DIAGNOSES

presents analyses of the management case

Bharat Petroleum by academicians and practitioners.

Corporation Limited

CASE ANALYSIS I
ANALYSIS
N Ravichandran
Professor, P & QM Area
Indian Institute of Management
Ahmedabad
e-mail: nravi@[Link]

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 IMPLEMENTATION ST
IMPLEMENTA AGES
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
The July-September 2002 (Vol 27,
availability and consistency, process orientation, technical ability of
No 3) issue of Vikalpa had published
a management case title “Bharat executives, management culture, IT strategy, ability to work in teams,
Petroleum Corporation Limited” and learning attitude).
(BPCL) by Anand Teltumbde, • Implementation (process mapping, gap analysis, process redesign, data
Arabinda Tripathy, and Amiya K creation, pilot implementation, and propagation).
Sahu. This issue features four res- • Stability, maintenance, and enhancement.
ponses on the case by N Ravi-
These implementation stages are usually supported by:
chandran; S Padmanaban and AK
Rao; Harekrishna Misra; and Salma • Top management support (motivation, budget support, resource
Ahmed and Ashfaque Khan. creation and deployment, generating backup options, etc.).

VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003 125

 • Efficient project execution team (reporting for- Usually, the cost of networking and disaster
mats, time-and cost management-related issues, management is not considered. Inventory reduction
resource allocation, use of external consultants and other benefits projected are one-time savings and
and internal implementation team, etc. they are not exclusively related to ERP. Therefore, the
• Conflict resolution procedures (committee stru- best way of evaluating a need for ERP would be based
cture, role clarity, and process team structure). on cost of operation. This would mean the cost of an
• Training and education (technical, behaviour on ERP solution proposed and the inefficiencies and hence
change management process and managerial the burden on the company for not implementing an
process orientation. ERP may be used to arrive at a solution. In short, what
is proposed is to replace an investment analysis
BPCL Experience
oriented decision-making environment with an
The BPCL experience is similar to these well known orientation to compare the cost of relevant alternatives.
implementation procedures. There are no major sur-
ERP and BPR Interlinkages
prises or uniqueness associated with the BPCL im-
plementation plan. Some noteworthy features are: There is a close relationship between BPR and ERP.
• Top management involvement and guidance. Organizations usually have two broad options:
• Financial evaluation (cost-benefit analysis). • Conduct a BPR project, select an ERP, and customize
• Stage 1 (process mapping) and Stage 2 it for the proposed BPR.
(implementation). • Adopt an ERP, customize the current processes to
• Appropriate use of consultants and internal team the ERP process, and hence achieve a moderate BPR.
members.
Approach 1 is very attractive and has a potential
• Training on ERP, process redesign, and change for maximum benefit. But it is risky. The ERP may
management. require extensive customization. Two successive major
• Project monitoring and identification of key change initiatives may not be sustainable. Alternative
deliverables at every stage. 2 is realistic. This is somewhat increment in approach
• Management of employee apprehensions and stress. and assumes ERP processes are the best possible.
The actual benefits of ERP implementation in BPCL Implementation issues are reduced. Subsequent
are difficult to measure. Post-implementation, the process changes would be influenced by ERP vendor.
employee stress is reported to be higher. The imple- The appropriate solution is a function of what the
mentation is under progress. Projected benefits are organization is capable of handling, the business needs
reduction in inventory, increase in customer satis- and the extent to which ERP can be customized without
faction, better managerial control, data integrity compromising its basic character.
(enhanced), and improved process discipline.
Creativity and Process Discipline Trade-of
rade-offf
Trade-of

ERP-RELATED ISSUES
ERP-RELATED ERP, once implemented, would require data integrity
and process discipline. Often, this is considered as a
The ERP implementation (as described in the case) in restriction. This is not true. Process discipline is neither
BPCL raises some important managerial issues, which in conflict with creativity nor is it a substitute for it.
we discuss briefly below, to identify a positioning for The creativity would be reflected in the redesigned
ERP. process before customizing ERP. Also, there are several
opportunities in the organization to unleash the
Cost-Benefit Evaluation
creative potential of individuals in an organization.
Often, the implementation organization does a cost- When this is effectively practised, it would place a
benefit analysis of ERP and generates a solution healthy demand on the maintenance and enhancement
approach based on economic considerations (typically phase of an ERP. The confusion is between the process
an investment analysis orientation). There are several and scope for creativity versus a customized (creative)
shortcomings (possible) related to this approach. process.

