Efficient Business Planning & Consolidation: SAP BPC Solution For Oil & Gas May 2009

Efficient Business Planning & Consolidation
Delivering Value to the Oil & Gas Sector

SAP BPC Solution for Oil & Gas
May 2009
*connectedthinking PricewaterhouseCoopers
J anuary 2009
2
PricewaterhouseCoopers
Contents
A: Oil & Gas Industry Value Chain
B: SAP Budgeting Planning & Consolidation (BPC) Solution An Overview
C: SAP BPC Business Benefits to Oil & Gas Industry
D: Demo Business Planning and Budgeting
E: Select Oil & Gas Customer Success Stories
F: PwC Delivering value to the Energy Industry
G: PwC India SAP FPM Practice Highlights
J anuary 2009
3
Section A
Oil & Gas Industry Value Chain
J anuary 2009
4
UPSTREAM
OIL FIELD
SERVICES
MID STREAM
DOWNSTREAM
MARKETING &
TRANSPORTATION
DOWNSTREAM
REFINING
Searching for
potential
underground or
underwater oil &
gas fields,
exploratory well
drilling, operating
the well to recover
crude oil & bring it
to surface
Services provided
for oil drilling &
exploration without
getting involved in
actual oil extraction
Processing,
storage, marketing
& transportation of
crude oil, natural
gas, natural gas
liquids etc.
Refers to refining of crude oil & selling and
distribution of natural gas & products derived
from crude oil (Petrol, Diesel, LNG etc). This
sector includes refineries, petrochemical plants,
retail outlets & natural gas distribution
companies.
J anuary 2009
5
Parent/ Subsidiaries/
Associates/ J oint Ventures
Ownership Structure
Operations in various
geographies
Indian GAAP,
US GAAP
and IFRS
Multi- Currency
Multi- Platform
Closing Cycles
Less time for
Data Analysis
Very limited linkage of
strategies to the real execution
No controlled
Business Process
Flows
Audit Trails
Data confidence Data Warehousing
Ineffective budgeting and
forecasting process
Slow & costly
budgeting process
IT dependent
How to capture the true
cost and profitability
still management wants
some different info. &
that also in diff format
More time for data building
Challenges in Budgeting, Planning & Consolidation for Oil & Gas
J anuary 2009
Data source PM Appli cation
Suites/Modules
User
Interface
Unstructured Data
Structured Data
?
Planning
Reporting
Consolidation
Is our reporting structure looks like this?
J anuary 2009
7
Section B
SAP Budgeting Planning & Consolidation (BPC):
An Overview
J anuary 2009
B: SAP BPC: An Overview
LOB
GRC CRM
ERP
Other
Structured Data
Unstructured Data
Adaptable
User Interfaces
(Built on Web 2.0)
Web Browser
Microsoft Office
Custom Portal
Fast and Accurate Fast and Accurate
BPC Reporting will look like this -
J anuary 2009
Where BPC Stands in solution to the CFO Office
Slide 9
Strategize &
Prioritize
Plan &
Execute
Consolidate &
Monitor
Model &
Optimize
Strategy Management
Business Planning
Business Consol idations
Profitabili ty Management
J anuary 2009
BPC Capabilities
Financial reporting and analysis
Ad hoc
Financial Statements for submissions
Automated variance analysis
Driver analysis (industry, growth,
capacity, etc.)
Forecasting and consensus building
Rolling forecasts
Continuous planning
Collaboration
Business planning
Sales/revenue planning
Capital expenditure planning
Headcount/staffing
Expense planning
Cash flow planning
Project and Bid Management
Consolidation
Intercompany matching/reconciliation
Intercompany eliminations
Management roll-ups
Legal consolidation
Multi GAAP Management (including
IFRS)
J anuary 2009
Planning Single solution with multi-dimensions
Operational Tasks
B
u
s
i
n
e
s
s

P
r
o
c
e
s
s
e
s
Strategic Planning
Budgeting
Periodic Close
Forecasting
Performance
Measurement
C
o
m
m
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n
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t
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n
C
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A
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y
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s

