Spreadsheets, Headaches, and Wasted Time: Inside Energy’s Broken Bidding Process

By Jacob Gritte, General Manager, Source-to-Pay Solutions

From the moment an energy company needs a supplier for a project to the moment final payment is rendered, a lot can — and often does — go wrong. For both operators and the vendors they rely on for equipment and services, challenges abound at every turn.

We’ve talked about why it’s so much harder than it needs to be for everyone in the energy ecosystem to work together to deliver projects, and why we believe ground zero for this challenge is the source-to-pay (S2P) lifecycle. 

Let’s be clear. Everyone is getting by, but for an industry that in the US will spend $1T in the field this year, every percentage point of inefficiency matters. And costs are measured in more than just dollars — there’s also safety, productivity, and execution risk at stake. 

Bidding is the opening gambit in that purchasing lifecycle, known as S2P. It may be limited to the first few moves, but it can determine the outcome of the game. So while it might seem like a small or even insignificant step, we see it as an area where the industry has missed a massive opportunity to improve how it operates, and get more value out of every dollar it deploys.

The Operator’s Experience Today 

Here’s a story that illustrates how bidding typically works for operators:

It starts with John, an operations superintendent at a midsized producer in Midland, TX. John needs bids for onsite accommodations on an upcoming project. (For anyone who isn’t familiar with Oil & Gas field operations, ‘onsite accommodations’ are the temporary living quarters and all related amenities provided for workers at a job site.)

John has two vendors in mind, and pulls up Google to find a third he’s never worked with. He emails requests for bids to Joe at Gravity Rentals, Karen at Blackwing Well Services, and a third to the inquiries email for the vendor he found on Google. 

He includes the basic details — services required, location, dates of service, and so on — and a templated form so that each vendor can get back to him with pricing for the services he’s asking for. In this case, that includes a 2-bedroom trailer house, internet service, trash trailer, fresh water stations, and Porta Potties for a new drill site. 

Despite the Excel template John sent to standardize the bids…

• Joe replies with a PDF proposal, with some caveats and questions for followup.
• Karen replies with an Excel sheet that her company uses for all their bids.
• Steve at Mesa Services Group (the company he found with a Google search) replies with a one pager about the company and a Word Doc attachment containing his bid. 

Each bid is formatted differently, so John creates a new Excel spreadsheet. This way he can collate the pricing and related details for all three of the bids he received, and compare them side-by-side. 

In the process, he notices the pricing for Mesa Services Group is substantially lower, but he also realizes he didn’t get basic safety and insurance details from Bill, so he emails Bill to make sure Mesa Services Group is really an option that he can consider, and pulls up ISN to vet their safety ratings, which check out.

The next day, Bill replies, and John learns that Mesa Services unfortunately doesn’t meet his company’s insurance requirements, so he’ll need another vendor to meet his company’s requirements.

Eventually John gets a referral from a friend — Blake Rentals — and, after confirming this company is eligible to work on the project, he can compare it with the other two. He’s got some unanswered questions. Blake Rentals’ pricing seems high, but inflation is also high, so maybe it checks out? Either way, he doesn’t have anything to compare it to, so it’s time to make a call and move on.

In the end, John goes with Blackwing Well Services, even though the bid was higher than he was expecting. Better to keep things running with a reliable vendor than risk a disruption, he decides. 

If you’ve made it this far, you’ll have noticed a few things.

From start to finish, John has spent many hours working on bids for a single service. And that’s just one of hundreds of services required to operate the projects he oversees. 

Because it’s so time-consuming to run bids manually, John is much more likely to run competitive bids for large, strategic investments, and usually will forgo bidding on smaller tactical services. (And we haven’t even scratched the surface of how time-consuming this process will become.)

The process unfolds entirely in email and Excel documents, local to John’s computer. This means that:

• John’s team doesn’t know where things stand unless they call to ask him, which takes even more time.
• Once a vendor is selected, hand-off to procurement and/or onboarding teams is manual, often raising new questions for John which he has to handle, before direct contact is made.
• To initiate the handoff, John has to go and fill out forms in a new system to trigger onboarding of the vendor in question — yet more hours in which he’s pulled from more high-impact priorities to take care of logistical requirements.
• The pricing from any of the three bids received — valuable information John and his colleagues elsewhere in operations or in other departments (supply chain, procurement, accounts payable, and finance, to name a few) — is sitting on John’s computer, where it can’t be accessed or leveraged by others.
• So when John’s friend Erin, who manages operations up the road, needs the same service called out, she has to start where he started, rather than being able to see the latest pricing from other projects in her region to know if the bids she’s getting are competitive.
• And finally, 60 days after John’s chosen supplier, Blackwing Well Services, submitted the invoice for completed work, John gets a call from Stacy in AP — she’s at risk of delaying payment because she can’t locate the initial bid to be sure the pricing on the invoice matches the agreed-upon pricing from the estimate. 
• John goes digging in his email. The cycle continues…
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Supply Chain 101

Competition = pricing leverage. Nothing is more effective in reducing the cost of goods and services than healthy competition.