126 BHARAT PETROLEUM CORPORATION LIMITED

Productivity (Improved) and Manpower Hence, one should view ERP implementation as one
Rationalization step close to benchmark (targets).
Module mix (from ERP Suite) and hardware and
ERP implementation would provide opportunity to
software interfaces are desirable elements. An
increase productivity at all managerial levels in the
optimization on this dimension would be useful but
organization. This is primarily due to easy availability
such an exercise depends on the internal dynamics of
of relevant data, consistency on data elements, and
the organization related to application mix, technology
improved process (connecting various departments)
understanding, and the proactive nature of IS
integration. Managers and executives would now
resources. For several organizations, for a variety of
spend less time in non-value added activities. Because
reasons, ERP is a one-time upgradation of IT systems
of process automation, there would be one time
and advancement of IT strategy. For such organizations,
reduction on activities. Consequently, there would be
the module mix optimization would remain as a long-
a surplus situation on manpower. This needs to be
term IT strategy.
absorbed either by redeployment or by business
growth. In any case, the employee growth would be at
a reduced pace than what it was as a consequence of Inhouse ERP Consultants
ERP implementation using process simplification and True consultants who played an important role in
automation. implementation would find a natural settlement. The
Organizational Flexibility best would become inhouse maintenance and
enhancement consultants. They may even leave the
It is widely believed that organizational flexibility may organization for a similar position. The rest need to be
be reduced because of ERP, which is not a true. An given other responsibility as change agents. After all,
organization’s flexibility is a way by which the they are the ones who have proved that they can help
competitiveness of the organization is managed as a change in an organization. All other things being equal,
consequence of external environment, intensity of they would be preferred to initiate other change
competition, and expected trends in the market place. management activities within the organization as well
ERP is only enabling the appropriate strategy by as with business partners.
process improvement and data integration. To argue
that the strategy of the organization would be
influenced by ERP is neither correct nor feasible. As a CONCLUSION
matter of fact, a successful ERP implementation would
give necessary confidence to the senior management ERP needs to be positioned as a strategic enabler. It
in their ability to implement major organizational provides a platform to implement a competitive
changes. strategy on dimensions related to data integration,
process redesign and upgradation, and interfacing
Benchmarking, Module Mix, and Interfaces
functional systems. Also, ERP is not the end of all that
These are desirable features. Benchmarking should be an organization can do. It is one of the tools (process-
done to understand the potential gap in performance. based) which an organization would employ to
Benchmarking is useful to initiate redesigned enhance its competitiveness. Surely, strategy first and
processes. Often, the best benchmark may not be then the enablers. In some situations of strategy, process
realizable given the environment in which the firm may play an important role and hence ERP. But, that
operates. In any case, the redesigned processes would cannot be the reason to assign a large role to this useful
improve the performance (by an order of magnitude). concept and tool.

VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003 127

CASE ANALYSIS II
ANALYSIS

S Padmanaban A K Rao
Professor, Systems Area Director
SDM Institute for Management Development SDM Institute for Management Development
Mysore Mysore
e-mail: paddy43@[Link] e-mail: raoarza@[Link]

B
PCL, one of the largest petroleum-oil-and- appropriate in the first place. Nevertheless, a closer
allied-products-marketing companies had examination reveals a number of issues and key
embarked on an ambitious project of planning questions to be (and ought to have been) addressed.
for and implementing an ERP system (SAP R/3). The The analysis flows from three perspectives, viz.,
main objectives were to remain competitive through cost-benefit justification, business objectives
improved customer service and customer satisfaction, realization, and technological imperatives/issues
transform the company into a learning organization, management. Keeping these ‘objectives’ in focus, the
and prepare itself to face the challenges (likely to be) analysis covers the following aspects:
thrown in the deregulated business environment. • Measures for successful implementation
During late 1996, the company started off with a • Customer focus and CRM
change initiative programme called CUSECS • Vendor focus and SCM
(Customer Service and Customer Satisfaction) with • Competition analyses
help from Arthur D Little Inc (ADL). Later, it went • Knowledge base and management through data
through an elaborate scheme of planning for and mining
implementing ERP in two phases, viz., CDP (Conce- • Web-enabled and secured interfaces
ptual Design and Planning), and DDI (Detailed Design
Cost-Benefit Justification
and Implementation). The project-phase of DDI was
called ENTRANS (Enterprise Transformation) As the case itself points out at the end, how does one
reflecting the top management’s visions and aspira- ‘measure and accept’ successful implementation of an
tions. ERP? Any comments and conclusion from the vendor
While CDP involved mainly internal group (in this case SAP) may not be taken seriously. Nor can
members signifying pre-software-acquisition scenario, the estimates of recurrent benefits (valued around Rs
DDI involved an external implementation consultant, 42 crore per annum) imputed by the company mainly
PWC (Price Waterhouse Coopers), signifying techno- because they are still estimates. It should also be
logical (hardware, software, netware) and organization recognized that many of the benefits might not be
(read people) change scenario, following pilot and full quantifiable and therefore have to be regarded as
roll-out implementation sequence. It is claimed that positive indicators rather than quantity estimates.
the company has managed the ‘change’ well, and the Indeed, in the absence of transparent mechanisms for
system is running with all the 12 modules encom- and methods of imputing these benefits, first in the
passing the entire operations across 200 locations beginning (pre-ERP) and later on a regular basis (run-
within the country. Estimated annual savings attri- ERP), it would be risky to use the figures to justify
butable to ERP are put around Rs 42 crore. investment and expenditure.
We take for instance the high-value item
KEY ISSUES ‘Lubricants — Inventory Management’ in Annexure 2
of the case, accounting for as much as Rs 11.4 crore.
Given the central cabinet’s recent approval of The key questions are: How is this benefit estimated
divestment of BPCL and the entry (and growth) of and the value arrived at? When was it done first? How
private players like Reliance, the foresight the company is it going to be derived on a regular basis? How does
had almost six years ago and the strategic preparatory one take into account the marginal effects if it is done
IT initiatives it commenced do appear to be timely and and reported on a regular basis? In other words, is the

