1204: SAP & ElemicaA Winning e-Business Combination

• Background

• The Winning Combination - SAP

• The Winning Combination - Elemica

• Past the Hype: Reality of Connectivity

• Key Learnings

• Progress by the Numbers

Agenda

BackgroundBackground

• Exploration & Production

• Oil Products

• Chemicals*• Gas &

Power• Renewable

s

1700 Companies1700 Companies 135 Countries135 Countries

$13bn net income$13bn net income

Royal Dutch/Shell - Royal Dutch/Shell - ChemicalsChemicals

* The expression 'Shell Chemicals' refers to the companies of the Royal Dutch/Shell Group which are engaged in the chemicals business. Each of the companies which make up the Royal Dutch/Shell Group of companies is an independent entity and has its own separate identity.

Delivering BulkDelivering BulkPetrochemicalsPetrochemicals

• Close to cracker• Similar strategies

• Focused investments

To LargeTo LargeIndustrialIndustrialCustomersCustomers

• Fewer Customers• Strong relationshipsStrong relationships

• Delivering value Delivering value propositionspropositions

Providing theProviding theLowest TotalLowest Total

Delivered CostDelivered Cost• Low Cost CultureLow Cost Culture

• World scale plants• Feedstock integration• Focused process R&D• Consolidated support

services• Optimized channels Optimized channels

of commerceof commerce

eBusinesseBusiness

Through SimplerThrough SimplerStructuresStructures

• StreamlinedStreamlined Global Global Winning ProcessesWinning Processes• Clear accountability

•Winning Attributes & Behaviors• “Everyone a leader”

Shell Chemicals Operating Model

Providing customers with opportunities for self-service and collaboration.

Participating in networks to expand electronic reach and enhance efficiency.

Suppliers Customers

ERP System

Network HubTranslators

Why e-Business?

Shell Chemicals Shell Chemicals Customer Customer LoungeLounge

This This wwill ill bbe a journey with e a journey with evolving opportunitiesevolving opportunities..

Structural DifferentiatorsTable Stakes

Interface/Relationship OpportunitiesInternal Opportunities

Certainty UncertaintyCertainty Uncertainty

Value

Value

Adopti

on

OrganisationalStructure

Connect

ion

SimplifiedIT

Transactional Efficiencies

Order to CashCompression

Efficiency

ElemicaCustomer Lounge

Supply ChainVisibility

NetworkOptimisation

Effectiveness

CPFR / VMI

IndustryTransformation

Industry Structure

Value ChainIntegration

e-Business Value

Sell-side: Order Create, Order Change, Order Response, Ship Notice & Invoice.

Certificate of Analysis due in the summer; Load Tender Ocean, Load Tender Truck and Load Tender Response under consideration.

Buy-side: Order Create, Order Change & Order Response (in July)

Scope of Connectivity

Yesterday’s Process*

Buyer

ERP

CRC

Out of office, full voice mail box, phone tag, …

Copious amounts of email (lost in the volume), virus attacks, server outages, out of office …

Jammed paper, out of ink, out of paper, busy line, lost/ misplaced fax, …

Accts Receivable

Receiving

Carrier

**Sell SideSell Side

Today & Future Process*

Buyer

ERP

Accts Receivable

Carrier

Receiving

OrdersOrders

Order ConfirmationOrder ConfirmationShipNotice, InvoiceShipNotice, Invoice,,CoA, LoadTenderCoA, LoadTender

LoadTenderLoadTender

Order ConfirmationOrder ConfirmationShipNotice, Invoice,ShipNotice, Invoice,CoACoA

OrdersOrders

**Sell SideSell Side

CRC

For RelationshipFor RelationshipManagement & Management & Exception HandlingException Handling

By By ExceptionException

The Winning The Winning CombinationCombination

SAPSAP

2000 2003

Customers & Suppliers Customers & Suppliers

Non-standard Management information

Unaligned regional business processes

Local, “silo”ed mentality

Fragmented IT platforms

Consistent Management information

Global world class business processes

Supplemented by Winning Attributes & Behaviours

Single common IT platform

Americas EuropeAfrica

Asia PacificMiddle East

Americas Europe AfricaAsia/Pacific Middle East

Rumba EuroSAP APSAP

OE CF CP FI OE CF CPFI OE CF CP FI

GI

Global SAP

OE CF CP FI

Desktops

ERPs

Applications

Data Structures

Management Info

JDE

JDE

ElemicaElemica

SAP: The Foundation

Flexibility to operate a global installation yet still account for regional nuances in processes & regulatory requirements.

