DIAGNOSES

Bharat Petroleum Corporation Limited

presents analyses of the management case by academicians and practitioners.

ANALYSIS CASE ANALYSIS I

N Ravichandran
Professor, P & QM Area Indian Institute of Management Ahmedabad e-mail: nravi@iimahd.ernet.in

he BPCL case presents an ERP implementation experience in the context of an integrated energy organization which is geographically well spread and characterized by large size operating in a rapidly changing competitive environment. This diagnosis is organized in two segments. The first segment reviews the stages in an ERP implementation experience and summarizes the learnings and insights in the context of BPCL. The second and concluding segment discusses several significant managerial (both tactical and strategic) concerns and concludes with an appropriate positioning of ERP.

IMPLEMENTA STAGES ERP IMPLEMENTATION STAGES

It is now well known that an ERP implementation is designed in several inter-connected stages like: Need for ERP (based on the current business practices, changed or changing environment conditions, and the proposed business strategy). Evaluation of organizations preparedness (issues related to data availability and consistency, process orientation, technical ability of executives, management culture, IT strategy, ability to work in teams, and learning attitude). Implementation (process mapping, gap analysis, process redesign, data creation, pilot implementation, and propagation). Stability, maintenance, and enhancement. These implementation stages are usually supported by: Top management support (motivation, budget support, resource creation and deployment, generating backup options, etc.).

The July-September 2002 (Vol 27, No 3) issue of Vikalpa had published a management case title Bharat Petroleum Corporation Limited (BPCL) by Anand Teltumbde, Arabinda Tripathy, and Amiya K Sahu. This issue features four responses on the case by N Ravichandran; S Padmanaban and AK Rao; Harekrishna Misra; and Salma Ahmed and Ashfaque Khan.

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 Efficient project execution team (reporting formats, time-and cost management-related issues, resource allocation, use of external consultants and internal implementation team, etc. Conflict resolution procedures (committee structure, role clarity, and process team structure). Training and education (technical, behaviour on change management process and managerial process orientation. BPCL Experience The BPCL experience is similar to these well known implementation procedures. There are no major surprises or uniqueness associated with the BPCL implementation plan. Some noteworthy features are: Top management involvement and guidance. Financial evaluation (cost-benefit analysis). Stage 1 (process mapping) and Stage 2 (implementation). Appropriate use of consultants and internal team members. Training on ERP, process redesign, and change management. Project monitoring and identification of key deliverables at every stage. Management of employee apprehensions and stress. The actual benefits of ERP implementation in BPCL are difficult to measure. Post-implementation, the employee stress is reported to be higher. The implementation is under progress. Projected benefits are reduction in inventory, increase in customer satisfaction, better managerial control, data integrity (enhanced), and improved process discipline.

Usually, the cost of networking and disaster management is not considered. Inventory reduction and other benefits projected are one-time savings and they are not exclusively related to ERP. Therefore, the best way of evaluating a need for ERP would be based on cost of operation. This would mean the cost of an ERP solution proposed and the inefficiencies and hence the burden on the company for not implementing an ERP may be used to arrive at a solution. In short, what is proposed is to replace an investment analysis oriented decision-making environment with an orientation to compare the cost of relevant alternatives. ERP and BPR Interlinkages There is a close relationship between BPR and ERP. Organizations usually have two broad options: Conduct a BPR project, select an ERP, and customize it for the proposed BPR. Adopt an ERP, customize the current processes to the ERP process, and hence achieve a moderate BPR. Approach 1 is very attractive and has a potential for maximum benefit. But it is risky. The ERP may require extensive customization. Two successive major change initiatives may not be sustainable. Alternative 2 is realistic. This is somewhat increment in approach and assumes ERP processes are the best possible. Implementation issues are reduced. Subsequent process changes would be influenced by ERP vendor. The appropriate solution is a function of what the organization is capable of handling, the business needs and the extent to which ERP can be customized without compromising its basic character. Trade-of rade-off Creativity and Process Discipline Trade-off ERP, once implemented, would require data integrity and process discipline. Often, this is considered as a restriction. This is not true. Process discipline is neither in conflict with creativity nor is it a substitute for it. The creativity would be reflected in the redesigned process before customizing ERP. Also, there are several opportunities in the organization to unleash the creative potential of individuals in an organization. When this is effectively practised, it would place a healthy demand on the maintenance and enhancement phase of an ERP. The confusion is between the process and scope for creativity versus a customized (creative) process.
BHARAT PETROLEUM CORPORATION LIMITED

ERP-RELATED ERP-RELATED ISSUES

The ERP implementation (as described in the case) in BPCL raises some important managerial issues, which we discuss briefly below, to identify a positioning for ERP. Cost-Benefit Evaluation Often, the implementation organization does a costbenefit analysis of ERP and generates a solution approach based on economic considerations (typically an investment analysis orientation). There are several shortcomings (possible) related to this approach.

