DIAGNOSES

Bharat Petroleum Corporation Limited

presents analyses of the management case by academicians and practitioners.

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

T

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.

ERP IMPLEMENT ATION ST AGES IMPLEMENTA 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 organization’s 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.

VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003

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The ERP may require extensive customization. customize the current processes to the ERP process. the employee stress is reported to be higher. Post-implementation. role clarity. would require data integrity and process discipline. BHARAT PETROLEUM CORPORATION LIMITED ERP-RELA TED ISSUES ERP-RELATED The ERP implementation (as described in the case) in BPCL raises some important managerial issues. Creativity and Process Discipline T rade-of f Trade-of rade-off ERP. 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. The creativity would be reflected in the redesigned process before customizing ERP. to identify a positioning for ERP. In short. time-and cost management-related issues. Therefore. When this is effectively practised. data integrity (enhanced). • Conflict resolution procedures (committee structure. • Adopt an ERP. and change management. Often. Implementation issues are reduced. the best way of evaluating a need for ERP would be based on cost of operation. Alternative 2 is realistic. once implemented. behaviour on change management process and managerial process orientation. Subsequent process changes would be influenced by ERP vendor. it would place a healthy demand on the maintenance and enhancement phase of an ERP. There are several shortcomings (possible) related to this approach. better managerial control. what is proposed is to replace an investment analysis oriented decision-making environment with an orientation to compare the cost of relevant alternatives. there are several opportunities in the organization to unleash the creative potential of individuals in an organization. increase in customer satisfaction. • Appropriate use of consultants and internal team members. and improved process discipline. • Financial evaluation (cost-benefit analysis). There are no major surprises or uniqueness associated with the BPCL implementation plan. Cost-Benefit Evaluation Often. resource allocation. • Training on ERP. process redesign. The actual benefits of ERP implementation in BPCL are difficult to measure. • Stage 1 (process mapping) and Stage 2 (implementation). Usually. Approach 1 is very attractive and has a potential for maximum benefit. which we discuss briefly below. The confusion is between the process and scope for creativity versus a customized (creative) process. • Project monitoring and identification of key deliverables at every stage. Organizations usually have two broad options: • Conduct a BPR project. Process discipline is neither in conflict with creativity nor is it a substitute for it. BPCL Experience The BPCL experience is similar to these well known implementation procedures. But it is risky. • Management of employee apprehensions and stress.• Efficient project execution team (reporting formats. and customize it for the proposed BPR. and process team structure). select an ERP. • Training and education (technical. etc. the cost of networking and disaster management is not considered. this is considered as a restriction. Two successive major change initiatives may not be sustainable. The appropriate solution is a function of what the organization is capable of handling. and hence achieve a moderate BPR. Inventory reduction and other benefits projected are one-time savings and they are not exclusively related to ERP. the business needs and the extent to which ERP can be customized without compromising its basic character. This is somewhat increment in approach and assumes ERP processes are the best possible. This is not true. Some noteworthy features are: • Top management involvement and guidance. the implementation organization does a costbenefit analysis of ERP and generates a solution approach based on economic considerations (typically an investment analysis orientation). 126 . Projected benefits are reduction in inventory. use of external consultants and internal implementation team. ERP and BPR Interlinkages There is a close relationship between BPR and ERP. The implementation is under progress. Also.