&
R
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t
i
n
g
D
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o
n
Supports top-down and bottom
up planning leading to timely, more
accurate plans that are aligned with
strategic goals
Facilitates collaborative planning
across all functions for more accurate
budgets
Enables continuous planning and
rolling forecasts to meet rapidly
changing business conditions and
reduce budget cycle time
Automates the consolidation
process, meeting all financial
reporting requirements with a
complete audit trail for a fast,
accurate close
Industry Specific features can be
incorporated with greater flexibility
J anuary 2009
12
Section C
SAP BPC:
Business Benefits to Oil & Gas Industry
J anuary 2009
13
C: SAP BPC: Business Benefits
Capital Expenditure Planning
- Improved Cost Management & Availability of materials at Project level
- Reduced cycle time in creating & approving budgets & through faster
collaboration & alignment of operations & finance w. r. t. budgets
- Leverage scenario analysis to determine viability of potential projects
- Clear-cut segregation of Planned and Un-planned CapEx with greater
degree of Control
Asset Optimization & Utilization Planning
- Enhanced control over equipment availability & condition
- Analyze billing data to identify opportunities & get faster equipment
deployment
- Perform utilization modeling using daily rates to assess key metrics like
turnaround, availability & downtime
J anuary 2009
14
C: SAP BPC: Business Benefits contd.
Production / Reserve Planning
- Analyze reserves from production to proven by leveraging key metrics like
Cost of Production & ROI
- Perform price of oil modeling & analyze results across user defined
volume calculations for Barrel Oil Equivalents (BOE)
- Support strategic decisions at the well level across a telescoping time
horizon
Merger & Acquisition Planning
- Enable calculated decision making by evaluating risk accountability
- Enhanced acquisition analysis & decision making by quickly & easily
incorporating potential acquisition targets into the model for robust what-
ifanalysis
J anuary 2009
15
C: SAP BPC: Business Benefits contd.
Management Reporting & Ad-hoc Analysis
- Transparent reporting with full audit trail from a single data repository
minimizes business & compliance risks
- Dashboards to monitor KPIs enhance enterprise-wide visibility &
transparency
- Independence of operational users enables quick adaptation to changing
market conditions & regulatory landscape
Business Process Optimization
- Empower operational users to own & modify common business processes
without finance or IT assistance
- Leverage SAP BPCs native Office integration to reduce training & roll-out
costs & enhance adoption
- Enhanced new user productivity with minimal training owing to familiar
Microsoft Office interface
J anuary 2009
16
The Demo
Demo Business Planning and Budgeting
J anuary 2009
17
Dashboard and KPIs
Controlled Data Access
Multi version
Multi currency
Assumptive/ Driver based
Setting of Targets
Allocation of Targets
Centrally controlled
Revenue Planning
Cost Planning
Data Slicing and Dicing
Human Resource Planning
Entry and Approval Mechanism
Operational Expenditure Planning
Going beyond the GL
Capital Expenditure Planning
Project wise Tracking
Balance Sheet Drivers & Roll
Forwards
Consolidation
Allocation of Overheads
Reporting and Analysis
Demo Coverage
J anuary 2009
18
For ABC Oil & Gas Company for the year 2008
Budget version 1 is already prepared by the Middle level managers
Management want to revise the targets considering the trend and
industry benchmarks
Assumptions outlined
J anuary 2009
19
Demo Business Planning and Budgeting
J anuary 2009
20
Building the confidence brick by brick
Multi Scenarios Multi Versioning
Target Allocation Based on Pre-defined Rules
Top-Down Bottom-Up
Excel +Word +PowerPoint
On Web Drill down
Facilitates Benchmarking
User Alerts Quick Tips and Help
Integration with Strategy Management
Non-financial
Data
Organization
Hierarchy
Security Matrix
Intelligent
Action Pane
Single data
repository
Managing the Comments
Unstructured
Data sharing
Self Service
Reporting
J anuary 2009
21
Section E
SAP BPC:
Select Oil & Gas Customer Success Stories
J anuary 2009
22
E: Customer Success Stories
LITASCO is a Switzerland based Trader of Crude Oil & Refined Petroleum
Challenges and Opportuniti es
Needed insight into the vital reporting and
analysis of the organization
Needed forward-looking capability to shape
business success and insight to identify key
performers
Enterprise-wide, scalable solution that enhanced
the ability to easily manage operation and
financial requirements
Objecti ves
Cut reporting time
Remove reliance on spreadsheets
Enhance ability to analyze KPIs
Easy integration with existing SAP systems
Highli ghts
Excellent training and ease of use
Streamlined successful implementation in 5-
months
Immediate access to reporting, GAAP
consolidation, KPI analysis and score-carding
Business Benefits
Greater 360 degree business insight across the
enterprise
Compliance with GAAP consolidation regulations
Streamlined three month consolidation process
