S. P.

Jain Institute of Management & Research PGDM-2013-15

Enterprise Solutions
SAP Implementation in BPCL

In the rapidly changing environment with deregulation of Oil sector, new markets, new
competition and increasing customer expectations growing in an exponential manner,
BPCL realized the urgent need to review and reengineer its processes to stay ahead of
the competition. BPCL also felt the need to have an aggressive cost control initiatives in
place, well-informed and timely decision making process, flexibility to respond to
changing needs and a change in the way of doing business to take on the competition.

Therefore BPCL was looking at ways and means of ensuring that timely information is
available so as to facilitate effective decision making. However, BPCL realized that the
legacy systems and applications were mostly point solutions and the focus was on
automating tasks and there were time lag in information. In order to overcome these
limitations and to use IT as a differentiator BPCL needed a common enterprise-wide
backbone business solution.

BPCL took up implementation of SAP, an integrated, flexible and standardized
information system as a key strategic initiative to create a robust IT backbone, enhance
operational efficiency and introduce strong and dynamic systems to achieve sound
business performance.

The project named as Project ENTRANS an acronym for Enterprise wide
Transformation was driven by the business. Considering the size, complexity and the
geographical spread, BPCL went for a phased implementation. The project went through
3 phases viz: conceptual Design and Planning phase, Detailed Design and
Implementation phase and Rollout phase. The project team which started with a 6
member core team grew to a size of 160 at the peak of rollout phase.

SAP implementation was guided, monitored and supported by 11 member Steering
Committee consisting of SBU and Major Entity heads. Various layers and levels of people
in the organization were engaged in the project throughout the implementation cycle.

SAP was implemented using ASAP methodology. The multi-modular Implementation in
BPCL has user strength of around 3200. A well-trained and fully equipped BPCL project
team took up one of the largest SAP implementation project as a challenge to complete
rollouts on schedule, delivering quality results. This has enabled the organization to
switch over its business process smoothly from legacy system to the Best of class
business process offered by SAP. BPCL has successfully rolled out the solution at all its
374 company owned locations in a record time within the budgeted cost and time.

The core package of SAP R/3 consists of SD, MM, FI, CO, PS, PM, PP, QM, HR AM
PA/PCA and IM all of which have been implemented in BPCL. As a parallel effort, we
have also activated Corporate Functionality like Cash Management, Profit Center
Accounting, Profitability Analysis and Vendor Evaluation System.


The ERP project considered one amongst the largest in the Asia Pacific region had been
full of challenges which included the size and magnitude of implementation, establishing
connectivity at locations through the length and breadth of the country and training large
number of end users in a stringent time frame. The focused approach and commitment
exhibited at all levels in the organization has led to on time completion of the project with
no cost over run.

The project has created highly skilled and specialized resources that are in a position to
absorb and leverage on the new technologies to bring benefits to the business operations.
SAP R/3 has become a way of life in BPCL for the 3200 strong end user community. With
the implementation of the world class system, BPCL has developed a large number of
knowledge workers behind every business operation.

All the business processes of the organization are run on SAP R/3. The company now
runs on a single system with 100% of the business in SAP. BPCL does not have any
parallel legacy system.

Besides aggressive planning and execution of rollout at sites, the challenge for the
project had been transition from legacy system to the new SAP system, identification of
roles, communication and training of users in the SAP processes. We have been able to
manage the change effectively and stabilize the functioning of locations in the new
environment.

Auditing of accounts in the SAP system by Statutory and Government Auditors has been
completed satisfactorily. We have also completed review of controls and security aspects
in SAP with the objective of securing these areas.

The system benefits both the external and internal customers in many areas and in
many ways. The system enables the company to have a single interface with the
customer. As an example, the customer who needs different petroleum products at
different locations is able to the tender payment at one place and able to have a
common customer accounting view. The customers requirements are met with by
different supply locations instantly with the availability of on line information.

With a single data entry, the system updates all other relevant records thus eliminating
repeated data entries and repeated manual interventions which otherwise would have
led to errors, reconciliation and duplication of efforts. The real time online information
enables managers to take timely business decisions based on accurate data.

BPCL is reaping the benefits of the integrated system in many areas of its operation.
The system enables the locations to maintain optimum level of hydrocarbon and non
hydrocarbon inventory which is one of the key areas of benefit. On line availability of
information help the organization to collect the receivables in time and thus have a
better working capital management and improved responsiveness to customer and
market requirements. The company is in an advantageous position by effectively
managing the Supply-Chain & removing suspense stock and track transit stocks

effectively. The procurement teams have been able to bring down the procurement
cycle time with on line availability of real time information

BPCL has activated Cash Management functionality, which would make available the
short-term liquidity forecast thereby facilitating effective management of funds and
borrowings. This would optimize the interest outgo while ensuring that no funds remain
idle. Profit Center Accounting which has gone live provides online view of the operating
results including the return on investment in the internal units of the Organization. This
helps in close monitoring of performance and effective remedial action in time.
Profitability Analysis provides a detailed profitability analysis of the different market
segments. Based on this analysis a number of significant decisions on pricing focusing
on specific segments can be taken in a scientific manner.