a successful ERP implementation would give necessary confidence to the senior management in their ability to implement major organizational changes. Managers and executives would now spend less time in non-value added activities. To argue that the strategy of the organization would be influenced by ERP is neither correct nor feasible. Surely. In any case. The rest need to be given other responsibility as change agents. intensity of competition. ERP is not the end of all that an organization can do. Benchmarking should be done to understand the potential gap in performance. An optimization on this dimension would be useful but such an exercise depends on the internal dynamics of the organization related to application mix. there would be a surplus situation on manpower. they are the ones who have proved that they can help change in an organization. that cannot be the reason to assign a large role to this useful concept and tool. VIKALPA • VOLUME 28 • NO 1 • JANUARY . It is one of the tools (processbased) which an organization would employ to enhance its competitiveness. Also. technology understanding. ERP is only enabling the appropriate strategy by process improvement and data integration. and expected trends in the market place. After all. For such organizations. Benchmarking. the redesigned processes would improve the performance (by an order of magnitude). which is not a true. Module Mix. for a variety of reasons. they would be preferred to initiate other change management activities within the organization as well as with business partners. consistency on data elements. All other things being equal. Often. process may play an important role and hence ERP. This needs to be absorbed either by redeployment or by business growth. Hence. one should view ERP implementation as one step close to benchmark (targets). strategy first and then the enablers. An organization’s flexibility is a way by which the competitiveness of the organization is managed as a consequence of external environment. Benchmarking is useful to initiate redesigned processes. For several organizations.Productivity (Improved) and Manpower Rationalization ERP implementation would provide opportunity to increase productivity at all managerial levels in the organization. and Interfaces These are desirable features.MARCH 2003 127 . They may even leave the organization for a similar position. Organizational Flexibility It is widely believed that organizational flexibility may be reduced because of ERP. In some situations of strategy. As a matter of fact. It provides a platform to implement a competitive strategy on dimensions related to data integration. Consequently. This is primarily due to easy availability of relevant data. Inhouse ERP Consultants True consultants who played an important role in implementation would find a natural settlement. CONCLUSION ERP needs to be positioned as a strategic enabler. the best benchmark may not be realizable given the environment in which the firm operates. there would be one time reduction on activities. In any case. the module mix optimization would remain as a longterm IT strategy. and the proactive nature of IS resources. process redesign and upgradation. ERP is a one-time upgradation of IT systems and advancement of IT strategy. and interfacing functional systems. Because of process automation. and improved process (connecting various departments) integration. the employee growth would be at a reduced pace than what it was as a consequence of ERP implementation using process simplification and automation. Module mix (from ERP Suite) and hardware and software interfaces are desirable elements. The best would become inhouse maintenance and enhancement consultants. But.

Indeed. the foresight the company had almost six years ago and the strategic preparatory IT initiatives it commenced do appear to be timely and 128 . transform the company into a learning organization. business objectives realization. Nevertheless. The main objectives were to remain competitive through improved customer service and customer satisfaction. viz. netware) and organization (read people) change scenario.CASE ANAL YSIS II ANALYSIS S Padmanaban Professor. first in the beginning (pre-ERP) and later on a regular basis (runERP).com appropriate in the first place.. 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. following pilot and full roll-out implementation sequence. DDI involved an external implementation consultant. cost-benefit justification. the company started off with a change initiative programme called CUSECS (Customer Service and Customer Satisfaction) with help from Arthur D Little Inc (ADL)..co. Systems Area SDM Institute for Management Development Mysore e-mail: paddy43@yahoo. The analysis flows from three perspectives. software. 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. and DDI (Detailed Design and Implementation). PWC (Price Waterhouse Coopers). KEY ISSUES Given the central cabinet’s recent approval of divestment of BPCL and the entry (and growth) of private players like Reliance. 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). signifying technological (hardware. viz. and prepare itself to face the challenges (likely to be) thrown in the deregulated business environment.in A K Rao Director SDM Institute for Management Development Mysore e-mail: raoarza@yahoo. Nor can the estimates of recurrent benefits (valued around Rs 42 crore per annum) imputed by the company mainly because they are still estimates. Estimated annual savings attributable to ERP are put around Rs 42 crore. is the BHARAT PETROLEUM CORPORATION LIMITED B PCL. Keeping these ‘objectives’ in focus. it went through an elaborate scheme of planning for and implementing ERP in two phases. 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.4 crore. During late 1996. 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. accounting for as much as Rs 11. It is claimed that the company has managed the ‘change’ well. CDP (Conceptual Design and Planning). in the absence of transparent mechanisms for and methods of imputing these benefits. and technological imperatives/issues management. it would be risky to use the figures to justify investment and expenditure. and the system is running with all the 12 modules encompassing the entire operations across 200 locations within the country. While CDP involved mainly internal group members signifying pre-software-acquisition scenario. The project-phase of DDI was called ENTRANS (Enterprise Transformation) reflecting the top management’s visions and aspirations. We take for instance the high-value item ‘Lubricants — Inventory Management’ in Annexure 2 of the case. Later. a closer examination reveals a number of issues and key questions to be (and ought to have been) addressed.

