Analysis of Business Functions
Enterprise resource planning systems have provided many systems with business functions such as the optimization and the integration in the processes of the business which have led to making plans which are improved and quality decisions. This has further smoothened the coordination between the units of the business which have resulted to efficiency being high, quick response time especially when the customers make the inquiries and demands. Enterprise resource planning systems is the application of software’s and applications may they be in cloud, on-premise or the hosted one in operating the business functions of a given organization. The extensive knowledge that has been acquired with reference to oil and gas sector has helped in understanding the implementation of ERP in to the oil and gas industry.
The ERP being flexible and asset/project oriented in giving solutions have driven the urge digitally so that one organization can be able to manage its contracts, projects, assets and lifecycle services very easily. Oilfield Service (IFS) has been recognized for leading when it comes to supply oil and gas software for ERP and the enterprises assets managements globally. IFS has more than four hundred projects and assets-oriented organizations that have been using their IFS software’s and applications in running their businesses daily (Ifsworld, 2018).
Complexity in the environment of business has increased with the functional units being in need of more inter-functional flow of the data for making of their decisions, the specified time and the efficiency of the procurement of the parts of the product , the inventory management, accounting operations, human resources and the good and services being distributed (Lui, 2008). In dealing with such issues and challenges the emergence of ERP have tried to deal with such, thus bringing a lot of change in the above sector. In defining an Enterprise Resource Planning (ERP), it will be termed as an integrated subsystems sets that have integrated all the faces of business which may include plan, manufacture and logistic, the number of sales and marketing. In this era, enterprise resource systems have grown in such manner they serve needs of the manufacturing companies in terms of information. There are some of the industries which have been served by ERP in the current world which may include, finance sectors and their services, management in the supplier chains and the HR sectors. ERP systems have been known for offering provisions of systems to many business such as integrating their functions and optimizing the various processes in the major business, and with this is what the companies have been looking for (Milford, 2000)alongside all the benefits of the organization which may be tangible or intangible (Mabert, 2013). Integration has always been the key for the business system to be effective and if any link within the business fails then the company may suffer some losses and thus not able to meet its goals and expectations as it is expected by the customers when compared to the competitors in the same level.
The oil industry started getting in to the market well in the early 1970s where they handled the operations such as drilling which were required when exploring and developing the field as well as work-over undertaken and lastly the operations maintenance in the areas in the offshore and onshore. This has been able to make the sector to be successful in carrying out all its requirements such as the operations of drilling and thus a very important role is played in the oil and gas sector discovery. The following are some of the major business functions in the oil and gas sector.
Case Study
This is a major function in the business processes of the oil and gas sector as it has been classified in to two other main divisions namely the offshore and the onshore respectively. The two divisions where each handles the operations such as drilling. The division of logistics has also been included here and has been for its responsibility in offering provisions of logistics assistance or support when it comes to transporting and the required civil equipment’s when doing drilling operations.
This is another business function in the oil and gas sector that is responsible for offering provisions of technical support to all the operational functions that are put in place. The major divisions in this department are majored to be commercial.
- Procurement
- Tendering
- Warehouses
- Inventory
- Engineering and The projects
- Maintenance
- Support in the Business.
The technical field has been supporting the support services where we can have two ware houses and workshops respectively which are may be in the maintenance department or division and the Commercial divisions respectively.
The major function of this business process is offering provisions of administrative support that may include the Human resources, finances, information technology and in terms all the services in general. All the above divisions are located in the head office.
ERP systems have been known for having very appropriate data infrastructure, tools and techniques for the implementation of the oil and gas sector that is fully functional. The scope of ERP for the past 20 years have expanded in all angles in a very dramatic way. Many supplier have created their own offerings and giving such provisions to the departments such as the manufacturing, human resource management or the core modulation in the logistic department. In many companies such as the oil and gas sector who are the biggest players ERP have provided a suite that is comprehensive and with software modules including.
- Manufacturing Department
- SCM(Supply Chain Management)
- Finance Department
- Projects
- Human Resources management
- CRM (Customer Resource Management)
- Data Warehouse stores
Many companies like the one in the oil and gas industry have tended to have such various collections with legacy systems which they have acquired for a number of years. The legacy systems have been reported to be very old, sometimes inflexible and very expensive when it comes to maintenance. ERP has offered box-to-box solutions for integrating which have a prospective that is attractive and thus growing effectively in the market.
