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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 Mintzbergs model (Figure 4) which essentially mentions technostructure an important element of the
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.

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).

Top Management

Strategic Business Units

Refinery

Retail

LPG

Lubricants

Industrial & Commercial

Aviation

SUPPORT FUNCTIONS
Information

Finance

HR

System

Marketing

Fig 3: Four Layered Restructuring of BPCL

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 organizations 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.
Fig 4: Mintzb erg s O rganiz ational Model

ERP PLANNING AND IMPLEMENTATION


The complete ERP Planning can be mapped as following:

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
5. TWO PHASE
Modules to implement Conceptual Design & Planning (CDP) PWC, 6 Months Detailed Design and Implementation (DDI)

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

6. CD&P
All stakeholders together Capacity Planning Network Planning System Landscaping Authorization Management

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 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 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

7. DDI
SAP implementation by InHouse 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.

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

11. ROLL OUT Measurement of Success


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

10.

BIGGEST CHALLENGE HOW TO MESAURE THE SUCCESS ???

CHALLENGES
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

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 organization within the toward
Departing understand Employees the

customer centricity in the business. Integration of all

undocumented processes for the business efficiency. The mere existence of the same

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

undocumented even after

processes ERP

implementation makes doing the job much harder for new employees.

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.

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 parameters? the the success

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 Doesnt 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. 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.
Benchmark
Fig 6: Factors Determining Performance Metrics
Fig 5: Com mod itiz atio n of ERP. So urce: Nich olas G. Carr, May 2003, Harvard Business

Benefits

Evlauation

Performance Metrics

Risks