Enterprise resource planning (ERP) is used as essential business management software in the city gas distribution (CGD) segment. It is a suite of integrated applications used by large enterprises to store, manage and interpret data. Due to high levels of investment and capital, and supply chain complexities, many companies in the CGD industry deploy ERP systems to effectively manage their day-to-day business. The overall process to discover, extract and deliver energy is complex and requires robust ERP software to ensure smarter project management, procurement and supplier management to improve operational efficiency, control costs and improve capital planning.
Key considerations while selecting ERP solutions
An increasingly complex and volatile business environment requires sound solutions for CGD companies seeking to mitigate risk, enhance efficiencies, and rein in costs while developing projects and managing project portfolios. An ERP system integrates information and processes of all the functional divisions of an organisation, thereby providing easy access and structured workflow.
The complete chain of processes involved in the ERP system includes manufacturing, finance, human capital, supply chain management, project management and customer relationship management.
With the growing concern for alternative energy, infrastructure concerns and increased exploration and production costs, organisations must carefully select the appropriate ERP system to understand and plan for project risks in advance using powerful cost and schedule analysis tools. Some points that need to be taken into consideration while selecting an appropriate ERP system are as follows:
- Localisation for financial accounting: Industry experts have found that the single most effective component of an ERP system is a well-developed multilingual financial suite that is capable of handling a range of legal entities for each geographic area. An ERP system for the gas industry should be capable of providing a complete costing structure to remote business users. This would include direct and overhead costs for each function in multiple languages.
- Asset management in real time: Energy companies use a wide range of machines and other critical assets in their operations. Given the breadth of such a portfolio, business leaders across the industry are looking for a more effective way to manage these assets in real time. As more sensors are built into the machines, it will become essential to capture real-time data from those sensors. Therefore, an ERP system should be configured to transmit this data to the respective systems.
- Integration: It is imperative that manufacturers and distributors adopt a service integration tool to sync data across their software ecosystem. This allows business users to share and review data from a single source in real time and provides a 360°-view of day-to-day operational costs.
Implementation strategies for ERP solutions
The successful implementation of ERP solutions depends on the strategy adopted. This strategy (also known as transition strategy) should focus on the process of transition from a legacy system to the new ERP system. For the successful execution of ERP systems, it is imperative to understand the relationship between ERP transition strategies and processes, as well as people and technologies. This, in turn, helps to understand the type or combination of types of ERP transition strategies that are best suited under different conditions.
It is imperative for CGD players to know that ERP implementation needs to be undertaken in a phased manner from the initial stage itself. Even though a CGD company may find it easier to operate without an ERP system initially, its implementation becomes necessary at a later stage.