and networking. and quantify as much as possible. etc. infrastructural changes. and for how long. • 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. and TCOP (total cost of operations). This category of benefit appears once more under ‘Refinery’ included in the figure of 0.23 crore rupees. Ideally. 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. and accepted as reference points. Very often. both at the time of acquisition and for upgrades. These include costs of hardware. verified. ‘enquiry to order confirmation cycle is reduced from seven days to one day’ and so on. For instance. measure. Payback) applied on such costs and benefits streams. and knowledge management right from the beginning. or occasional flows over the project period) and revenue (series of flows over the project period). 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 benefits—0. Business Objectives Realization The second perspective relates to the goals and objectives with which BPCL initiated the project. 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. VIKALPA • VOLUME 28 • NO 1 • JANUARY .84 crore rupees. It puts data warehouse SCM and internet enablement in the new initiatives category.’ which in turn would be linked to ‘Business Requirements Analysed and Processes Reengineered. benefits should be linked to and derived from a set of ‘system requirement specifications. Important among these objectives were: customer focus and orientation..’ They should also align with the system objectives and be as specific and measurable/verifiable as possible. is attributable to ERP? Ironically. This process implies that adequate and confirmatory cost and time data on pre-ERP processes have been collected. the IS plan for ERP should have included data warehouse and data mining. training. but all the same constitute benefits and contribute to the strategic shifts being considered. For information systems project. Here again. and so on. IRR. Cost-benefit (analysis and therefore) justification in any project has to consider cost/benefit flows typified into two parts. It is necessary to identify. For instance. and report how customer service in SBU A would be different between pre-ERP and post-ERP scenarios. While a detailed cost-benefit analysis and justification for the BPCL-ERP-project is out of scope here. in terms of capital (one time flow. This goes well with the learning organization objective. software. they are used even for final testing and acceptance of the system. data archival. while ‘no retrenchment or downsizing’ has almost been guaranteed by the Chairman. capital and revenue. authorization. viz. facing competition. A justification follows well-known capital budgeting methods (like NPV.benefit one time or recurrent? How much of it. warranty-extensions. these justifications have been supplemented by considerations like TCO (total cost of ownership). AMC. Equally important is the mechanism to collect and report similar data during run-ERP to facilitate justification on an on-going basis. • 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. Ideally. one would like to see. Some of these may not be convertible into money terms directly. and becoming and being learning organization. upgrades. the presented data do not throw enough light on some key issues. both costs and benefits. For instance. expresed in specific measurable terms.MARCH 2003 129 . for a large organization like BPCL. 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.

audit. Optimal use of internal resources BHARAT PETROLEUM CORPORATION LIMITED . in terms of OS. Anand e-mail: hkmishra@irma. While a major chunk of raw material (crude oil) was imported. 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. In order to stay competitive.’ which business processes and what type of architectures have been considered? • Have policies and guidelines on information systems security. decision-making process will improve in terms of quality and time. 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. RDBMS. This should take care of productivity and also handling data deluge issues. the major stakeholder. and this should indicate two things: one.ac. in the open and free category. and deployment rights from the vendors? • In the context of ‘web-enabling. As analysed here. Java (as one of the web-enabling tools). and webenabling tools. 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. generally the time taken for processes and transactions (whether paper-based or work floworiented) comes down. given the emerging open standards and licence-freedom in the software realm? If there are bindings. the same number of staff will be able to handle higher volume of processes and transactions as the business expands. 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. It appears that a great deal of efforts and resources have gone into change management with commitment from the top management.Technological Imperatives/Issues Management From the perspective of technological imperatives/ issues management. what programmes have been standardized? For instance. CONCLUSION BPCL’s accomplishment is commendable. OTHER ISSUES Of the other concerns expressed by the case-authors. the following questions arise: • To what extent has BPCL exposed itself to a singular or a few proprietary vendors. As the company grows. there was little scope for input cost control. one of the leading Public Sector Undertakings (PSUs) in India. CASE ANAL YSIS III ANALYSIS Harekrishna Misra Associate Professor Institute of Rural Management. there are key issues and questions still to be addressed. 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. While some of the benefits expected may have been realized. considering the elaborate planning and implementation processes done to cover all operations across the country. Of course this implies that proper training on analytical skills and appropriate empowerment takes place. the company chose the option of managing its internal affairs by optimizing resources. Second. we do have Linux (as OS). The epicentre of the change was customer satisfaction with quality product and lower price. was operating in a protected market environment where pricing policy was under the control of Government of India (GOI). configurability. With ERP implementation. what are the cost implications now and for the future? More specifically.in B 130 PCL.

