Maximizing ROI with AI in Land Departments

Energy companies move fast, so efficiency and accuracy are paramount. Land departments, in particular, juggle numerous tasks—from managing leases and contracts to ensuring compliance and optimizing resource allocation. AI can be a game-changing technology that promises significant return on investment (ROI) if implemented correctly. But how do we quantify this ROI? Let’s break it down.

The Need for Quick ROI

According to G2’s 2024 Buyer Behavior Report, the pressure to achieve quick ROI is increasing. Here are some key stats:

• 57% of all software buyers expect to see ROI within 3 months.

• 75% of AI power users expect to see ROI for AI investments even faster.

This expectation isn’t just limited to general software. AI is being integrated into various go-to-market (GTM) functions, enhancing contract analysis, owner relations, negotiations, content generation, and more.

Understanding the 5 Types of ROI

To truly grasp the ROI of AI, especially in a specialized field like oil and gas, we can look at the five types of ROI identified by GTM Partners:

1. Attributable ROI

Description: Clear linkage between investment and revenue outcomes. More investment equals more revenue.

Measurement: Direct revenue (Pipeline, NRR, ARR), tangible outcomes/deliverables.

Example: Incorporating AI to enhance lease management can directly impact revenue by identifying contractual entitlements and increased production share.

Measurement: Identify the tangible values in the contract leading to direct revenue gains.

2. Transformational ROI

Description: Helps companies transform but relies on the organization adopting changes to see value.

Measurement: Access to new markets, improved employee satisfaction, reduction in headcount.

Example: AI-powered data analytics can transform how land departments acquire and manage their assets, outperforming their competition.

Measurement: New portfolio additions and enhanced strategic planning capabilities.

3. Efficiency ROI

Description: Clear link between implementation and cost reduction or increased productivity.

Measurement: Lower costs, fewer people, faster operations.

Example: AI tools can automate repetitive tasks such as data entry and compliance checks, significantly reducing labor costs. Automate what you can to give greater focus to value-adding activities.

Measurement: Calculate savings from reduced man-hours and increased productivity.

4. Necessity ROI

Description: Essential technology for running the business.

Measurement: Ease of use, value for money, service and support quality.

Example: AI-driven lease compliance management systems are essential for ensuring contract adherence in land operations, particularly post merger or acquisition.

Measurement: Evaluate based on ease of use, integration with existing systems, and compliance accuracy.

5. Indirect ROI

Description: Provides improvement in one business aspect, but the direct link to overall improvement is less clear.

Measurement: Influenced pipeline, revenue, and conversion funnel metrics.

Example: AI can provide predictive insights into competitor patterns, indirectly boosting found opportunities.

Measurement: Analyze improvements in operational and acquisition planning.

Steps to Get Started with AI for Data Management

To realize ROI, especially in data management, it’s crucial to start with clean data. Here’s how to get started:

1. Assess Your Data Quality: Identify missing values, duplicates, inconsistencies, and errors.

2. Define Data Standards: Set clear guidelines for data entry, format consistency, and handling missing values.

3. Automate Data Cleaning: Use AI tools to identify duplicates, correct inconsistencies, and fill in missing information.

4. Regular Data Audits: Conduct periodic reviews to maintain data quality.

5. Training and Documentation: Ensure your team is well-trained in data management best practices.

Professional Data Management: A Smart Investment

While AI can automate many aspects of data cleaning, consider leveraging professional data management teams. They bring the expertise needed to ensure thorough and effective data organization, maximizing the ROI from your AI investments.

Unlock Value From Your AI Investments

AI holds immense potential to revolutionize land departments in the oil and gas industry. By understanding and applying the different types of ROI, and focusing on clean data and professional management, companies can unlock significant value from their AI investments.

Remember, it’s not just about replacing entire workflows but enhancing individual steps to drive overall efficiency and productivity.