BPR at ONGC – A success story

By: Rupali Saini

MHROD Sem IV
Summary
When Oil and Natural Gas Corporation Limited- India's largest oil exploration and
production company- set out to completely transform its business, it turned to SAP
solutions and services. As a result:
◦ the company was able to overcome the challenge of standardizing business processes across its
500-plus locations.
◦ At the same time replication of data and configuration in real-time via satellite as well as linking
to existing systems was also required. That’s where ABB with SCADA (Supervisory Control
and Data Acquisition)

ONGC, a fortune 500 company, is the flagship company of India; and making this
possible is a dedicated team of nearly 33,000 professionals. With market
capitalization over USD 22 billion, ONGC contributes more than 80% of India's oil
and gas production. The company has adopted progressive policies in scientific
planning, acquisition, utilization, training and motivation of the team. It has a unique
distinction of being a company with in-house service capabilities in all the activity
areas of exploration and production of oil & gas and related oil-field services.
Pre ERP Days
 ONGC used PC-based legacy system for material management,
project monitoring and maintenance planning.

 Information is as valuable as oil for any organization and

sometimes harder to locate. ONGC felt the need for a solution
using IT to solve the problems in streamline the business process,
and integrate all the information along the business process of
enterprise core business.

 ONGC spans across 10 countries outside India- from Russia to

Venezuela.
Pre ERP Days
 ONGC used PC-based legacy system for material management,
project monitoring and maintenance planning.

 Information is as valuable as oil for any organization and

sometimes harder to locate. ONGC felt the need for a solution
using IT to solve the problems in streamline the business process,
and integrate all the information along the business process of
enterprise core business.

 ONGC spans across 10 countries outside India- from Russia to

Venezuela.
Existing Environment

◦ Database: Oracle
◦ Hardware: HP, Compaq, IBM and Sun
◦ Operating system: Microsoft Win NT, Sun Solaris, and Unix

Challenges: Transform Business Operations

◦ Collation, consolidation, and analysis of operational data were difficult and time
consuming.
◦ Standardize more than 200 business processes for 13,000 users across a total of more than
500 offshore and onshore locations- all in under 30 months
◦ Cleanup and migration of huge amount of data from legacy systems and creation of data
from hard copies
◦ Create one of the largest data centers in Asia Pacific for SAP
◦ Replication of data and configuration in real-time via satellite as well as linking to existing
systems was also required.
◦ The system deployment could not upset current operations within ONGC, rendering the
need for outstanding ABB coordination and customer relations.
◦ Multiple simultaneous implementation teams were organized by ABB in India, Canada,
Germany and Switzerland all coordinated in one ABB team
◦ The SAP project was slated to be completed in 30 months including a stabilization phase
IT Initiatives by ONGC: Move towards
Business Process Re-engineering
EPINET- Salient
Features

•Client-Server
computing environment
•User friendly database
application S/W
•POSC compliant data
model
•Extensive GUI
capabilities
•Fast data
communication Network
•Concurrent data
accessibility
•Multilevel data security

•Integration with Seismic

& Electro log archive &
Asset database
 Business Process Re-engineering (BPR)
implementation
In 2000, ONGC started project ICE- Information Consolidation for Efficiency- achieve
global standards in operations and introduce new business processes. This was called
“One Organization, One Data, One Information”.

Today the real-time data is becoming part of management dynamics in reaching business
conclusions. Keeping this as an imperative, ONGC aims to take maximum advantage of
the state-of-the art technology in SCADA for leveraging productivity and thereby profits.

The move towards ERP package was to enable the availability of information on a real
time basis and the elimination of duplicate activities across business processes by
capturing data at the source point. This will, in turn, facilitate decision support, better
operation control, and efficient cost management.

Overall ONGC has kept aside Rs 1000 Cr to invest in IT. In addition to Rs 95Cr invested
in SAP implementation, ONGC is also looking to invest Rs 45Cr every year towards
software implementation. Another Rs 600 crore in project for a communication and
control network.
“The project is all about data capture as part of all transactions. If there is an invoice drawn up
somewhere it is automatically fed into the system as data, so is a pay slip or the day’s measurement of oil
from a well ...and the beauty is that it would all be available on tap" Subir Raha, chairman & managing
Project Objective

Objective for SAP implementation:

◦ Optimization and standardization of business processes

◦ Higher visibility of operations to improve productivity
◦ More efficient processes with higher visibility of costs
◦ Integration and extension of value chain

Other objectives of Project ICE:

◦ Integrate all scientific systems: Integration system to provide the data validation to
ensure correct numbers are sent to integrated systems
◦ The rest of the amount will be spent on EPNet, its exploration and production network,
being implemented in two phases by Schlumberger.
◦ The company’s hardware investment would relate high power computing systems and
PC clusters and grid computing using several PC clusters.
SAP Solution and Services

