SAP BPC Solution for Oil & Gas May 2009 *connectedthinking PricewaterhouseCoopers J anuary 2009 2 PricewaterhouseCoopers Contents A: Oil & Gas Industry Value Chain B: SAP Budgeting Planning & Consolidation (BPC) Solution An Overview C: SAP BPC Business Benefits to Oil & Gas Industry D: Demo Business Planning and Budgeting E: Select Oil & Gas Customer Success Stories F: PwC Delivering value to the Energy Industry G: PwC India SAP FPM Practice Highlights J anuary 2009 3 PricewaterhouseCoopers Section A Oil & Gas Industry Value Chain J anuary 2009 4 PricewaterhouseCoopers A: Oil & Gas Industry Value Chain UPSTREAM OIL FIELD SERVICES MID STREAM DOWNSTREAM MARKETING & TRANSPORTATION DOWNSTREAM REFINING Searching for potential underground or underwater oil & gas fields, exploratory well drilling, operating the well to recover crude oil & bring it to surface Services provided for oil drilling & exploration without getting involved in actual oil extraction Processing, storage, marketing & transportation of crude oil, natural gas, natural gas liquids etc. Refers to refining of crude oil & selling and distribution of natural gas & products derived from crude oil (Petrol, Diesel, LNG etc). This sector includes refineries, petrochemical plants, retail outlets & natural gas distribution companies. J anuary 2009 5 PricewaterhouseCoopers Parent/ Subsidiaries/ Associates/ J oint Ventures Ownership Structure Operations in various geographies Indian GAAP, US GAAP and IFRS Multi- Currency Multi- Platform Closing Cycles Less time for Data Analysis Very limited linkage of strategies to the real execution No controlled Business Process Flows Audit Trails Data confidence Data Warehousing Ineffective budgeting and forecasting process Slow & costly budgeting process IT dependent How to capture the true cost and profitability still management wants some different info. & that also in diff format More time for data building A: Oil & Gas Industry Value Chain Challenges in Budgeting, Planning & Consolidation for Oil & Gas J anuary 2009 Data source PM Appli cation Suites/Modules User Interface Unstructured Data Structured Data ? Planning Reporting Consolidation A: Oil & Gas Industry Value Chain Is our reporting structure looks like this? J anuary 2009 7 PricewaterhouseCoopers Section B SAP Budgeting Planning & Consolidation (BPC): An Overview J anuary 2009 B: SAP BPC: An Overview LOB GRC CRM ERP Other Structured Data Unstructured Data Adaptable User Interfaces (Built on Web 2.0) Web Browser Microsoft Office Custom Portal Fast and Accurate Fast and Accurate BPC Reporting will look like this - J anuary 2009 B: SAP BPC: An Overview Where BPC Stands in solution to the CFO Office Slide 9 Strategize & Prioritize Plan & Execute Consolidate & Monitor Model & Optimize Strategy Management Business Planning Business Consol idations Profitabili ty Management J anuary 2009 B: SAP BPC: An Overview BPC Capabilities Financial reporting and analysis Ad hoc Financial Statements for submissions Automated variance analysis Driver analysis (industry, growth, capacity, etc.) Forecasting and consensus building Rolling forecasts Continuous planning Collaboration Business planning Sales/revenue planning Capital expenditure planning Headcount/staffing Expense planning Cash flow planning Project and Bid Management Consolidation Intercompany matching/reconciliation Intercompany eliminations Management roll-ups Legal consolidation Multi GAAP Management (including IFRS) J anuary 2009 B: SAP BPC: An Overview Planning Single solution with multi-dimensions Operational Tasks B u s i n e s s
P r o c e s s e s Strategic Planning Budgeting Periodic Close Forecasting Performance Measurement C o m m u n i c a t i o n C o l l e c t i o n C o n s o l i d a t i o n A n a l y s i s
