Speeding up exploration

  • 21/04/2008

  • Financial Express (New Delhi)

For a large enterprise such as Oil India Ltd (OIL), which has a number of offices including those at remote locations, information integration is important for enabling transparency and speedy decision-making. Oil India wanted to have a system that would integrate its processes and systems to streamline oil exploration, production as well as the transportation of crude oil and natural gas. It wanted to get a quick overview of information pertaining to its operations. The company has over 1,00,000 sq km of concession area (onshore) for carrying out hydrocarbon exploration and production activities. It also transports crude oil produced in the northeast region through its 1,200 km integrated cross-country pipeline to five refineries in the region. The company also produces LPG at its LPG recovery plant in Assam. Due to its large-scale operations and widespread offices, Oil India found that operations management had become inefficient. AN Saikia, general manager (ERP), Oil India Ltd, explains, "Although there were islands of computerisation, most of the processes were being done manually and were paper-based. There was complete disintegration of information that was affecting the decision-making process. The business processes of different departments did not talk to each other." Additionally, although Oil India had invested in software solutions in the past to handle its operations, they were not well integrated, and data interchange across the organisation was inadequate. To add to the existing problems, the data transfers were one-way and maintained in disparate systems. Even the business transactions were not fully automated. There was a delay in processing and capturing business information, which, in turn, led to delay and inaccurate decision making for the organisation. There was also inaccurate budgeting and costing and there was a tonne of unclean data whose existence hampered analytical studies. The lack of a project management system and burgeoning inventory contributed to the company's woes. There was a direct impact on account closure as well. Account information was unavailable on a real-time basis and in case of any expenditure for a particular task/project there was no transparency with regard to data. For instance, for LPG production from a particular plant, the costing of the plant-in terms of turnover, capacity and consumables-could not be properly ascertained as all the relevant data had to be manually compiled. There was also no proper inventory control as the materials department lacked real-time information about the materials in stock, in transit at any given location. It was also challenging to raise a quotation in real-time due to the lack of an integrated information system. Oil India drew up stringent parameters to evaluate an ERP system for its set-up, as it wanted to address multiple issues by implementing the system. During the process, three major ERP vendors-SAP, Oracle and JD Edwards-were evaluated. Different departments of Oil India had made business script demonstrations in front of these vendors. The demonstrations involved a script of different issues that each department hoped to resolve by implementing an ERP system. There were about 50 such business scripts. Oil India looked for an ERP solution provider with vertical capability in oil and gas exploration. A partner with referenceable customers was desired. A comprehensive set of evaluation criteria was laid down and the short listed products were meticulously evaluated and rated. "Primarily, we needed a product that had the best credentials for oil and gas upstream. Nearly 3,000 functional needs were identified, covering all the business requirements of OIL," says Saikia. Most importantly, various vendors were evaluated in terms of number of sites (worldwide) that they had successfully implemented and their total oil and gas industry implementation experience, product features and the R&D efforts and lastly, the product road map was also evaluated. Based on this stringent evaluation, SAP (mySAP ERP 4.7 version) was selected as the best-fit package for the company's needs. SAP scored high mainly in the areas of vendor credentials and also its R&D effort and road map to support the oil and gas industry vertical. The implementation project was dubbed 'Project Aarohan' and it kicked off in April 2005. A lot of customisation was done with the challenge being to manage a large-scale implementation. SAP had to be implemented across 11 scattered locations and all modules including finance and inventory, material management, HRMS, sales, production, BI, SRM, CFM were implemented. A total of 80 people were involved in the implementation. A 50-member internal team and a 30-member team from SAP India Consulting were involved. Post implementation, Oil India has derived significant benefits, as there has been centralisation of information resulting in corporate visibility. The end-to-end process of production, sales, delivery and invoicing both product and area-wise details are now available online and in real-time. All processes, from contract requisition to payment, have been automated and the asset data is available on SAP. Budgetary control has been established. The ERP system has streamlined the HR processes and post implementation, all employee payrolls are processed through the system. With overseas operations in Libya, Gabon and Nigeria, Oil India plans to gradually extend the ERP system to these locations in the future.