C4_BPCL

IT Strategy and Transformation in BPCL

I n d i a n I n s t i t u t e 0 f M a n a g e m e n t

K o z h i k o d e

3 / 3 / 2 0 1 3

Group No. 4

Abdul F. Hassan(120)

Karthik K Samala(147)

Nitin Narsaria(151)

Prabhu P(155)

Shivanand Mohan(169)

Vandana Yadav(176)

Section C

1 IT Strategy and Transformation in BPCL

Contents 1 Company Background ..................................................................................................................2

2 Overview of the IT system employed in BPCL ................................................................................2

2.1 Project CUSECS ....................................................................................................................3

2.2 Project ENTRANS .................................................................................................................3

2.3 Project Destiny ....................................................................................................................3

2.4 Project Synergy....................................................................................................................3

2.5 Project ARYABHATTA ...........................................................................................................4

3 Analysis of ERP implementation process .......................................................................................4

3.1 Choosing the Right ERP system .............................................................................................4

3.2 IMPLEMENTATION ...............................................................................................................5

3.2.1 Phase 1 CDP(Conceptual Design Phase) .......................................................................5

3.2.2 Phase 2 DDI (Detailed design Implementation)- ...........................................................7

3.3 Project Management and Implementation Methodologies.....................................................8

3.3.1 Pilot Implementation Phase ..........................................................................................8

3.3.2 Roll Out Phase ..............................................................................................................9

3.4 Change Management ......................................................................................................... 10

3.5 IT Governance ................................................................................................................... 11

3.5.1 Governance Risk and Compliance (GRC) module........................................................... 11

3.5.2 Data Backup ............................................................................................................... 12

3.5.3 IS Security Policy......................................................................................................... 12

3.6 IT Leadership ..................................................................................................................... 12

3.6.1 Project Caliber ............................................................................................................ 12

4 Summary .................................................................................................................................. 12


1 Company Background

In 1976 the Burmah-Shell Oil Storage and Distributing Company of India Limited was overtaken by

Govt. of India to form Bharat Refineries Ltd. This company was renamed as Bharat Petroleum

Corporation Ltd. in 1977. It is headquartered in Mumbai, Maharashtra and ranks 225th

in Fortune Global

500 rankings for 2012. BPCL is into exploration , production, retailing of petroleum and petrol related

products.The Strategic Business Units (SBU) of Bharat Petroleum Corporation are as follows -

Refinery Strategic Business Unit

Retail Strategic Business Unit

LPG Strategic Business Unit

Lubricant Strategic Business Unit

Aviation Strategic Business Unit

Industrial and Commercial Strategic Business Unit

The retail business unit is into marketing of diesel , petrol and kerosene. To provide customers with a

whole new experience of retailing BPCL has opened 6553 retail outlets and 1007 kerosene dealers and

has partnered with big brands like CCD , McDonalds , Subway etc. In the refining business BPCL has

four major refineries in Mumbai, Kochi, Numaligarh and Bina, Madhya Pradesh.

2 Overview of the IT system employed in BPCL BPCL was one of the pioneers in its sector to successfully implement an IT system at the organizational

level. This system encompassed the its entire operations of an integrated Oil marketing company covering

200 different locations. The liberalization policy followed by the government of India , which removed a

lot of regulations for the private sector, almost forced BPCL to go for ERP implementation as there was a

huge gap between its vision and the current position it found itself in. The company successfully

implemented SAPs R/3 aligning its IT to meet its strategic business goals. During this implementation

the company faced several challenges in the form of project management, change management,

leadership and IT governance challenges. But with its key message for communication was Together

We make IT happen it was able to overcome all these problems . The timeline of IS implementation in

BPCL can be described from the following diagram :


2.1 Project CUSECS To bridge the gaps between vision and current reality , BPCL focused on Customer focus as a key to

success. Customer Service and Customer Satisfaction(CUSECS) was the program undertaken to

transform the company as per the new focus. This change plan resulted in restructuring and delayering of

the organization and six SBU(Strategic Business Units) were created eliminating the earlier silos

department structure. After this change plan it became important to implement an IT system to integrate

the people and information.

2.2 Project ENTRANS The implementation of SAP R/3 was named as ENTRANS( Enterprise Transformation). Top brass

believed that post implementation it should be a completely transformed organization. Surprisingly, the

implementation phase was led by a non IS person Mr. Srikanth Gathoo HR guy. It was considered to

be a business initiative right from its conception.

