at the enterprise and the consumer level. There are certainly some challenges that need to be addressed, including: 1) HP is building a full suite of IP services with the acquisition of Palm, 3COM, etc. But there’s still not a clear strategy in terms of how HP will leverage these acquisitions; 2) The integration of Palm itself into HP – employees, technologies, how quickly, etc. will be of prime importance to ensure a smooth transition that doesn’t derail whatever vision HP has for the mobile market.

We’ll continue to monitor and provide our thoughts.