For an ERP system to be fully functional then there are some basic need that will need to be fulfilled and the following are some of the functional requirements.
- The system must be unified, with the users at the oil and gas company able to use such applications easily and thus working seamlessly across all the multiple necessary departments with the access that is controlled.
- They must have a database that is common meaning that it can share resources in a distributed way and that it can be accesses in many applications within different departments in the organization.
- It should be able to search and report all the utilities that are used when generating the reports on the basis of the various parameters such as the orders of oil and gas that has not been shipped.
- It must be scalable, easy to integrate and customize all the adhoc modules as it is needed.
When it comes to implementation of the ERP the following tools and techniques must be applied for the oil and gas sector to be successful when meeting the three functions operations, technical and administration respectively.
The storage of the data is a very key area that will need to be addressed in a very detailed manner. The database is established to show the workflow in the departments and acts as the backbone of any given ERP system. There are many techniques and tools that are applied in the storage of data such as the relational databases which are provided by organisations such as Oracle, Microsoft, Sybase, and DB2 Apache among others (SAP, 2018). There are other management tools with reference to data storage such as the Content management systems and the repository applications managements systems.
Tools and Techniques used during ERP implementation
The selection of the Database management tool will be dependent on the functions and requirements of the oil and gas sector. A good example in the market sector of oil and gas industry the transactional database like MySQL will be suitable in relevant transactions between the organisations and their suppliers giving track and records of all the available details between them when transacting their businesses (Oracle, 2016).
For any ERP System to be complete, it must constitute many modules and data repositories where there are updates of data followed by the actions which are defined logically with a sequence on the basis of the needs of the business. This will constitute of the workflow. Workflow in most cases is thought as way such functions of the body are controlled by the brain (Pierre, 2003).
At the levels of management, department and the team generation of reports will be very key appropriate data infrastructure, tools and techniques for the implementation of an ERP system when an ERP is to be implemented. This will be usually available in the dashboard with data in real time which has showed information of the orders received and those that has not yet been shipped.
There must exist the tools for communications for any organisation to work effectively across all the multiple departments. Communication is termed to be mandatory. ERP systems have facilitated the above by offering tools that are based on the actions of generating emails automatic, the instant messaging scenarios, chat or broadcasting generally to all the individuals and group levels (Pierre, 2007).
ERP systems have been integrated with analytical tools within the Enterprise Resource Planning systems for the intelligence of the business, analysis that is predictive, mining of data and the analysis that is related. The above tools are used in getting the insights that is valuable when one is creating a business decision that is strategic and made on the basis of data available.
This is an ERP tool that is used when the resources are allocated to the available departments and also used of scheduling of tasks and operations within the organisation. There are other add on features of the ERP systems that can be integrated with the modules in the oil and sector industry such as the Time Tracking Systems (TTS), Project Management(PM), Document Management (DM) and Human Resource Management with reference to the needs of the business. (Seth, 2018).
In many system implementations there must be laid strategies that will help in selecting and defining the best plan so that the company gets the benefits from such evolution and adoption. There are so many things that are always set by an organisation for them when defining the goals clearly and setting their expectations where the taskforce arrangements in the workshop with reference to what the management team has obtained from the viewpoint. The major participants have to agree on some key points with regards to laid strategies.
- Timeframe is where the implementation is not supposed to take long time before completion.
- Cost is where the one learns from the industry experience and the general concern being the implementation and the cost estimated.
The following are some of the strategies that should be laid across for the success of the ERP in the oil and industry sector.
This is the first task that is supposed to be finalized in any ERP system in particular. The task fotrce had to do an evaluation on the following options
- The Single ERP (Systems Applications products- which could be Oracle or SAP)
- Best Breed used when selecting the best modules for each available functional area.
The second option was discarded because it requires a lot of capital, takes a lot of time to implement and much more it requires a lot skills when implementing it. In addition, it may require detailed skills and expertise in some various applications and this may be extremely difficult at this time. With the above disadvantage of second option the selected option was going with the single ERP. The next idea was to choose either SAP or Oracle as they were the most popular in the sectors of oil and gas industries. The following options were to be considered.