The mySAP.com™ e-business solutions proposed to be implemented over the next

30 months across five regions of ONGC for over 8,500 users, include solutions
covering financials, corporate financial management, business intelligence, supplier
relationship management, enterprise portals (for workplace), upstream oil and gas
requirements, strategic enterprise management and product lifecycle management.
The ONGC was already using a human resource package (Shramik) and financial
package (Kuber) from SAP. Reasons why SAP was chosen:

◦ SAP Project Management services of the SAP consulting organization

◦ mySAP™ Business Suite family of business solutions

◦ SAP for Oil & Gas solution portfolio: SAP has experience with global oil and gas production
companies

◦ Solutions and services complemented existing SAP finance and human resources applications
Implementation
 SAP India signed its largest ever deal in India ONGC for
implementation of the ICE (Information Consolidation for
Efficiency) project.

 The deal worth Rs 950 million ($19 million) would provide a

comprehensive IT-enabled system for the oil and gas PSU — right
from its well heads all the way to its boardrooms.

 It was also the largest consulting deal for SAP Asia Pacific. In
terms of sheer size (with 8,500 licensed users across ONGC) it
would be Asia’s largest ERP project.
Implementation Plan

 Comprehensive implementation of mySAP Business Suite and the SAP for

Oil & Gas solution portfolio, including the SAP® Strategic Enterprise
Management (SAP SEM®) application, SAP Business Information
Warehouse component (part of the SAP NetWeaver® Business Intelligence
component), and SAP portal.

 The implementation also includes other SAP solutions, such as the

Collaboration Projects suite, as well as supplier relationship management
and upstream oil and gas exploration and production solutions.

 The enterprise-wide project was designed to integrate with existing SAP

financials and human resource solutions used in more than 500 ONGC
locations. SAP solutions support ONGC’s exploration, production,
maintenance, procurement, finance, payroll, sales, offshore logistics, joint
ventures, treasury, and quality management processes, including the
monitoring of key performance indicators.
Implementation highlights
 Project started with clear motto of "One data, one system".

 As far back as 1996, the company undertook Project Kuber, wherein it implemented
SAP R/3 ERP (Enterprise Resource Planning) system for its finance function.
Thereafter, in Dec 1999, ONGC started another project, Project Shramik, where it
deployed SAP for automation of all HR modules including payroll and
administration. ICE implementation started in mid 2000 and it went live in 2004

 The project was envisaged by core design and engineering team of ONGC under
the initiative of Chairman of ONGC Limited. It had best brain from different
departments working on it- text book example of best practice. The team looked
like mini ONGC- the perfect team.

 The western offshore business division (Headquarter at Mumbai) of ONGC was the
first to go live in its exhaustive ERP deployment. The first rollout was for 3,000
users in the company’s offshore operations centered at Mumbai. One key test was
making the transition at the most challenging sites: offshore and onshore oil
drilling platforms, where daily activity reports are required by 6 a.m. without fail.
 Instead of trying a ‘soft’ target first, ONGC chose the hardest and most critical
areas first: production and drilling to go live with. This required processes and
actions had to be

 documented in a standardized format and recorded in a time-bound period. Idea

was if hard target succeed then all the others would fall in line. First day of a
quarter as a go-live date.

 By the time the project was completed in May 2005, the project team had added
other geographical locations and functions to the implementation, making new
solutions available to a total of 13,000 users – 65% more than the user base
originally planned.

 SAP Consulting blended expertise with ability to improvise as complexities of

project required

 Excellent knowledge transfer from collaboration with SAP consultants

 Project team consultants from SAP played critical role in rollout and education of
users
 SAP used ONGC as training centers for its employees to learn about Oil & Gas
industry

 The ABB SCADA system was deployed in 179 onshore servers, 8 offshore servers,
2 plants in tier 1, and 13 redundant servers in Tier 2 control centers. As well, the
system will be implemented in the corporate centre in Delhi with a backup centre
in Bombay.

 The ABB SCADA project covers 157 offshore platforms and 247 onshore
installations, pipelines and 2 processing plants with a cost of approximately 100
Million dollars.

 Enterprise Wide SCADA for all Production and Drilling Facility of ONGC Spread
across India and in Arabian Sea.

 The Automation system was integrated with the SAP is must to ensure the error
free production, Sale numbers reporting on day to day basis.
 The project management group also excelled in meeting the logistical challenge of
connecting hundreds of sites across India – even on nomadic drilling rigs and
seismic field parties. Innovative solutions included secure satellite and radio-based
communication network access to offshore locations and other remote locations
deployed through a tightly coordinated schedule between the ONGC project team
and service providers.