& R e p o r t i n g D i s t r i b u t i o n Supports top-down and bottom up planning leading to timely, more accurate plans that are aligned with strategic goals Facilitates collaborative planning across all functions for more accurate budgets Enables continuous planning and rolling forecasts to meet rapidly changing business conditions and reduce budget cycle time Automates the consolidation process, meeting all financial reporting requirements with a complete audit trail for a fast, accurate close Industry Specific features can be incorporated with greater flexibility J anuary 2009 12 PricewaterhouseCoopers Section C SAP BPC: Business Benefits to Oil & Gas Industry J anuary 2009 13 PricewaterhouseCoopers C: SAP BPC: Business Benefits Capital Expenditure Planning - Improved Cost Management & Availability of materials at Project level - Reduced cycle time in creating & approving budgets & through faster collaboration & alignment of operations & finance w. r. t. budgets - Leverage scenario analysis to determine viability of potential projects - Clear-cut segregation of Planned and Un-planned CapEx with greater degree of Control Asset Optimization & Utilization Planning - Enhanced control over equipment availability & condition - Analyze billing data to identify opportunities & get faster equipment deployment - Perform utilization modeling using daily rates to assess key metrics like turnaround, availability & downtime J anuary 2009 14 PricewaterhouseCoopers C: SAP BPC: Business Benefits contd. Production / Reserve Planning - Analyze reserves from production to proven by leveraging key metrics like Cost of Production & ROI - Perform price of oil modeling & analyze results across user defined volume calculations for Barrel Oil Equivalents (BOE) - Support strategic decisions at the well level across a telescoping time horizon Merger & Acquisition Planning - Enable calculated decision making by evaluating risk accountability - Enhanced acquisition analysis & decision making by quickly & easily incorporating potential acquisition targets into the model for robust what- ifanalysis J anuary 2009 15 PricewaterhouseCoopers C: SAP BPC: Business Benefits contd. Management Reporting & Ad-hoc Analysis - Transparent reporting with full audit trail from a single data repository minimizes business & compliance risks - Dashboards to monitor KPIs enhance enterprise-wide visibility & transparency - Independence of operational users enables quick adaptation to changing market conditions & regulatory landscape Business Process Optimization - Empower operational users to own & modify common business processes without finance or IT assistance - Leverage SAP BPCs native Office integration to reduce training & roll-out costs & enhance adoption - Enhanced new user productivity with minimal training owing to familiar Microsoft Office interface J anuary 2009 16 PricewaterhouseCoopers D: Demo Business Planning and Budgeting The Demo Demo Business Planning and Budgeting J anuary 2009 17 PricewaterhouseCoopers D: Demo Business Planning and Budgeting Dashboard and KPIs Controlled Data Access Multi version Multi currency Assumptive/ Driver based Setting of Targets Allocation of Targets Centrally controlled Revenue Planning Cost Planning Data Slicing and Dicing Human Resource Planning Entry and Approval Mechanism Operational Expenditure Planning Going beyond the GL Capital Expenditure Planning Project wise Tracking Balance Sheet Drivers & Roll Forwards Consolidation Allocation of Overheads Reporting and Analysis Demo Coverage J anuary 2009 18 PricewaterhouseCoopers D: Demo Business Planning and Budgeting For ABC Oil & Gas Company for the year 2008 Budget version 1 is already prepared by the Middle level managers Management want to revise the targets considering the trend and industry benchmarks Assumptions outlined J anuary 2009 19 PricewaterhouseCoopers Demo Business Planning and Budgeting J anuary 2009 20 PricewaterhouseCoopers D: Demo Business Planning and Budgeting Building the confidence brick by brick Multi Scenarios Multi Versioning Target Allocation Based on Pre-defined Rules Top-Down Bottom-Up Excel +Word +PowerPoint On Web Drill down Facilitates Benchmarking User Alerts Quick Tips and Help Integration with Strategy Management Non-financial Data Organization Hierarchy Security Matrix Intelligent Action Pane Single data repository Managing the Comments Unstructured Data sharing Self Service Reporting J anuary 2009 21 PricewaterhouseCoopers Section E SAP BPC: Select Oil & Gas Customer Success Stories J anuary 2009 22 PricewaterhouseCoopers E: Customer Success Stories LITASCO is a Switzerland based Trader of Crude Oil & Refined Petroleum Challenges and Opportuniti es Needed insight into the vital reporting and analysis of the organization Needed forward-looking capability to shape business success and insight to identify key performers Enterprise-wide, scalable solution that