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Productivity (Improved) and Manpower Rationalization ERP implementation would provide opportunity to increase productivity at all managerial levels in the organization. This is primarily due to easy availability of relevant data, consistency on data elements, and improved process (connecting various departments) integration. Managers and executives would now spend less time in non-value added activities. Because of process automation, there would be one time reduction on activities. Consequently, there would be a surplus situation on manpower. This needs to be absorbed either by redeployment or by business growth. In any case, the employee growth would be at a reduced pace than what it was as a consequence of ERP implementation using process simplification and automation. Organizational Flexibility It is widely believed that organizational flexibility may be reduced because of ERP, which is not a true. An organizations flexibility is a way by which the competitiveness of the organization is managed as a consequence of external environment, intensity of competition, and expected trends in the market place. ERP is only enabling the appropriate strategy by process improvement and data integration. To argue that the strategy of the organization would be influenced by ERP is neither correct nor feasible. As a matter of fact, a successful ERP implementation would give necessary confidence to the senior management in their ability to implement major organizational changes. Benchmarking, Module Mix, and Interfaces These are desirable features. Benchmarking should be done to understand the potential gap in performance. Benchmarking is useful to initiate redesigned processes. Often, the best benchmark may not be realizable given the environment in which the firm operates. In any case, the redesigned processes would improve the performance (by an order of magnitude).

Hence, one should view ERP implementation as one step close to benchmark (targets). Module mix (from ERP Suite) and hardware and software interfaces are desirable elements. An optimization on this dimension would be useful but such an exercise depends on the internal dynamics of the organization related to application mix, technology understanding, and the proactive nature of IS resources. For several organizations, for a variety of reasons, ERP is a one-time upgradation of IT systems and advancement of IT strategy. For such organizations, the module mix optimization would remain as a longterm IT strategy. Inhouse ERP Consultants True consultants who played an important role in implementation would find a natural settlement. The best would become inhouse maintenance and enhancement consultants. They may even leave the organization for a similar position. The rest need to be given other responsibility as change agents. After all, they are the ones who have proved that they can help change in an organization. All other things being equal, they would be preferred to initiate other change management activities within the organization as well as with business partners.

CONCLUSION
ERP needs to be positioned as a strategic enabler. It provides a platform to implement a competitive strategy on dimensions related to data integration, process redesign and upgradation, and interfacing functional systems. Also, ERP is not the end of all that an organization can do. It is one of the tools (processbased) which an organization would employ to enhance its competitiveness. Surely, strategy first and then the enablers. In some situations of strategy, process may play an important role and hence ERP. But, that cannot be the reason to assign a large role to this useful concept and tool.

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ANALYSIS CASE ANALYSIS II

S Padmanaban
Professor, Systems Area SDM Institute for Management Development Mysore e-mail: paddy43@yahoo.co.in

A K Rao
Director SDM Institute for Management Development Mysore e-mail: raoarza@yahoo.com appropriate in the first place. Nevertheless, a closer examination reveals a number of issues and key questions to be (and ought to have been) addressed. The analysis flows from three perspectives, viz., cost-benefit justification, business objectives realization, and technological imperatives/issues management. Keeping these objectives in focus, the analysis covers the following aspects: Measures for successful implementation Customer focus and CRM Vendor focus and SCM Competition analyses Knowledge base and management through data mining Web-enabled and secured interfaces Cost-Benefit Justification As the case itself points out at the end, how does one measure and accept successful implementation of an ERP? Any comments and conclusion from the vendor (in this case SAP) may not be taken seriously. Nor can the estimates of recurrent benefits (valued around Rs 42 crore per annum) imputed by the company mainly because they are still estimates. It should also be recognized that many of the benefits might not be quantifiable and therefore have to be regarded as positive indicators rather than quantity estimates. Indeed, in the absence of transparent mechanisms for and methods of imputing these benefits, first in the beginning (pre-ERP) and later on a regular basis (runERP), it would be risky to use the figures to justify investment and expenditure. We take for instance the high-value item Lubricants Inventory Management in Annexure 2 of the case, accounting for as much as Rs 11.4 crore. The key questions are: How is this benefit estimated and the value arrived at? When was it done first? How is it going to be derived on a regular basis? How does one take into account the marginal effects if it is done and reported on a regular basis? In other words, is the
BHARAT PETROLEUM CORPORATION LIMITED