 Main reason for ONGC to think about such LARGE architecture

 Efficient Real time Monitoring of the Production and Drilling Parameters across all
the assets in India

 Remote control of the production well in case of Offshore platform

 Facilitate offline analysis of the Valuable/ High Producing Wells through third
party E&P Applications.

 Provide summarized information to the management for effective decision making

 Total Facelift in the day to day operation of ONGC Production and Drilling facility
to improve the efficiency
Post Implementation
 From its earliest interactions in the project, SAP Consulting quickly
recognized that Project ICE meant far more to ONGC than simply
the implementation of new hardware and software. And this
realization affirmed ONGC's decision to use SAP Consulting in the
first place.

 What ONGC had in mind was a total transformation of its business,

and the SAP track record and experience with customers in oil and
gas industries worldwide was a key reason ONGC believed SAP
Consulting was up to the job. And the partnership was a great
success.
Business Process Re-engineering

 Improved, disciplined approach to accounting, procurement and

financial systems

 Rapid acceptance and improved performance by workers

 Improved ability to compete through the strategic use of new IT

platform

 Improved visibility of business processes across different business

functions from exploration to production to sales and offshore joint
ventures
Business Process Re-engineering: SCADA
Project

 Supplied 16 Data Centers including the corporate data centre across

India to enable efficient operation of respective Assets.

 UPS for all the 250 plus tier 1 control room of production and
drilling SCADA along with FCBC (Float cum boost charger)for 85
no of remote RTU (Remote Terminal Unit) with solar chargers.

 SAP, Epinet, VRC- Integrations of Real-time and History Data.

 Disaster Recovery Solution for the corporate data centre.

Business Process Re-engineering: SAP Project
 More than 200 end-to-end, daily business processes were replaced,
yielding unparalleled insights into operations, real-time reporting on oil
exploration and production, inventory, financial analysis, and accurate and
efficiently delivered data.

 Solutions met stringent regulatory controls (considering its state

ownership), yet remain adaptable enough for users throughout the
company.

 Redefinition of work roles and duties meant greater transparency and

accountability.

 Daily and weekly reports replaced quarterly data and facilitated real-time
reconciliation.
 Built-In Checks to Ensure Compliance: To make sure the change
management happened without any problem, the new solution meant that
paper-based contracts and vendor payments were complemented by
electronic trans- actions – workers had to begin using the new system.
Also, to ensure compliance and data integrity, the project team
implemented built-in checks to make sure users followed the correct
procedures when entering data and identifying themselves.

 For example, in the area of procurement – using SAP business intelligence

functionality – the team built in validations to ensure that users could place
a purchase order only with an approved requisition and available budget.
In addition, the company now sends out payments

 for purchased products only after invoice verification. Likewise, payments

for services are made only after service entries have been completed and
the project’s progress has been updated.

 Raising the Visibility of Critical Data: A key benefit of the new solution is
that it creates high visibility for critical data. The new solution ensures that
critical operational data is available online for all levels of management.
Reverse Auction process: Benefit of ERP
implementation
 One of the benefits of using SAP was the launch of Reverse
Auction process, first PSU to do so. Termed as "Live Action
Cockpit" (LAC), the system will enable ONGC to collect and
compare price and bid information of various suppliers in a real-
time, open bidding environment. The reverse auction will ensure
transparency in the tendering process and thereby generate
confidence amongst the bidders. It will also add speed to the
process of procurement which will allow ONGC to source best in
class technology. On the basis of the pilot project it is estimated that
reverse auction will be able to accrue a cost saving of nearly 10
percent. The reverse auction process enables supplier selection
process by facilitating vendors worldwide to participate in the
bidding process seamlessly.
Ready to explore new ventures

 The potent combination of a new business culture supported by a

new IT tool and the flexibility to adopt new business innovations,
along with an in-house leadership capability, prepares ONGC to
explore new frontiers, including joint ventures overseas. ONGC has
also implemented the employee self-service (ESS) functionality of
the mySAP ERP solution, thereby expanding its to reach to cover
36,000 users, making it one of the largest ESS implementation in
India. ESS – christened “SAMPARC,” meaning “connect” –
facilitates employees to apply for leave, submit their claims, and
view their payment details online. For ONGC, SAP solutions have
equipped the world’s second-largest oil exploration and Production
Company with the reliable, available data it needs to manage the
magnitude of the 21st century challenges it will face.
References

 With interaction with few ONGC employees who were involved in

implementation
 http://infotech.indiatimes.com/articleshow/943355.cms
 http://www.brplindia.in/news_erp_sap.htm
 http://www.sapendusers.com/oilIndia.php
 http://www.ongc.net/press_release1_new.asp?fold=press&file=press112.txt
 www.sap.com
 www.Abb.com
 Various news items from sites like NDTV, rediff etc
 Various reports available on public domain
THANK YOU