Project Management

BHARAT PETROLEUM CORPORATION

LIMITED (BPCL)

Submitted to

Prof. Arbinda Tripathy

In partial fulfillment of the requirement of the course

By

Anish Racherla

Prashant Dhayal

Rishabh Chadha

Sanzgiri Amogh

On

November 15, 2012

INTRODUCTION

Being a progressive organization, BPCL was one of the earliest one in the energy sector to

implement the Enterprise Resource Planning. Enterprise Resource Planning is the ability to

leverage business and IT Strategy together to increase its effectiveness and efficiency of

technology initiatives. Therefore to establish ERP, organization must choose and measure the

project on three criteria:

a) Does it increase revenue

b) Does it cut costs

c) Does it increase performance efficiency

The synergies in an organization are driven by its

three elements: People, Process and Technology.

Combined the three elements determine the culture

of an organization. Any alteration in any one of the

elements my lead to a substantiated affect on the

organizational culture and hence its performance.

Therefore, it is imperative to align all the parameters

in the direction to synchronize the organizational culture.

Enterprise resource planning is not simply a set of technological tools, but a revolution of the

enterprise approach to fabricate strategy to address the business requirements that realize cost

savings, performance improvement, and if possible, new innovative source of revenue.

Why BPCL forms a classic case of the ERP implementation because at the very early stage of the

project only, it realized the fact that applying the technology to solve complex challenges multiplies

the impact and visibility of the problem unless it is harmonized with the people and processes.

BPCL realized that implementing technology first is a temporary fix to the problem in a complex

business environment.

= + +

Fig 1: Three Pillars of Organizational Culture

ERP

PEOPLE

PROCESS

TECHNOLOGY

Fig 2: ERP Implementation: Making People understand, getting process maps from them and then

implement the technology. The BPCL WAY

CONECEPTUALIZATION & IDEOLOGY The ideology behind the shift towards “TO-BE” environment

from existing business legacy is about first making the people

and processes within the organization more efficient, and then

giving them tools and technology to make them more effective.

BPCL effectively did the same thing by forming Strategic

Business Units (SBU). While forming six strategic business

units, it gives away with the departmental silos and reduced

from a seven layer structure to a four layer structure as

depicted in Figure 3. This effectively means the radical

restructuring of the entire organization. This can be understood

well with Mintzberg’s model (Figure 4) which essentially

mentions technostructure an important element of the

organizational structure. Any alteration in the height with one pillar (here technostructure) would

essentially mean proportionate alteration in the height of other pillars i.e. top management followed

by Strategic Business Units viz., Refinery, Retail, LPG, Lubricants, Industrial & Commercial, and

Aviation; support staff (Finance, HR, Information Systems and Marketing).

Fig 3: Four Layered Restructuring of BPCL

Top

Management

Strategic

Business

Units

Refinery Retail LPG LubricantsIndustrial &

CommercialAviation

While carrying such major

technological transformations,

the project management team

should also schedule not only

for the technological planning

and implementation but also

for people and processes

transformation.

This effectively means that the

team should plan for the entire

organizational restructuring.

SUPPORT FUNCTIONS

Finance HR Information

System Marketing

The organizational restructuring was also evident as the

company was now moving from the status quo to customer

centric approach of business. ERP implementation involves

broader organizational transformation processes involving

business processes, with significant implications to the

organization’s management model, organization structure,

management style and culture, particular to people. The

mammoth organization change owing to ERP resulted to

BPCL towards a shift from a fragmented function based

organization structure to a processed one served by an

integrated system.

ERP PLANNING AND IMPLEMENTATION The complete ERP Planning can be mapped as following: Measurement of Success

Fig 4: Mintzb erg ’s O rganiz ational Model

1.IS PLAN

� Identify Business Aspirations

� Map Existing Business System

� Future needs based on Customer

focus, Integration, flexibility &

Resource-Optimization

� IS – Process Anchor

2. SELECTION OF ERP

PACKAGE � Mapping of Major Processes

(Over 600) with processes

experts

� Development of Detailed

Requirement List

3. QUANTITATIVE BENEFITS

� Estimated Benefits : INR 42 Crore per year

� Maximum Benefit achieved through

• Inventory Management:15.41 Crore

• Reduction in Working capital

• Reduction in Account Receivables Days

4. PROJECT ENTRANS

� Driven towards Enterprise Transformation

� ERP – Business Initiative driven towards

Customer Focus

� Project Steering Committee (PSC) involving

Heads of SBUs, Finance, HR & IS

• To Integrate Interfaces

5. TWO PHASE

� Modules to implement

� Conceptual Design &

Planning (CDP)

• PWC, 6 Months

� Detailed Design and

Implementation (DDI)

6. CD&P

� All stakeholders together

� Capacity Planning

� Network Planning

� System Landscaping

� Authorization Management

7. DDI

� SAP implementation by In-

House Team

� Development of In House SAP

Consultants ( over 70)

� SAP India to Assist

� Schedule -24 Months for all the

offices and Units of the

organization

8. DDI OBJECTIVE

� Execute the Implementation

in phases

� Effective Network Planning

and Parallel Execution of

Phases

� Pilot Run to Measure the

Efficiency of the Critical

Business Processes

9. DDI KEY DELIVERABLES

� Pilot Implementation : 6 Phases

• Realization of Qualitative and

Quantitative Benefits

� Detailed Process Design & Configuration

� Data Migration

� Integration Testing

� Development & Interfaces

� Basis & Authorization for Transactions

10. PILOT IMPLEMENTATION

� Identification of Pilot Sites

• IT Readiness of Location and Proximity

with Project team

� ISSUES IDENTIFIED:

