Achieving high performance with Business Process Management in Energy Trends and challenges in the spotlight

To compete in today’s volatile business, economic and technical environment, oil and gas companies must ensure transparency, agility and compliance across their global operations while maintaining a laser focus on quality and efficiency. As they drive to embed these qualities in their organisations, Accenture’s experience shows that leading companies are adopting business process management as a core discipline.

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Business process management (BPM) is a management discipline for aligning vital business processes with corporate strategy and bringing them “up to speed” with transformation initiatives. BPM ensures the efficiency and effectiveness of business processes, employing methods, policies, metrics, management practices and software tools to manage and optimize an organization’s activities across the business process lifecycle.

In an environment that is less certain, more complex and faster-paced than ever before, BPM is delivering benefits to energy companies worldwide. As well as helping them to focus on the day-to-day complications of running oil and gas assets safely and efficiently, this discipline equips them to continuously monitor and adapt strategy and execution to account for future certainties—ultimately ensuring there are “no surprises” in how they are operating their assets.

Based on Accenture’s experience with oil and gas companies worldwide, we can identify a number of trends in how BPM is being adopted and put into action.1 This point of view highlights four trends, identifying particular challenges that BPM is being used to address, as well as the ways in which it is being operationalized.

1. Anchoring BPM in the organization

Companies have traditionally carried out BPM-type initiatives on an ad hoc basis, often as a strand of broader enterprise-wide programs such as cost cutting, Lean Six Sigma and systems implementations. Typically isolated and unconnected, these various process initiatives have been difficult to reuse across other business units and/or geographies, and their benefits have proved impossible to sustain.

In today’s volatile business and technology environment, oil and gas companies need process capabilities that enable them to react rapidly to change by tightening the integration between business strategy, IT and people-based execution. Leading organizations are addressing this by anchoring BPM into the fabric of the enterprise and implementing it through a formalized “process of process management.”

This approach is designed to bring together all the core organizational components that result in a functioning business process. Accenture analysis shows how it is being put into action in a number of ways:

• Multiple energy companies have conducted, or are conducting, BPM strategy projects aimed at defining governance2 structures that ensure business processes are optimized and aligned with corporate objectives.

• Multiple energy companies have implemented, or are currently implement-ing, a BPM Center of Excellence. • Many of these BPM Centers of Excellence are being set up offshore or in combined offshore/onshore structures, with a global mandate that can better support BPM activities and drive efficiency and effectiveness across businesses and regions.

• Increasingly, business transformation projects incorporate separate work streams focused on BPM governance.

• BPM is being further embedded in the organization through employee portals that provide access to role-specific information, including work instructions, templates and training materials.

As these actions clearly indicate, BPM has evolved from an isolated, often overlooked function to become an integral manage-ment discipline for increasing numbers of energy companies. Now as companies build toward developing comprehensive BPM capabilities, our experience shows that this should be planned as a multi-year journey. A bold BPM vision is essential. But for the program to gain traction and embed itself in the organization, each step toward this vision must deliver immediate business value, with clear linkage between all BPM initiatives. For more insights into key success factors and how to turn stakeholders into supporters and drivers of BPM, please see Accenture’s recent point of view on the topic.3

2. Aligning BPM with enterprise resource planning systems

An Accenture survey4 reveals that companies are often disappointed by the gap between the business benefits they expect and what they actually get from their enterprise resource planning (ERP) implementations. This is due to, at least in part, the disconnect between what ERP systems were originally intended to achieve and the role that they have come to play within organizations. ERP was not on its own designed to keep up with the accel-erating speed of technological change and the pace of business evolution. However, because all business activity eventually finds its way into ERP, the core information inside these systems and the processes that they support has become central to making the business successful.

To address this disconnect, the focus in many organizations is now on transforming ERP systems to drive out additional business benefit. But because ERP is often regarded as the preserve of IT, these transformations can fail to address the

wider needs of the enterprise and are therefore unable to secure adoption and buy-in from business users. In some com-panies standardization goes too far, with vendor standards being imposed that inhibit business agility and constrain the business benefits that should be delivered by ERP. In others, over-customization of the ERP solution creates difficulties, resulting in cumbersome enhancements and complex upgrade processes.

We are seeing oil and gas companies overcome these challenges by adopting a process-led approach to ERP. In these companies, the ERP program provides the means to focus on business process improvement, with systems used to drive greater process efficiency, effectiveness and compliance. Our analysis shows that leading companies recognize the need to align BPM and ERP to create the foundation for a broad set of business capabilities. To achieve this aim, they are taking a number of vital steps:

• Critically, they are moving BPM roles from IT to the business, creating lead roles within the organization that own both BPM and ERP.

• Their ERP projects are launched as business transformation programs, with significant BPM components.

• They are integrating technical aspects of both BPM and ERP, in many cases by using tools to link a process repository application with an ERP system, such as SAP® through SAP Solution Manager.

These actions show how oil and gas companies can bridge the disconnect described above by embedding a process-led approach to ERP. This enables discrimination between those processes that create competitive advantage and justify system adaptation and those for which standard solutions should be used. As business conditions change, the ERP system can adapt in an agile way.

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The ways in which BPM is being used to address risks highlight the wider benefits that this management discipline can bring. By enabling complex, organization-wide processes to become more integrated, more transparent and better managed, BPM can be used to enhance quality and efficiency across the oil and gas value chain.

