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ERG Group: First in Italy with mySAP® IS-OIL Solutions

ERG is Italy's largest independent Italian Group in the Energy and Petroleum sector, the most important Italian exporter of petroleum products (mainly gasoil and petrol) and the first in Italy to implement mySAP IS-Oil solutions.

Oil is the most heavily traded commodity worldwide. Every major integrated oil company produces, stores, transports trades, blends and markets oil products around the world. through vast networks of outlets. ERG is Italy’s largest independent Italian Group in the Energy and Petroleum sector, the most important Italian exporter of petroleum products (mainly gasoil and petrol) and the first in Italy to implement mySAP IS-Oil solutions.

Capgemini took ERG through three projects, from Business Process Reengineering to implementation of IS-Oil components and Business Warehouse. The system is interfaced with GEIS (General Electric Information Services) that allow ERG to receive during the night all the stock movement (purchases) made among the other subscribing oil companies. ERG has now moved to a fully integrated system that is ready for future expansion as the business grows.

Client Profile

ERG is the largest independent Italian group in the energy and petroleum sectors that is quoted on the Italian Stock Exchange. It is active in the processing of crude oil, in the distribution of petroleum products and production of electrical power. Today it accounts for 22% of the Italian refining capacity and it is the second operator in Italy in the sector. ERG sales, in the domestic market, account for 9% of the national oil products consumption. ERG has 2246 employees.

ERG is the most important Italian exporter of petroleum products (mainly gasoil and petrol) ERG Petroli’s main activities are logistics and marketing in the domestic market. The ERG logistics system is one of the most extensive in Italy and it is strategically positioned to allow the distribution of petroleum products throughout the country. ERG Petroli distributes oil products throughout Italy via its 2,032 outlets which account for 7% of the national market. Besides this ERG Petroli also sells in the wholesale market, petrol, gasoil, fuel oil, bitumen and GPL through a network of wholesalers both in Italy and Switzerland. ERG Petroli, also supplies other petroleum companies operating throughout the country with products.

Through ERG Petroleos (wholly owned by ERG Petroli) ERG Petroli is, also, active in the retail and wholesale market in Spain.

ERG develops and manages its activities for the production and sale of electricity through ERG Power & Gas (owned 100% by ERG).

Business Issues

ERG’s aim is to be first on the market with new innovations, winning an advantage over the competition. ERG was growing rapidly and needed to standardise all business processes across Italy. Outdated mainframe and disparate software platforms in place were lacking scaleability. ERG’s attention was focussed on

• creating one common system, company-wide for Italy enabling all locations to operate in harmony
• maximising shareholder value by increasing cash flow, employing capital efficiently and stabilising earnings
• becoming a multi-energy company, widening the portfolio of products traded and produced in Refining, Marketing and Logistics, Power and Gas.

Solution

Project 1: Business Process Reengineering

A vital step before implementing an ERP package is conducting thorough business planning. Executive management at ERG was in complete agreement with this approach. Capgemini defined an Enterprise Model for ERG - ‘mega process’ and ‘major processes’ comprised:

• strategic planning
• network optimisation
• market scenarios
• supply and refining
• operation to production
• distribution
• retail infrastructure
• non-retail sales
• business infrastructure.

For each of these processes, Capgemini defined and examined ERG’s operating procedures for people, processes and technology before selecting mySAP® Oil & Gas, component IS-Oil.

Project 2: mySAP Implementation

ERG was the first oil and gas group in Italy to implement SAP IS-Oil

The Exchange & Throughput Handling modules for Supply within in IS-Oil support the core business functions of ERG. Capgemini upgraded to 4.6b release modules and implemented new modules euro Conversion, Service Station Retailing, Fleet and Credit Card, Franchising, Real Estate. The non-oil mySAP R/3 modules in place at ERG were FI, CO, MM, PM, PS.

ERG decided to manage directly its more important service stations (approx. 40). In order to do this, ERG created two companies as new businesses. For these, Capgemini implemented modules FI, CO, MM and the SAP interfaces to take information directly from the field (Pump Sales Meter Data and Retail Shop Cash Registers).

Capgemini interfaced the ERG SAP system with GEIS (General Electric Insformation Services) to exchange the Bill of Loads with the other Italian oil companies. This allows ERG to receive during the night all the stock movement (purchases) made among the other subscribing oil companies and permits visibility on information with an updated bill of load. This is the only world-wide area network that allows oil companies to balance their exchanges.

Project 3: SAP Business Warehouse (BW)

Capgemini received the first customer shipment of BW in the world for versions R2.0A and BC Is-OIL. This project, for ERG included Data Modules SD MM for Oil (Wet Stock), MM (non Oil - Dry Stock), PM, PS, SSR (Service Station Retailing).

Benefits

ERG benefits from the SAP and Capgemini Strategic Global Alliance partnership offering:

• geographic reach - able to provide customer intimacy with local operations in multiple geographies
• global sourcing, skills and competencies (onshore, nearshore and offshore)
• sector knowledge - an Oil & Gas Center of Expertise (CoE) is a community of consultants using industry-specific process scenarios and providing helpdesk facilities and access to specialized SAP consultants.

The SAP IS-Oil solution was the first industry solution installed at the Capgemini

Center for Connected SAP Solutions (CCSS). The CCSS provides training & demonstration support in Walldorf, Germany as well as in other European Capgemini offices.

ERG has now moved to a fully integrated system that is ready for future expansion as the business grows.

The system offers ERG more focus on its market, efficient customer handling and improved reporting and information management.

Written in co-operation with ERG GROUP