- Conduction of a heavy self-study and choose between the two
- Hire a consultant to study the requirements of the company and propose one of the two.
After the both options were evaluated, the team dismissed the option two as it was costly and much time was required when it came to tender the process itself and this could take many weeks. Meetings were arranged to discuss the ERP option vendor to be considered with the sister companies who had knowledge and had already implemented the ERP in their companies. The aim for such meeting is getting to learn and obtain the knowledge and experience of how such ERP System works. After doing a comprehensive study the company agreed to install SAP. This led to them conducting a market research so that they can find a range of costs and the timeframes respectively.
The taskforce next agenda was to move to scoping and the phase of planning where a team focused on all the functional areas which created the joints developing the requirements of the business that documented the implementation of the ERP. The major areas that were selected were needed to have 80 percentage of their allocation to be business hours and the task was due four weeks. Many focal were new to this approach kind of a job and thus they started working from their own style perspective. The organization consolidations requirements that were set that were given by the team as results lacked the quality and the consistency as they were too high and very detailed. With the above faults the team had to take two other weeks in refining the given requirements (Jurison, 2015). The figure below illustrates how the approach was supposed to have been done.
Figure 1 the requirements of oil and gas sector
The following strategic options were addressed by the taskforce.
The first idea is finalizing the approach implementation, this may be done the parallel approach of the modules or even use an approach that is phased where every module must be implemented in a manner that is sequential. The phased approach seemed to have a lot of cycles when implementing and thus the team proposed that the adoption of the big-bang approach will be the best.
The idea was finalizing on the approach of the implementation, the concern was on the basis of the timeframe as well as the cost implemented. There were many various options that were considered and the evaluated options were such as hiring the SAP consultants on a contract and this to come along with the manager of SAP who is experienced and whose major task is managing such SAP contracts and staff in delivering the timeframe agreed.
The recruited manager was supposed to form a functional team that included the focal points in each of the areas of the business and that of the SAP functional consultants. The formed functional team was tasked in helping in preparation of details of the business blueprints which were mainly the company’s processes definitions and the strategy mapping defined in implementation of SAP. In many areas the company agreed in adopting the process which were inbuilt of SAP thus giving opportunities in implementations of practices which are simultaneously performed. The Human Resource and the modules of the payrolls needed to be customized, as there were certain policies of local personnel’s which were governed by the rules and laws laid by the government.
The main idea was in the design phase and that of the development, the project team was supposed to move the development phase (Chen, 2009). The following was supposed to be followed as the activities.
- Setting up of the hardware’s
- The installation of the Microsoft SQL server and configuring the DB server
- Installing and configuring the development and the environment to be tested on the separate servers(Piturro, 2014).
- Preparations of the above test-user machines.
- Configuring the applications of SAP.
- Migrating the data and conversing with the applications in existence.
Many are times most of the ERP systems are viewed as the extensions logically evolving from the Electronic data processing (EDP), Management Information Systems, Decision Support Systems and the Knowledge based systems. For over the past forty years.
The ERP is known the below stated features.
- The module for Finance that is integrated with features such as the management accounting for the General Ledger, the balance sheets and the profit and the loss statements, the closing procedures. The other feature in finance module is the AR custmomer management where there is the invoice and dunning. Last feature is that AP receipts for invoices. The finance module has major functions such as those of consolidating, controlling of the finance and managinf the assets respectively.
- All transactions on-line known as the cost module. This one is centered on the order and project accounting, cost- accounting products and the performance analysis inclusive of the ABC.
- Sales Module which includes the sales support including DBs, tele marketing and the customer call management, Inquiry, Quotation, invoicing and Sales IS.
- Production planning modules which has features such as the BOM with many levels, MRP II simulations, Capacity planning’s, costing and Production IS..
- Material Management Module which has features such as the forecasting, evaluation of the vendors, management of the purchase and the inventory management.
- Quality Module with features such as the planning quality, controlling quality and inspections as well as the quality IS.
- Plant Maintenance Module which has features such as the planning the maintenance, orders that need to be maintained, asset history management, worker scheduling as well as the integration with PLC.
- Service management module which has features such as the management of the customers, Device managements, Warranty, cost and Service IS.
- Human Resource Module.