PCL, one of the largest petroleum-oil-andallied-products-marketing companies had embarked on an ambitious project of planning for and implementing an ERP system (SAP R/3). The main objectives were to remain competitive through improved customer service and customer satisfaction, transform the company into a learning organization, and prepare itself to face the challenges (likely to be) thrown in the deregulated business environment. During late 1996, the company started off with a change initiative programme called CUSECS (Customer Service and Customer Satisfaction) with help from Arthur D Little Inc (ADL). Later, it went through an elaborate scheme of planning for and implementing ERP in two phases, viz., CDP (Conceptual Design and Planning), and DDI (Detailed Design and Implementation). The project-phase of DDI was called ENTRANS (Enterprise Transformation) reflecting the top managements visions and aspirations. While CDP involved mainly internal group members signifying pre-software-acquisition scenario, DDI involved an external implementation consultant, PWC (Price Waterhouse Coopers), signifying technological (hardware, software, netware) and organization (read people) change scenario, following pilot and full roll-out implementation sequence. It is claimed that the company has managed the change well, and the system is running with all the 12 modules encompassing the entire operations across 200 locations within the country. Estimated annual savings attributable to ERP are put around Rs 42 crore.

KEY ISSUES
Given the central cabinets recent approval of divestment of BPCL and the entry (and growth) of private players like Reliance, the foresight the company had almost six years ago and the strategic preparatory IT initiatives it commenced do appear to be timely and

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benefit one time or recurrent? How much of it, and for how long, is attributable to ERP? Ironically, one of the benefit items in the same annexure under Finance refers to reduction in staff cost and increase in ROI on funds invested by retirement benefits0.23 crore rupees, while no retrenchment or downsizing has almost been guaranteed by the Chairman. This category of benefit appears once more under Refinery included in the figure of 0.84 crore rupees. Ideally, benefits should be linked to and derived from a set of system requirement specifications, which in turn would be linked to Business Requirements Analysed and Processes Reengineered. They should also align with the system objectives and be as specific and measurable/verifiable as possible. Very often, they are used even for final testing and acceptance of the system. For instance, one would like to see, measure, and report how customer service in SBU A would be different between pre-ERP and post-ERP scenarios, expresed in specific measurable terms. For instance, enquiry to order confirmation cycle is reduced from seven days to one day and so on. Some of these may not be convertible into money terms directly, but all the same constitute benefits and contribute to the strategic shifts being considered. This process implies that adequate and confirmatory cost and time data on pre-ERP processes have been collected, verified, and accepted as reference points. Equally important is the mechanism to collect and report similar data during run-ERP to facilitate justification on an on-going basis. Cost-benefit (analysis and therefore) justification in any project has to consider cost/benefit flows typified into two parts, viz., capital and revenue. It is necessary to identify, and quantify as much as possible, both costs and benefits, in terms of capital (one time flow, or occasional flows over the project period) and revenue (series of flows over the project period). A justification follows well-known capital budgeting methods (like NPV, IRR, Payback) applied on such costs and benefits streams. For information systems project, these justifications have been supplemented by considerations like TCO (total cost of ownership), and TCOP (total cost of operations). These include costs of hardware, software, and networking, both at the time of acquisition and for upgrades, warranty-extensions, AMC, training, infrastructural changes, and so on.

