HPCL Refines Business Processes With ERP Implementation
S T Sathiavageeswaran, GM - Information Systems at HPCL charts out the company's JD Edwards EnterpriseOne Implementation map.
Hindustan Petroleum Corporation Limited (HPCL), whose roots go back to 1952, is today operational in the oil refinery and LPG distribution space. A Fortune 500 company, HPCL recorded an annual turnover of over Rs 91,448 cr for the financial year ended March 2007. Currently, the company enjoys a 16 percent refining and marketing share in India and a strong market infrastructure. The company has successfully completed Asia's largest JD Edwards EnterpriseOne ERP implementation spanning about 400 locations and 4,000 employees across the nation.
S T Sathiavageeswaran, GM – Information Systems at HPCL gives an insight to Biztech2.0 about the ERP rollout, its challenges and benefits.
The Implementation Plan
According to Sathiavageeswaran, the ERP implementation programme was started way back in 2000. The availability of a sound technical infrastructure was necessary for implementing such a large initiative. This meant building a centralised data centre where the servers and applications could be hosted as well as having efficient connectivity for all locations spread across India's geography. Around 400 locations had to be connected.
"When we started the implementation, one of the important initial tasks was to build a data centre equipped with servers and the related infrastructure required for rolling out applications," cites Sathiavageeswaran. To start with, HPCL covered three locations within a month; ultimately, all 400 locations were completed over a period of two-and-a-half years. As each location was selected for inclusion, the related infrastructure (like WAN, lease lines, VPN and VSATs) was built simultaneously depending on the availability.
The DC, based in Mumbai, was powered with adequate computing capacity to enable it to handle the expected growth in the wake of the ERP rollout. The company is now building another DC in Hyderabad, which is visualised as a primary DC. "By the end of 2008, we will be moving our applications to Hyderabad," says Sathiavageeswaran. The company runs a refinery in Vizag and has also made significant investments in the state, so Hyderabad was a natural choice for the new DC.
As HPCL enjoys a national presence, it was important to determine the path for the ERP rollout. Several business processes were analysed for determining the points affecting the process look. "We came to the conclusion that the roll out should follow the logical movement of the product," explains Sathiavageeswaran. Thus, the ERP roll out started with locations in and around Mumbai, followed by other Maharashtra and Gujarat locations, and finally, covered the entire footprint of all 400 locations.
"As per our strategy, we tried our best to get every possible and available means of connectivity," elaborates Sathiavageeswaran. BSNL was the only player in the connectivity space at that time. It provided a connectivity platform for most locations; however, for distant locations HPCL had to depend on VSATs. Over a period of time, as newer options like RF and broadband networks entered the market, they were embedded into the existing set-up. Today, HPCL’s network is a hybrid one powered by lease lines, VSATs, VPN, RF links and broadband links. The company operates on BSNL's MPLS as well as a private service provider’s MPLS network for redundancy.
The ERP implementation at HPCL, with all its challenges and successes, finally saw the light of the day in December 2005 at an organisation-wide level.
Alignment of In-house and Vendor Teams
The project was kicked off with a 25 member in-house team comprising representatives from all functional areas. Post the completion of the first phase of the project, which included system configuration, more employees were inducted into the team and its size now expanded to 100 people. In addition to this, a team of 100 consultants was also working from Capgemini’s side, which was chosen to be the implementation partner for the project.
The company had set up a separate team for infrastructure building at each location. Based on the roll out schedule, the lead time for infrastructure provision was calculated for each location. The infrastructure team had to reach the respective locations on the basis of the lead time available so that the roll out team could initiate the work as per schedule. Planning and monitoring human resource mobilisation from various teams to various locations was a challenge for the company.
The locations due for the 'Go-Live' stage in a particular month were given top priority and a 'work backwards' system was followed to arrive at separate tasks and their deadlines for those locations. These tasks included procurement of hardware, applications for communication links, and testing and liasioning with local people at the location. This kind of systematic planning helped the company to reap the maximum benefits of its HR pool and consulting team.
Business Process Speed Enhancement & Standardisation: Major Benefits
Post implementation, the company has noticed substantial improvement in efficiencies. For example, before the implementation, the annual financial accounts closure would approximately take a month while the monthly closing would consume 15 to 20 days. In the past year i.e. 2007-08, the monthly and quarterly closing was completed in about five days while the annual closing took a mere 10 to 12 days.
The second major benefit of the centralised ERP implementation was that it compelled the company to look at various other services that could be offered to customers with the help of IT. 'We realised that we could improve our transparency by making more information available to our customers, vendors and transporters on a real-time basis with the help of the Internet so that they can log in and check the status of loads, orders, and payments," informs Sathiavageeswaran.
The implementation gave the company an opportunity to re-look at all its business processes from the beginning. A lot of processes like manufacturing planning, procurement and employee benefits that were being implemented manually previously are now automated. The company is now looking at an IT-efficient growth strategy for the future.
Visibility Benefits for Top Management
The ERP enabled the generation of various day-end MIS reports on a regular basis. This helped to revamp the way in which reporting was done to the top management. The IT team went ahead and equipped the top management with Information portals to better their business visibility. "We have used the concept of portals whereby the top management can quickly view the summarised information online. At the end of the day, a lot of transaction details are summarised and converted into a pre-packaged MIS before reaching the top management," elaborates Sathiavageeswaran.
Factors That Shaped the Success Story
Sathiavageeswaran attributes the success of the implementation to four main factors - the expertise of the internal team; the right implementation partner; commitment and support from the top management; and effective project management practices.
"We had experts from our finance, refinery, marketing and LPG departments. These were people who knew the business line. They brought in that knowledge to add to the expertise of the IT team. This helped the project to gain a macro, company-level perspective," says Sathiavageeswaran. The HPCL ERP implementation can be exemplary to other large organisations wishing to derive benefits from IT adoption.
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