into a week
Predictive analysis for non-financial KPIs allowing
them to compare business targets
The implementation process was incredibly quick, and the
easy-to use nature of the software meant our employees only
required three days training. The implementation was so quick
that during the same month the financial reporting component
went live, we were able to produce that month's financial
reports using the new software. All in a fraction of the time it
used to take.
Laurent Corbaz
Head of Financial Reporting & Planning
LITASCO
J anuary 2009
23
Management Cockpit
J anuary 2009
24
Cockpit
Room
J anuary 2009
25
British Petroleum is into exploration & production of crude oil & natural gas, refining,
marketing, supply, transportation & manufacture & marketing of petrochemicals. BP
deployed SAP BPC for Upstream Planning & Forecasting
Challenges and Opportuniti es for Upstream
Planni ng & Forecasti ng
Manual processes were slow & error prone
Disparate & changing methods of forecasting
Inefficient & inconsistent management reporting
process
Needed a single, Global Financial Outlook (GFO)
Highli ghts
Global implementation 700+users, 12+countries
Solution included Budgeting, Forecasting, Financial
Reporting & Operational Analytics
Business Benefits
Single FPM platform for all North American Upstream
BUs
Allows BP to model, archive, report & analyze GFO
content from a single centralized source
On-demand standard reports & analysis for business
users
Greatly improved forecasting model quality
Vast improvements in communication & collaboration
J anuary 2009
26
Chevron deployed SAP BPC for Upstream Planning
Challenges and Opportuniti es
Manual planning processes were slow & error prone
Spreadsheet hell
Inefficient & inconsistent management reporting
process
Inefficient planning model
Highli ghts
Global implementation 25+Business units, 24
countries, 200+users
Business Benefits
Replaced 1500+excel workbooks each fiscal period
Streamlined Upstream Strategic Planning process
Data integrity based self-sufficiency for Finance
BOD report (future state)
Rapidly expanding to Upstream global business units
Exposure to downstream SAP Projects
J anuary 2009
27
Section F
PricewaterhouseCoopers (PwC):
Delivering Value to the Energy Industry
J anuary 2009
28
F: PwC - Delivering Value to the Energy Industry
PwC worldwide is largest professional services organization, helps its clients build value, manage risk and improve their
performance. Presently PwC draws on the talents of more than 150,000 people in over 153 countries to provide a full
range of professional services. PwC worldwide has a vast experience to work with national and international Governments,
public institutions in business advisory, technology services and has a successful track record of executing projects across
the globe.
Gartner Group endorses PwC by stating: PwC has one of the best track records in the industry with respect to
transferring methods and skills to clients
Introduction
J anuary 2009
29
Ranked as the largest Business Consulting Firm
Serving more than 90% of Fortune 500Energy Companies
Audits 3 of the 6 super-majors: ExxonMobil, Shell & Chevron
Audits 3 Top National Oil Companies
3100 staff & 300 partners dedicated globally to the Energy Sector
Strong focus on Quality & Relationships
Impressive Track Record in Serving the Energy Sector:
Our Energy Knowledge supports your Success
J anuary 2009
30
Articles & Publications
Thought Leadership to propel Value Proposition
The Wealth of Nations How well do
countries petroleum strategies align?
Read about the new dynamics of the NOC &
considerations for operating in the new
world-order
Value & Growth in the liquefied natural gas
market
As LNG is hailed as the major factor in
meeting growing energy demand, we look
into the paths to value & growth
Managing Tomorrows People The future of
work to 2020
Human Resource scarcity is a critical issue
al ready impacting the energy i ndustry.
Explore strategies for future workforce
planni ng in this article
12
th
Annual Global CEO Survey
Get a timely & insightful picture of the
current attitudes, perceptions & expectations
of major business leaders around the worl d
And Many More.
J anuary 2009
31
Events & Sponsorship
Training & Education
Partnerships for a holistic future
Offici al / Annual Sponsor
World Energy Congress
World Petroleum Congress
CERAWeek
International Financials Reporting Standards
Roundtable Series
Energy Board Symposium
Mergers & Acquisitions Roundtable Series
Energy Board Roundtable Series
Board of Directors Collage
Thompson & Kni ght Global Energy Services International Petrol eum Expl oration & Producti on
Business Management Program
Program contributor to this unique business management learning opportunity for accounting
curriculum.
Petroleum Accounting, Principles, Procedures & Issues (6
th
Edi tion)
PwC in conjunction with the Professional Development Institute of the University of North Texas (PDI)
published the 6
th
edition of this manual
J anuary 2009
32
Section G
PwC India:
SAP FPM Practice Highlights
J anuary 2009
33
G: PwC India
SAP Practice Offerings
S
e
c
u
r
i
t
y