While a detailed cost-benefit analysis and justification for the BPCL-ERP-project is out of scope here, suffice it to say that: It is extremely difficult to justify the project only in terms of a revenue benefits stream of the value of Rs 42 crore. It is equally difficult to justify the project even in terms of capital streams as figures of overall cost incurred for starting the project and running it now are not available/given. It would be desirable and necessary to start compiling and archiving data in terms of TCO and TCOP to facilitate justifying futuristic decisions on maintenance and enhancement. Business Objectives Realization The second perspective relates to the goals and objectives with which BPCL initiated the project. Important among these objectives were: customer focus and orientation; facing competition; and becoming and being learning organization. Here again, the presented data do not throw enough light on some key issues. For instance, what are the measures available and used to continually record and report improvement in customer service and satisfaction in the run-ERP scenario? How have the CRM and SCM components been inter-linked in order to improve the competitiveness and customer orientation? To what extent are the functional modules capable of facilitating competition analysis and strategic initiatives? How have the people responsible for the expected improvements and benefits been empowered? The case reports that the CCSE (Centre for Customer Support and Excellence) formed as part of ENTRANS was meant to take care of a number of implementation supportive aspects ranging from master files, authorization, data archival, upgrades, etc. It puts data warehouse SCM and internet enablement in the new initiatives category. Ideally, for a large organization like BPCL, the IS plan for ERP should have included data warehouse and data mining, and knowledge management right from the beginning. This goes well with the learning organization objective. The culmination of efforts in this direction should be the build up and maintenance of a BPCL Knowledge Base (a repertoire of corporate wisdom) with appropriate access and usage controls in place.

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Technological Imperatives/Issues Management From the perspective of technological imperatives/ issues management, the following questions arise: To what extent has BPCL exposed itself to a singular or a few proprietary vendors, given the emerging open standards and licence-freedom in the software realm? If there are bindings, what are the cost implications now and for the future? More specifically, in terms of OS, RDBMS, and webenabling tools, what programmes have been standardized? For instance, in the open and free category, we do have Linux (as OS), Java (as one of the web-enabling tools), and so on. What is the degree of customization? To what extent has BPCL been able to leverage its position to wrest control of source code, configurability, and deployment rights from the vendors? In the context of web-enabling, which business processes and what type of architectures have been considered? Have policies and guidelines on information systems security, audit, and control been laid down? What has been decided on business continuity plan? How much of the overall TCO and TCOP is accounted by proprietary vendor binding and upgrade costs? Has BPO [Business Processes Outsourcing] been considered both from offering and accepting positions in order to optimize TCO and TCOP?

one relates to employee productivity. With ERP implementation, generally the time taken for processes and transactions (whether paper-based or work floworiented) comes down, and this should indicate two things: one, the same number of staff will be able to handle higher volume of processes and transactions as the business expands. Second, decision-making process will improve in terms of quality and time. Of course this implies that proper training on analytical skills and appropriate empowerment takes place. This should take care of productivity and also handling data deluge issues. As the company grows, continual changes in the processes and reengineering thereof would call for the services of the SAP specialists to make suitable changes in the ERP. Job rotation should be considered to take care of reducing levels of motivation due to cobweb of systems.

CONCLUSION
BPCLs accomplishment is commendable, considering the elaborate planning and implementation processes done to cover all operations across the country. It appears that a great deal of efforts and resources have gone into change management with commitment from the top management. While some of the benefits expected may have been realized, there are key issues and questions still to be addressed. As analysed here, these range from the very basis of estimating and ascertaining benefits to better alignment of benefits to the organizational goals evolving as appropriate to the emerging business and economic scenario.

OTHER ISSUES
Of the other concerns expressed by the case-authors,

CASE ANALYSIS III ANALYSIS

Harekrishna Misra
Associate Professor Institute of Rural Management, Anand e-mail: hkmishra@irma.ac.in

B
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PCL, one of the leading Public Sector Undertakings (PSUs) in India, was operating in a protected market environment where pricing policy was under the control of Government of India (GOI), the major stakeholder. But the intention of GOI to de-regulate the oil industry forced all the players including BPCL to manage in a fast changing

competitive environment. In order to stay competitive, the company chose the option of managing its internal affairs by optimizing resources. The epicentre of the change was customer satisfaction with quality product and lower price. While a major chunk of raw material (crude oil) was imported, there was little scope for input cost control. Optimal use of internal resources
BHARAT PETROLEUM CORPORATION LIMITED

was, therefore, one major potential area where BPCL wanted to manage through ERP implementation. This case clearly brings out issues that needed to be addressed while implementing ERP in a large organization like BPCL.