• Some Simple Tasks turned Complex

• Requirement of Formalization

• Configuration Problems

• Staff more Stressed with SAP

11. ROLL OUT

� Five Phases:

� ISSUE

• Network Support

� Delayed Network Plan owing

to non-availability of satellite

Transponders

� NEW INITIATIVES

• Data Warehouse

• Internet Enablement

• Supply Chain Mgmt

• Central Help Desk

12. CHANGE MANAGEMENT

� Foremost Challenge

� Selection of Coaches

� Training, Workshops

� Identification of new roles &

Competencies

� Process for Communication

� Communication Tools

� Identification of Key

Performance Indicators (KPIs)

� Process of Benefit Realization

BIGGEST CHALLENGE

� HOW TO MESAURE THE SUCCESS ???

CHALLENGES

The implementation of ERP was not an easy task. There were

many challenges to deal with. The first and foremost challenge

was to integrate the existing culture of the organization with

the Enterprise Resource Planning.

The second challenge was to drive the traditional way of

working within the

organization toward

customer centricity in the

business. Integration of all

the business activities was a critical face up to.

Also there was a threat in the employees that ERP

implementation would be succeeded by layoffs. However, with

layoffs goes away the knowledge and information that an

employee holds. leaving employees have deep domain expertise

and knowledge and they understand the undocumented

functions of the organization-information that can be lost-but, in addition, the mere existence of

those same undocumented processes makes doing the job much harder for new employees. BPCL

could foresee the problem and made sure that employees stay with the company and also that

there are no layoffs.

Another major challenge was to ensure the integration of

the functions and to interlink the SBUs through proper

interfaces. Project Steering Committee was constituted for

the purpose.

Roll out of ERP countrywide was yet another test for BPCL

owing to poor network support because the feeble links to

most of the BPCL locations could not support the on-line

SAP transactions.

One of the major challenges was and is still existent is of

standardization of the processes and hence minimized

scope for innovation in the processes.

Departing Employees

understand the

undocumented processes for

the business efficiency. The

mere existence of the same

undocumented processes

even after ERP

implementation makes doing

the job much harder for new

employees.

Measurement of Success of ERP

implementation was the real

challenge. How can one start a

project when the desired outcome

of the project is not known?

One of the pertinent questions

which exist in project management

is when to count a project as

success- when the project got

successfully implemented or when

the project after implementation

has served the purpose? How to

determine the the success

parameters?

Key Challenges:

� Integration of Business by

replacing fragmented system

� Turn BPCL into a learning

organization

� Emerge as a leader in the

deregulated environment

� Incorporate flexibility &

agility to respond to the

dynamic environment

Yet the real test was of measurement of success of ERP implementation. One of the pertinent

questions which exist in project management is when to count a project as success- when the

project got successfully implemented or when the project after implementation has served the

purpose. Identification of the success parameters of the projects was not clear and the

benchmarking of the success parameters was yet to be done.

LONG TERM V/S SHORT TERM One of the key considerations while driving any project is to measure the long term qualitative and

quantitative advantage of the project with respect to short term investment and logistic issues.

Short Term Issues

a) High cost of implementation of SAP

b) Investment on regular upgradation of the ERP technology

c) Establishment of central help desk for the to sort out the issues of SAP users

d) Standardization of processes and hence lack of innovation.

e) High degree of dependence on the system

f) Initial System Crash

g) Inefficient Software security

However, most of these short term issues can be resolved in the longer run by having data centers

to hedge against system crashes, technological advancement to have efficient systems and strong

software security. Also, what initially be the standardized processes can incorporate innovations

through innovations.

Long Term Benefits

a) Integration of Business systems

b) Control over the processes and hence reduced slippages

c) Real time streamlined flow of information

d) Increased saving by better inventory management, forecasting and hence reduced working

capital

e) Improved decision making because of readily available of historical data and linkages with

the present business context

f) Easy upgradation of system possible

ERP THEN AND NOW AND BPCL

Owing to the long term benefits, ERP implementation

at an early stage was an adroit decision to get the

early mover advantage. Over a period of time, as

mentioned by Nicholas G. Carr in his article “IT

Doesn’t Matter”, ERP will be become an infrastructural

necessity i.e. rather than being a competitive

advantage, it will turn into commodity. BPCL by early

implementation of ERP has capitalized on the benefits

of ERP and now today stands as the one of the most

successful Oil companies in India with large range of

financial and operating benefits as enumerated below:

Financial and Strategic Benefits

a) Reduced stationeries, sheer reduction in

printing of 20000+ pay slips per month

b) Reduced monthly payroll processes

c) Gained ability to audit reports, process

information and make retroactive changes

d) Implemented process workflow based on HR

organizational structure

Operational Benefits

a) Reduced cycle time for key business activities

b) Increased productivity

c) Implementation of online performance Metrics

However, implementation of successful performance

metrics requires thorough evaluation of the risks

associated and the expected benefits to accrue. This

can be incorporated through benchmarking with

existing industry performance across globe localized

to Indian Context.

Performance

Metrics

Benefits

Risks

Benchmark

Evlauation

Fig 5: Com mod itiz atio n of ERP.

So urce: Nich olas G. Carr, May 2003, Harvard Business

Fig 6: Factors

Determining

Performance

Metrics

Nevertheless, BPCL successfully implemented SAP

ERP at 160 of its 200 locations and is rated as one of

the most successful projects. The success of the

project is mores so important owing to the bureaucratic

environment prevailed and lack of political will.