128 BHARAT PETROLEUM CORPORATION LIMITED

benefit one time or recurrent? How much of it, and for While a detailed cost-benefit analysis and
how long, is attributable to ERP? justification for the BPCL-ERP-project is out of scope
Ironically, one of the benefit items in the same here, suffice it to say that:
annexure under ‘Finance’ refers to reduction in staff • It is extremely difficult to justify the project only in
cost and increase in ROI on funds invested by terms of a revenue benefits stream of the value of
retirement benefits—0.23 crore rupees, while ‘no Rs 42 crore.
retrenchment or downsizing’ has almost been • It is equally difficult to justify the project even in
guaranteed by the Chairman. This category of benefit terms of capital streams as figures of overall cost
appears once more under ‘Refinery’ included in the incurred for starting the project and running it now
figure of 0.84 crore rupees. are not available/given.
Ideally, benefits should be linked to and derived • It would be desirable and necessary to start
from a set of ‘system requirement specifications,’ which compiling and archiving data in terms of TCO and
in turn would be linked to ‘Business Requirements TCOP to facilitate justifying futuristic decisions on
Analysed and Processes Reengineered.’ They should maintenance and enhancement.
also align with the system objectives and be as specific
Business Objectives Realization
and measurable/verifiable as possible. Very often, they
are used even for final testing and acceptance of the The second perspective relates to the goals and
system. For instance, one would like to see, measure, objectives with which BPCL initiated the project.
and report how customer service in SBU A would be Important among these objectives were: customer focus
different between pre-ERP and post-ERP scenarios, and orientation; facing competition; and becoming and
expresed in specific measurable terms. For instance, being learning organization. Here again, the presented
‘enquiry to order confirmation cycle is reduced from data do not throw enough light on some key issues.
seven days to one day’ and so on. Some of these may For instance, what are the measures available and
not be convertible into money terms directly, but all used to continually record and report improvement in
the same constitute benefits and contribute to the customer service and satisfaction in the run-ERP
strategic shifts being considered. This process implies scenario? How have the CRM and SCM components
that adequate and confirmatory cost and time data on been inter-linked in order to improve the compe-
pre-ERP processes have been collected, verified, and titiveness and customer orientation? To what extent
accepted as reference points. Equally important is the are the functional modules capable of facilitating
mechanism to collect and report similar data during competition analysis and strategic initiatives? How
run-ERP to facilitate justification on an on-going basis. have the people responsible for the expected
Cost-benefit (analysis and therefore) justification improvements and benefits been empowered?
in any project has to consider cost/benefit flows The case reports that the CCSE (Centre for
typified into two parts, viz., capital and revenue. It is Customer Support and Excellence) formed as part of
necessary to identify, and quantify as much as possible, ENTRANS was meant to take care of a number of
both costs and benefits, in terms of capital (one time implementation supportive aspects ranging from
flow, or occasional flows over the project period) and master files, authorization, data archival, upgrades,
revenue (series of flows over the project period). A etc. It puts data warehouse SCM and internet
justification follows well-known capital budgeting enablement in the new initiatives category. Ideally, for
methods (like NPV, IRR, Payback) applied on such costs a large organization like BPCL, the IS plan for ERP
and benefits streams. For information systems project, should have included data warehouse and data mining,
these justifications have been supplemented by and knowledge management right from the beginning.
considerations like TCO (total cost of ownership), and This goes well with the learning organization objective.
TCOP (total cost of operations). These include costs of The culmination of efforts in this direction should be
hardware, software, and networking, both at the time the build up and maintenance of a BPCL Knowledge
of acquisition and for upgrades, warranty-extensions, Base (a repertoire of corporate wisdom) with appro-
AMC, training, infrastructural changes, and so on. priate access and usage controls in place.

VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003 129

Technological Imperatives/Issues Management one relates to employee productivity. With ERP
implementation, generally the time taken for processes
From the perspective of technological imperatives/
and transactions (whether paper-based or work flow-
issues management, the following questions arise:
oriented) comes down, and this should indicate two
• To what extent has BPCL exposed itself to a singular
things: one, the same number of staff will be able to
or a few proprietary vendors, given the emerging
handle higher volume of processes and transactions as
open standards and licence-freedom in the software
the business expands. Second, decision-making
realm? If there are bindings, what are the cost
process will improve in terms of quality and time. Of
implications now and for the future? More
course this implies that proper training on analytical
specifically, in terms of OS, RDBMS, and web-
skills and appropriate empowerment takes place. This
enabling tools, what programmes have been
should take care of productivity and also handling data
standardized? For instance, in the open and free
deluge issues.
category, we do have Linux (as OS), Java (as one of
As the company grows, continual changes in the
the web-enabling tools), and so on.
processes and reengineering thereof would call for the
• What is the degree of ‘customization’? To what
services of the SAP specialists to make suitable changes
extent has BPCL been able to leverage its position
in the ERP. Job rotation should be considered to take
to wrest control of source code, configurability, and
care of reducing levels of motivation due to cobweb of
deployment rights from the vendors?
systems.
• In the context of ‘web-enabling,’ which business
processes and what type of architectures have been
considered? CONCLUSION
• Have policies and guidelines on information
systems security, audit, and control been laid down? BPCL’s accomplishment is commendable, considering
• What has been decided on business continuity plan? the elaborate planning and implementation processes
• How much of the overall TCO and TCOP is done to cover all operations across the country. It
accounted by proprietary vendor binding and appears that a great deal of efforts and resources have
upgrade costs? gone into change management with commitment from
• Has BPO [Business Processes Outsourcing] been the top management. While some of the benefits
considered both from offering and accepting expected may have been realized, there are key issues
positions in order to optimize TCO and TCOP? and questions still to be addressed. As analysed here,
these range from the very basis of estimating and
OTHER ISSUES ascertaining benefits to better alignment of benefits to
the organizational goals evolving as appropriate to the
Of the other concerns expressed by the case-authors, emerging business and economic scenario.