enhanced the ability to easily manage operation and financial requirements Objecti ves Cut reporting time Remove reliance on spreadsheets Enhance ability to analyze KPIs Easy integration with existing SAP systems Highli ghts Excellent training and ease of use Streamlined successful implementation in 5- months Immediate access to reporting, GAAP consolidation, KPI analysis and score-carding Business Benefits Greater 360 degree business insight across the enterprise Compliance with GAAP consolidation regulations Streamlined three month consolidation process into a week Predictive analysis for non-financial KPIs allowing them to compare business targets The implementation process was incredibly quick, and the easy-to use nature of the software meant our employees only required three days training. The implementation was so quick that during the same month the financial reporting component went live, we were able to produce that month's financial reports using the new software. All in a fraction of the time it used to take. Laurent Corbaz Head of Financial Reporting & Planning LITASCO J anuary 2009 23 PricewaterhouseCoopers E: Customer Success Stories Management Cockpit J anuary 2009 24 PricewaterhouseCoopers E: Customer Success Stories Cockpit Room J anuary 2009 25 PricewaterhouseCoopers E: Customer Success Stories British Petroleum is into exploration & production of crude oil & natural gas, refining, marketing, supply, transportation & manufacture & marketing of petrochemicals. BP deployed SAP BPC for Upstream Planning & Forecasting Challenges and Opportuniti es for Upstream Planni ng & Forecasti ng Manual processes were slow & error prone Disparate & changing methods of forecasting Inefficient & inconsistent management reporting process Needed a single, Global Financial Outlook (GFO) Highli ghts Global implementation 700+users, 12+countries Solution included Budgeting, Forecasting, Financial Reporting & Operational Analytics Business Benefits Single FPM platform for all North American Upstream BUs Allows BP to model, archive, report & analyze GFO content from a single centralized source On-demand standard reports & analysis for business users Greatly improved forecasting model quality Vast improvements in communication & collaboration J anuary 2009 26 PricewaterhouseCoopers E: Customer Success Stories Chevron deployed SAP BPC for Upstream Planning Challenges and Opportuniti es Manual planning processes were slow & error prone Spreadsheet hell Inefficient & inconsistent management reporting process Inefficient planning model Highli ghts Global implementation 25+Business units, 24 countries, 200+users Business Benefits Replaced 1500+excel workbooks each fiscal period Streamlined Upstream Strategic Planning process Data integrity based self-sufficiency for Finance BOD report (future state) Rapidly expanding to Upstream global business units Exposure to downstream SAP Projects J anuary 2009 27 PricewaterhouseCoopers Section F PricewaterhouseCoopers (PwC): Delivering Value to the Energy Industry J anuary 2009 28 PricewaterhouseCoopers F: PwC - Delivering Value to the Energy Industry PwC worldwide is largest professional services organization, helps its clients build value, manage risk and improve their performance. Presently PwC draws on the talents of more than 150,000 people in over 153 countries to provide a full range of professional services. PwC worldwide has a vast experience to work with national and international Governments, public institutions in business advisory, technology services and has a successful track record of executing projects across the globe. Gartner Group endorses PwC by stating: PwC has one of the best track records in the industry with respect to transferring methods and skills to clients Introduction J anuary 2009 29 PricewaterhouseCoopers F: PwC - Delivering Value to the Energy Industry Ranked as the largest Business Consulting Firm Serving more than 90% of Fortune 500Energy Companies Audits 3 of the 6 super-majors: ExxonMobil, Shell & Chevron Audits 3 Top National Oil Companies 3100 staff & 300 partners dedicated globally to the Energy Sector Strong focus on Quality & Relationships Impressive Track Record in Serving the Energy Sector: Our Energy Knowledge supports your Success J anuary 2009 30 PricewaterhouseCoopers F: PwC - Delivering Value to the Energy