Understanding issues related to alignment of technology with business process is an important critical success factor for any ERP implementation process. An organization must know the limitation of ERP that it is not a management support system. Human Resour ce Readiness Resource Acquisition of ERP is a strategic issue since it directly affects the process owners and functional entities in the process. This is a part of HR readiness but needs clear focus during the pre-acquisition phase. BPCL had the advantage of customer service and customer satisfaction (CUSECS) which oriented the employees towards customer focus. therefore. Integration is the central issue in an ERP environment. 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. BPCL has strategically addressed this issue and. implementation. which will bring in new business opportunities. acquisition process. it has not only trained the trainers but also acquired professionalism in inhouse consultancy. The organization has to be ready for meeting the demands of alignment and BPCL addressed this issue professionally. BPCL’s 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. This case clearly brings out issues that needed to be addressed while implementing ERP in a large organization like BPCL. and technology transfer readiness. ERP packages provide choices for tuning and configuring. selection of vendor. changing the mindset of people who would absorb this new concept is a daunting task. It aims at a slot to meet the needs for an online transaction processing (OLTP) system in an organization. and selection of technology infrastructure.was. 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. and commercial operations. It has a large workforce and it employs high-end technology for operations. ENTERPRISE APPLICA TION SCENARIO APPLICATION BPCL is a large network of geographically dispersed installations. processes. Additional information on this would have been useful in knowing the steps taken by BPCL to understand and address this gap. 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). Therefore. Therefore. Therefore. Conceptual design and planning (CDP) approach proved quite helpful in addressing technology alignment issues. technology absorption readiness. Technology T ransfer Readiness Transfer This is one of the major issues which is normally deferred to the post-implementation phase. a right Technology Absorption Readiness ERP brings in a technology bias inherent to business VIKALPA • VOLUME 28 • NO 1 • JANUARY . Acquisition Phase The acquisition phase includes choosing the right architecture. one major potential area where BPCL wanted to manage through ERP implementation. The case does not reveal the methodology adopted to address “process latency” which might have crept into the system due to ERP acquisition. and post-implementation. before selecting an ERP. It warrants standardization of various processes in order to make transactions possible. in the process. Choosing the Right Ar chitectur e Architectur chitecture An ERP is effective in delivering results in an OLTP environment. There might still have been gaps in the deliverables of ERP product and that of BPCL’s requirement. The foresight of the management and the decision makers reveals seriousness and commitment their which is normally not seen in many PSUs.MARCH 2003 131 . This process involves preparing the organization from the point of view of employees’ willingness to accept change. 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. The steps taken by BPCL have been methodical and in the right direction. administrative offices. one of the possible approaches for acquisition of ERP could be through a careful analysis of various phases such as pre-acquisition process. This approach made the employees feel the importance of IT as a tool and played a major role in effectively introducing ERP.