A
u
d
i
t
SAP ERP
Implementation
ESA framework
Implementation
Business
Intell igence
D
a
t
a

M
a
n
a
g
e
m
e
n
t
Governance,
Risk and
Controls
Industry
Soluti ons
Enterpri se
Portal
RFID
Integrati on
& Mobility
Business
Process
Re-engineeri ng
Suppl y Chain
Redesign
Version
Upgrade &
Traini ng
Process
Controls
FPM
CRM,
SRM,
SEM
PwC India SAP Offerings
SAP Implementations
J anuary 2009
34
G: PwC India - SAP FPM Practice Highlights
Service Offerings
Business Goal of FPM Practice Provide Solutions to the CFOs Office
Service Offerings:
PwC FPM
Offerings
COSTING
Product Costing
Cost Accounting Structure
Activity Based Costing
Profitability Analysis
PLANNING & BUDGETING
Process Re-Design
SOP Definition
System Implementation
MANAGEMENT REPORTING
Reporting Frameworks
Dashboard / Scorecard Design
STRATEGY MANAGEMENT
Closing the gap between
Strategy & Execution
LEGAL & MANGEMENT
CONSOLIDATION
And Reporting System
Convergence
IFRS COMPLIANCE
Based on SAPs
Accelerator Toolkits and
PwC's IFRS capabilities
J anuary 2009
35
Practice Strengths
Strength of Synergy: Amongst Domain Experts right from Finance, IFRS,
Corporate, Regulatory, Taxation to Technology Experts
Strength of Integrated Methodology: Proven Finance Performance
Management advisory, change management & process improvement expertise.
Supported by Documentation & Knowledge Transfer
Strength of Industry Experience: Cross industry & cross functional knowledge
& experience across different lines of services within PwC
Strength of Quality Management: BS 7799, ISO 9001:2000 & Tick IT
Certification by Det Norske Veritas (DNV). PwC India also accessed at CMMi
Maturity Level 5
Strength of Network: A Global firm with a Local Face. One of the largest
Management advisory practices in the world. Access to the global database of
Best Practices & Project Repositories
Strength of Technology: Through partnership with SAP
J anuary 2009
36
PwCs Solution Implementation Methodology
Assess Design Construct Tune Depl oy Review
J anuary 2009
37
PwCs Solution Implementation Methodology contd.
Implementation
Stages
Assess Design Construct Tune
Deploy &
Review
1. FPM
Implementation
Prepare
infrastructure
define technical
requirements
Study existing
processes and design
Best Business Process
Flows. Design interfaces
and reports
Configure and
test in
Development
and Integration
environments
Migrate
configuration to
production
environment.
Conduct pre
Deployment checks
Deploy. Address
issues.
2. Data
Migration
Identify master
data
Prepare templates.
Create and check test
data. Suggest controls
and validations.
Develop and
test data
migration
programs.
Master and
transaction data
upload.
Address issues.
Sustenance plan.
3. Infrastructure
Study HW, SW
requirements.
HW sizing and
installation.
Recommend steps to
define security policy.
Framework for creating
users and
authorizations.
Create client for
Test. Install
production
server.
Configure
transport
system.
Final testing and
transport. Pre
Deploy check.
Performance check.
Legacy system
cut off.
Production
system
performance
monitoring.
4. Benefit
Realization and
Sustenance
Identify
processes,
bottlenecks and
CSFs.
Define performance
measures and
framework to measure
it.
Standardize
processes.
Realize KPIs.