4. Making BPM part of everyday life

While many oil and gas companies have made investments in documenting their business processes, these efforts are often conducted on a one-off basis in response to a specific initiative such as the imple-mentation of a large system, international expansion or a risk management initiative. Once captured and stored in one of a number of standard formats—or in a dedicated repository—this process knowledge is generally neglected in business-as-usual activities.

Where process knowledge is used, it has tended to be by process owners or BPM specialists. This is at least in part because repository tools have until recently been very academic, requiring detailed, process-specific expertise. Now, however, repositories and other process tools are much more user-friendly, with dynamic user interfaces that facilitate interaction and reduce the need for specific process know-how. As a result, we are seeing BPM being used to bring processes to life and provide process transparency for individuals across all parts of the organization.

Leading oil and gas companies are taking steps to ensure that process knowledge is made easily accessible and relevant for day-to-day activities across various business contexts. Key actions include:

• Creating both manual and electronic tools to support specific jobs and tasks.

• Performing dedicated business process management training.

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We piloted our approach in multiple business functions, with an initial transition phase to allow for baselining of SLAs and with the flexibility needed to expand over time to include additional services. Through the pilot phase, we established an engagement methodology and governance structure for delivering the various services. In the transition phase, we developed an understanding of the business priorities for different customers, finalizing the full catalog of services to be offered by the BPM Centers of Excellence based in Bangalore and Gurgaon in India.

High performance delivered: With a dedicated team of experts at its disposal, the client is benefiting from increased effectiveness and efficiency across its BPM capability. Repository mainte-nance and support is now provided as a sustainable managed solution, with cost-effective offshore components and a state-of-the-art process repository.

BPM leading practice in action

Business challenge: BPM presented multiple challenges for an international oil company client. Process owners lacked the time needed for BPM maintenance activities, and inconsistent process management execution was pervasive across the organization. Smaller business units did not have the critical mass of BPM activity needed to justify a full-time team. And there was no centralized location for process assets.

How Accenture helped: Accenture worked with the oil company to provide an outcome-based BPM managed service, initially built around maintenance of process models in provision repositories and measured on standard service level agreements (SLAs) and key performance indicators (KPIs).

3. Using BPM to manage risks

Oil and gas companies are exposed to multiple risks—from complex financial and operational issues to environmental, health and safety (EH&S) risks. As well as being subjected to considerable regulatory and legal scrutiny in all these areas, they are also driven by their own aspirations to display effective risk management to stakeholders and protect people and the environments in which they operate. A number of recent industry events have only served to reinforce the centrality of EH&S risks to oil and gas operations.

The management of these risks presents particular challenges. Because operational processes in most oil and gas companies run across organizational boundaries—and are handled by multiple parties—it is hard to identify and manage the scope of risks to which an organization is exposed. Our analysis shows that effective process management and a comprehensive knowledge of process execution are increasingly recognized as key to addressing these challenges—enabling the transparent enterprise-wide processes needed to rapidly identify any deviations.

We see BPM playing an increasingly vital role in enabling processes to be mapped to specific risks, ensuring that risk-related key performance indicators are monitored to provide an early warning sign of potential problems. Leading organizations are putting this approach into action in a number of ways:

• Business processes and specific risks are mapped to create a matrix for visualizing whether a particular process creates a high, medium or low risk.

• Processes are reviewed according to the risks associated with them, including identification of targeted actions for process improvement, training and compliance management.

• The focus is on enabling end-to-end ownership of processes so that all components—including those executed by third parties—are managed in an integrated way.

The rise of BPMOnce consigned to discrete silos of activity and embedded within other capabilities, BPM is now becoming an important and integral element of an oil and gas company’s capability roadmap. As our research into industry BPM trends makes clear, oil and gas businesses understand the importance of BPM and the value it can deliver across the whole organization. But achieving comprehensive BPM capabilities is not an overnight transformation. It is a multi-year journey that needs to achieve a pragmatic balance between the creation of a bold vision and the practical steps needed to achieve it.

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Your journey to high performance Experience shows that the gulf between winners and losers in any industry widens during periods of uncertainty. Accenture’s ongoing business research program confirms that high-performance businesses use times of change and uncertainty to move ahead of competitors.

By working with Accenture, energy companies can build the robust BPM capabilities they need to improve process transparency, instill greater organizational agility and efficiency and, ultimately, foster high performance for years to come.

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Endnotes 1 Based on an internal Accenture analysis of BPM adoption across a sample cross-section of energy sector clients. 2 Based on an internal Accenture BPM governance study looking at how BPM is being applied in energy companies.

3 “Achieving High Performance with Business Process Management in Energy – Transforming Stakeholders into Supporters and Drivers,” Accenture, 2012. www.accenture.com/us-en/Pages/insight-bpm- energy-transforming-stakeholders.aspx.

4 Thomas H. Davenport, Jeanne G. Harris and Susan Cantrell. “The return of enterprise solutions: the director’s cut.” Accenture Institute of High Performance, 2004.

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with approximately 266,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012.

For more information, please contact:

Silke Lehmann

Managing Director- Energy, Accenture Enterprise Services and Business Process Management

silke.lehmann@accenture.com

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