Course Project: Enterprise System By: Hassaan Bin Mazhar

PART 1:

ABC Pakistan an Oil & Gas exploration and production company has been operating in Pakistan since
2000. ABC Pakistan is the operator of the gas producing fields and is a partner in the third party operated
fields as well. With a yearly average net equity production of over 50,000 boepd ABC Pakistan ranks as
the largest foreign producer in the Pakistan E&P sector.

ABC Pakistan business growing requires an adequate ICT system evolution. Currently, ABC Pakistan
business processes are supported by different non integrated nor interfaced application solutions (i.e. Sun
Accounts and Maximo software applications). In particular, for the financial process, today solution is an
old SUN SYSTEM version completely stand-alone. While for contracts and Procurement C&P, material
management and maintenance are run through an old version of Maximo. Whereas, gas producing fields
and corporate head office are using two different Maximo installations

SUN (financial system)

 It is used for the accounting process management. The system is not completely covering the business
requirements. User access restriction is limited i.e. when restriction is placed read access is also
restricted.
 The system does not have the management of the Original currency for each finance accounting entry
that is posted in SUN. Two currency only are managed USD and Rupia. For each transaction having a
currency different from the two previous on the accountant manually calculate the equivalent amount
and make the posting with that value, entering in a text field the original amount.
 There are concerns in Joint Venture assignment as well.
 While the system does not warn the business if the expenditures over-run or exceed 80% of project
expenditures.

MAXIMO (C&P / Material Management)

 It is used for the Contract & Procurement, material management and maintenance process
management. The release in use is 4.1 that is going to be out of maintenance from May, 1st 2022.
Currently two different installation of Maximo are used in Head office and Field locations. These two
system are aligned every night. The weakest point is the unavailability of Call Off management. It is
also missing an automatic release strategy. Different warehouse are present but for each material one
only moving average price is managed.
 Material acquired and directly charge to a job but not immediately used and physically stocked
(project stock). Materials acquired and charged to the inventory and physically stocked (Direct
charge). When materials are returned from a completed Well are stocked in a special warehouse
(Leftover). These materials may be in any condition. Materials can be in condition A,B,C,D,E
corresponding to 100%, 75%, 50%, 25%,0%. While MRP is automatically managed by the system based
on minimum and maximum stock level

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Course Project: Enterprise System By: Hassaan Bin Mazhar

 Vendor qualification, is managed outside the system. Material and services are separately managed
(different requisitions) No service entries are made. Tender are manually managed. For requisition
less than 75k$ a simplified tender procedure is followed. Even contracts are not printed by the system.

Business Requirement:
Due to inadequacy of existing applications in capturing many business processes and current increase in
business activities, the management of ABC Pakistan deemed it necessary to implement an organization
wide integrated solution which will encapsulate existing functionality provided by Sun Accounts and
Maximo; automate / capture the business processes such as Commitment Management which are being
done manually; and be capable of meeting the current and future business requirements of the
organization.

Having collected updated information on the current situation and to define the better tool to support
ABC Pakistan business. The implementation of an ERP (Enterprise Resource Planning) system is required,
as a single integrated information system that will cater to the business needs of ABC Pakistan. Therefore,
SAP is being considered as medium-big sized company. Since

PART 2:

For ABC Pakistan, SAP is considered as an integrated and modular solution, since all the structures are real
time updated. Being SAP a scalable solution, different modules can be activated at different stages.

The system will aim at enabling all the main processes of Finance, Controlling and Tax, Procurement,
Material Management and Plant Maintenance. While both application and infrastructure aspects will be
taken in consideration. Since SAP, as a true ERP system that integrates the Financial, Procurement,
Material Management, Plant Maintenance and Cost Control processes.

As per business requirement, SAP modules that need to be implemented as a part of the ERP solution for
ABC Pakistan follows.

FI (Financial Accounting) Module

The FI (Financial Accounting) module is required for meeting all the accounting and financial needs of the
organization. The FI Module comprises several sub-modules of which the following need to be
implemented:

Accounts Receivables (FI–AR) Module

AR (Accounts Receivables) module records all account postings. These postings are automatically updated
in the General Ledger. The Accounts Receivable Module also integrates with the General Ledger and Cash
Management Modules.

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Course Project: Enterprise System By: Hassaan Bin Mazhar

Accounts Payable (FI–AP) Module

AP (Accounts Payable) module records account postings generated as a result of Vendor purchasing
activity. Payment programs within SAP enable the payment of payable documents by check, EDI, or
transfers.

Asset Accounting (FI–AA) Module

AA (Asset Accounting) module is used for managing the organization’s Fixed Assets. AA module allows to
categorize assets and to set values for depreciation calculations in each asset class.

General Ledger (FI–GL) Module

GL (General Ledger) module records all accounting postings. These postings are displayed in real-time
providing up-to-date visibility of the financial accounts.

The real-time functionality of these modules, especially their integration with each other and other
modules, allows for better decision making and strategic planning.

CO (Controlling) Module
The CO (Controlling) module provides supporting information to Management for the purpose of
planning, reporting, as well as monitoring the operations of the business.

The Controlling Module is required for processes such as Commitment Management.

Some of the components of the CO (Controlling) Module are as:
 Cost Element Accounting
 Cost Center Accounting
 Internal Orders
 Activity-Based Costing (ABC)
 Profitability Analysis
 Profit Center Accounting

TR (Treasury/Cash Management) Module

The TR (Treasury Management System) module is used to predict the cash flows that will be occurring in
future periods. These amounts flow from the Accounts Receivable and Accounts Payable processes and
depend on expected payment dates and value dates.