The applications of ERP in corporations have really put their concentration on the efficiencies internally. ERP system have related with the customers through such systems where the company can communicate with customer on the system. The relationship and bond created via the two that Is the provider and the customer brings in the concept of customer relationship management which is a module in the ERP system that has been used in strengthening the bond between the two.
ERP systems have been used in the finance sectors of oil and gas in paying the staff, preparing and generating financial statements when need arises. The other relationship between ERP and Finance is that the finance module is integrated in a manner that it communicates with other modules in monitoring and evaluating the details of a given staff and thus it works within the set policies when the ERP was implemented.
The idea behind the understanding such success in the implementation of the ERP from the perspective of the users the following should be considered.
In this area the research is done in two steps. The first step is doing a literature review that aim at deriving the CSFs for the enterprise resource planning system to be implemented. The second step is conducting a survey that will help in evaluating the importance of the CSFs as seen from the perspectives of the user. Here the data is collected by use of questionnaire that were distributed in the organisation and thus developed on the basis of the CSFs.
One limitation that was recorded was that many respondents originated from department in the industry. The findings sometimes may differ in future due to the context as the organization expands. The other limitation in the findings was that study will only evaluate the existing CSFs from the perspective of the user (reitsma, 2018).
Figure 2 the extended list of critical success factor for implementation.
There are many reasons to why companies find themselves over budgeting when implementing the ERP systems. The graph below shows some of the reasons.
Figure 3 over budget during ERP implementation
Source (Solutions, 2015).
The following table is a list of proposed critical success factors for ERP implementation to be successful.
|
(Umble, 2013) |
(Nah, 2011) |
(Hong, 2002) |
(Holland, 199) |
|
|
Must knowledge of the company that detailes and the legacy systems |
Not applicable |
Determining the information technology and the organizational changes that are required for the success. |
Analysis of the factors of success that fits the organization knowledge before they adopt. |
The legacy systems. |
|
Having a strategy that is clear and concise. |
Organization strategic goals |
The business model and plan being clear |
Success of the ERP implemented |
Vision of the business |
|
Sponsorship from the top management. |
The top management being committed |
Project champion plus the support of the top management |
Not applicable |
The Enterprise Resource Planning strategy support from the top management. |
|
Top Notch practices in the project management being followed |
Having clear definitions when practicing the project management. |
PM |
Mentioning the factors that fit in the organization |
Plans or the projects schedules. |
|
Composition of team that is skillful and knowledgeable |
The team being devoted and selecting according to set skills |
Composition and teamwork for ERP. |
Success of the ERP implemented |
Not applicable |
|
Accurate data entries and clear procedures created |
Establishment of accuracy of data quality |
Not applicable |
It is not mentioned significantly in the factors under the fit of the organization. |
Not applicable |
|
Conduction of trainings and streamlining all the communications |
Training in all levels of the company for enabling the staff to work with the system well. |
Evaluation and monitoring of the performance. |
Success of the ERP implemented |
BPC |
Table 1 Success factors for ERP implementation
In the above case study the oil and gas ERP system was installed. The main purpose of the ERP in the oil and gas sector was maintaining all the records in assessing the quantities of the products. The production scheduling software’s or components must be able to the raw materials moving in and out and all the intermediate products being moved from one unit or department in operation to the other. Many of the ERPs that have been existing in the market have not been offering such provisions like capturing the specific information in particular and much more to this sectors of the oil and gas industry. The organization was seen to have developed it in-house systems for controlling the oil and gas operations, management and thus these were not well captured when doing an analysis of such stage. The results given in the ERP implementation were captured incorrectly as the new ERP was not in the position in satisfying all the tests required for more resources, the effort and the time and much more the problems of the poor designs of the interfaces which resulted in failures of the entire project (] Nazir, 2005).
Conclusion
In conclusion, the above discussion has majored on the implementation of the Enterprise Resource Planning Systems in the oil and gas industries. ERP has evolved quickly and in rapid manner as the new technology is advancing each and every day. The results seen from the various case studies as explained in the study have illustrated that when an oil and gas sector want to implement an ERP then a lot of research and study will need to be done so that the concept of accuracy and quality is maintained. The idea of implementing the ERP system to oil and gas sector is not increase the expenses but to benefit from it in many ways ranging from operations, technical functions and to the top management (administration).
List of References
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