In the past few years, Indian gas utilities have undergone many fundamental changes, right from their operational techniques to how their services and products reach end consumers. Given that utilities are fast evolving in every aspect, it is essential to deploy solutions that can gather information from various functions, and departments of an organisation to create one large collaborative platform.
Enterprise resource planning (ERP) is one such solution that offers integration of core business management processes. It streamlines inventory and order management, accounting, human resources, customer relationship management (CRM), supply chain management, coordination between various departments in an organisation, etc. The main feature of an ERP system is that it provides a shared database that supports multiple functions used by various business units. Besides integration, ERP software also offers some degree of synchronisation in reporting and automation. In addition, ERP solutions provide a portal or a dashboard to help employees map business performance across key metrics. ERP also provides data/information on a real-time basis for quick and informed decision-making. ERP is a powerful tool for processing and organising financial data.
Need for ERP in the CGD industry
The city gas distribution (CGD) sector faces many business complexities owing to various internal and external factors. These include limited period of market exclusivity, regulated margins, capital-intensive nature of the business and the need for high uptime for pipeline infrastructure to ensure uninterrupted gas supply. Since profit margins depend on overall operational efficiency, it is important for CGD companies to deploy ERP solutions. These solutions can be beneficial for CGD utilities in many ways such as:
- Easy integration: ERP solutions can easily integrate with third-party applications in terms of cost and schedules. They help CGD companies in managing resources and overall costs, thereby assisting them in meeting their deadlines and delivering on time.
- Risk management: CGD companies can use ERP software to identify risks associated with different projects well in advance. Further, they can get complete information on the potential success of a project. The software can also be used to come up with contingency plans in case of emergencies.
- Automated report generation: In an ERP system, reports are generated in an automated template system, allowing various departments to access information seamlessly.
- Data quality: As compared to manual record keeping or other traditional methods, ERP systems help improve data quality. This results in better decision-making considering supply-demand scenarios.
- Facilitate research: Given that ERP systems are essentially a storehouse of integrated information, carrying out research related to future supply, demand projections, market analysis, pricing, procurement, etc. becomes easier.
- ERP systems can also keep track of pipeline integrity by detecting leakages and other risks.
- Real-time asset management: ERP solutions help in real-time asset management as the performance of various components of the ERP system can be optimised and their maintenance schedules automated. Regular maintenance of assets can help avoid the sudden breakdown of utilities and gas distribution infrastructure and loss of productive time. Consequently, resource planning can be performed and tight control can be administered over all resources.
- Cost control: ERP systems help track labour and overhead costs, which in turn control the production costs and improve operational efficiency. A detailed snapshot of cost components can help CGD companies manage their demand-supply scenarios efficiently.
- Monitoring daily tasks and employee performance: ERP helps manage the daily distribution of piped gas across the city, time, quantity, etc. at the click of a button.
- Reduced operational costs: ERP solutions can be deployed in a central location with remote locations connected as nodes to the central servers. This immediately reduces the capital requirements of deploying additional workers at the remote locations to accomplish any task.
- Customised view of business process: Open source ERP software and proprietary ERP solutions come with customisable front-end and back-end functionalities that can be changed to suit business requirements. Thus, CGD companies can install packages that can be tailored as per the demographics and other conditions of the area that they will be serving.
ERP adoption in the Indian context
Some CGD companies in India have already adopted ERP solutions. A brief snapshot is as follows:
- GAIL Gas Limited deployed ERP solutions using the SAP platform to meet the company’s requirements. The project was awarded to IBM in 2003. ERP has helped integrate all the functions of GAIL Gas, including product planning, development, manufacturing processes, human resources, financials, and sales and marketing.
- Indraprastha Gas Limited integrated the field equipment data with the SAP system to enable better control and reporting by implementing the Manufacturing Integration and Intelligence module. This module’s functionality has been leveraged to offer a discount to CNG customers, by implementing differential pricing based on dispenser sales data. The company undertook major transformation of its business processes by implementing state-of-the-art SAP modules for its domestic PNG business.
- Central UP Gas Limited has also implemented ERP/SAP solutions in its CGD operations. The company has implemented SAP B1, which is compatible with SAP R3. This has resulted in easy billing, creation of management information system, effective inventory management and faster query resolution.
- The Adani Group has adopted SAP for streamlining its business operations. This has resulted in many benefits such as the provision of a single-window mechanism for customers, shared services for common processes like procurement and human resource management, easy transfer and reallocation of resources across the group, and less time for billing and invoicing processes.
The successful implementation of ERP solutions is dependent upon the transition strategy, which refers to the process of shifting from a legacy system to an ERP system. Therefore, selecting the right transition strategy is critical. The successful functioning of an ERP system demands an understanding of the relationship between ERP transition strategies and processes, people and technologies. It is crucial for CGD players to implement ERP in phases. The benefits of such solutions in a CGD company outweigh the efforts involved.