bpc en oil & gas

Efficient Business Planning & ConsolidationDelivering Value to the Oil & Gas Sector

SAP BPC Solution for Oil & Gas

May 2009

*connectedthinking PricewaterhouseCoopers

January 20092

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

January 20093


Section A

Oil & Gas Industry Value Chain

January 20094


A: Oil & Gas Industry Value Chain

UPSTREAM OIL FIELDSERVICES MID STREAM

DOWNSTREAMMARKETING &

TRANSPORTATION

DOWNSTREAMREFINING

Searching forpotential

underground orunderwater oil &

gas fields,exploratory well

drilling, operatingthe well to recovercrude oil & bring it

to surface

Services providedfor oil drilling &

exploration withoutgetting involved inactual oil extraction

Processing,storage, marketing& transportation ofcrude oil, naturalgas, natural gas

liquids etc.

Refers to refining of crude oil & selling anddistribution of natural gas & products derivedfrom crude oil (Petrol, Diesel, LNG etc). This

sector includes refineries, petrochemical plants,retail outlets & natural gas distribution

companies.

January 20095


Parent/ Subsidiaries/Associates/ Joint VenturesOwnership Structure

Operations in variousgeographies

Indian GAAP,US GAAPand IFRS

Multi- Currency

Multi- Platform Closing Cycles

Less time forData Analysis

Very limited linkage ofstrategies to the real execution

No controlledBusiness Process

FlowsAudit Trails

Data confidence Data Warehousing

Ineffective budgeting andforecasting process

Slow & costlybudgeting process

IT dependent

How to capture the truecost and profitability

still management wantssome different info. &that also in diff format

More time for data building

A: Oil & Gas Industry Value ChainChallenges in Budgeting, Planning & Consolidation for Oil & Gas

January 2009

Data source PM Application“Suites/Modules”

UserInterface

Unstructured Data

Structured Data

?Planning

Reporting

Consolidation

A: Oil & Gas Industry Value ChainIs our reporting structure looks like this?

January 20097


Section B

SAP Budgeting Planning & Consolidation (BPC):An Overview

January 2009

B: SAP BPC: An Overview

LOB

GRC CRM

ERP

Other

Structured Data

Unstructured Data

AdaptableUser Interfaces(Built on Web 2.0)

Web Browser

Microsoft Office

Custom Portal

Fast and AccurateFast and Accurate

BPC Reporting will look like this -

January 2009

B: SAP BPC: An OverviewWhere BPC Stands in solution to the CFO Office

Slide 9

Strategize &Prioritize

Plan &Execute

Consolidate &Monitor

Model &Optimize

Strategy Management

Business Planning

Business Consolidations

Profitability Management

January 2009

B: SAP BPC: An OverviewBPC 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 (includingIFRS)

January 2009

B: SAP BPC: An OverviewPlanning – Single solution with multi-dimensions

Operational Tasks

Bus

ines

s Pr

oces

ses

Strategic Planning

Budgeting

Periodic Close

Forecasting

PerformanceMeasurement

Com

mun

icat

ion

Col

lect

ion

Con

solid

atio

n

Ana

lysi

s &

Rep

ortin

g

Dis

tribu

tion

Supports top-down and bottomup planning leading to timely, moreaccurate plans that are aligned withstrategic goals

Facilitates collaborative planningacross all functions for more accuratebudgets

Enables continuous planning androlling forecasts to meet rapidlychanging business conditions andreduce budget cycle time

Automates the consolidationprocess, meeting all financialreporting requirements with acomplete audit trail for a fast,accurate close

Industry Specific features can beincorporated with greater flexibility

January 200912


Section C

SAP BPC:Business Benefits to Oil & Gas Industry

January 200913


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

January 200914


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-if” analysis

January 200915


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 BPC’s native Office integration to reduce training & roll-out

costs & enhance adoption- Enhanced new user productivity with minimal training owing to familiar

Microsoft Office interface

January 200916


D: Demo – Business Planning and BudgetingThe Demo

Demo – Business Planning and Budgeting

January 200917


D: Demo – Business Planning and Budgeting

Dashboard and KPIs

Controlled Data Access

Multi – version

Multi – currency

Assumptive/ Driver based

Setting of Targets

Allocation of Targets

Centrally controlledRevenue PlanningCost Planning

Data Slicing and DicingHuman Resource PlanningEntry and Approval MechanismOperational Expenditure PlanningGoing beyond the GLCapital Expenditure PlanningProject wise TrackingBalance Sheet Drivers & RollForwardsConsolidationAllocation of OverheadsReporting and Analysis

Demo Coverage

January 200918


D: Demo – Business Planning and Budgeting

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 andindustry benchmarks

Assumptions outlined

January 200919


Demo – Business Planning and Budgeting

January 200920


D: Demo – Business Planning and BudgetingBuilding 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-financialData