ABC Pakistan would require a limited implementation of the TR module.

PS (Project System) Module

The PS (Project System) module supports the planning, control and monitoring of long-term, highly
complex projects with defined goals.

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Course Project: Enterprise System By: Hassaan Bin Mazhar

The limited implementation of PS (Project System) module is required mainly for implementation of WBS
(Work Breakdown Structure) in the ABC Pakistan environment.

AM (Asset Management) Module

The AM (Asset Management) module is used to manage and supervise individual aspects of fixed assets
including purchase and sale of assets, depreciation and investment management.

A limited implementation of the Asset Management module may be required.

MM (Material Management) Module

The MM (Materials Management) module supports all the phases of materials management: materials
planning and control, purchasing, goods receiving, inventory management, and invoice verification. MM
module is fully integrated with the other modules of the SAP System.

The following are also a part of MM (Materials Management) module:

 Requisitions
 Purchase Orders (Closed Orders, Open Contracts and Call-offs)
 Goods Receipts
 Accounts Payable Integration
 Inventory Management

The MM module is required for the C&P and MM processes at ABC Pakistan .

WM (Warehouse Management) Module

The WM (Warehouse Management) module subdivides the "Storage Location", which is used in the MM
Module to define inventory values by location, into "Storage Types" and then into "Storage Bins". It gives
control of stock to a physical level down to a warehouse bin.

A limited implementation of Warehouse Management module is required at ABC Pakistan for managing
“Storage Bins”.

JVA (Joint Venture Accounting) Module

The JVA (Joint Venture Accounting) module is used for joint venture partnerships. It is module designed
specifically for the Oil & Gas Upstream Sector and uses functions from the components Financial
Accounting (FI), Controlling (CO), Asset Management (AM), Materials Management (MM), Plant
Maintenance (PM), and Project System (PS). JVA module covers the “TO BE” Joint Venture Accounting
requirements of ABC Pakistan . It has the following capabilities.

Joint Venture Data Capture

Captures and codes all transactions, including vendor invoices, inventory movements and allocations, with
an option to produce balanced venture books.

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Course Project: Enterprise System By: Hassaan Bin Mazhar

Cash Calls
Request cash payments from partners for future venture operations.

Partner Billing
Calculates partner shares for venture expenses and revenue, monitors partner cash calls and receivables,
and produces a partner bill containing all relevant information.

Overheads
Calculates different types of overhead as agreed in the Joint Operating Agreement (JOA).

Allocations distribution
Distributes billable and non-billable costs (such as facility, payroll, and related expenses) to cost centers
or projects throughout the allocation cycle.

Multi-Currency Processing
Supports the multi-currency requirements of typical venture activities.

PM (Plant Maintenance) Module

The Plant Maintenance (PM) module comprises activities such as inspection for measuring and
establishing the actual condition of a system, preventive maintenance for measuring and maintaining the
ideal condition of a system, repairs for measuring and restoring the ideal condition of a system and other
activities that need to be taken by the maintenance organization.

Plant Maintenance is closely integrated with other modules such as Materials Management, and
Controlling.

The following are also a part of PM (Plant Maintenance) module:

 Labor
 Material
 Down time and outages

The Plant Maintenance module is required for managing the maintenance activities of the Bhit Plant at
ABC Pakistan .

WF (Work Flow) Module

WF (Workflow) module is required to define business processes that are not yet mapped in the System.
This includes both simple release and approval procedures, and more complex business processes such
as creating a material masters and the associated coordination of the departments involved. Workflow is
especially helpful where large number of users is involved.

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Course Project: Enterprise System By: Hassaan Bin Mazhar

Workflow module will be helpful in automating processes such as Requisitioning, Contracts, Call-offs,
Purchase Orders, Goods and Service Receipts, Inspections, Invoices, Work Orders etc where a large
number of users are involved.

PART 3:

As a last part, to procure enterprise system, the ERP assessment and feasibility study concentrated only
on the ERP solutions, SAP and SPACE. Maximo as a plant maintenance solution was also included in the
scope of the feasibility study. The three scenarios are as:

 Scenario 1 – SAP, as a true ERP and completely integrated solution

 Scenario 2 – SPACE (for Finance, C&P and Material Management) and Maximo for Plant Maintenance
 Scenario 3 – SPACE (for Finance) and Maximo for (C&P, Material Management and Plant Maintenance)

An approach for conducting the Assessment and Feasibility Study was established based on the Study
goals. The approach implied proceeding as:

 Establishing an initial AS IS situation

o AS IS Refinements through questionnaires and face to face interviews
o Use of above input for an insight in establishing TO BE requirements
 Highlighting and explaining possible ERP solution scenarios suitable for ABC Pakistan
 Establishing TO BE Requirements
o Demos of ERP solution scenarios for ABC Pakistan based on initial TO BE requirements
o Compilation, refinement and finalization of TO BE requirements document
 Coverage and Gap Analysis
o Analysis of the extent of functional coverage of each ERP solution scenario with respect to the TO
BE requirements
o Analysis of the gaps that exist between solution functionality and the TO BE requirements
o Analysis of the cost and effort required to cover these gaps.
 Presentation of study findings and recommendations to the management
 Solution selection by ABC Pakistan management and stake holders

A comparative analysis of the available ERP solutions, based on the functional coverage, the gaps between
the ERP solutions and the “TO BE” requirements, current business need, scalability for future business
growth, and the expertise available, SAP is considered as the solution of choice. This selection also bears
recommendations and corporate guidelines from the respective functional areas in the Corporate.

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