Managerial Information System Case Analysis Bharat Petroleum Corporation Limited

Submitted to Dr. Gayatri Doctor Submitted by Hardick shobhawat AM2212 Date 5 march 2013

The 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 STAGES It is now well known that an ERP implementation is designed in several interconnected stages like: Need for ERP (based on the current business practices, changed or changing environment conditions, and the proposed business strategy). Evaluation of organizations preparedness (issues related to data availability and consistency, process orientation, technical ability of executives, management culture, IT strategy, ability to work in teams, and learning attitude). Implementation (process mapping, gap analysis, process redesign, data creation, pilot implementation, and propagation). Stability, maintenance, and enhancement.

These implementation stages are usually supported by: Top management support (motivation, budget support, resource creation and deployment, generating backup options, etc.). Efficient project execution team (reporting formats, time-and cost management-related issues, resource allocation, use of external consultants and internal implementation team, etc. Conflict resolution procedures (committee structure, role clarity, and process team structure). Training and education (technical, behaviour on change management process and managerial process orientation.

BPCL Experience The BPCL experience is similar to these well-known implementation procedures. There are no major surprises Or uniqueness associated with the BPCL implementation plan. Some noteworthy features are: Top management involvement and guidance. Financial evaluation (cost-benefit analysis). Stage 1 (process mapping) and Stage 2 (implementation). Appropriate use of consultants and internal team members. Training on ERP, process redesign, and change management. Project monitoring and identification of key deliverables at every stage.

ERP-RELATED ISSUES The ERP implementation (as described in the case) in BPCL raises some important managerial issues, which we discuss briefly below, to identify a positioning for ERP.

Cost-Benefit Evaluation Often, the implementation organization does a cost benefit analysis of ERP and generates a solution approach based on economic considerations (typically an investment analysis orientation). There are several shortcomings (possible) related to this approach.

Usually, the cost of networking and disaster management is not considered. Inventory reduction and other benefits projected are one-time savings and they are not exclusively related to ERP. Therefore, the best way of evaluating a need for ERP would be based on cost of operation. This would mean the cost of an ERP solution proposed and the inefficiencies and hence the burden on the company for not implementing an ERP may be used to arrive at a solution. In short, what is proposed is to replace an investment analysis oriented decision-making environment with an orientation to compare the cost of relevant alternatives.

ERP and BPR Interlink ages There is a close relationship between BPR and ERP. Organizations usually have two broad options: Conduct a BPR project, select an ERP, and customize it for the proposed BPR. Adopt an ERP, customize the current processes to the ERP process, and hence achieve a moderate BPR. Approach 1 is very attractive and has a potential for maximum benefit. But it is risky. The ERP may require extensive customization. Two successive major change initiatives may not be sustainable. Alternative 2 is realistic. This is somewhat increment in approach and assumes ERP processes are the best possible. Implementation issues are reduced. Subsequent process changes would be influenced by ERP vendor. The appropriate solution is a function of what the organization is capable of handling, the business needs and the extent to which ERP can be customized without compromising its basic character.

Creativity and Process Discipline Trade-off ERP, once implemented, would require data integrity and process discipline. Often, this is considered as a restriction. This is not true. Process discipline is neither in conflict with creativity nor is it a substitute for it. The creativity would be reflected in the redesigned process before customizing ERP. Also, there are several opportunities in the organization to unleash the creative potential of individuals in an organization. When this is effectively practised, it would place a healthy demand on the maintenance and enhancement phase of an ERP. The confusion is between the process and scope for creativity versus a customized (creative) process.

Productivity (Improved) and Manpower Rationalization ERP implementation would provide opportunity to increase productivity at all managerial levels in the organization. This is primarily due to easy availability of relevant data, consistency on data elements, and improved process (connecting various departments) integration. Managers and executives would now spend less time in non-value added activities. Because of process automation, there would be one time reduction on activities. Consequently, there would be a surplus situation on manpower. This needs to be 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 ERP implementation using process simplification and automation.

Organizational Flexibility It is widely believed that organizational flexibility may be reduced because of ERP, which is not a true. An organizations flexibility is a way by which the competitiveness of the organization is managed as a consequence of external environment, intensity of competition, and expected trends in the market place. ERP is only enabling the appropriate strategy by 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 matter of fact, a successful ERP implementation would give necessary confidence to the senior management in their ability to implement major organizational changes.

Benchmarking, Module Mix, and Interfaces These are desirable features. Benchmarking should be done to understand the potential gap in performance. Benchmarking is useful to initiate redesigned processes. Often, the best benchmark may not be realizable given the environment in which the firm operates. In any case, the redesigned processes would improve the performance (by an order of magnitude).

Hence, one should view ERP implementation as one step close to benchmark (targets). Module mix (from ERP Suite) and hardware and software interfaces are desirable elements. An optimization on this dimension would be useful but such an exercise depends on the internal dynamics of the organization related to application mix, technology understanding, and the proactive nature of IS resources. For several organizations, for a variety of reasons, ERP is a one-time up gradation of IT systems and advancement of IT strategy. For such organizations, the module mix optimization would remain as a long-term IT strategy.

In-house ERP Consultants True consultants who played an important role in implementation would find a natural settlement. The best would become inhouse maintenance and enhancement consultants. They may even leave the organization for a similar position. The rest need

to be given other responsibility as change agents. After all, they are the ones who have proved that they can help change in an organization. All other things being equal, they would be preferred to initiate other change management activities within the organization as well as with business partners.

CONCLUSION ERP needs to be positioned as a strategic enabler. It provides a platform to implement a competitive strategy on dimensions related to data integration, process redesign and up gradation, and interfacing functional systems. Also, ERP is not the end of all that an organization can do. It is one of the tools (process based) which an organization would employ to enhance its competitiveness. Surely, strategy first and then the enablers. In some situations of strategy, process may play an important role and hence ERP. But, that cannot be the reason to assign a large role to this useful concept and tool.