BPCL is ably leveraging on increased efficiency and productivity with better
accountability bringing in quantum benefits and profits in all its area of operations at the
sites which have gone live on SAP. Thus BPCL has emerged as one of the very few
companies in the country privileged to have such wide functionality and multiple
modules implemented to support all of its business operations.

Some of the other areas of benefits are:

Reduction in LPG cylinder circulation ratio by 0.2 % resulting in huge cost saving
Reduction in indent to cash cycle time
Reduction inventory holding of stock items in Refinery by 22%
Reduction in procurement cycle time in Refinery by 50 %
Optimized inventory level of finished products and raw materials
Better control over receivables leading to better working capital management
Predictive maintenance leading to increased plant availability
Repair / replacement decisions based on equipment history and maintenance
costs
Reduction in time spent on reconciliation, follow up and reporting activities
Automatic generation of purchase indents based on min / max inventory levels
Integration from Purchase to Finance to capitalization of Assets
Improved responsiveness to customer and market requirements

SAP improves the internal efficiency to further enhance shareholders value and customer
services. It enables the company to have a single interface with the customer. The
customers requirements are met with by different supply locations instantly with the
availability of on line information. The real time online information supports timely
business decisions based on accurate data.

Importance and criticality of change management can not be underestimated in a
project like ERP implementation as it is going to impact the individual in one way or the
other as a result of the project. Change management effort should start from the
beginning of the project and it should run parallel to the project till the desired objective
is achieved. Change management is unique to an organization and one need to drive
this initiative based on the culture, climate and type of the organization.


Top managements commitment and support are of paramount importance to the
success of any ERP implementation and BPCL is proud to have enjoyed such a support
and commitment from the top management throughout the project life cycle.
The factors which have contributed to the success are:

Top management commitment and support to the project and project team
members
The operational freedom extended by the organization to the project team
Involvement of stakeholders, process owners, location anchors and power users
at each stage of the project
Full guidance and support rendered by the steering committee

We contained our implementation cost within the budgeted cost. Some of the
contributing factors are:

We had practically avoided any scope creep during the project
We reduced our dependence on the consultants by enabling our internal
resources to acquire the knowledge and confidence about the product.
We treated our vendor as a partner.
We took charge of the project from day one and never let it go off our hands.

Yet another initiative successfully implemented was Business Information Warehouse
which enables the management to take strategic and business decisions based on real
time accurate data.

The Company has also gone live with Management staff pay roll in J une 2001 and Non
Management staff pay roll in April 2002, thus bringing the 12923 staff under largest pay
roll system operating in SAP R/3 in the country.

BPCL has set up one of the largest Centre of Excellence (COE) in the country to pursue
continuous business improvement, add new functionalities in SAP, handle technological
support and provide training and support to the end users. The disaster recovery site
has been set up for the production environment to ensure business continuity in the
event of a disaster. The hardware has been upgraded with high-end superdome servers
to cope up growth of database.

Other uniqueness of the project is as follows.
Involvement of stakeholders, process owners, location anchors and power users
at each stage of the project
Seeding of change management right from beginning throughout the project
Taking charge of the project from day one and we never let it go off our hands.
We kept scope creep to the minimum.
We never cut cost on training. We always believe it to be an investment, which
has paid rich dividend to the project.

We have in our project 100 SAP certified internal consultants, highest number
by any standard in any project.
Top management commitment and support to the project and project team
members
Operational freedom given to project team since its inception.
Full guidance and support rendered by the steering committee to the project
team

In recognition of its achievement in making SAP implementation a success story, BPCL
has been awarded the coveted Star Implementation Award by SAP.

The excerpts from the award from SAP read as follows.
"BPCL has the distinction of having executed one of the most ambitious SAP
implementations in the country The SAP implementation puts BPCL in a firm position
to initiate e-business forays. Thus, BPCL is one of the finest examples of focused, result-
oriented SAP implementations that has been made possible due to extraordinary top
management vision and commitment and an equally responsive team of Project
ENTRANS, who drove change through the organization.
The leadership that you have shown in planning, execution and roll-out of SAP across
your organization has created a benchmark which others will seek to emulate in times to
come."
BPCL is the only privileged company in the country to have been inducted as a member
in GIAC ( Global Industry Advisory Council) of SAP alongside International oil majors
like British Petroleum, Chevron Texaco, Citgo, Exxon-Mobil, Petronas, Petro SA, Saudi
Aramco, Shell, Stateoil, TotalFinaElf and Conoco-Phillips.