Ovintiv cracks the code of efficiency with Dynamics 365

Bold business model accelerates modernization

The team at Ovintiv knows it takes more than a productive well location to ensure success. From land leases and geological exploration to massive capital investments and environmental regulations, there is much to manage. Projects typically require buy-in from landowners, cooperation with government agencies, and investment from banks, brokers, and individuals. For these reasons, accurate accounting, reconciliation, supply chain management, and compliance are essential.

Ovintiv has been at the forefront of its industry’s transition to a “new” business model which focuses on generating free cash flow and delivering quality returns for investors. Key to meeting that goal is becoming more efficient and cost effective in business operations through modern technology solutions. After assessing their 20-year-old, highly customized Oracle JD Edwards EnterpriseOne system, the Ovintiv leadership team determined the time had come to “modernize our foundation for future success.”

The company’s most pressing challenge was improving the process and speed for month-end accounting reconciliations and reporting. For companies involved in energy exploration, development, and production operations, joint ventures are a common business arrangement. Given the size and scale of projects along with the myriad of investors and landowners, the company adheres to Joint Venture Accounting (JVA) and Authorization for Expenditure (AFE) management methodologies. JVA allows for recording each owner’s share of the revenues, expenses, assets, and liabilities of the operation. AFE management software helps producers to manage the spending controls on large purchase orders to ensure sufficient funds before proceeding. Both help manage investor expectations and improve visibility into well-level activities.

Ovintiv has active operations in Texas, Oklahoma, Utah, Alberta, and British Columbia. As its multi-basin portfolio of sites grew in the US and Canada, completing month-end closing was taking five days—often around the clock—to hit the mandated deadline. In 2020, the company started the RFP process to identify a new solution.

Leading the charge for change

Over the years the company’s legacy Oracle solution became harder and harder to work with or enhance. “The core system itself was quite heavy and expensive to operate,” explains Diane Chen, Director of Finance, Shared Services. The system was supported by an internal and external team consisting of 20 people. And, with over 100 integrations and bolt-on tools, it had become unwieldy to maintain. “We got to the point where we were starting to look at automations, workflows, things like that, but it almost seemed like the core system was holding us back from being able to move quickly and adopt some of the newer technology that was coming out,” says Chen.

In addition, with data stored across many discrete databases, it was impossible to get accurate, on-demand insights. When something was updated in one place, it didn’t show up on other reports until the month-end reconciliation. And processes were 80% transactional work, leaving little time to look ahead, dive deeper into analytics, or utilize insights to make improvements. In fact, to meet their deadline, the accounting team had to begin the month-end closing process on the 25^th, missing the last five to six days of financial activity. Working around this created extra steps the team needed to take to account for the missing transactions.

After exploring multiple ERP providers, they selected Microsoft Dynamics 365 because of its robust cloud ecosystem, the breadth of capabilities, continuous reinvestment and improvements, and ease of extensibility. In addition, they chose Avanade as an implementation partner and EnergyCONNECT from MCA Connect, an Independent Software Vendor (ISV) solution, to address specific industry and business requirements for JVA and AFE. With the decision made, Ovintiv began working to plan its execution.

Building a stronger foundation

The Ovintiv digital transformation plan consisted of three key objectives:

• Replace in-house, on-prem Oracle data warehouse with Azure-based analytics.
• Deploy Dynamics 365 Finance and Supply Chain Management with MCA Connect ISV solution.
• Update and modernize the third-party production accounting system.        

Right from the beginning, the change management team had support from corporate leadership who communicated the need for, and value of, the new system on a regular basis to all staff. Part of the strategy included starting fresh and implementing a new ERP across all US and Canada entities.

The team took an agile approach which meant performing multiple small tests to validate or fail fast and apply learnings to subsequent steps. The change management group even dedicated an internal team to support the training and rollout.

To increase speed and reduce risk, an MVP (Minimum Viable Product) approach was selected. This would ensure that all essential functionalities worked at “go live,” but certain features and capabilities would come later, or may not perform perfectly on launch day. The change management team also communicated that the new tools and processes might not seem better right away, acknowledging that change is hard, and to be patient.

