Scaling IT at Penn Virginia Corporation

Gary Bailey built the IT infrastructure for Penn Virginia Corporation as it grew from 2005 to 2010. He then had to turn around and downscale carefully when the company contracted.

When Gary Bailey joined Penn Virginia Corporation in 2005, the company was composed of a dense web of interconnected businesses. It was engaged in oil and gas exploration and production in several geographic locations, and it also owned a controlling interest in Penn Virginia Resource Partners, a publically traded partnership occupied with natural resource land management and the gathering and processing of natural gas.

Gary Bailey, Penn Virginia Corporation
Gary Bailey, Penn Virginia Corporation

Bailey, a veteran of the IT world since the days of Hollerith’s punch cards and mainframes, had been in the energy industry since 1982. He was tasked with expanding Penn Virginia’s technological framework to better fit its multifaceted corporate structure. As he worked toward his current position as vice president of IT, he built his team from two to fifteen, upgraded various technologies, and, in concert with the accounting and management teams, switched the company over to SAP’s intricate ERP software in 2007.

By 2012, though, Penn Virginia had divested its interest in Penn Virginia Resource Partners to become a pure-play exploration and production company focused on unconventional shale plays. Its headcount fell significantly as a result. And Bailey’s job completely reversed course, from building up the company’s increasingly complex technological framework to downscaling it.

Bailey got his start in computer accounting and auditing and understands well the importance of maintaining the right amount of IT infrastructure for the right amount of money. He knew by 2012 that though SAP’s software had been appropriate for the kind of multifaceted company Penn Virginia had been, it was too complicated and costly for the focused company it had become. The software, built primarily for retail and manufacturing companies, was grand in scale and server intensive, and it included modules that Penn Virginia didn’t even need. “It wasn’t because of functionality or because SAP had a bad product; in fact, it is a very good product,” Bailey says. “It was just because it was unnecessarily complex and expensive for our needs. It’s like having a mansion, and you only use the bedroom, the kitchen, and the TV room, but you still have to pay the utility to cool it and heat it and maintain it.”

To remedy this, Bailey worked again with Penn Virginia’s accounting and management teams to transition the company to Enertia’s ERP software. Enertia runs in a more basic Microsoft SQL Server environment, has a smaller technical footprint, and requires far less third-party support. According to Bailey, Enertia has approximately 150 oil-and-gas customers whereas SAP has significantly fewer—and most using SAP are large companies that need to track a vast amount of data.

The most difficult part of the conversion was condensing the data in the SAP system to fit it into the new Enertia system. “It’s like putting ten pounds of sand in a five-pound bag,” Bailey says. “You’d take column A, compare it to column B, and do some calculations and interpretations to derive the data that Enertia was wanting. You multiply that over a hundred or a thousand times, then all of a sudden you can see how difficult the data conversion was.” Bailey and his team spent more than half a year compressing the data, but when they were done, Penn Virginia had a leaner ERP system that better matched its business needs. Bailey estimates the new system, over the course of its first five years, will save the company approximately $3 million.

To round out the capabilities of the Enertia system, Bailey, in collaboration with key departmental managers, has also implemented a few special-purpose software products: EMK3, 3esi, and RIMBase3. The first handles Penn Virginia’s marketing concerns (product pricing, purchaser information, transportation costs to deliver the products, etc.), the second tackles planning and forecasting matters such as cost estimates for new drilling projects, and the third helps track the management and operation of the company’s wells.

As a final move to scale back, Bailey has switched Penn Virginia’s telecommunications infrastructure from a multiprotocol label-switching (MPLS) network to a simplified virtual private network (VPN). The MPLS network was a dedicated system that worked well when the company had offices in several states, but now Penn Virginia can maintain privacy among fewer locations using the VPN’s firewalls.

Bailey hasn’t had to further stabilize his company’s IT infrastructure through colocation because he already did so in 2010. Penn Virginia’s data center now resides in a CyrusOne facility that is protected from heat, extreme weather, power failures, and physical security breaches, saving the company serious money on data center management costs.

Between 2016 and 2018, Bailey aims to continue strengthening Penn Virginia’s security against cyberattacks while adding new business-intelligence, enhanced-management-reporting, and mobile capabilities. And, no matter the update, he’ll work to make sure it comes at the right price.