Project Manthan

By
Abhishek Saini(151104)
Lovish Garg
Saumya Dutta
Majumder(151349)
Gunpreet Chugh

Public Sector Undertakings and

Deregulation
1950s and 1960s saw the emergence of several Indian Public Sector
Undertakings.
Govt. regulations and Public sector Units were a necessity for the nation as core
industries called for sizable investments.
But Govt. began to disinvest in these PSUs low productivity, unsatisfactory
quality of goods, excessive manpower utilization, inadequate human resource
development and rate of return on capital.
Private ownership was allowed in nearly every sector.

Oil Industry Deregulation

Since 1976 , oil industry operated under govt. controlled APM for petroleum
products.
It ensured fixed level of profitability for govt. owned oil companies.
Also ensured oil product such as kerosene, diesel etc. were protected from the
international price fluctuations.
In 1995 it was recommended that by 2002 complete deregulation of Indias oil
industry would be done.
Now oil industry moved from the APM to market determining price situations.

Indian Oil Corporation Ltd

Incorporated in 1959 as Indian Oil Company Ltd.
Merged with Indian Refineries Ltd. in 1964.
It emerged as Indias largest commercial undertaking.
In the business of refining, transporting and marketing petroleum products.
Ranked 191 in 2002 in the List of fortune 500 companies. Only Indian Company
in that list.
IOCL had divisional structure. Marketing division was responsible for sales and
distribution.
Refineries division operated the countrys 7 out the 18 refineries.
R&D division was engaged in research on lubricants , refinery process and
pipeline transportation.

Information technology at IOCL

Outdated electronic data processing was replaced by Personal Computers in 1986. They
were opposed by unions as replacement of workers. In 1992 ,IOCL employed Mainframe
Computers.
The main focus was mainly on financial systems, payroll and sales stats.
Legacy softwares were developed like TDM( terminal documentation
module),PDM(plant documentation module) for marketing department.
FMS(Financial management system), MMS(material management system) and the online
maintenance and inspection system(OMNIS)
There was no standardisation in local and wide area networks.
Scattered information across different legacy systems which were designed to meet
specific demands.
Lack of standardisation and technological gaps along with Y2K bug were among the
chief issues.

Project MANTHAN
Introduced to integrate the organisation using IT systems.
Workshops were conducted by the functional experts to gather knowledge.
Scope and objectives were decided by core group on basis of collective knowledge.
Synergy was to be created through upgrade of hardware, use of a common platform,
integration of all functional modules and open architecture.
Optimization and information analysis would cause a substantial savings to IOCL as
calculated by cost benefit equation.
Price Waterhouse associates was selected for task of implementing ERP across IOCL
in 29 months.
PWC submitted the CTP with some recommendations:
Implementation of suitable ERP software , add on software packages, installation and
commissioning of a robust communication network , installation and commissioning
of appropriate hardware and transition management.

Project MANTHAN
70 people were selected from various functional units of all the divisions to form the
core team.
SAP R/3 was selected in October 1999.
A huge extensive telecommunications network was required for new centralized
approach.
A multitiered approach was required for implementing a single bandwidth network.
Four stages were decided for project completion as conceptual design, detailed
design, construction and implementation.
Some challenges faced by organization are:
Many add-ons were very new and had never been implemented in India.
Little experience with computers among employees.

The Dilemma
The three-tier ERP architecture made challenging to identify where the
bottleneck was
The SAP application
The database server
Way of database implementation
Communications bandwidth constraints
No direct control over causal factors like communications bandwidth.
The end-users were growing discontent with the poor response time.

The Options
Continue with the implementation and simultaneously resolve issues
Core team displayed considerable enthusiasm
Eight year of implementation pressure from the top management
Competitors in advanced stages of their ERP implementation
Stop the implementation till the response time issue is resolved
This was an unexpected problem
Poor response times were jeopardizing the operations
Will have to come up with a plan to get the implementation back on track

Complexity of the problem solving

Design team may have underestimated the technological requirements such as
server size and bandwidth.
Variety of vendors.
VSAT network Department of Telecommunications, with the help of HCL
Comnet
Leased lines Bharat Sanchar Nigam Limited
Servers for production systems HP India
Database Vendor Oracle India
ERP supplier SAP
Project consultant - PwC

The Future Course

Puri was asked for recommendations on the job profiles of the IS department
and its personnel.
With implementation of SAP R/3, IS personnels roles and responsibilities will
change.
IS personnel had to be retrained so that phase II can be completed without
external consultants.
Uncertain on how the divisions will respond to giving up there is personnel.

Audit after ERP implementation

(http://www.intosaiitaudit.org/hosted_externa
l_publications/India_1IOCL.pdf)
The Company could not develop adequate in-house expertise even after
implementation of 99 sites as per their plan. The rollout beyond 99 sites was assigned
to five outside consultants entailing an additional and avoidable expenditure of
Rs.9.56 crore.
An exclusive Committee to monitor all aspects of Manthan was absent for most part
of the project.
Heavy reliance was placed on the consultant firm.
Non-synchronisation of various phases of project resulted in a delay of over two
years from September 2002 to November 2004.