During the planning stage, they also took the opportunity to rethink their processes. They considered better ways to do everything—from simple tasks to complex reporting—and help the team to establish new norms while lightening their loads. This ultimately reduced the number of integrations from more than 100 to 15 required for the MVP. In addition, moving functions to Dynamics 365 enabled retirement of several ancillary applications, including Oracle Hyperion Financial Management (HFM), which had been used for financial consolidation, while reducing 600 legacy reports to only 50 at go live.

Some of the many integrations retired were related to data warehousing. Before Microsoft and Dynamics 365, a decades old on-premises data warehouse provided aggregated reporting data three or four times a day. A new Azure Data Lake data warehouse was built in tandem with the Dynamics 365 implementation. The near-real-time analytics from Dynamics 365 Export to Azure Data Lake are changing the way Ovintiv operates.

“We took a leap away from industry-specific software solutions to Microsoft products and Dynamics 365 because they’re always reinvesting in the platform and technology and could support our company-wide digital transformation process,” explains Chen.

The approach was a great success. With a solid strategy, testing, and hard work behind the scenes in advance of the rollout, Ovintiv went live with Dynamics 365 Finance and Supply Chain Management in less than nine months—on time and on budget. This is rare for large ERP transitions from on-premises to the cloud, but it is amazing for this complex industry.

Extracting value from technology

Although they’re still implementing new capabilities and features, the team is already reaping significant benefits and improved productivity:

Cost savings

With the modern architecture of Dynamics 365 and interoperability with other Microsoft services, Ovintiv has streamlined its technology stack, reducing complexity and increasing efficiency, and is projecting ERP-related cost savings of 30% this year.

Efficient management

With fewer ancillary applications and integrations, the team saves time toggling between multiple apps to perform a task and no longer suffers needless reconciliation steps to ensure data integrity. Workloads went from 80% transactional and repetitive to a majority well on their way to being analytical and strategic.

Brisk month-end close

Simplified month-end processes are now run on the last day of the month. All reporting data is up to date with no need to amend numbers for the last five days of the previous month. They simplified the Chart of Accounts from 9,000 to 1,000 and reduced duplication and redundancies in monthly reports. The older legacy system housed thousands of data assets that are no longer accessed, and hundreds of reports are now streamlined into consolidated insights created in Dynamics 365—shortening month-end processing from days to hours.

Timely, accurate, on-demand data

Dynamics 365 and export to Azure Data Lake provide near real-time data access. Using a modern data warehouse, the most current information is available when it’s needed, saving time, improving analytics, and generating actionable insights the company needs to meet its transformation goals. In addition, the team is now working from current data and content and knows they can access archival data if needed.

Increased automation

Using Power Apps, employees can now pursue more value-add projects for the finance team versus focusing on data manipulation and reporting. "We’ve been actively automating as much as possible with a number of applications that we've rebuilt using the power platform: a manual payment request, monthly Accounts Receivable and bank account reconciliations. There are several tools we've rebuilt and then a number of tools that we have built from scratch,” says Chen.

“Moving to Dynamics 365 has opened up so many possibilities for Ovintiv,” adds Michael Liedtke, VP of Accounting and Treasury at Ovintiv. “We’re now able to pivot quickly as our business and industry evolves and teams continue to streamline and automate processes—saving them time every day.”

Fueling a bright future

The team at Ovintiv is looking into additional Dynamics 365, Azure, and other innovative Microsoft solutions. Some of these include:

• Replacing an existing contract management solution with core Dynamics 365 functionality.
• Building out supply chain management areas of procurement, vendor collaboration, and inventory.
• Investigating further automation for AP invoicing operations.
• Continue utilizing advancements as they are released such as AI productivity support from Microsoft Copilot.
• Considering adding Microsoft Sales Copilot module and Viva Learning which may replace current ISVs.

With Dynamics 365, Ovintiv has the breadth of capabilities needed to continue its digital transformation.