Implementation of SAP ERP in ONGC

Arpit Agarwal (B01) Rishikesh Ashar (B05) Ankur Gupta (B21) Aditya Nadimpalli (B38) Abhinav Pattarkine (B45) Praveen Rajagopalan (B47) Apoorv Singhal (B54)

About ONGC
ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994 The Government disinvested 2 percent of its shares through competitive bidding in 1994.

During March 1999, ONGC, Indian Oil Corporation (IOC) and Gas Authority of India Limited (GAIL) , agreed to have cross holding in each other's stock

In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC diversified into the downstream sector

ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL)

Pre ERP days

ONGC used PCbased legacy system for material management, project monitoring and maintenance planning

Information is as valuable as oil for any organization and sometimes harder to locate

ONGC felt the need for a solution using IT to solve the problems in streamlining the business processes, and integrating all the information along the enterprises core business processes

ONGC spans across 10 countries outside India- from Russia to Venezuela

Leveraging IT
Existing Environment
Database: Hardware: Operating system: Oracle HP, Compaq, IBM and Sun Microsoft Win NT, Sun Solaris, and Unix

1996 ONGC undertook Project Kuber for an integrated financial system December, 1999 ONGC started Project Shramik for automation of HR Modules Shortcomings of piecemeal implementation of SAP Lack of real-time information Monthly reports generated were insufficient to take forward-looking managerial decisions Need for integrating all functions of the company under one umbrella

Implementation Plan
ONGC had the IT mission to develop an integrated, flexible and standardized Information Technology architecture for fundamental competitive advantage.

The organization decided to realign its business processes to bring all the legacy systems under a common ERP. The vision of the then C&MD Mr. Subir Raha to have One organization, one data, one Information ushered in a new era of organization-wide information sharing, and its use would enhance business efficiency. ONGC before the implementation of project ICE monitored its activities on daily, monthly, quarterly and annual basis. This required comprehensive, exhaustive multi process based data integrated manually with each other. In absence of any integrated online data systems, key executives always had to face time lags between the activity period and data availability, resulting in constraints in logical decision making. This crisis led to creation of an IT landscape that was decentralized, comprising of multiple stand alone systems and packages. Evidently an integrated information system for good governance was missing.

ICE Project Objectives

Information Consolidation for Efficiency (ICE) Optimization and standardization of business Availability of information on real time basis Elimination of duplication of activities Facilitate information consolidation at corporate level Availability of information at the right time Integrating all business applications

Key Benefits of Project ICE

Better Decision Support
Better Operation Control Effective Cost Management Enabling Internal Performance Measurements (KPIs and SLAs) Improved responsiveness to changing market / global conditions Enabling Transformation
Alignment to new Organisation Structures e-Corporation

Chosen Partner: SAP Why?

Solutions and services complemented existing SAP finance and HR applications

SAP had experience with global Oil and Gas production companies

SAP Consulting blended expertise with ability to improvise as complexities of project required.

SAP consultants played a critical role in Rollout and Education of users

Project ICE
First Major ERP exercise in Indian Oil & Gas Industry 23 SAP modules

To serve 23000 end users

27 months across 500 locations Deep sea vessels in Bay of Bengal to Drilling Rigs in Rajasthan 150 project core team members, 60 SAP consultants, 4000 Sq.ft area data center 10 agencies with a cost of Rs 195 Cr Started January 21st ,2002

What ICE Project is NOT!

It is NOT an IT Project

It is NOT an approach to look at Functions and Departments

It is NOT a Technical or Process Control System

It is NOT about modeling current processes into an IT Package

It is NOT about writing program codes and building database structures

The 1000 islands dilemma!

Sales A/R Engineering Design

Mfg. Engineering

What SAP did!

General Ledger Shop Floor execution

R/3

A/P Inventory

Controlling

Purchasing

Production Planning

1,000 island solution

The R/3 SAP Framework

SD MM PP SM
Production Planning Sales & Distribution Materials Mgmt.

FI
Financial Accounting

CO
Controlling

Service Management Quality Management Plant Maintenance

R/3
Client / Server ABAP/4
CIN/ IS-Oil

AM
Fixed Assets Mgmt.

EC

QM

PS WF
Workflow

Enterprise Controlling

PM

Project System

HR

Human Resources

Implementation
Constituted of 150 Project Core Team Members, 60 SAP Consultants, 18000 sq. ft Project Office, 4000 Sq. ft area data center with 22.5 TB storage capacities ONGC implemented an enterprise-wide ERP implementation under Project ICE comprising 23 SAP modules They adopted SAP R/3 to streamline and integrate its various functions The data center is located in New Delhi The project currently has 23000 end-users working on the system and using the employee selfservice (ESS) functionality under SAMPARC Production and Planning (PP) To track planned and actual costs of production processing of Crude Oil, Natural Gas Facilitates real time updating of data, helps in calculating actual & standard costs at any stage in the product cycle Monitors real time production environment related to Materials & Products, as well as customized report generation for faster decision making Plant Maintenance (PM): The PM module provides a system for the management and maintenance of technical systems including the cost incurred in the planned and breakdown maintenance. By being integrated with other modules it gives the cost of each maintenance activity. It will also track various audit activities and their follow up actions in ONGC.