2.3 Project Destiny This was implemented with an aim to make BPCL most profitable oil company in next five years. Double

revenue and quadruple profits. Grow refining and lubes business and there was a strong focus on cost.

2.4 Project Synergy KRL(Kochi Refinery) was an independent company and a subsidiary of BPCL corporate till 2006. It was

later merged with BPCL. The biggest challenge was the alignment of all IT systems including SAP R/3.

Project Synergy was launched for consolidating and aligning the IT systems of KRL and BPCL. The

SAP consolidation was the biggest challenge. The project went through CDP and DDI phases with teams


from KRL and BPCL. A steering committee guided and monitored the project, which took 5 months for

completion.

2.5 Project ARYABHATTA IIS (Integrated Information Systems) came up with Project Aryabhatta to support Project destiny

initiatives and formulate IT strategy aligning with business requirements. Key Objectives of Project

Aryabhatta:

To align IT initiatives in line with business and corporate strategies

To use IT as a key differentiator to move closer and more responsive

To explore new technologies, systems and solutions to meet business challenges

To retain technology leadership and achieve competitive edge

To develop capacity and skills within to take the IT initiatives successfully forward

3 Analysis of ERP implementation process

3.1 Choosing the Right ERP system The first step was mapping todays business activities with their relevance in the future. Customer s,

optimizing techniques, flexibility etc. characterized the future. So batch process legacy systems had to be

done away with. ERP was the way forward.

Challenges on the way

1) Which ERP package to choose?

a. Mapping of relevant processes ( over 600) relevant processes were chosen through

workshops in Chennai, Kolkata, Bombay and Delhi. A list of requirements and a

questionnaire were developed. These were based on the processes. A number of scripts

were written to capture significant business scenarios.

b. All the stakeholders had to be taken care of SBUs , entities etc. hence another set of

workshops to educate them about ERP were undertaken. Basically these answered what,

when, where why of ERP.

c. Vendors were selected and each vendor was given a time frame of 3 days to present their

products before 100 key business people. Each SBU came out with its own benefits

quantitative and qualitative. This was the basis of approval.

d. Then a technical selection phase followed. This was done to identify the ERP package

that fit best with BPCLs needs.


Reason for choosing SAPs R/3 :

Comparison with other vendors

SAPs R/3 Oracles OED Ramcos Marshall Industry leader Implementation in leading Oil companies

Acquisition of British Petroleums in-house OED product

Indian Vendor

Indian presence Indian presence Availability of resources Technology and R&D R&D

Factors considered for evaluation:

Business functionality: Fit with current and future business requirements, ease of use and

flexibility.

Technology: Performance , scalability, technical design etc.

Localization: Excise , sales tax etc.

Vendor credentials : Market and financial position.

Oil Industry Specifics: Previous implementation in the industry.

3.2 IMPLEMENTATION

3.2.1 Phase 1 CDP(Conceptual Design Phase)

The CDP phase started with documenting the current as-is process and designing the to-be process. The

gaps and resolutions are identified after mapping the as-is and to-be process. Continuous management

initiatives were started along with CDP. The process was focused on System landscaping, Capacity

Planning, Infrastructure building, Network planning, Printing methods. Most of this was done without the

actual software in place. CDP brought together the stakeholders and many important features were

decided. CDP experience was instrumental in strategizing the DDI phase. It was decided that DDI would

be led by an in-house team working closely with the solution partner. So many members were sent for

SAP training. The result, BPCL had 70 SAP certified in house consultants one of the largest in India.


3.2.1.1 Key deliverables

SAP Organization Hierarchy : Define the top level model for current and future needs, which

would be further developed and finalized during DDI.

Conceptual Design To be Process : Identify the business priorities which provide the greatest

benefits , support the change and are critical to the business processes.

Identify the Business Critical Processes.

Identify the gaps which needs to be taken care of.

Conceptual Application and Technical Architecture : Identify key control and security

requirements for applications , information flows and technical architecture needs.

Project Plan : Implementation plan based on the resources , dependencies and minimal risks.

Time and phases for each module implementation.

Transition plan for migration from legacy systems to SAP.

Resource Estimation for the project.

Project Structure and Management : Responsibilities of project teams and control and tracking

methods.

Training and communication requirements.

Documentation , Signing off and Closure.

