Fuelling future growth

Planning for the future has paid off for a fast-growing oil company in the UAE. Daniel Stanton asks how its ERP has helped it keep a complete business view.

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By  Daniel Stanton Published  November 7, 2006

|~|danseppco200.jpg|~|EPPCO: ENOC's retail business
also needs to be catered for by
its ERP solution.|~|When the UAE's national oil conglomerate implemented an ERP solution almost 10 years ago, few could have imagined how large the group would become. All the same, it was vital that the solution it deployed could cope with ongoing growth and diversification.

Emirates National Oil Company (ENOC) completed an upgrade of its Oracle E-Business Suite earlier this year to improve business efficiency by automating several critical processes, including oil inventory management and costing, order management and distribution. The upgrade marked another step away from its previous use of in-house systems.

"The first time we implemented (Oracle) was in 1997, but since then we have continued to add modules and also migrate to more recent versions of the E-Business Suite," says Shankar Iyer, CIO of the ENOC Group.

"There were about five companies at that point in the ENOC group. We had a system which we developed and was catering for our needs, but at that time ENOC was really poised for growth, both diversification within oil and gas, and also expansion.

"Today we have 40-plus companies which all use the same instance and the same set-up. There is a uniform implementation for the whole group, but users can access it from different countries and continents. We've got some in Singapore, some in Africa and so on."

Although the group has most of the modules, they will not be used in all of the businesses. "We have the majority of the modules: the core financials, which include the general ledger, accounts payable, accounts receivable, fixed assets and the cash management, and purchase processing," says Iyer. "That is across the group, every company will use these, irrespective of the nature of their business.

"Then if you take specific modules like asset management or order management or inventory, specific modules would be within a particular company which needs them. ENOC Corporate is not a revenue-generating company, it is a holding company so you will not have anything on inventory or asset management and so on."

ENOC trades in 15 currencies and required applications that could deal with fluctuating exchange rates and give a clear view of the revenues and cost side of the business. It also has its own special requirements related to the oil and gas industry. "For example, there is bulk oil inventory movement, there is a financial system for the terminals which are operating in our retail stations, and the supply chain related to that," says Iyer.

"There are trading and risk management systems in our Singapore office. There are systems at Dubai international airport, Sharjah airport and so on. So data is integrated from a host of other systems. They all integrate into Oracle Financials."||**|||~|dansenoc200.jpg|~|ENOC: Grown from five companies to more than 40 in the last decade.|~|Fortunately, forward thinking from the outset means that integration has not been a problem. "The initial vision and the design itself enabled us to handle this because it's set up so that if I make one change it's applicable to the whole group," says Iyer.

"You need a lot of selling in the initial stages because everyone feels that they're losing their control and they're giving up something, although it's almost the reverse and there's more control being introduced by that, so the selling takes place up front.

"Take for example implementing HR payroll. If you don't have a uniform policy of HR then you'll maintain 40 types of policies on the system and it will become a nightmare. So taking care of the basics in the first place and getting the user to buy it allows you to maintain the system very easily."

Data is captured at the point of origin, something which helps simplify processes. "It's not captured somewhere, transcribed somewhere and then put into the system," explains Iyer. "As far as possible it is captured at the point where it originates.

"Second, there is no duplication. If it's captured in one system it's available across all the other systems. And wherever there are tasks that can be automated by something like the content manager in Oracle, we use that, so that there are no jobs that are done by the IT department itself - the bad jobs are ended everywhere."

The reporting process has also been simplified, to give users the option to choose pre-formatted or ad hoc reports. ENOC has been using business intelligence since its earliest Oracle implementation and continues to use it, mainly for sales and financial analysis.

Although Iyer estimates ENOC has spent around US$15 million in licensing, updating and supporting Oracle over the last nine years, he believes it has given the group a much larger return on investment. "If you take one of our subsidiaries, EPPCO, the refilling station, we would have millions of transactions related from various filling stations and we maintain balance sheets and profit and loss accounts for each of the retail outlets, so we can go up to that level," he says. "And internal stock takes - we have even gone down to drilling down to a cost centre or a particular operation in the site.”

Iyer says that the main factors that influenced his decision to choose Oracle were the level of support, ease of training users, and simplicity of implementation. He was also influenced by the speed with which new companies can be added to the system.

"Today if a new company comes up in the organisation, I can do the set up in a matter of two days and they're live from that point of time," he says. "When we look back, I'm happy that we made the choice."

Even though the solution is doing everything the group needs, Iyer believes processes can always be improved. "It's not the end because today you might not have a feature, but Oracle definitely has a roadmap," he says.

"There are many like the property management which wasn't there when we started. Features like analytics are going to be available to us in the future, so this is very exciting for us."

ENOC has also given its own feedback on the ERP, with suggestions for improvements and new functionality. "They have been one of our best customers, not only for using our package but also giving modifications advice that we need to make to the package, especially when it comes to the industry-specific kinds of functionality," says Samir Eid, director, energy industry, Oracle Middle East and Africa.

"We try to accommodate the functionality that they advise into our package. So they are in a way our advisory board for any investment in the industry."||**||

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