Erp Implimentation Process In Indian Oil Corporation

1. Abstract:

This report describes the ERP implementation project in IndianOil Corporation. The whole project was one of the biggest ERP project in South East Asia. I joined the firm in 2004 when it was half way through the implementation program. The report is based on my observations and the IT audit carried out by IndianOil Corporation. The implementation process is tracked right from its inception and to where it stands today. An analysis of the problems faced during this whole process and the steps taken by IndianOil Corporation to bring it parallel with its business strategies is also discussed.

2. Table of Contents:

1. Abstract 2

2. Table of Contents 3

3. Introduction 4

4. Benefits of ERP 5

5. Company and Its Products 5

5.1. Strategy 6

5.2. Future Plans 6

5.3. Challenges and Opportunities 6

5.4. Scenario before Implementing ERP 6

5.5. The Implementation Process 7

5.6. Barriers for the Implementation of ERP 8

5.7. Steps Taken for Mitigation of Project 9

5.8. Business Process Re-engineering (BPR) program 9

5.9. Timescales 10

6. Conclusion 11

7. References 12

3. Introduction:

Many Firms today are investing into information technology with an objective to improve their business processes. The use of information technology is an indicator that information technology is being used to leverage the company’s resources and thus create a competitive advantage in the marketplace. Information technology solutions to Enterprise Resource Planning (ERP) are a big help to many companies as they help them to improve and standardize their processes, cut down their operating cost and improve decision making capability.

Wallace and Kremzar (2001) described ERP as an enterprise вЂ"wide set of management tools that balances demand and supply, containing the ability to link customers and suppliers into a complete supply chain, employing proven business process for decision making, and providing high degree of cross functional integration among sales, marketing, manufacturing, operations, logistics, purchasing, finance, new product development, and human resources, thereby enabling people to run their business with high levels of customer service and productivity, and simultaneously lower costs and inventories; and providing the foundation for effective e-commerce. Firms all over the world have been implementing ERP packages since the 1990s to have a homogeneous information system in the organization (Rajagopal, 2002). Sometimes ERP implementation fails to reap the desired benefits as the firm may not be ready for integration and the several departments in the firm may have their own agenda and aims that conflict with each other (Langenwalter, 2000).

Figure 1: The structure of ERP (Source: http://erp.manufacturer-supplier.com/)

4. Benefits of ERP:

The benefits of ERP are listed below.

Tangible Benefits Intangible Benefits

Inventory Reduction

Personnel Reduction

Productivity Improvement

Order Management Improvement

Financial Cycle Improvement

Information Technology Cost Reduction

Procurement Cost Reduction

Cash Management Improvement

Revenue/Profit Increase

Transportation/Logistics Cost Reduction

Maintenance reductions

On-Time Delivery Improvements

Information Visibility

New/Improved Processes

Customer Responsiveness

Cost Reductions

Integration

Standardization

Flexibility

Globalization

Supply/Demand Chain

Business Performance

Dismantling Inefficient Legacy Systems

5. Company and Its Products:

IndianOil Corporation is a major diversified, transnational, integrated energy company in India, with national leadership and playing a national role in oil security& public distribution. Indian Oil Corporation Ltd. was formed in 1964 with the merger of Indian Refineries Limited and Indian Oil Company Limited. IndianOil and its subsidiaries account for 47% petroleum products market share, 40.4% refining capacity and 67% downstream sector pipelines capacity in India. It is India's largest commercial enterprise, with a sales turnover of Rs. 2, 20,779 crore (US $51 billion) and profits of Rs. 7,499 crore (US $1.73 billion) for fiscal 2006. IndianOil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing. It is also the 20th largest petroleum company in the world. The total sales of IndianOil group for the year 2006-07 is 57.97 million tonnes of petroleum products, which includes 1.63 million tonnes of natural gas and exports of 3.13 million tonnes. The IndianOil Group of companies owns and operates 10 out of 19 refineries with a total refining capacity of 60.2 million MMTPA (Million Metric Tonnes Per Annum), which includes two refineries of subsidiary Chennai Petroleum Corporation Limited and one of Bongaigaon Refinery and