3.2.1.2 Desired outcome of the Conceptual Design & Planning phase

Developing a blueprint for the use and operation of SAP and its impact on the people , process and

technology thereby transforming the critical business processes in the firm . Desired outcome of CD&P

phase are as follows:

Definition of the span of SAPs functionality necessary to support BPCLs operations by the project team. Areas impacted and non-impacted by SAP Understanding the SAP hierarchy and its implications to the project team and process owners. The implications of information consolidation (E.g. Profit & Loss statement at Business Unit versus Territory level) as per the choices of the SAP Hierarchical elements. Process Owners granting access to project teams for the identified business critical "TO BE" processes. The best option within SAP R/3 chosen and have got the acceptance grant of access by Process Owners for the business critical "TO BE" processes to the project team.


Acknowledgement of anticipated benefits of the chosen process options along with the change implications involved and to embark on detailed design. Identification of match (support) in SAP R/3 , gap analysis and resolution such gaps. Work around in SAP R/3, legacy interface and third party solutions were considered Understanding the Project implementation methodology, learning the skills to effectively monitor implementation and drawing an extensive Project plan.

Implementation partner PwC was considered for sake of continuity but finally SAP India was chosen

3.2.2 Phase 2 DDI (Detailed design Implementation)- Objective

Multiple phase implementation was chalked out to manage scalability issues. Parallel implementation was

carried out in select phases.. The pilot testing would help in understanding and measuring the critical

business processes in SAP and for providing clarity. Pilot locations were chosen to carry out the

implementation which would thereby act as a precursor for a companywide rollout.

3.2.2.1 Key deliverables of the Detailed Design & Implementation phase

BPCL undertook the detailed design, configuration and implementation in base SAP R/3. The key

deliverables were as follows.

Pilot implementation

o Modules/Processes/Functionalities to be implemented in Pilots

Detailed documentation of TO BE processes in all functional areas carrying certain

recommendations/solutions from SAP through their Quality Audit.

o Benefits to be derived from Pilot implementations

Quantitative and qualitative benefits were estimated and the implementation focused on

deriving those benefits. The pilot implementation helped in realization of such benefits with

the association of the implementation partner.


Detailed Process Design & Configuration

With the CDP as base, the processes were designed to further levels of detail.

o Designing of the specific screens and data along with the process and method

o Configuring the system according to the processes and level of detail required

o Integration of the detailed design across modules o Module level testing of the configuration o Identification of the fields that need to be captured for the masters and mapping of the

information with the legacy systems

Data migration

Building the data requirements and designing the relevant master files. Definition of all

specifications that are needed to populate the data into the new system and development of

templates to undertake the migration of legacy and new data elements to the SAP R/3 system.

Integration testing

Development of exhaustive test cases and performing integration tests on these scenarios and

corrective action based on test results and the feedback.

Developments & Interfaces

Identification of critical developments and interfaces. Developments, enhancements and

interfaces that are both interim and permanent in nature were included in the indicative list.

Basis and authorisation

Structuring the access rights and creation of corresponding authorisation profiles implementation

partner to help execute transactions as per BPCLs requirements.

3.3 Project Management and Implementation Methodologies

3.3.1 Pilot Implementation Phase

To go ahead with SAP project BPCL chose to implement the project in some selected location, to look for

the any possible problems and improvements that can be made before going for a full phase

implementation. The locations chosen were Refinery, Wadilub lubricants plant and a Lubs C&F Agency

in Pune. The reasons for choosing these were

Business and IT- Readiness

Proximity to the project team( Mumbai)

Salience of processed involved

Problems faced:

Many simple tasks became time consuming through SAP

Many informal process have to be formalized

Stress on staff was more after implementation


Benefits:

No suspense issue due to strict discipline to follow certain step because of SAP

Access to logistics information- Inventory , products dispatches , pending orders

3.3.2 Roll Out Phase

ASAP (Accelerated SAP) methodology was applied which had five different stages:

All SBUs followed two phase implementation : pilot and then full roll out. They first implemented in

some locations and then went on with full implementation in every location. Steps followed for the roll

out were:

A roll out team will go and test the location for readiness in terms of its hardware, software and

connectivity

Train users at the location

Final SAP implementation at the location

Center for Customer Support and Excellence(CCSE) was formed for support of users.

A cross functional team of 15 who were experts in all modules handled this center.

CCSE acted as a central helpdesk performing all tasks such as updates of software and hardware,

data archival , data warehouse , communication to all users etc.


3.4 Change Management Apart from many technological and management challenges, the biggest challenge faced by BPCL was

that of change management. BPCL recognized change management as a major challenge and started to

deal with it from the initial stages of project implementation. It used its experience of previous projects to

come over this barrier.

