THE BPCL STORY

An Enterprise Systems & IT Strategy Case

Presentation

Submitted By:

Submitted To:

Group Epsilon

Prof Harshal Arolkar

Palash Acharya (20135045)

Purvi Upadhyay (20135049)
Roshni Nair (20135051)

Visiting Faculty (ES & ITS)

SPM, PDPU

BPCL COMES TO LIFE..

1952- Burmah Shell Oil Refineries Limited
1975- Bharat Refineries

1977- Bharat Petroleum Corporation Limited

1990s- Indias 2nd Largest Oil Company
1992- Govt. disinvested 30% stake
1998- Govt. further disinvested 26% stake
2000- 32% Market Share in Petrol & 27% in Diesel

2001- 4500 Outlets (60% Owned/Leased- Highest for any OC)

November 2001- First Indian Oil Company to implement ERP (Much
ahead of competitors IOCL & HPCL)

WHY ERP?
Planned increase in Non-Fuel Revenues (VAS).
Need for IT initiatives in post-APM era.

Organizational Restructuring into 6 SBUs Retail

Aviation
Lubricants
LPG
Industrial & Commercial (I&C)
Refinery

Need for Streamlining processes

IT INITIATIVES @ BPCL
Three-Pronged Strategy
1.

Creating Communication Network

2.

Creating Basic Information Network

3.

Process Transactions with customers across the country.

WHAT?

WHY?

HOW?

Creating Communication
Network

1. High cost of traditional

communications
2. Slow sharing of
information
3. Need to communicate
with recipients across
locations

Microsoft Exchange
Server Intranet

Creating Basic
Information Network

Need to facilitate
information retrieval from
corporate databases

Query By Mail (QBM)

Process transactions with

recipients across the
country

1. Need to offer better

and standardized
services
2. Internal employee
connections
3. Building employee
skills & competencies

VSAT hub

THE BPCL-ERP STORY

Project CUSEC (Customer Services & Satisfaction)
Finalization of SAP R/3
Used by most Oil Majors
Only ERP offering Oil Industry Specific Package
Only ERP offering Indian Industry specific package

BPCL appointed consultants Coopers & Lybrand for planning

SAP R/3 implementation.
Rise in revenue by 2.28% after implementation in spite of
overall reduction of 3.4% in Petroleum Industry revenues.

THE SYSTEMS
Security for Online Business
Sun Ultra 5 Firewalls

Real Secure
Internet Scanner
Floodgate

Web Trend & Web Sense

Quality Assurance Server (QAS)

A Compaq Proliant NT Server, an SCO Box
A Tivoli Enterprise System Management (ESM)

PROJECT ENTRANS
ERP SYSTEM IMPLEMENTATION AT BPCL

A NECESSITY IN CHANGING
TIMES
1991 economic reforms
Partial deregulation of the sector
Imperative to remain competitive through improved customer
service and customer satisfaction and to transform the
company into a Learning Organization

IS PLAN
Massive restructuring undertaken at all levels of the organization;
CUSECS initiated.
Evolution of IS: replace the existing batch-process-oriented legacy
systems with a state-of-the-art ERP system.
Mapping of major processes;
Pre-selecting, validating and evaluation of ERP products
Training provided to employees
Involvement of all stakeholders including vendors; SAP R/3 software
selected

IMPLEMENTATION
A Project Steering Committee (PSC) was constituted with the
heads of all the SBUs, Finance, HR, and IS as its members.
Conceived in two phases:
I.

Conceptual Design and Planning (CDP)

II.

Detailed Design and Implementation (DDI).

IMPLEMENTATION
SAP's ASAP methodology for implementation consisted of five
distinct phases, viz., project preparation, business blueprint,
realization, final preparation, and go live and support.

However, in BPCL, the whole project was divided into a pilot phase
and a rollout phase.

All the SBUs went live at one or two locations and only after their
stabilization, the remaining locations were added.

PILOT PHASE
Three sites were selected: Refinery, Wadilub Lubricants Plant,
and a Lubs C&F Agency at Pune.
Criteria : business and IT-readiness, proximity to project team
(Juhu, Mumbai), salience of processes involved.
The SAP modules implemented during the pilot
implementation were FI, MM, QM, PP, SD, PM, IS oil, and CIN

PROBLEMS FACED
Tasks becoming tedious and time consuming
Formalization required
Configuration issues

BENEFIT
Discipline enforced
Data made available

ROLL OUT PHASE

A team comprising ENTRANS, Business, and IS would visit the location and
ascertain its readiness for the roll-out in terms of hardware, software, and
connectivity
The training of the users would be conducted at the suitable location.

The actual roll-out team will then go to the location and execute cut-over
to SAP R/3.
Support provided in the form of CCSE.

CHALLENGES AHEAD
The cost estimates of the project do not cover disaster recovery or networking.
Many of the estimated benefits could be attributed to networking of the locations and not to
ERP.
No process reengineering in BPCL's implementation.

The change in process and consequently in roles has been software-driven and not through
a radical business review.
Without process reengineering, ERP provides mere process automation and integration that
can lead certainly to downsizing of the workforce. BPCL's benefit list does not include any
man power reduction.
In order to provide for benefit measurement (project evaluation), there should be
benchmarks for the key parameters. In the absence of these benchmarks, benefit
measurement remains a big question mark.

Optimization
Impact on productivity and creativity of workforce.
Redefining of roles and expertise.

Flexibility

QUESTION & ANSWERS

Question 1: Explain the reasons behind BPCLs

decision to implement SAP R/3 ERP solution
against the backdrop of the companys IT initiatives
that began in 1996.

REASONS BEHIND ERP

IMPLEMENTATIONS
To integrate all activities
To speed up decision making
Respond faster to customer needs and to retain them
To show differentiation in service

To streamline processes
Retain market position

Question 2: Examine the ERP implementation exercise at

BPCL and comment on the infrastructure utilized for the
same. Also analyse the benefits reaped by the company
as a result of the exercise.

INFRASTRUCTURE REQUIRED
Intranet
7 web servers
VSAT hub
Routers and switches

BENEFITS FROM ERP

Customers track the status of orders online
Inventory Management
Petro card and Fleet card
Information retrieval from corporate database
QBM
Communication cost reduced
Increased its share of I & C customers from 14.9% to 15.8%
Revenue grew by 2.28%
Employees constantly connected to each other and outside world

Question 3: Analyze the pre-requisites for a successful

ERP implementation. Also comment on the future of the
ERP market in India keeping in mind the global
slowdown in the IT industry in 2001.

PRE- REQUISITE
Top-Management Involvement
Strong & Multi-talented Project Management
Active Risk Management
Project controls on schedule & scope
Capable Teams

Good External Consultants

Transition Management
Balance of IT & Business emphasis
User Involvement
Clear & Measurable Project objectives
Open Communication to entire company

FUTURE SCOPE (AFTER 2001)

Rise of SMEs- Module Specific Implementations
Larger firms focusing on ERP II, i.e. SCM & CRM
Emergence of ERP consultants
Total Cost reduced since country specific localizations
available
Collaborative ERP

Thank You