THE BPCL STORY

An Enterprise Systems & IT Strategy Case

Presentation

Submitted By:

Group Epsilon

Palash Acharya (20135045)

Purvi Upadhyay (20135049)

Roshni Nair (20135051)

Submitted To:

Prof Harshal Arolkar

Visiting Faculty (ES & ITS)

SPM, PDPU

BPCL COMES TO LIFE..

• 1952- Burmah Shell Oil Refineries Limited

• 1975- Bharat Refineries

• 1977- Bharat Petroleum Corporation Limited

• 1990s- India’s 2nd Largest Oil Company

• 1992- Govt. disinvested 30% stake

• 1998- Govt. further disinvested 26% stake

• 2000- 32% Market Share in Petrol & 27% in Diesel

• 2001- 4500 Outlets (60% Owned/Leased- Highest for any OC)

• November 2001- First Indian Oil Company to implement ERP (Much

ahead of competitors IOCL & HPCL)

WHY ERP?

• Planned increase in Non-Fuel Revenues (VAS).

• Need for IT initiatives in post-APM era.

• Organizational Restructuring into 6 SBUs-

• Retail

• Aviation

• Lubricants

• LPG

• Industrial & Commercial (I&C)

• Refinery

• Need for Streamlining processes

IT INITIATIVES @ BPCL

• Three-Pronged Strategy

1. Creating Communication Network

2. Creating Basic Information Network

3. Process Transactions with customers across the country.

WHAT? WHY? HOW?

Creating Communication

Network

1. High cost of traditional

communications

2. Slow sharing of

information

3. Need to communicate

with recipients across

locations

Microsoft Exchange

Server Intranet

Creating Basic

Information Network

Need to facilitate

information retrieval from

corporate databases

Query By Mail (QBM)

Process transactions with

recipients across the

country

1. Need to offer better

and standardized

services

2. Internal employee

connections

3. Building employee

skills & competencies

VSAT hub

THE BPCL-ERP STORY

• Project CUSEC (Customer Services & Satisfaction)

• Finalization of SAP R/3

• Used by most Oil Majors

• Only ERP offering Oil Industry Specific Package

• Only ERP offering Indian Industry specific package

• BPCL appointed consultants Coopers & Lybrand for planning

SAP R/3 implementation.

• Rise in revenue by 2.28% after implementation in spite of

overall reduction of 3.4% in Petroleum Industry revenues.

THE SYSTEMS

• Security for Online Business

• Sun Ultra 5 Firewalls

• Real Secure

• Internet Scanner

• Floodgate

• Web Trend & Web Sense

• Quality Assurance Server (QAS)

• A Compaq Proliant NT Server, an SCO Box

• A Tivoli Enterprise System Management (ESM)

PROJECT ENTRANSERP SYSTEM IMPLEMENTATION AT BPCL

A NECESSITY IN CHANGING TIMES

• 1991 economic reforms

• Partial deregulation of the sector

• Imperative to remain competitive through improved customer

service and customer satisfaction and to transform the

company into a Learning Organization

IS PLAN

• Massive restructuring undertaken at all levels of the organization;

CUSECS initiated.

• Evolution of IS: replace the existing batch-process-oriented legacy

systems with a state-of-the-art ERP system.

• Mapping of major processes;

• Pre-selecting, validating and evaluation of ERP products

• Training provided to employees

• Involvement of all stakeholders including vendors; SAP R/3 software

selected

IMPLEMENTATION

• A Project Steering Committee (PSC) was constituted with the

heads of all the SBUs, Finance, HR, and IS as its members.

• Conceived in two phases:

I. Conceptual Design and Planning (CDP)

II. Detailed Design and Implementation (DDI).

IMPLEMENTATION

• SAP's ASAP methodology for implementation consisted of five

distinct phases, viz., project preparation, business blueprint,

realization, final preparation, and go live and support.

• However, in BPCL, the whole project was divided into a pilot phase

and a rollout phase.

• All the SBUs went live at one or two locations and only after their

stabilization, the remaining locations were added.

PILOT PHASE

• Three sites were selected: Refinery, Wadilub Lubricants Plant,

and a Lubs C&F Agency at Pune.

• Criteria : business and IT-readiness, proximity to project team

(Juhu, Mumbai), salience of processes involved.

• The SAP modules implemented during the pilot

implementation were FI, MM, QM, PP, SD, PM, IS oil, and CIN

BENEFIT

• Tasks becoming tedious and time consuming

• Formalization required

• Configuration issues

• Discipline enforced

• Data made available

PROBLEMS FACED

ROLL OUT PHASE

• A team comprising ENTRANS, Business, and IS would visit the location and

ascertain its readiness for the roll-out in terms of hardware, software, and

connectivity

• The training of the users would be conducted at the suitable location.

• The actual roll-out team will then go to the location and execute cut-over

to SAP R/3.

• Support provided in the form of CCSE.

CHALLENGES AHEAD

• The cost estimates of the project do not cover disaster recovery or networking.

• Many of the estimated benefits could be attributed to networking of the locations and not to

ERP.

• No process reengineering in BPCL's implementation.

• The change in process and consequently in roles has been software-driven and not through

a radical business review.

• Without process reengineering, ERP provides mere process automation and integration that

can lead certainly to downsizing of the workforce. BPCL's benefit list does not include any

man power reduction.

• In order to provide for benefit measurement (project evaluation), there should be

benchmarks for the key parameters. In the absence of these benchmarks, benefit

measurement remains a big question mark.

• Optimization

• Impact on productivity and creativity of workforce.

• Redefining of roles and expertise.

• Flexibility

QUESTION & ANSWERS

Question 1: Explain the reasons behind BPCL’s

decision to implement SAP R/3 ERP solution

against the backdrop of the company’s IT initiatives

that began in 1996.

REASONS BEHIND ERP IMPLEMENTATIONS

• To integrate all activities

• To speed up decision making

• Respond faster to customer needs and to retain them

• To show differentiation in service

• To streamline processes

• Retain market position

Question 2: Examine the ERP implementation exercise at

BPCL and comment on the infrastructure utilized for the

same. Also analyse the benefits reaped by the company

as a result of the exercise.

INFRASTRUCTURE REQUIRED

• Intranet

• 7 web servers

• VSAT hub

• Routers and switches

BENEFITS FROM ERP

• Customers track the status of orders online

• Inventory Management

• Petro card and Fleet card

• Information retrieval from corporate database

• QBM

• Communication cost reduced

• Increased its share of I & C customers from 14.9% to 15.8%

• Revenue grew by 2.28%

• Employees constantly connected to each other and outside world

Question 3: Analyze the pre-requisites for a successful

ERP implementation. Also comment on the future of the

ERP market in India keeping in mind the global

slowdown in the IT industry in 2001.

PRE- REQUISITE• Top-Management Involvement

• Strong & Multi-talented Project Management

• Active Risk Management

• Project controls on schedule & scope

• Capable Teams

• Good External Consultants

• Transition Management

• Balance of IT & Business emphasis

• User Involvement

• Clear & Measurable Project objectives

• Open Communication to entire company

FUTURE SCOPE (AFTER 2001)

• Rise of SMEs- Module Specific Implementations

• Larger firms focusing on ERP II, i.e. SCM & CRM

• Emergence of ERP consultants

• Total Cost reduced since country specific localizations

available

• Collaborative ERP

Thank You