APPLICATION ENTERPRISE APPLICATION SCENARIO

BPCL is a large network of geographically dispersed installations, administrative offices, and commercial operations. It has a large workforce and it employs high-end technology for operations. Therefore, one of the possible approaches for acquisition of ERP could be through a careful analysis of various phases such as pre-acquisition process, acquisition process, implementation, and post-implementation. Pre-acquisition Process ERP is not just a product to be purchased but a process which needs efforts to align the product to the business processes. This process involves preparing the organization from the point of view of employees willingness to accept change, technology absorption readiness, and technology transfer readiness.

Resource Human Resource Readiness

Acquisition of ERP is a strategic issue since it directly affects the process owners and functional entities in the process. Therefore, changing the mindset of people who would absorb this new concept is a daunting task. BPCL had the advantage of customer service and customer satisfaction (CUSECS) which oriented the employees towards customer focus. The steps taken by BPCL have been methodical and in the right direction. The foresight of the management and the decision makers reveals seriousness and commitment their which is normally not seen in many PSUs. CUSECS provided the necessary base for employees to orient themselves towards customers and align the information systems to business processes through the concepts of strategic business units (SBUs). This approach made the employees feel the importance of IT as a tool and played a major role in effectively introducing ERP. IT orientation of employees (demand from internal customers for use of IT) is a biggest challenge in IT alignment and BPCL handled this problem well.

processes. It aims at a slot to meet the needs for an online transaction processing (OLTP) system in an organization. It warrants standardization of various processes in order to make transactions possible. Integration is the central issue in an ERP environment. Understanding issues related to alignment of technology with business process is an important critical success factor for any ERP implementation process. The organization has to be ready for meeting the demands of alignment and BPCL addressed this issue professionally. Conceptual design and planning (CDP) approach proved quite helpful in addressing technology alignment issues. ERP packages provide choices for tuning and configuring. BPCLs good understanding of the business through SBU approach in CUSECS enabled it to organize the processes well to ensure that ERP package fitted in with their requirements. There might still have been gaps in the deliverables of ERP product and that of BPCLs requirement. Additional information on this would have been useful in knowing the steps taken by BPCL to understand and address this gap. The case does not reveal the methodology adopted to address process latency which might have crept into the system due to ERP acquisition. It is a serious issue and can affect the Transaction Processing System (TPS) in the long run and requires to be addressed in the pre-acquisition process.

Transfer Technology Transfer Readiness

This is one of the major issues which is normally deferred to the post-implementation phase. This is a part of HR readiness but needs clear focus during the pre-acquisition phase. BPCL has strategically addressed this issue and, in the process, it has not only trained the trainers but also acquired professionalism in inhouse consultancy, which will bring in new business opportunities. Acquisition Phase The acquisition phase includes choosing the right architecture, selection of vendor, and selection of technology infrastructure.

Architectur chitecture Choosing the Right Architecture

An ERP is effective in delivering results in an OLTP environment. An organization must know the limitation of ERP that it is not a management support system. Therefore, before selecting an ERP, a right

Technology Absorption Readiness

ERP brings in a technology bias inherent to business
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architecture should be chosen so that it would provide scope for growth, scalability, and complex interfaces among components, sustaining the dynamic TPS. It is not clear from the facts provided whether BPCL has done this exercise.

Vendor Selection of Vendor

ERP vendors are many and they promote their product in modules as well as an enterprise product. Since integration is the central issue, vendor selection is a key process in ERP acquisition. From the BPCL point of view, it is not clear whether benchmarking has been done for selection of a vendor. Besides, there is no data available to understand the issues regarding total cost of ownership while evaluating the vendors. However, other parameters as chosen are in line with expectation.

methodical as it set up a high-end service centre called CCSE with ENTRANS team. Additionally, its vision is quite clear for the post-implementation phase which focuses on use of knowledge repository and oil industry templates. Transformation: Since success of ERP implementation assures a good and robust TPS, the implementing organization has a long way to go. It must transfer its database to knowledge base since it now has a good system to capture correct, authenticated, and up-todate data through an ERP. BPCL has the advantage now to transform its data to knowledge by adding value to ERP and moving towards an advanced MIS scenario.