CASE ANALYSIS III

ANALYSIS

Harekrishna Misra
Associate Professor
Institute of Rural Management, Anand
e-mail: hkmishra@[Link]

B
PCL, one of the leading Public Sector competitive environment. In order to stay competitive,
Undertakings (PSUs) in India, was operating the company chose the option of managing its internal
in a protected market environment where affairs by optimizing resources. The epicentre of the
pricing policy was under the control of Government of change was customer satisfaction with quality product
India (GOI), the major stakeholder. But the intention and lower price. While a major chunk of raw material
of GOI to de-regulate the oil industry forced all the (crude oil) was imported, there was little scope for
players including BPCL to manage in a fast changing input cost control. Optimal use of internal resources
130 BHARAT PETROLEUM CORPORATION LIMITED
was, therefore, one major potential area where BPCL processes. It aims at a slot to meet the needs for an
wanted to manage through ERP implementation. This online transaction processing (OLTP) system in an
case clearly brings out issues that needed to be organization. It warrants standardization of various
addressed while implementing ERP in a large processes in order to make transactions possible.
organization like BPCL. Integration is the central issue in an ERP environment.
Understanding issues related to alignment of
ENTERPRISE APPLICATION SCENARIO
APPLICATION technology with business process is an important
critical success factor for any ERP implementation
BPCL is a large network of geographically dispersed process. The organization has to be ready for meeting
installations, administrative offices, and commercial the demands of alignment and BPCL addressed this
operations. It has a large workforce and it employs issue professionally. Conceptual design and planning
high-end technology for operations. Therefore, one of (CDP) approach proved quite helpful in addressing
the possible approaches for acquisition of ERP could technology alignment issues.
be through a careful analysis of various phases such as ERP packages provide choices for tuning and
pre-acquisition process, acquisition process, configuring. BPCL’s good understanding of the
implementation, and post-implementation. business through SBU approach in CUSECS enabled it
Pre-acquisition Process to organize the processes well to ensure that ERP
package fitted in with their requirements. There might
ERP is not just a product to be purchased but a process still have been gaps in the deliverables of ERP product
which needs efforts to align the product to the business and that of BPCL’s requirement. Additional informa-
processes. This process involves preparing the tion on this would have been useful in knowing the
organization from the point of view of employees’ steps taken by BPCL to understand and address this
willingness to accept change, technology absorption gap.
readiness, and technology transfer readiness. The case does not reveal the methodology adopted
Human Resource Readiness
Resource to address “process latency” which might have crept
Acquisition of ERP is a strategic issue since it directly into the system due to ERP acquisition. It is a serious
affects the process owners and functional entities in issue and can affect the Transaction Processing System
the process. Therefore, changing the mindset of people (TPS) in the long run and requires to be addressed in
who would absorb this new concept is a daunting task. the pre-acquisition process.
BPCL had the advantage of customer service and Technology Transfer Readiness
Transfer
customer satisfaction (CUSECS) which oriented the This is one of the major issues which is normally
employees towards customer focus. The steps taken deferred to the post-implementation phase. This is a
by BPCL have been methodical and in the right part of HR readiness but needs clear focus during the
direction. The foresight of the management and the pre-acquisition phase. BPCL has strategically addre-
decision makers reveals seriousness and commitment ssed this issue and, in the process, it has not only trained
their which is normally not seen in many PSUs. the trainers but also acquired professionalism in in-