The industry needs a solution that helps energy companies operationalize competitive bidding, so that John and Erin can be sure they are paying the right price for goods and services. So that Stacy in AP has the data she needs to quickly and accurately process invoices without picking up the phone, and so that the teams back at HQ can improve spend management systematically, across all of the goods and services they procure.

Imagine what John could accomplish if he wasn’t stuck in this maze of bid-related activities.

The Suppliers’ Experience Today

For all the headaches on the operators’ side, bidding is no walk in the park for suppliers either. For the majority of energy services companies, sending out new bids is just one of many responsibilities shouldered by the teams that run the business. 

Some of the challenges they face:

Teams are pulled in many different directions. And if they are good at what they do, a constant stream of RFQs and informal bid requests is flowing across their desks.

Every operator has its own structure and format for receiving bids, and asks are made with different levels of fidelity. This explains why suppliers often feel like they’re playing a guessing game. 

It would be hard enough to respond to RFQs above and beyond other responsibilities if they were formatted consistently. Making suppliers decode them on a case-by-case basis only increases opportunities for error — and increases the back-and-forth that inevitably comes in the space between bid submittal and project approval.

Depending on the size and scale of the bid, the response may require inputs from different departments, but there isn’t a great way today for teams to collaborate on a single bid. 

Typically a point person is interfacing with the client, but their collaborators may not be on the email thread, and there often isn’t a single place to work together to fill in the gaps or ask clarifying questions. This creates more work for the point and their colleagues, and slows down the process from RFQ acceptance to delivery back to the client.

Each competitive bid is a chance to play the game. But it’s often unclear when the game is over and, when a service company loses out on an opportunity, why that is. Everyone knows what it’s like to put time into an RFQ and be ghosted. If a supplier can’t get feedback on why they weren’t selected, how can they improve when the next opportunity comes their way?

There is a Better Way

For an industry that is skilled at making long-term bets, it’s time to solve the problems that lie in the opening gambit. To overcome the inertia of the status quo, and to look at bidding as a critical step in a much bigger universe: consider it in the context of the source-to-pay lifecycle.

When bidding — and all the critical data it involves — is captured on a single unbroken chain from sourcing to payments, everything changes.

For Operators

The same rigor that’s applied to strategic bidding today can be applied to every category of spend, regardless of size. 

John from Operations can spin up RFQs using a standard process in no time, and can see results side-by-side with no manual collation. He can see pricing for previous bids for similar services in his region, as well as execution data, so he can start with the best, most cost-effective supplier, even for just-in-time needs.

Stacy from AP can see not just prior bids but contracts, work orders, and even contact details for every invoice that comes across her desk — all in just a few clicks. No more calling Karen at Blackwing Well Services to ask about an invoice from two months ago. And in the not so distant future, the data captured in accepted bids will flow through to contracts, work verification, and payments, without Stacy lifting a finger.

For Suppliers

At last, they can efficiently respond to RFQs while juggling other priorities. No more decoding of asks and formats. No more guesswork.

Team members across departments can collaborate on responses, with a single source of truth for the bid as it stands.

Once a response is delivered to the client, they can turn their attention to the job at hand, and spend less time on the back-and-forth between submittal and decision day.

Win or lose, they always get an answer. They also receive feedback so they can adjust or improve next time if necessary.

More efficient and accurate response rates means more opportunities to win work, and fewer RFQs passed over because no one had the time to respond in the moment.

Lasting Solutions Require a Unified Strategy

It will take solving for both sides of the equation — energy companies and their suppliers — to crack this nut once and for all. And it will require adoption by both sides of the equation for these improvements to deliver a step change for the industry. But make no mistake, the stakes are very real.

With every step forward — AI, electrification, you name it — meeting the rising energy needs of the world is becoming a steeper and steeper mountain to climb. Energy companies must find ways to reduce costs and increase profitability in order to invest in the solutions the world needs, and to become the energy giants of tomorrow.

When you consider how central competitive bidding is to managing costs, and thereby efficiently deploying capital, these global challenges and John’s challenges in West Texas aren’t actually very far apart at all.

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As General Manager, Source-to-Pay Solutions, Jacob Gritte oversees the overall strategy, as well as the marriage of product and go-to-market functions, for all solutions that sit within the Source-to-Pay umbrella at Workrise. Jacob holds a degree in Petroleum Engineering from Texas A&M and lives in Austin, Texas, with his wife and three children.

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