BENEFIT PROJECTIONS
Annexure 2 of the case describes certain benefits that are projected on account of implementation of ERP in BPCL. In order to make the analysis beneficial, the projections made are grouped in two categories, i.e. transaction-centric and management-centric because it is felt that most of the benefits drawn from ERP are through OLTP environment. Transaction-centric benefits are referred to those directly conceived to be the effect of ERP and management-centric benefits are the other synergic benefits because of ERP implementation. Table 1 shows benefits grouped under a benefit-centre. A benefit centre is either a support function or a production process. It is clear from the table that out of a total benefit of Rs 42.20 crore, transaction-centric benefits are Rs 33.03 crore and management-centric benefits are Rs 9.17 crore. Table 1: Benefits of ERP Implementation
Description of Benefit Centre Lubricants Retail Sales Retail Logistics Industrial and Commercial Aviation Finance Human Resource IS Engg. and Projects Materials Refinery LPG Total Benefits in Rs Crore Transaction -centric 11.40 1.90 5.21 2.29 0.45 4.35 1.95 0.00 3.23 0.38 0.48 1.39 33.03 Management -centric 0.11 0.00 0.37 0.03 0.29 0.23 0.00 0.61 1.54 1.28 4.10 0.61 9.17 Total 11.51 1.90 5.58 2.32 0.74 4.58 1.95 0.61 4.77 1.66 4.58 2.00 42.20

Technology Infrastructure Selection of Technology Infrastructure

The case does not elaborate the strategy adopted by BPCL for acquisition of technology infrastructure at an enterprise level but it seems to be appropriate. Additional information on communication networking architectures in the study would have helped for a better understanding of ERP implementation. Implementation Phase There is a belief that a vendor, though assessed for quality processes, does not necessarily deliver a quality product. Therefore, one needs to be prudent to go for modules approach while deciding on ERP implementation for an enterprise that demands large-scale integration. BPCL has made the right choice in going for implementation in two phases: Pilot phase and rollout phase. Post-acquisition Post-acquisition of ERP includes stabilization, continuous improvement, and transformation. Stabilization: ERP brings in more post-acquisition shocks to an organization because of high investment, aspiration-reality gap on ROI, cultural shock, fear of loosing importance among employees and above all the transaction process latency. BPCL faced these shocks and the apprehensions of the authors are quite genuine. improvement: Continuous improvement: Given the fact that postERP-implementation phase is quite crucial, continuous improvement to come out of blues of process latency and work towards large-scale integration for an enterprise is necessary. BPCLs approach in this respect is

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BHARAT PETROLEUM CORPORATION LIMITED

Graph 1 suggests that management benefits constitute around 22 per cent of the total benefits whereas transaction-centric benefits are 78 per cent. This justifies expecting such results for BPCL. However, Graph 2 indicates that out of the transaction-centric benefits of Rs 33.03 crore, the major contribution is from lubricants. However, no significant result is expected from other areas such as materials and refinery which are probably some of the major potential functions and processes to deliver process improvement results if transactions are effectively managed through ERP. Additional information on each of the benefit centres in the form of overheads, transaction costs, operation costs; and costs incurred in all phases of implementation would have given a clear picture on total cost, of ownership and would have also given a good base for analysing the payback period.

Graph 1 : Benefits from ERP Implementation

22% 22%

78% 78%

Transcation centric Transcation-centric

Management Centric Management-centric

Graph 2: Projections of Benefits

12.00 10.00 Value in Rs. crores 8.00 6.00 4.00 2.00
Transaction-centric Transaction Centric

Management Centirc Management-centric

CONCLUSION
ERP in BPCL would bring significant benefits to the organization at the operational level. Efforts ought to be made to organize process improvement strategies through ERP. If further management-centric benefits are to be derived from this process, enough attention needs to be given to address issues like having a good architecture, improvement in process latency, implementing good tools for data warehousing, online analytical processing (OLAP), and enterprise application intergration (EAI).