OrganizationHierarchy

Security Matrix

IntelligentAction Pane

Single datarepository

Managing the Comments

UnstructuredData sharing

Self ServiceReporting

January 200921


Section E

SAP BPC:Select Oil & Gas Customer Success Stories

January 200922


E: Customer Success Stories

LITASCO is a Switzerland based Trader of Crude Oil & Refined Petroleum

Challenges and Opportunities• Needed insight into the vital reporting and

analysis of the organization• Needed forward-looking capability to shape

business success and insight to identify keyperformers

• Enterprise-wide, scalable solution that enhancedthe ability to easily manage operation andfinancial requirements

Objectives• Cut reporting time• Remove reliance on spreadsheets• Enhance ability to analyze KPIs• Easy integration with existing SAP systems

Highlights• 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 theeasy-to use nature of the software meant our employees onlyrequired three days training. The implementation was so quickthat during the same month the financial reporting componentwent live, we were able to produce that month's financialreports using the new software. All in a fraction of the time itused to take.”

Laurent CorbazHead of Financial Reporting & PlanningLITASCO

January 200923



Management Cockpit…

January 200924



CockpitRoom…

January 200925



British Petroleum is into exploration & production of crude oil & natural gas, refining,marketing, supply, transportation & manufacture & marketing of petrochemicals. BPdeployed SAP BPC for Upstream Planning & Forecasting

Challenges and Opportunities for UpstreamPlanning & Forecasting• Manual processes were slow & error prone• Disparate & changing methods of forecasting• Inefficient & inconsistent management reporting

process• Needed a single, Global Financial Outlook (GFO)

Highlights• Global implementation – 700+ users, 12+ countries• Solution included Budgeting, Forecasting, Financial

Reporting & Operational Analytics

Business Benefits• Single FPM platform for all North American Upstream

BU’s• 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

January 200926



Chevron deployed SAP BPC for Upstream Planning

Challenges and Opportunities• Manual planning processes were slow & error prone• “Spreadsheet hell”• Inefficient & inconsistent management reporting

process• Inefficient planning model

Highlights• 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

January 200927


Section F

PricewaterhouseCoopers (PwC):Delivering Value to the Energy Industry

January 200928


F: PwC - Delivering Value to the Energy Industry

• PwC worldwide is largest professional services organization, helps its clients build value, manage risk and improve theirperformance. Presently PwC draws on the talents of more than 150,000 people in over 153 countries to provide a fullrange 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 acrossthe globe.

• Gartner Group endorses PwC by stating: “PwC has one of the best track records in the industry with respect totransferring methods and skills to clients”

Introduction

January 200929



• Ranked as the largest Business Consulting Firm• Serving more than 90% of Fortune 500 Energy 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

January 200930



• Articles & Publications…

Thought Leadership to propel Value Proposition

The Wealth of Nations – How well docountries’ petroleum strategies align?Read about the new dynamics of the NOC &considerations for operating in the newworld-order

Value & Growth in the liquefied natural gasmarket

As LNG is hailed as the major factor inmeeting growing energy demand, we look

into the paths to value & growth

Managing Tomorrow’s People – The future ofwork to 2020Human Resource scarcity is a critical issuealready impacting the energy industry.Explore strategies for future workforceplanning in this article

12th Annual Global CEO SurveyGet a timely & insightful picture of the

current attitudes, perceptions & expectationsof major business leaders around the world

And Many More….

January 200931



• Events & Sponsorship…

• Training & Education…

Partnerships for a holistic future

Official / Annual SponsorWorld Energy CongressWorld Petroleum CongressCERAWeekInternational Financials Reporting StandardsRoundtable Series

Energy Board SymposiumMergers & Acquisitions Roundtable SeriesEnergy Board Roundtable SeriesBoard of Director’s Collage

Thompson & Knight Global Energy Services International Petroleum Exploration & ProductionBusiness Management ProgramProgram contributor to this unique business management learning opportunity for accountingcurriculum.

Petroleum Accounting, Principles, Procedures & Issues (6th Edition)PwC in conjunction with the Professional Development Institute of the University of North Texas (PDI)published the 6th edition of this manual

January 200932


Section G

PwC India:SAP FPM Practice Highlights

January 200933


G: PwC IndiaSAP Practice Offerings

Secu

rity

Aud

it

SAP ERPImplementation

ESA frameworkImplementation

BusinessIntelligence

Dat

a M

anag

emen

t

Governance,Risk andControls

IndustrySolutions

EnterprisePortal

RFIDIntegration& Mobility

BusinessProcess

Re-engineering

Supply ChainRedesign

VersionUpgrade &Training

ProcessControls

FPMCRM,SRM,SEM

PwC India SAP Offerings

SAP Implementations

January 200934


G: PwC India - SAP FPM Practice HighlightsService Offerings

• Business Goal of FPM Practice – Provide Solutions to the CFO’s Office• Service Offerings:

PwC FPMOfferings

COSTINGProduct CostingCost Accounting StructureActivity Based CostingProfitability Analysis