Implementation
Financial Accounting (FI) This module Integrates General Ledger, Accounts Payable, Accounts Receivable with all the sub ledgers synchronized with the G/L in an on-line, real-time manner. The existing SAP customization KUBER is a stand alone module with only FI functions. In ICE FI function is integrated with all the adopted R/3 modules starting from supply to the sales. Sales & Distribution (SD): SD module comprises of entire Sales & Distribution activities starting from sales agreements to delivery and generation & printing of invoice in integrated sales process for all products of ONGC including scrap and services. It is integrated with financial accounting for account receivable management; material management and production planning for real time stock updating.

Implementation
Quality Management (QM) QM module covers inspection of procured material, inspection of in-house products, and generation of Quality certificate for issuing finished products to the Customers. Among many features, Vendor/Material complaints processing, quality clearance certificate for incoming material and for the products, failure analysis etc. shall be available through this system.

Business Information Warehouse (BW) This module shall generate analytical and strategic reports for Business Analysis and performance tracking including the Corporate Key Performance Indicators. This would become the single, integrated, MIS System for ONGC.

Implementation Highlights
Converting Knowledge to Wealth The total deal for the implementation of the ICE project is Rs. 95 Crores Project ICE is one of the worlds biggest ERP (Enterprise Resource Planning) packages, across its 400 locations By the time the project was completed in May 2005, this new solution was available to a total of 23,000 users 65% more than the user base originally planned This is the first major ERP exercise in the Indian Oil & Gas industry One of the largest in size the world , the project was very challenging in terms of complexity also. ONGCs Exploration and Production (E&P) business is unique, different in many ways from other businesses of manufacturing, trading and services for which SAP is known best for This large and complex exercise has been completed within 30 months (from July 2002 to December 2004), which is a record of sorts

Implementation Highlights
ONGC chose the hardest and most critical areas first: production and drilling to go live with. Idea was if hard target succeed then all the others would fall in line. The Mumbai Headquarters of ONGC was the first to go live in its exhaustive ERP deployment. First rollout was for 3,000 users. One key test was making the transition at the most challenging sites: offshore and onshore oil drilling platforms, where daily activity reports are required by 6 a.m. without fail. SAP Consulting blended expertise with ability to improvise as complexities of project required. Project team consultants from SAP played critical role in rollout and education of users. SAP used ONGC as training centers for its employees to learn about Oil & Gas industry The project management group also excelled in meeting the logistical challenge of connecting hundreds of sites across India even on nomadic drilling rigs and seismic field parties. Innovative solutions included secure satellite and radio-based communication network access to offshore locations and other remote locations deployed through a tightly coordinated schedule between the ONGC project team and service providers.

Business Information Warehouse

BW Service API for SAP

Legacy Systems

Non SAP

SAP BW

BAPI

File
VSAM ADABAS
RDBMS (DB2)

BW Load Pack

E-Business Applications
Siebel PeopleSoft

Oracle

...

A very important tool for Asset Managers and Business Managers to monitor performances and evolve business strategies

To summarize the Functional Scope

Stage 1
Financial Management (FI) Controlling Costing (CO) Asset Management (AM) Materials Management (MM) Warehouse Management (WM) Sales & Distribution (SD) Quality Management (QM) Production Planning (PP) Product Costing (CO-PC) Joint Venture Accounting (JVA) Prod.Sharing Agreements (PSA) Offshore Logistics Mgmt (OLM) Plant Maintenance (PM) Project Systems (PS) Investment Management (IM) Funds Management (FM) Treasury Management (TM) Business Info. Warehouse (BW) Stage 2
Enterprise Buyer Professional

Stage 3
Workplace for Key Business Managers

Stage 4
EDMS Lifecycle Data Management concept

Stage 5
Strategic Enterprise Management

Stage 6
Asset Lifecycle Costing

Add-On 1
UFSO/CRC Realignment

Add-On 2
HR Migration / Integration

Implementation Options
FI MM

Application Area PM CFA PP IM

Company

Big Bang Phased

Corporate Location 1 Location 2 Location 3

Application Area FI Corporate MM Phase 1 PM CFA

PP

IM

Phase 2

Company

Location 1

Roll-out

Roll-out

Location 2

Roll-out

Hybrid Approach for ONGC

ONGC is a large and complex organization needs a hybrid approach

Stages Take all relevant functionalities of one or more mySAP Component Phases Implement the functionalities of a given Stage in Pilot Location (Western Offshore) and then Rollout to Other Businesses Milestones SAPs proven ASAP methodology shall be used and each Phase will be implemented in 5 major milestones Project Preparation Business Blueprint Design Realization Preparation to Go-Live Go-Live and Support

