Business Process Re-engineering ONGC

1 The BPR story at ONGC – A success story

A n j a n a * C h e t a n * P r a c h i * P u n e e t * R a j e s h * S w a p n i l

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The BPR story at ONGC – A success story

IM Group 2: Anjana, Chetan, Prachi, Puneet, Rajesh & Swapnil



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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.



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Table of contents Pre ERP days

Existing Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06

Challenges: Transform Business Operations . . . . . . . . . . . . . . . . 06

IT initiatives by ONGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07

Business Process Re-engineering plan . . . . . . . . . . . . . . . . . . . . . 09

Project Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The Implementation phase

Implementation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Implementation Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Post Implementation

SCADA System Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Business Process Re-egineering changes . . . . . . . . . . . . . . . . . 19

Reverse Auction process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24



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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.



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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



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IT Initiatives by ONGC: Move towards Business Process Re-engineering



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EPINET Sites & Networking

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



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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 director, ONGC.



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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.



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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



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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.



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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.



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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



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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.



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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

o Efficient Real time Monitoring of the Production and Drilling Parameters across all the

assets in India

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

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

Applications.

o Provide summarized information to the management for effective decision making

o Total Facelift in the day to day operation of ONGC Production and Drilling facility to

improve the efficiency



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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.



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Fig 1: ONGC SCADA System Architecture implemented by ABB



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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.



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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.

Using 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 transactions – 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



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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.



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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.



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“At end of the day, SAP Consulting excelled,

I must say. They gave us a good support and

tried to understand our business to deliver

the product we were looking for”

KS Jamestin, General Manager and Head of

Project, ICE, ONGC

“ONGC strongly believes in adopting world-

class processes and technologies to

generate better value for its

stakeholders.On the basis of the pilot

project it is estimated that reverse auction

will be able to accrue a cost saving of nearly

10%.”

Mr. U.N. Bose, Director (T&FS), ONGC

"Our plant maintenance solution now has a service history

and a method of capturing the total cost of ownership.

Decisions are made faster and are more informed by data

from across the entire organization.”

KS Jamestin, General Manager and Head of Project, ICE,

ONGC



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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

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

http://www.sap.com/

http://www.abb.com/