ONGCA case of Business Process

Reengineering with IT

Summary: ONGC, a fortune 500 company is the flagship

company of India

Has a market capitalization of over USD 22 billion

They carry out all the activities such as

It contributes more than 80% of India's oil and gas production

Operations include :

7 basins, 33,000 employees with more than 500 offshore and onshore locations.

Pre-ERP days of ONGC Project Kuber, started in 1996 for its finance

function.

Thereafter in 1999, it started another project, Project Shramik for all HR modules

ONGC used PC-based legacy systems for material management, project monitoring and maintenance planning

Issues & challenges faced by ONGC

Collation, consolidation and analysis of operational data were difficult and time consuming

Standardize more than 200 business processes for 13000 users across a total of more than 500 offshore and onshore locations all in under 30 months

Cleanup and migrate huge data from legacy systems and hard copies

The system deployment could not upset the operations within ONGC

Replication and configuration of data in real time via satellite and by linking existing systems.

Project objectiveObjective for SAP implementation

Optimization & standardization of business process

All local and offshore business operations of ONGC had to be integrated into a single ERP

Availability of information on real time basis

Higher visibility of operations to improve productivity

More efficient processes with higher visibility of cost

Integration & extension of value chain

SolutionsSAP solution and services

mySAP.com e-business solutions was proposed to be implemented over the next 30months across 5 regions of ONGC for over 8500 users

Solutions covering financials, corporate management, business intelligence, supplier relationship management and other critical operations of ONGC.

Why SAP?

SAP had the experience with global oil and gas production companies

Solutions of the business complemented existing SAP finance and HR applications

Implementation plan and Roll-out SAP India signed the largest ever deal in

ONGC

The deal worth Rs.950 crores would provide comprehensive IT enabled system for the PSU

It was also the largest consulting deal for SAP Asia Pacific.

mySAP business suite and the SAP for oil and gas solution portfolio, including the SAP strategic enterprise management (SAP SEM) application, SAP business information warehouse component part and SAP portal were implemented.

Were designed to integrate with existing finance and HR solutions used

The implementation also includes other SAP solutions, such as collaboration projects suite, supplier relationship management and upstream oil and gas exploration and production solutions

Project team consultants from SAP played a critical role in the roll out and education of users

By the time the project was completed in May 2005, the team had added other geographical locations and functions to the implementation, making new solutions available to total of 13000 users-65% more than the user base originally planned.

The system was implemented in corporate center in New Delhi with a back up in Mumbai.

Business Process reengineering A business process is a collection of activities

which together produce something of value to a customer”

– e.g. Customer Order Entry

Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.

What to re-engineer:

BPR changes processes, and not functions, departments, geographies or tasks.

IT in BPR

Shared data base, making information available at many places.

Decision support tools, allowing org to be centralized and de-centralized at the same time.

Automatic identification and tracking, allowing objects to tell where they are, instead of requiring to be found.

BPR achieved through IT in ONGC More than 200 end to end processes were replaced

with redesigned processes.

The new process yielded insight into operations, real time reporting on E&P, inventory, FA , & accurate and efficiently delivered data.

The new solution meant that paper based contracts & vendor payments were complemented by electronic transactions.

The daily & weekly reports replaced the quarterly reports & facilitated real time reconciliation.

Process-oriented redefinition of work roles and duties were assigned and this resulted in greater transparency and accountability.

The co sends out the payments for the purchased products & service only after the verification of invoice.

Benefits achieved by ONGC after SAP implementation Improved and disciplined approach to accounting and

financial system

Availability of critical data online for all levels of management.

Launch of Reverse auction process, first PSU to do so. Termed as “live action cockpit” the system enables ONGC to collect and compare price and bid information of various suppliers in real time.

The reverse auction will ensure transparency in the process

ONGC also implemented employee self-service (ESS) functionality of the mySAP ERP solution, expanding its reach to 36,000 users. The ESS codenamed Samparc which facilitates employees to apply for leave, submit their claims and view their payment details online.

Improved visibility across the enterprise across the globe

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

Increased productivity of the employees

Questions! Do you agree with the arguments made in this

case in support of the BPR provided by IT in business? Why or Why not?

How has SAP implementation helped achieve BPR?

What strategic advantages has ONGC been able to gain by relying on IT and IS ?

Other companies that have used IT strategically and gained competitive advantages/

THANK YOU !!