The world`s leading oil companies are users of enterprise business software from SAP. All ten oil and gas companies in the Fortune 50 depend on the SAP Oil & Gas solution for their core business processes and petroleum-specific processes.
And companies in South Africa are following suit, with Sasol-Oil, Caltex SA and Engen all now either implementing or running this leading enterprise solution.
"To provide a true cross-industry solution for our customers, SAP works with the leading companies worldwide in all major industry sectors to develop industry-specific business processes," says Simon Carpenter, product manager: logistics at SAP Southern Africa. "SAP is therefore able to offer comprehensive functionality for the standard business needs in a company, together with integrated industry-specific business processes.
"Feedback from practical experience is transferred into the ongoing development of industry-specific enhancements of the SAP System. SAP has set up Industry Centers of Expertise, and draws on the experience gained from working together with the leading companies in their industries, and suggestions from user groups."
As the oil and gas industry is a complex process industry with several unique features, SAP has developed a specific solution. The SAP Oil & Gas solution combines the core R/3 system with two industry-unique modules - IS-Oil Upstream and IS-Oil Downstream. Oil companies can significantly extend and optimise the functionality of the SAP solution using the IS-Oil solution.
"The oil industry globally is a unique mix of national and international companies that have to react in different ways to market conditions in different countries," says Carpenter. "They have to be able to manage globalisation and deregulation - and while competition has always been strong, developments such as the opening up of eastern markets to western oil companies is further intensifying competition.
"Our IS-Oil solution is focused on enabling oil players to integrate their business processes and their people; to strategically speed up their procedures and to make their corporate processes more transparent."
The SAP Oil & Gas solution has been developed with leading customers and partners over the past several years, and SAP continues this collaboration to further enhance the solution.
In South Africa, Caltex, Sasol-Oil and Engen are all going the SAP route.
"Because the world`s largest oil companies, including Caltex Petroleum, participated in the development of IS-Oil, it is a comprehensive product using the sophisticated business processes of R/3," says Dave Jewett of Caltex SA. "It is a very good fit for our company."
Caltex SA has recently installed SAP R/3, and one of the major benefits to accrue from the implementation is that the company is now firmly focused on its bottom line, rather than on the traditional "number of barrels sold". Other major benefits include better stock control, optimal inventory levels, and more efficient business processes. Caltex`s people are also now working more efficiently because of the disciplines imposed by the new system.
The partnership between Caltex SA and SAP started in 1991 when the company began implementing mainframe-based SAP R/2 financial modules. When SAP R/3 was launched, the decision was made to migrate these modules to R/3, a project that was carried out during 1995 and 1996. At the same time, Caltex decided to implement a number of SAP R/3 logistics modules as well. The 1995 to 1997 timeframe saw the successful implementation of Sales and Distribution, Materials Management and Production Planning, and the Human Resources module, including Payroll, was installed in 1998.
The local company`s parent company, Caltex Petroleum, a leader in the Asian-Pacific petroleum markets, is also implementing the SAP Oil & Gas solution to streamline its operations and improve its entire business process. Currently, Caltex Petroleum is using the SAP Oil & Gas solution to address industry-specific requirements such as transportation, storage and delivery, as well as to manage its finance, controlling, materials management, asset management, and sales and distribution operations in Singapore, Hong Kong, Thailand, Malaysia, the Philippines and South Africa.
Sasol Oil, crude oil refinery and marketing subsidiary to South African industrial giant Sasol Ltd., completed its SAP implementation in June this year (1998).
"One of the major advantages of SAP is the IS-Oil solution, which has been developed for the oil industry," comments Jaco Claassens, Sasol Oil SAP project leader. "This means that we are able to harness business processes which impact the oil industry, thereby becoming more responsive to changes in our industry.
"Through the SAP project, we will be able to gain improved control over all of the diverse elements in the supply chain as the entire value chain is linked. We are looking to analyse profitability and performance in real-time, while managing organisational change. Essentially, we want to ensure our management approach is proactive and not reactive," he says.
Sasol Oil implemented the IS-Oil Downstream integrated module which enables oil companies to address numerous functions unique to marketing and refining oil.
Mobil, a global integrated energy company with $66 billion in annual revenues, is replacing over 400 legacy systems with the SAP Oil & Gas solution in its U.S. exploration and production, marketing and refining, and financial operations. Because of the successful implementations of SAP Oil & Gas in several international locations since 1996 and to gain year 2000 compliance, Mobil selected SAP Oil & Gas as the solution for its U.S. affiliate. When the global implementation is completed, more than 3,600 Mobil employees will use the SAP Oil & Gas solution for sales and distribution, finance, controlling, asset management, materials management, production planning, project systems and some human resources functionality.
Mobil`s current plan is to begin the U.S. rollout in November 1998 and conclude in June 1999.
"SAP was the best option to meet our needs for a fully integrated solution," said Mike Brown, SAP project manager for Mobil. "With the SAP Oil & Gas solution, for the first time we will have timely and reliable information available for the entire U.S. operations, which will enable business process standardisation and improved decision-making."
Editors note
SAP Oil & Gas Solution
SAP`s Oil & Gas solution comprises core SAP R/3 applications and the industry-specific component IS-Oil. SAP R/3 integrates an enterprise`s entire operations in an overall system for planning, controlling and monitoring. IS-Oil addresses the critical supply chain needs of the oil and gas industry with upstream, downstream and oil-field services solutions that link the entire hydrocarbon supply chain, from acquiring, producing and trading to commercial and retail customers. Designed to lower costs and enhance performance in all aspects of the customer`s core business, SAP Oil & Gas also improves decision-making ability by providing customers with real-time information. The SAP Business Framework provides interfaces and integration technologies, allowing customers to extend their SAP solution with existing and third-party software to further meet customers` needs.
The SAP Oil & Gas solution enables oil and gas companies to support the majority of their information-processing requirements with one open, scaleable, integrated package. The functionality includes marketing and refining bulk transportation management, exchange handling, commodity-based pricing and bulk distribution requirement planning.
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