Industry Articles & Publications Thought Leadership to propel Value Proposition The Wealth of Nations How well do countries petroleum strategies align? Read about the new dynamics of the NOC & considerations for operating in the new world-order Value & Growth in the liquefied natural gas market As LNG is hailed as the major factor in meeting growing energy demand, we look into the paths to value & growth Managing Tomorrows People The future of work to 2020 Human Resource scarcity is a critical issue al ready impacting the energy i ndustry. Explore strategies for future workforce planni ng in this article 12 th Annual Global CEO Survey Get a timely & insightful picture of the current attitudes, perceptions & expectations of major business leaders around the worl d And Many More. J anuary 2009 31 PricewaterhouseCoopers F: PwC - Delivering Value to the Energy Industry Events & Sponsorship Training & Education Partnerships for a holistic future Offici al / Annual Sponsor World Energy Congress World Petroleum Congress CERAWeek International Financials Reporting Standards Roundtable Series Energy Board Symposium Mergers & Acquisitions Roundtable Series Energy Board Roundtable Series Board of Directors Collage Thompson & Kni ght Global Energy Services International Petrol eum Expl oration & Producti on Business Management Program Program contributor to this unique business management learning opportunity for accounting curriculum. Petroleum Accounting, Principles, Procedures & Issues (6 th Edi tion) PwC in conjunction with the Professional Development Institute of the University of North Texas (PDI) published the 6 th edition of this manual J anuary 2009 32 PricewaterhouseCoopers Section G PwC India: SAP FPM Practice Highlights J anuary 2009 33 PricewaterhouseCoopers G: PwC India SAP Practice Offerings S e c u r i t y
A u d i t SAP ERP Implementation ESA framework Implementation Business Intell igence D a t a
M a n a g e m e n t Governance, Risk and Controls Industry Soluti ons Enterpri se Portal RFID Integrati on & Mobility Business Process Re-engineeri ng Suppl y Chain Redesign Version Upgrade & Traini ng Process Controls FPM CRM, SRM, SEM PwC India SAP Offerings SAP Implementations J anuary 2009 34 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights Service Offerings Business Goal of FPM Practice Provide Solutions to the CFOs Office Service Offerings: PwC FPM Offerings COSTING Product Costing Cost Accounting Structure Activity Based Costing Profitability Analysis PLANNING & BUDGETING Process Re-Design SOP Definition System Implementation MANAGEMENT REPORTING Reporting Frameworks Dashboard / Scorecard Design STRATEGY MANAGEMENT Closing the gap between Strategy & Execution LEGAL & MANGEMENT CONSOLIDATION And Reporting System Convergence IFRS COMPLIANCE Based on SAPs Accelerator Toolkits and PwC's IFRS capabilities J anuary 2009 35 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights Practice Strengths Strength of Synergy: Amongst Domain Experts right from Finance, IFRS, Corporate, Regulatory, Taxation to Technology Experts Strength of Integrated Methodology: Proven Finance Performance Management advisory, change management & process improvement expertise. Supported by Documentation & Knowledge Transfer Strength of Industry Experience: Cross industry & cross functional knowledge & experience across different lines of services within PwC Strength of Quality Management: BS 7799, ISO 9001:2000 & Tick IT Certification by Det Norske Veritas (DNV). PwC India also accessed at CMMi Maturity Level 5 Strength of Network: A Global firm with a Local Face. One of the largest Management advisory practices in the world. Access to the global database of Best Practices & Project Repositories Strength of Technology: Through partnership with SAP J anuary 2009 36 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights PwCs Solution Implementation Methodology Assess Design Construct Tune Depl oy Review J anuary 2009 37 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights PwCs Solution Implementation Methodology contd. Implementation Stages Assess Design Construct Tune Deploy & Review 1. FPM Implementation Prepare infrastructure define technical requirements Study existing processes and design Best Business Process Flows. Design interfaces and reports Configure and test in Development and Integration environments Migrate configuration to production environment. Conduct pre Deployment checks Deploy. Address issues. 