0.00 Human Resource Lubricants Engg. And Projects Retail Logistics Refinery Aviation

Benefit Centres

ANALYSIS CASE ANALYSIS IV

Salma Ahmed
Senior Lecturer, Logistics and Information Systems Aligarh Muslim University Aligarh e-mail: salmaahmed6@rediffmail.com

Ashfaque Khan
Manager Kale Consultants Ltd New Delhi

PCL has a dominant position in the area of distribution of petrol and petroleum products in the Indian market. Environmental conditions forced BPCL to change. Customer focus emerged as the major concern of its change initiative. As a result, inteVIKALPA VOLUME 28 NO 1 JANUARY - MARCH 2003

gration of its activities was the need of the hour. BPCL implemented an ERP system to create an integrated and responsive supply chain. It was the first time that the entire operations of an oil marketing company of such a large magnitude were integrated downstream.

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MAJOR ISSUES IN ERP IMPLEMENTA IMPLEMENTATION

The major issues concerning any ERP implementation exercise are: choice of a vendor; implementation method, cultural block. vendor: Choice of a vendor A major concern here is the vendors experience and expertise in similar industry. BPCL is the industry leader with multiple leading oil company implementations and also has Indian implementation partners. Also, it could fit with current needs and also future requirements which are critical for ERP implementation. Implementation issues : BPCL undertook implementation of ERP in a phased manner with its introduction at select three sites and business areas, i.e., at Refinery, Wadilub Lubricant Plant, and a Lubs C&F Agency at Pune. This was a pilot study. Once the company was satisfied with the results, it extended ERP to other locations and business areas. Cultural issues : Yet another critical issue to any IS implementation is the resistance to change or acceptance of ERP implementation in this case. However, BPCL handled this issue tactfully. In the pre-implementation stage, it asked each vendor to make a presentation of ERP implementation to a group of 100 key persons from diverse business areas of BPCL. The objective of this exercise was to clear their doubts, emphasize the foreseen benefits, and convince them of the need for implementation. During the post-implementation stage, the company drew members from different business groups and sought their active participation. The level of involvement was so high that out of a team of 70 members, only 10 were from IS department and the rest 60 were from various other areas. Further, it selected an HR professional to head this transformation process team. These factors enabled the acceptance of ERP implementation. Benefits One major advantage of having ERP in the BPCL kind of environment is almost a real-time connectivity with multi-location and multi-groups in the business. This would reduce the intra-office documentation and also involvement in mundane activities. This definitely would have a bearing on the productivity of the people. The advantages of ERP solution with its people-driven

focus would be: It would turn all roles and functions into procedural activity. It would help in better metricization of roles and functions. However, an analysis of these two issues reveals that employees do get bogged down by the process regimentation to an extent and limited to a few functions. Another major advantage is the increasing motivation level of employees with the adoption of technology. Firstly, they would be away from mundane and routine matters. Secondly, having worked with the state-ofthe-art technology, they would essentially enhance, their skill-set and hence their employability in the market.
Problem Areas Though ERP implementation is likely to increase the motivation level of employees in the long run, initially, there would be resistance to its acceptance. Also, while the roles of the employees tend to get defined in terms of profile in the system, to an extent, there would be compartmentalization of roles as defined by the system. It is in this context that the HR Department can play a vital role. Further, IT enablement of functions normally does not lead to an increase of jobs atleast not across the board, that is, not at the entry level positions. However, there would be demand for specialized functional domains. Moreover, jobs could also increase if one of the following takes place: Business increases due to macro-economic factors. IT enablement leads to substantial savings which could be invested to grow business. The organization should, therefore, focus on growing the business so that chances of layoffs are avoided.

CONCLUSIONS
A notable feature of BPCLs ERP implementation is that it has created a pool of skilled resources highly prized in the industry. Hence, to make best use of them, it should make an intelligent move and hive them off as a separate profit centre, use it as an implementation or analysis resource for the other oil majors because essentially that is where the domain knowledge of the resources lie. TELCO, Mahindra and Mahindra, and
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Seimens have also taken similar decisions. They have turned their IS Departments into separate companies after ERP implementation. This exercise could be undertaken either in partnership with SAP consulting or independently. Identification and mapping of the processes of an organization are an integral component of any ERP implementation. As far as introduction of new

processes or any other innovation in the strategic realm is concerned (to keep in tandem with the changing market dynamics), the agility or flexibility of the organization should remain intact. To conclude, ERP implementation at BPCL has far-reaching positive implications. The companys efforts at integrating the customers have proved to be worthwhile for the employees and the organization at large.

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