CUSECS provided the necessary base for house consultancy, which will bring in new business
employees to orient themselves towards customers and opportunities.
align the information systems to business processes
Acquisition Phase
through the concepts of strategic business units (SBUs).
This approach made the employees feel the importance The acquisition phase includes choosing the right
of IT as a tool and played a major role in effectively architecture, selection of vendor, and selection of tech-
introducing ERP. IT orientation of employees (demand nology infrastructure.
from internal customers for use of IT) is a biggest Choosing the Right Architectur
chitecturee
Architectur
challenge in IT alignment and BPCL handled this An ERP is effective in delivering results in an OLTP
problem well. environment. An organization must know the
Technology Absorption Readiness limitation of ERP that it is not a management support
ERP brings in a technology bias inherent to business system. Therefore, before selecting an ERP, a right
VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003 131
architecture should be chosen so that it would provide methodical as it set up a high-end service centre called
scope for growth, scalability, and complex interfaces CCSE with ENTRANS team. Additionally, its vision is
among components, sustaining the dynamic TPS. It is quite clear for the post-implementation phase which
not clear from the facts provided whether BPCL has focuses on “use of knowledge repository and oil
done this exercise. industry templates.”
Selection of Vendor
Vendor Transformation: Since success of ERP implementation
assures a good and robust TPS, the implementing
ERP vendors are many and they promote their product
organization has a long way to go. It must transfer its
in modules as well as an enterprise product. Since
database to knowledge base since it now has a good
integration is the central issue, vendor selection is a
system to capture correct, authenticated, and up-to-
key process in ERP acquisition. From the BPCL point
date data through an ERP. BPCL has the advantage
of view, it is not clear whether benchmarking has been
now to transform its data to knowledge by adding value
done for selection of a vendor. Besides, there is no data
to ERP and moving towards an advanced MIS scenario.
available to understand the issues regarding “total cost
of ownership” while evaluating the vendors. However,
other parameters as chosen are in line with expectation.
BENEFIT PROJECTIONS
Selection of Technology Infrastructur
Technology Infrastructuree
Annexure 2 of the case describes certain benefits that
The case does not elaborate the strategy adopted by are projected on account of implementation of ERP in
BPCL for acquisition of technology infrastructure at BPCL. In order to make the analysis beneficial, the
an enterprise level but it seems to be appropriate. projections made are grouped in two categories, i.e.
Additional information on communication networking transaction-centric and management-centric because
architectures in the study would have helped for a it is felt that most of the benefits drawn from ERP are
better understanding of ERP implementation. through OLTP environment. Transaction-centric
Implementation Phase benefits are referred to those directly conceived to be
the effect of ERP and management-centric benefits are
There is a belief that a vendor, though assessed for the other synergic benefits because of ERP
quality processes, does not necessarily deliver a quality implementation. Table 1 shows benefits grouped under
product. Therefore, one needs to be prudent to go for a benefit-centre. A benefit centre is either a support
modules approach while deciding on ERP implemen- function or a production process. It is clear from the
tation for an enterprise that demands large-scale table that out of a total benefit of Rs 42.20 crore,
integration. BPCL has made the right choice in going transaction-centric benefits are Rs 33.03 crore and
for implementation in two phases: Pilot phase and roll- management-centric benefits are Rs 9.17 crore.
out phase.
Post-acquisition Table 1: Benefits of ERP Implementation

Post-acquisition of ERP includes stabilization, Description of Benefits in Rs Crore