2. Data Migration Identify master data Prepare templates. Create and check test data. Suggest controls and validations. Develop and test data migration programs. Master and transaction data upload. Address issues. Sustenance plan. 3. Infrastructure Study HW, SW requirements. HW sizing and installation. Recommend steps to define security policy. Framework for creating users and authorizations. Create client for Test. Install production server. Configure transport system. Final testing and transport. Pre Deploy check. Performance check. Legacy system cut off. Production system performance monitoring. 4. Benefit Realization and Sustenance Identify processes, bottlenecks and CSFs. Define performance measures and framework to measure it. Standardize processes. Realize KPIs. Test changed processes and train users. Continuous monitoring of process performance. J anuary 2009 38 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights PwCs Solution Implementation Methodology contd. Implementation Stages Assess Design Construct Tune Deploy & Review 5. Project Management Project plan, templates, procedures and standards. Document escalation procedure. Ensure deliverables and sign off. Scope change review. Timely deliverable and sign off. Prepare contingency plan and cutover plan. Go Live sustenance plan. Support procedure and help desk. Manage project closure. 6. Change Management Identify change agents. Identify process and organization structure changes and its impact. Prepare communication plan. Conduct change workshops. Implement communication plan. Conduct change workshops. Implement communication plan. Access change readiness. Evaluate and monitor change. 7. Knowledge Transfer (Traini ng) FPM overview/ Master data/ Data migration and data base/ SQL training Prepare training templates and manuals. Hands on training to core team on Designing. Core team training (train the trainer) on actual Construction. End user training by trainers. Identify additional training needs for the end users. End user training on continuous basis. J anuary 2009 39 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights India Client References Client : Manipal Education About the Client: - Among top Indian Education Service Providers - Turnover: INR 2,404 millions - Operates in Multi-GAAP Environment - Operations in India, US, Dubai, Malaysia, Nepal etc. SAP FPM Assignment Scope: - Business Planning & Budgeting - Forecasting & What-IfAnalysis - Legal Consolidation - Financial Reporting - Management Consolidation & MIS - Best Practices in the area of Business Planning & Consolidation J anuary 2009 40 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights India Client References Client : Sterlite Technologies About the Client: - Among the top three power transmission conductor manufacturers - Among the top ten optical fiber manufacturers in the world - Turnover: INR 1686 Crores - Global provider of Optical Fibers, Telecommunication Cables and Power Transmission Conductors - Operations in India, China, Thailand, Russia, U.K. and South Africa. SAP FPM Assignment Scope: - Business Planning & Budgeting - Forecasting & What-IfAnalysis - Management Consolidation & MIS - Best Practices in the area of Business Planning & Consolidation J anuary 2009 41 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights India Client References Client : Panacea Biotec About the Client: - Among top Indian Pharma Groups - Turnover: INR 8,304 millions - Operates in Multi-GAAP Environment - 9+entities under group in form of subsidiaries, joint ventures etc. SAP FPM Assignment Scope: - Strategy Management - Business Planning & Budgeting - Forecasting & What-IfAnalysis - Legal Consolidation, Management Consolidation & MIS - Financial Reporting - IFRS Implementation using SAP IFRS Tool Kit - Best Practices in the area of Business Planning & Consolidation J anuary 2009 42 PricewaterhouseCoopers G: PwC India - SAP FPM Practice Highlights Global Client References By creating value in all aspects of our clients business with services ranging from strategy to advisory, we form a deep relationshi p with industry leaders!! J anuary 2009 We Can Team Up!
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