00 0. It is clear from the table that out of a total benefit of Rs 42.e. Additional information on communication networking architectures in the study would have helped for a better understanding of ERP implementation.58 2.45 4. Table 1: Benefits of ERP Implementation Description of Benefit Centre Lubricants Retail Sales Retail Logistics Industrial and Commercial Aviation Finance Human Resource IS Engg.20 crore. In order to make the analysis beneficial. does not necessarily deliver a quality product. It is not clear from the facts provided whether BPCL has done this exercise.51 1.35 1. other parameters as chosen are in line with expectation. Besides. transaction-centric and management-centric because it is felt that most of the benefits drawn from ERP are through OLTP environment. Table 1 shows benefits grouped under a benefit-centre.90 5.61 1. there is no data available to understand the issues regarding “total cost of ownership” while evaluating the vendors. and transformation. aspiration-reality gap on ROI. 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. BPCL has the advantage now to transform its data to knowledge by adding value to ERP and moving towards an advanced MIS scenario. Since integration is the central issue.29 0.39 33.61 4. i.03 0. vendor selection is a key process in ERP acquisition. and up-todate data through an ERP. Continuous impr ovement: Given the fact that postimprovement: ERP-implementation phase is quite crucial.00 3.23 0.95 0.74 4.10 0. and complex interfaces among components.66 4. it is not clear whether benchmarking has been done for selection of a vendor.21 2. sustaining the dynamic TPS. A benefit centre is either a support function or a production process. ‘fear of loosing importance’ among employees and above all the transaction process latency.20 Selection of T echnology Infrastructur e 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. the implementing organization has a long way to go.11 0. Selection of V endor Vendor ERP vendors are many and they promote their product in modules as well as an enterprise product. BPCL faced these shocks and the apprehensions of the authors are quite genuine. However.37 0.54 1. Post-acquisition Post-acquisition of ERP includes stabilization.17 Total 11.17 crore. Stabilization: ERP brings in more post-acquisition shocks to an organization because of high investment.28 4.48 1. and Projects Materials Refinery LPG Total Benefits in Rs Crore Transaction -centric 11.” Transformation: Since success of ERP implementation assures a good and robust TPS. methodical as it set up a high-end service centre called CCSE with ENTRANS team. though assessed for quality processes.29 0.00 0. transaction-centric benefits are Rs 33. cultural shock.00 42. From the BPCL point of view.58 2.58 1.95 0.40 1.77 1. Additionally. BPCL’s approach in this respect is 132 BHARAT PETROLEUM CORPORATION LIMITED . the projections made are grouped in two categories.38 0. continuous improvement. one needs to be prudent to go for modules approach while deciding on ERP implementation for an enterprise that demands large-scale integration.architecture should be chosen so that it would provide scope for growth.90 5. Implementation Phase There is a belief that a vendor. BPCL has made the right choice in going for implementation in two phases: Pilot phase and rollout phase. Therefore. scalability.61 9. BENEFIT PROJECTIONS Annexure 2 of the case describes certain benefits that are projected on account of implementation of ERP in BPCL. its vision is quite clear for the post-implementation phase which focuses on “use of knowledge repository and oil industry templates.23 0.32 0.03 crore and management-centric benefits are Rs 9.03 Management -centric 0. continuous improvement to come out of blues of process latency and work towards large-scale integration for an enterprise is necessary. authenticated. It must transfer its database to knowledge base since it now has a good system to capture correct.

online analytical processing (OLAP).com Ashfaque Khan Manager Kale Consultants Ltd New Delhi B PCL has a dominant position in the area of distribution of petrol and petroleum products in the Indian market. Customer focus emerged as the major concern of its change initiative.00 Human Resource Lubricants Engg. improvement in process latency. 0. As a result.00 Value in Rs. Graph 1 : Benefits from ERP Implementation 22% 22% 78% 78% Transcation centric Transcation-centric Management Centric Management-centric Graph 2: Projections of Benefits 12. of ownership’ and would have also given a good base for analysing the payback period. and costs incurred in all phases of implementation would have given a clear picture on ‘total cost. inteVIKALPA • VOLUME 28 • NO 1 • JANUARY . the major contribution is from lubricants.00 10. Logistics and Information Systems Aligarh Muslim University Aligarh e-mail: salmaahmed6@rediffmail.00 2. If further management-centric benefits are to be derived from this process. operation costs. enough attention needs to be given to address issues like having a good architecture.MARCH 2003 gration of its activities was the need of the hour. implementing good tools for data warehousing.Graph 1 suggests that management benefits constitute around 22 per cent of the total benefits whereas transaction-centric benefits are 78 per cent. 133 .00 4.00 6.03 crore. Environmental conditions forced BPCL to change. BPCL implemented an ERP system to create an integrated and responsive supply chain. Additional information on each of the benefit centres in the form of overheads. transaction costs. 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. and enterprise application intergration (EAI). And Projects Retail Logistics Refinery Aviation Benefit Centres CASE ANAL YSIS IV ANALYSIS Salma Ahmed Senior Lecturer. However. This justifies expecting such results for BPCL. Graph 2 indicates that out of the transaction-centric benefits of Rs 33. Efforts ought to be made to organize process improvement strategies through ERP.00 Transaction-centric Transaction Centric Management Centirc Management-centric CONCLUSION ERP in BPCL would bring significant benefits to the organization at the operational level. However. crores 8. It was the first time that the entire operations of an oil marketing company of such a large magnitude were integrated downstream.