Benefit Centre Transaction Management Total
continuous improvement, and transformation. -centric -centric
Stabilization: ERP brings in more post-acquisition
Lubricants 11.40 0.11 11.51
shocks to an organization because of high investment, Retail Sales 1.90 0.00 1.90
aspiration-reality gap on ROI, cultural shock, ‘fear of Retail Logistics 5.21 0.37 5.58
Industrial and
loosing importance’ among employees and above all
Commercial 2.29 0.03 2.32
the transaction process latency. BPCL faced these Aviation 0.45 0.29 0.74
shocks and the apprehensions of the authors are quite Finance 4.35 0.23 4.58
Human Resource 1.95 0.00 1.95
genuine.
IS 0.00 0.61 0.61
Continuous impr ovement: Given the fact that post-
improvement: Engg. and Projects 3.23 1.54 4.77
ERP-implementation phase is quite crucial, continuous Materials 0.38 1.28 1.66
improvement to come out of blues of process latency Refinery 0.48 4.10 4.58
LPG 1.39 0.61 2.00
and work towards large-scale integration for an enter-
Total 33.03 9.17 42.20
prise is necessary. BPCL’s approach in this respect is
132 BHARAT PETROLEUM CORPORATION LIMITED
Graph 1 suggests that management benefits constitute Graph 1 : Benefits from ERP Implementation
around 22 per cent of the total benefits whereas
transaction-centric benefits are 78 per cent. This justifies 22%
22%
expecting such results for BPCL.
However, Graph 2 indicates that out of the
transaction-centric benefits of Rs 33.03 crore, the major 78%
78%
contribution is from lubricants. However, no significant
result is expected from other areas such as materials
Transcation centric
Transcation-centric Management Centric
Management-centric
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. Graph 2: Projections of Benefits
Additional information on each of the benefit
12.00
centres in the form of overheads, transaction costs,
operation costs; and costs incurred in all phases of 10.00
implementation would have given a clear picture on

Value in Rs. crores

8.00
‘total cost, of ownership’ and would have also given a
Transaction-centric
Transaction Centric
good base for analysing the payback period. 6.00
Management Centirc
Management-centric

4.00
CONCLUSION
2.00

ERP in BPCL would bring significant benefits to the 0.00

Human Resource

Refinery
Aviation
Lubricants
organization at the operational level. Efforts ought to

Engg. And Projects

be made to organize process improvement strategies Retail Logistics

through ERP. If further management-centric benefits

are to be derived from this process, enough attention
needs to be given to address issues like having a good
Benefit Centres
architecture, improvement in process latency,
implementing good tools for data warehousing, on-
line analytical processing (OLAP), and enterprise
application intergration (EAI).

CASE ANALYSIS IV
ANALYSIS

Salma Ahmed Ashfaque Khan

Senior Lecturer, Logistics Manager
and Information Systems Kale Consultants Ltd
Aligarh Muslim University New Delhi
Aligarh
e-mail: salmaahmed6@[Link]

B
PCL has a dominant position in the area of gration of its activities was the need of the hour. BPCL
distribution of petrol and petroleum products implemented an ERP system to create an integrated and
in the Indian market. Environmental conditions responsive supply chain. It was the first time that the
forced BPCL to change. Customer focus emerged as the entire operations of an oil marketing company of such
major concern of its change initiative. As a result, inte- a large magnitude were integrated downstream.

VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003 133

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

134 BHARAT PETROLEUM CORPORATION LIMITED

Seimens have also taken similar decisions. They have processes or any other innovation in the strategic realm
turned their IS Departments into separate companies is concerned (to keep in tandem with the changing
after ERP implementation. This exercise could be market dynamics), the agility or flexibility of the
undertaken either in partnership with SAP consulting organization should remain intact. To conclude, ERP
or independently. implementation at BPCL has far-reaching positive
Identification and mapping of the processes of an implications. The company’s efforts at integrating the
organization are an integral component of any ERP customers have proved to be worthwhile for the
implementation. As far as introduction of new employees and the organization at large.

2003

VIKALPA • VOLUME 28 • NO 1 • JANUARY - MARCH 2003 135