Robust, standardized integration tools (BAPIs, IDOCs) make it easier to incorporate B2B, Internet-based processes into the core business process.

Variety of certified middleware vendors who have SAP adapters/connectors; choices to fit any budget & business model.

Winning Factors

The Winning The Winning CombinationCombination

ElemicaElemica

Founded by 22 of the largest chemical industry companies in the world.

Focused on meeting the buy & sell B2B needs of the chemical industry.

Provides hub based connectivity; eliminates the need for partners to build point to point connections with trading partners.

Elemica: What is it?

Information flow Product flow

Elemica: The Model

Connect Once, Connect to Many and…

NetworkNetwork

Partner’s ERP

ChemXMLChemXML

Elemica: The Process

…Standards & Rule-Based Connectivity

IDOCRFC

Industry collaborative exchange.

CIDX Standards as the foundation.

Enforced business process rules.

Open exchange of technical & process solution ideas amongst the members (Elemica Connectivity Advisory Group).

Implementation assistance.

Winning Factors

Past the Hype: Past the Hype: Reality of ConnectivityReality of Connectivity

Maturity of XML transaction standards – evolution continues; which do you go with; what if your partners choose something else?

The nice thing about standards is that there are so many of them to choose from.

Andres S. Tannenbaum

Technology Issues

Industry & Partner readiness – inexperience with connectivity & standards. Internet/XML-based connectivity sounds easy; in reality, it’s a new & unique skill area for most companies.

Myriad integration vendors & continued consolidation – consider carefully how much business logic to include in the middleware; what if the enabler is merged, bought out or discontinued?

Technology Issues

Industry process standardization – all must be willing to adapt processes to common business requirements where there is no competitive advantage to be gained. The good of the whole (industry) may supersede your company process design desires.

Any intelligent fool can make things bigger, more complex, … It takes a touch of genius - and a lot of courage - to move in the opposite direction.

E. F. Schumacker

Process Issues

Key LearningsKey Learnings

A Rube Goldberg approach to process design will needlessly complicate your B2B integration effort. Design with automation in mind. Think twice about that pop-up you want to create in SAP

– how will an automated, e-process handle this type of expected user input?

Always design a thing by considering it in its next larger context - a chair in a room, a room in a house, a house in an environment, an environment in a city plan…a business process in a touch-free environment.

Eliel Saarinen

Key Learnings

e-Speed really means p(eople)-Speed in mature organizations/industries. Adoption will increase but more slowly than first predicted.Process design, partner process design, cross-

company calendar coordination, internal IT standards, competing initiatives, etc. all work to make e-speed no faster than for any other business IT initiative.

Key Learnings

Operational support expands to include Elemica Client Support and the partner’s application support group. Occasional coaching of the buyer or CRC in a partner’s organization about how Elemica transactions are to be processed does occur.

The speed at which partner adoption can grow is equal to the the rate of speed of the slower adopters in the target community. Success is dependent on the success of partners.

Key Learnings

Progress by the NumbersProgress by the Numbers

0

5

10

15

20

25

30

35

40

45

50

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2003 Companies in Production

Data from the Elemica web site http://www.elemica.com on 9 April 2003

0

50

100

150

200

250

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2003 Trading Pairs in Production

Data from the Elemica web site http://www.elemica.com on 9 April 2003

Jan-02

Apr Jun Oct Jan-03

MonthlyTransactions

Jan-02

Apr Jul Oct Jan-03

TradingPartners

Shell Chemicals Data

Conclusions

Having a strong ERP foundation is essential to a winning e-Business effort.

A collaborative relationship with your chosen exchange & target partners creates the winning combination for all parties.

There is business value in electronically connecting with your partners in the way that best suits each specific relationship. It

opens new channels to dialog process issues that have been a problem for years

provides process efficiencies for both partners by reducing data discrepancies across the entire Order-to-Cash process.

freeing your resources to have a productive exchange about products/services rather than focusing on transactional activities.

Conclusions

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Session Code: 1204