only 10 were from IS department and the rest 60 were from various other areas. • It would help in better metricization of roles and functions. These factors enabled the acceptance of ERP implementation. and a Lubs C&F Agency at Pune. cultural block. to an extent.e. In the pre-implementation stage. emphasize the foreseen benefits. they would be away from mundane and routine matters. 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. it could fit with current needs and also future requirements which are critical for ERP implementation. Also. CONCLUSIONS A notable feature of BPCL’s ERP implementation is that it has created a pool of skilled resources highly prized in the industry. However. jobs could also increase if one of the following takes place: • Business increases due to macro-economic factors. 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. and BHARAT PETROLEUM CORPORATION LIMITED 134 . Cultural issues : Yet another critical issue to any IS implementation is the resistance to change or acceptance of ERP implementation in this case. Wadilub Lubricant Plant. • IT enablement leads to substantial savings which could be invested to grow business. BPCL handled this issue tactfully. the company drew members from different business groups and sought their active participation. Another major advantage is the increasing motivation level of employees with the adoption of technology. The objective of this exercise was to clear their doubts. BPCL is the industry leader with multiple leading oil company implementations and also has Indian implementation partners. Once the company was satisfied with the results. IT enablement of functions normally does not lead to an increase of jobs atleast not across the board. The organization should.MAJOR ISSUES IN ERP IMPLEMENT ATION IMPLEMENTA The major issues concerning any ERP implementation exercise are: choice of a vendor. Also. 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.. it asked each vendor to make a presentation of ERP implementation to a group of 100 key persons from diverse business areas of BPCL. Choice of a vendor: A major concern here is the vendor’s experience and expertise in similar industry. 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. Implementation issues : BPCL undertook implementation of ERP in a phased manner with its introduction at select three sites and business areas. it extended ERP to other locations and business areas. there would be compartmentalization of roles as defined by the system. Problem Areas Though ERP implementation is likely to increase the motivation level of employees in the long run. it should make an intelligent move and hive them off as a separate profit centre. However. i. The level of involvement was so high that out of a team of 70 members. Further. it selected an HR professional to head this transformation process team. while the roles of the employees tend to get defined in terms of profile in the system. Secondly. not at the entry level positions. there would be resistance to its acceptance. Moreover. The advantages of ERP solution with its people-driven focus would be: • It would turn all roles and functions into procedural activity. they would essentially enhance. to make best use of them. having worked with the state-ofthe-art technology. therefore. This was a pilot study. implementation method. Hence. focus on growing the business so that chances of layoffs are avoided. and convince them of the need for implementation. initially. at Refinery. During the post-implementation stage. However. It is in this context that the HR Department can play a vital role. Firstly. Mahindra and Mahindra. TELCO. Further. their skill-set and hence their employability in the market. that is. there would be demand for specialized functional domains.

2003 VIKALPA • VOLUME 28 • NO 1 • JANUARY . the agility or flexibility of the organization should remain intact. They have turned their IS Departments into separate companies after ERP implementation.MARCH 2003 135 . 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. To conclude. The company’s efforts at integrating the customers have proved to be worthwhile for the employees and the organization at large. ERP implementation at BPCL has far-reaching positive implications.Seimens have also taken similar decisions. 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).