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)

ONGC used PC-based 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 enterprise’s core business

processes

ONGC spans across 10 countries

outside India- from Russia to

Venezuela

Pre ERP days

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

Existing EnvironmentDatabase:Hardware:Operating system:

OracleHP, Compaq, IBM and SunMicrosoft Win NT, Sun Solaris, and Unix

Leveraging IT

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 (KPI’s and SLA’s)

Improved responsiveness to changing market / global conditions

Enabling Transformation

• Alignment to new Organisation Structures• e-Corporation

Chosen Partner: SAP – Why?

SAP had experience with

global Oil and Gas production companies

Solutions and services

complemented existing SAP

finance and HR applications

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 a Technical or

Process Control System

It is NOT about writing program

codes and building database structures

It is NOT about modeling current

processes into an IT Package

It is NOT an approach to

look at Functions and Departments

The 1000 islands dilemma!

1,000 island solution

ProductionPlanning

Shop Floor execution

Mfg.Engineering

Purchasing

A/R

Inventory

General Ledger

Sales

A/P

EngineeringDesign

Controlling

What SAP did!

R/3

The R/3 SAP Framework

R/3Client / Server

ABAP/4

FIFinancial

Accounting

COControlling

AMFixed Assets

Mgmt.

PSProjectSystem

WFWorkflow

MMMaterials

Mgmt.

HRHuman

Resources

SDSales &

Distribution

PPProduction

Planning

QMQuality

Manage-ment PM

Plant Main-tenance

SMService

Manage-ment

ECEnterpriseControlling

CIN/ IS-Oil

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 self-

service (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 world’s 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. ONGC’s 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 Load Pack

DataStage ETL Components

DataStage ETL Components

E-Business Applications

Legacy Systems

VSAMRDBMS (DB2)

ADABAS

File

Non SAP Non SAP

SAPBW

BW Service API for SAPBW Service API for SAP

Siebel Siebel PeopleSoft

DataStage ETL Components

DataStage ETL Components

BAPI

...Oracle

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

To summarize – the Functional ScopeStage 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 PM CFA PP IM

Application Area

Com

pany

Phase 1 Phase 2Corporate

Location 1

Location 2

Roll-out

Roll-out

Roll-out

Phased

FI MM PM CFA PP IM

Application Area

Com

pany

Corporate

Location 1

Location 2

Location 3

Big Bang

All together

Hybrid Approach for ONGC

ONGC is a large and complex organization – needs a hybrid approach

• Take all relevant functionalities of one or more mySAP Component

Stages

• Implement the functionalities of a given Stage in Pilot Location (Western Offshore) and then Rollout to Other Businesses

Phases

• SAP’s 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

Milestones

Go-live

Jul2002

Jan2003

Jan2004

Time line in Months Jan2005

Dec’04Oct’04Aug’04May’04

Nov’04North/ CentralOnshore

Nov’04

Sep’04EasternOnshore

Sep’04

Jul’04Southern Onshore +Corporate

Jul’04

Jan’04WesternOnshore

Jan’04

Sep’03WesternOffshore

Stage 3Workplace

Sep’03

Stage 4EDMS

Sep’03

Stage 6ALC

Nov’04

ICE Implementation Overview

Stage 2EBP

Mar’04

Stage 1mySAP

June’03 Common Design

Stage 5SEM

Nov’04

Geographical coverage

Western Offshore Western Onshore Southern & Corporate

Eastern Onshore Northern & Central

Vasudhara Bhavan Ahmedabad Chennai Sibsagar Agarthala

Uran Baroda Karaikal Sib.W.Shop Kolkatta-

Hazira Cambay Rajamundri Nazira RO

Nhava Supplu Base Mehsana Narsapur Stores Jorhat-DVP WBP

Offshore Rigs & Platforms Ankleswar Vizag S.Base Jorhat-GSD T & S

Juhu Helibase Jodpur Hyderabad Office Silchar Jammu

Maker Towers Location Stores Delhi Office

Bengal Chemicals Baroda W.Shop Dehradun

Priyadarshini IRS, Ahmedabad

Mahakali Caves, Andheri

T & S Office

Arcadia

Botwala Chambers

Panvel

12 Victoria Docks

Darukhana

Nirmal

IPSHEM, Goa

Estimated SAP user base in ONGC

MODULEWestern Offshore

Western Onshore

South & Corporate

Eastern Onshore

Central & Northern

Total Users

MM 1058 1416 890 690 141 4195

FI & CO 337 295 404 200 82 1318

PM 305 236 123 140 29 833

PS 157 88 156 40 28 469

HR 157 185 322 70 35 769

PP 40 -- -- -- -- 40

SD 10 10 22 5 5 52

TR & CFM 2 -- 15 -- -- 17

BW / SEM 80 55 135 30 20 320

JVA / PSA 10 -- 17 -- -- 27

8040

ProjectProject Team –

Full Time

Technical Project Manager… ONGC

Functional Project Manager… ONGC

Team LeadsTeam

LeadsTeam Leads

Integration Manager

ABAP Lead

Basis Lead

BW & Reports Lead

Lead Interfaces

Training Manager

Executive CommitteeProject Sponsor

Steering Committee

Program Manager…ONGC & SAPProject Manager… ONGC & SAP

ABAPDevelopers

Business Configurators

Business Analysts

Basis Team

Change Management

Team

Process Owners

Power User Team - Regional Business Analysts &

Configurators

Lead Internet Technology

Web Programmers

ICE Project Team Organization Structure

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.

Information on inventory, production of our finished goods, costing of goods andservices, operational reports like DPR’s and our performance reports etc. are nowavailable 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 caseof reporting chain where there were different levels of reporting consolidation before itcould 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 instock availability.

Performance and Evaluation