PLANNING & BUDGETINGProcess Re-DesignSOP DefinitionSystem Implementation

MANAGEMENT REPORTINGReporting Frameworks

Dashboard / Scorecard Design

STRATEGY MANAGEMENTClosing the gap between

Strategy & ExecutionLEGAL & MANGEMENT

CONSOLIDATIONAnd Reporting System

Convergence

IFRS COMPLIANCEBased on SAP’s

Accelerator Toolkits andPwC's IFRS capabilities

January 200935


G: PwC India - SAP FPM Practice HighlightsPractice Strengths

Strength of Synergy: Amongst Domain Experts right from Finance, IFRS,Corporate, Regulatory, Taxation to Technology Experts

Strength of Integrated Methodology: Proven Finance PerformanceManagement 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 ITCertification by Det Norske Veritas (DNV). PwC India also accessed at CMMiMaturity Level 5Strength of Network: A Global firm with a Local Face. One of the largestManagement advisory practices in the world. Access to the global database ofBest Practices & Project Repositories

Strength of Technology: Through partnership with SAP

January 200936


G: PwC India - SAP FPM Practice HighlightsPwC’s Solution Implementation Methodology

Assess Design Construct Tune Deploy Review

January 200937


G: PwC India - SAP FPM Practice HighlightsPwC’s Solution Implementation Methodology – contd.

ImplementationStages Assess Design Construct Tune Deploy &

Review

1. FPMImplementation

Prepareinfrastructuredefine technicalrequirements

Study existingprocesses and designBest Business ProcessFlows. Design interfacesand reports

Configure andtest inDevelopmentand Integrationenvironments

Migrateconfiguration toproductionenvironment.Conduct preDeployment checks

Deploy. Addressissues.

2. DataMigration

Identify masterdata

Prepare templates.Create and check testdata. Suggest controlsand validations.

Develop andtest datamigrationprograms.

Master andtransaction dataupload.

Address issues.Sustenance plan.

3. Infrastructure

Study HW, SWrequirements.HW sizing andinstallation.

Recommend steps todefine security policy.Framework for creatingusers andauthorizations.

Create client for‘Test’. Installproductionserver.Configuretransportsystem.

Final testing andtransport. PreDeploy check.Performance check.

Legacy systemcut off.Productionsystemperformancemonitoring.

4. BenefitRealization andSustenance

Identifyprocesses,bottlenecks andCSFs.

Define performancemeasures andframework to measureit.

Standardizeprocesses.Realize KPIs.

Test changedprocesses and trainusers.

Continuousmonitoring ofprocessperformance.

January 200938


G: PwC India - SAP FPM Practice HighlightsPwC’s Solution Implementation Methodology – contd.

ImplementationStages Assess Design Construct Tune Deploy &

Review

5. ProjectManagement

Project plan,templates,procedures andstandards.Documentescalationprocedure.

Ensure deliverables andsign off.

Scope changereview. Timelydeliverable andsign off.

Prepare contingencyplan and cutoverplan.

Go Livesustenance plan.Supportprocedure andhelp desk.Manage projectclosure.

6. ChangeManagement

Identify changeagents.

Identify process andorganization structurechanges and its impact.Prepare communicationplan.

Conduct changeworkshops.Implementcommunicationplan.

Conduct changeworkshops.Implementcommunication plan.Access changereadiness.

Evaluate andmonitor change.

7. KnowledgeTransfer(Training)

FPM overview/Master data/Data migrationand data base/SQL training

Prepare trainingtemplates and manuals.Hands on training tocore team on Designing.

Core teamtraining (trainthe trainer) onactualConstruction.

End user training bytrainers.

Identify additionaltraining needs forthe end users.End user trainingon continuousbasis.

January 200939


G: PwC India - SAP FPM Practice HighlightsIndia 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-If” Analysis- Legal Consolidation- Financial Reporting- Management Consolidation & MIS- Best Practices in the area of Business Planning & Consolidation

January 200940



• 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.

• SAP FPM Assignment Scope:- Business Planning & Budgeting- Forecasting & “What-If” Analysis- Management Consolidation & MIS- Best Practices in the area of Business Planning & Consolidation

January 200941



• 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.

• SAP FPM Assignment Scope:- Strategy Management- Business Planning & Budgeting- Forecasting & “What-If” Analysis- Legal Consolidation, Management Consolidation & MIS- Financial Reporting- IFRS Implementation using SAP IFRS Tool Kit- Best Practices in the area of Business Planning & Consolidation

January 200942


G: PwC India - SAP FPM Practice HighlightsGlobal Client References

By creatingvalue in allaspects of ourclient’sbusiness withservicesranging fromstrategy toadvisory, weform a deeprelationshipwith industryleaders!!

January 2009

We Can Team Up!

© 2009 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the networkof member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independentlegal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP (US).

…THANK YOU !!

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