Test changed
processes and train
users.
Continuous
monitoring of
process
performance.
J anuary 2009
38
PwCs Solution Implementation Methodology contd.
Implementation
Stages
Assess Design Construct Tune
Deploy &
Review
5. Project
Management
Project plan,
templates,
procedures and
standards.
Document
escalation
procedure.
Ensure deliverables and
sign off.
Scope change
review. Timely
deliverable and
sign off.
Prepare contingency
plan and cutover
plan.
Go Live
sustenance plan.
Support
procedure and
help desk.
Manage project
closure.
6. Change
Management
Identify change
agents.
Identify process and
organization structure
changes and its impact.
Prepare communication
plan.
Conduct change
workshops.
Implement
communication
plan.
Conduct change
workshops.
Implement
communication plan.
Access change
readiness.
Evaluate and
monitor change.
7. Knowledge
Transfer
(Traini ng)
FPM overview/
Master data/
Data migration
and data base/
SQL training
Prepare training
templates and manuals.
Hands on training to
core team on Designing.
Core team
training (train
the trainer) on
actual
Construction.
End user training by
trainers.
Identify additional
training needs for
the end users.
End user training
on continuous
basis.
J anuary 2009
39
India Client References
Client : Manipal Education
About the Client:
- Among top Indian Education Service Providers
- Turnover: INR 2,404 millions
- Operates in Multi-GAAP Environment
- Operations in India, US, Dubai, Malaysia, Nepal etc.
SAP FPM Assignment Scope:
- Business Planning & Budgeting
- Forecasting & What-IfAnalysis
- Legal Consolidation
- Financial Reporting
- Management Consolidation & MIS
- Best Practices in the area of Business Planning & Consolidation
J anuary 2009
40
Client : Sterlite Technologies
About the Client:
- Among the top three power transmission conductor manufacturers
- Among the top ten optical fiber manufacturers in the world
- Turnover: INR 1686 Crores
- Global provider of Optical Fibers, Telecommunication Cables and Power
Transmission Conductors
- Operations in India, China, Thailand, Russia, U.K. and South Africa.
- Management Consolidation & MIS
J anuary 2009
41
Client : Panacea Biotec
About the Client:
- Among top Indian Pharma Groups
- Turnover: INR 8,304 millions
- Operates in Multi-GAAP Environment
- 9+entities under group in form of subsidiaries, joint ventures etc.
- Strategy Management
- Legal Consolidation, Management Consolidation & MIS
- Financial Reporting
- IFRS Implementation using SAP IFRS Tool Kit
J anuary 2009
42
Global Client References
By creating
value in all
aspects of our
clients
business with
services
ranging from
strategy to
advisory, we
form a deep
relationshi p
with industry
leaders!!
J anuary 2009
We Can Team Up!
2009 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopersrefers to the network

of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent
legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP (US).
THANK YOU !!

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Efficient Business Planning & Consolidation

Delivering Value to the Oil & Gas Sector

2009 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopersrefers to the network

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