Many training and motivational exercises were conducted in small groups to maximise employee

participation and acceptance. The two main features of change management process are:

Commitment of top management.

Amount of organizational effort that was put.

A team of 16 employees were selected as coaches for change management process in BPCL. Of these 16

employees, 8 people become certified coaches after a training programme. The primary roles of these

coaches were to guide employees in transition of their role from pre ERP to post ERP implementation.

The change management in BPCL was implemented as a three step process:

Prepare a list of new roles available at the location across all Business.

Each role was defined with numbers required, competencies and deliverables expected.

The Change Management team visited the locations and identified SAP users, staff to perform

non-SAP roles, staff to be deployed to new roles and staff to perform transitory roles.

Communication

The main objective of communication programme was to gain and sustain employee support for a quick

and complete SAP implementation. To assist in this process, communication tools like ENTRANS News

(a periodic e-mail Communication), Intralink (Intranet Magazine), Official Company medium (BPJ,

Insight, and Madhyam) were used.

The change management training was done at four levels:

1. "The Foundations in Organisation Learning" (FOL): FOLs were used to prepare employees

at an individual level as well as at collective level .

2. Visionary Leadership and Planning Programs (VLP): Teams were encouraged to collectively

explore their aspirations, purpose and then create their Shared Vision and High leverage Result,

strategize and plan action steps for achieving their desired business results.


3. Facilitation of Business and Process Council meetings by Coaches: The effectiveness of such

meetings was raised by coaches, by raising awareness of the purpose of the meeting, structuring it

with time lines and making appropriate interventions.

4. Performance Coaching : To shift leadership style to coaching style.

3.5 IT Governance

3.5.1 Governance Risk and Compliance (GRC) module

For successful governance of the IT system implemented , BPCL has a Governance Risk and Compliance

(GRC) module . The governing structure followed is shown below

Process forum - Any change in process or a new process has to be presented in the process forum

and if it gets approved it goes for steering committee approval and then only it is implemented.

Steering Committee - There is steering committee which meets once in 3 months and review all the

IT related issues.

Master governance cell - Monitors and administer master data.

GRC module is implemented for authorisations - people can do transactions in the sap based on the

role in the organisation.

Business cycle process audit in SAP is conducted


3.5.2 Data Backup

BPCL has its central database in Mumbai. But for disaster recovery, data backup is present in Noida.

Mock drills are conducted at specified time intervals to ensure the functioning in case of disaster.

3.5.3 IS Security Policy

To ensure security , BPCL has a central IS policy which is strictly followed throughout the organization .

3.6 IT Leadership After implementation of Project destiny to achieve an aggressive growth with the ERP implementation ,

the main challenge faced by the organization was to develop sustainable leadership :

To develop talent from within the organization to align them to the critical roles.

And leadership to motivate the people to dream and work to deliver.

For mitigating these challenges , BPCL designed a new Project Caliber.

3.6.1 Project Caliber

The main results from this project were :

Acceptance and appreciation within the organization for a 360 degree feedback mechanism.

Leadership Bench Strength.

Robust planning for succession for critical roles.

Develop an understanding for present need and design learning programs to enhance leadership

skills.

Grooming people to the required potential.

4 Summary

IT has played a crucial role in the success of BPCL. Beginning with the organization restructuring in

1988, BPCL has achieved a whole organizational transformation with the implementation of ERP in all

its operations. To overcome the various challenges associated with size, leadership and governance , the

company went with the implementation in phases. A series of projects were undertaken to tackle the

issues which surfaced during earlier phases of implementation. With its strategy of tuning IT with

business , BPCL has been able to deliver the high degree of performance to its customers. The company

has been bestowed with various awards for its success in implementing IT solutions.


5 References We would like to thank Mr. Ramachandran for his guidance and insights regarding various IT processes

in BPCL. The materials and reports which we referenced for this report are :

http://www.bharatpetroleum.com/pdf/BPCLSD.pdf

http://www.bharatpetroleum.com/General/CR_Journey.aspx?id=4

http://www.vikalpa.com/pdf/articles/2002/2002_july_sep_45_58.pdf

http://petrofed.winwinhosting.net/upload/19%20Oct%2011/Presentation/Session%203/2_Jayesh%20S

hah.pdf

http://www.bharatpetroleum.com/Admin/Finance/SterliteDocument/F000000114_Annual%20Report%

202011-12.pdf

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C4_BPCL