ICE Implementation Overview

June03 Common Design Sep03 Western Offshore

Jan04 Western Onshore

Stage 1 mySAP Stage 2 EBP Stage 3 Workplace Stage 4 EDMS Stage 5 SEM Stage 6 ALC
Jul 2002 Jan 2003 Sep03 Jan04 Mar04

Jul04 Southern Onshore + Corporate

Sep04 Eastern Onshore

Nov04 North/ Central Onshore

May04

Aug04

Oct04

Dec04

Jul04

Sep04

Nov04

Sep03

Nov04

Nov04

Time line in Months

Jan 2004

Go-live

Jan 2005

Geographical coverage
Western Offshore Vasudhara Bhavan Uran Hazira Nhava Supplu Base Offshore Rigs & Platforms Juhu Helibase Maker Towers Bengal Chemicals Priyadarshini Mahakali Caves, Andheri T & S Office Arcadia Botwala Chambers Panvel 12 Victoria Docks Darukhana Nirmal IPSHEM, Goa Western Onshore Ahmedabad Baroda Cambay Mehsana Ankleswar Jodpur Location Stores Baroda W.Shop IRS, Ahmedabad Southern & Corporate Chennai Karaikal Rajamundri Narsapur Stores Vizag S.Base Hyderabad Office Delhi Office Dehradun Eastern Onshore Sibsagar Sib.W.Shop Nazira Jorhat-DVP Jorhat-GSD Silchar Northern & Central Agarthala KolkattaRO WBP T&S Jammu

Estimated SAP user base in ONGC

MODULE MM FI & CO PM PS HR PP Western Offshore 1058 337 305 157 157 40 Western Onshore 1416 295 236 88 185 -South & Corporate 890 404 123 156 322 -Eastern Onshore 690 200 140 40 70 -Central & Northern 141 82 29 28 35 -Total Users 4195 1318 833 469 769 40

SD
TR & CFM BW / SEM JVA / PSA

10
2 80 10

10
-55 --

22
15 135 17

5
-30 --

5
-20 --

52
17 320 27 8040

ICE Project Team Organization Structure

Project Sponsor Executive Committee Steering Committee Change Management Team

Power User Team Regional Business Analysts & Configurators

Program ManagerONGC & SAP Project Manager ONGC & SAP

Process Owners

Functional Project Manager ONGC

ProjectProject Team Full Time

Integration Manager ABAP Lead

Technical Project Manager ONGC

Team Team Leads Team Leads Leads

BW & Reports Lead

Training Manager

Lead Interfaces

Lead Internet Technology

Basis Lead

ABAP Developers Business Analysts Business Configurators

Web Programmers

Basis Team

Post Implementation

Business Process Re-engineering

Improved, disciplined approach to accounting, procurement and financial systems

Rapid acceptance and improved performance by workers

Improved ability to compete through the strategic use of new IT platform

Improved visibility of business processes across different business functions from exploration to production to sales and offshore joint ventures

Business Process Re-engineering: SCADA Project

Supplied 16 Data Centers including the corporate data centre across India to enable efficient operation of respective Assets. UPS for all the 250 plus tier 1 control room of production and drilling SCADA along with FCBC for 85 no of remote RTU (Remote Terminal Unit) with solar chargers.

SAP, Epinet, VRC- Integrations of Real-time and History Data.

Disaster Recovery Solution for the corporate data centre

Business Process Re-engineering: SAP Project

More than 200 end-to-end, daily business processes were replaced, yielding unparalleled insights

Solutions met stringent regulatory controls

Redefinition of work roles and duties meant greater transparency and accountability

Daily and weekly reports facilitated real-time reconciliation

Using Built-In Checks to Ensure Compliance

Raising the Visibility of Critical Data

Reverse Auction process: Benefit of ERP implementation

Collect and compare price and bid information of various suppliers in a real-time

Open bidding environment

Ensured transparency in the tendering process and thereby generate confidence amongst the bidders.

Add speed to the process of procurement which will allow ONGC to source best in class technology

Recent Developments
Overseas joint ventures

Implement the employee self-service (ESS) functionality of the mySAP ERP solution
Reach over 36000 users facilitates employees to apply for leave, submit their claims, and view their payment details online

Better equipped to manage the magnitude of the 21st century challenges.

Performance and Evaluation

Information on inventory, production of our finished goods, costing of goods and services, operational reports like DPRs and our performance reports etc. are now available online. Transparency is ensured by ready access to information on stock availability, purchase order status, funds utilization etc. This has enabled executives of the regions to get relevant information right at their desktops. Corporate executives can view and identify at any time the productivity from the functional operations and can also identify the reasons for much higher and lower productivity. Sales and production can also be monitored online with facility to draw profit and loss account and balance sheet sector ally instead of only company level reports. In addition to this, there has been elimination of duplicate and redundant activities in case of reporting chain where there were different levels of reporting consolidation before it could be compiled at corporate level. There has been reduction in material codes from 14.9 lakhs to 2.9 lakhs in the process of data cleansing. This has resulted in cutting down duplicate codes and has led to overall transparency in stock availability.