Oil and Gas Industry Spotlight: A Conceptual Look at How to Apply SAP BusinessObjects Planning and Consolidation to Upstream Operations

  • by Dr. Marco Sisfontes-Monge, Managing Partner, Arellius Enterprises, Inc.
  • July 6, 2010
Despite the complexities of the oil and gas industry, SAP BusinessObjects Planning and Consolidation can deliver a simplified environment that handles both planning and consolidation needs. You can base consolidations on period or calendar, and planning via reusing dimensions, reports, processes, and pre-delivered content to simplify your reporting environment.
Key Concept
The upstream operations of an oil and gas company, namely production and exploration activities, must be considered in your implementation of SAP BusinessObjects Planning and Consolidation. The implementation challenges not only reside in the development of reports but in balancing the new flexibility available in this environment and the development of a standard design. Using SAP BusinessObjects Planning and Consolidation in an upstream environment not only simplifies having multiple legal reporting formats with the same data, but also allows you to easily manage adjustments in multiple currencies.

It is not a secret that the oil and gas industry is a challenging environment. Its complexity and volume of financial transactions require a robust and flexible platform to perform financial reporting, consolidation, planning, and budgeting processes. In addition, the complexity of working in different areas of the world requires multiple legal reporting considerations such as US Generally Accepted Accounting Practices (GAAP), International Financial Reporting Standards (IFRS), local GAAPs, joint ventures (JV), mergers and acquisitions (M&A), royalty management, and private equity investments, among others.

For all these reasons, the implementation of a global or corporate platform that can accommodate all the financial needs required to manage commodities makes this effort extremely challenging. I will discuss how the general requirements of an oil and gas company are delivered with the functionality available in SAP BusinessObjects Planning and Consolidation. Initially, I’ll define a general framework of SAP BusinessObjects Planning and Consolidation and why it is important. Then I’ll identify some standard reporting needs of the oil and gas industry for upstream operations, and finally I’ll explore the processes that SAP BusinessObjects Planning and Consolidation can support based on its current reporting and consolidation capabilities.

While I’m focusing on the oil and gas industry, much of the article can be applied to other industries, especially those that are capital- and labor-intensive such as construction, mining, chemicals, and retail.

Finally, it is important to mention that the successful implementation of SAP BusinessObjects Planning and Consolidation depends not only on technology but also on the business and engineering knowledge of the implementation team. Thus, the implementation team must be able to design, for example, a consolidation environment common to all regions of the world, tax jurisdictions, GAAP, consolidation structure, currencies, and others, without losing the ability of easy reporting and comparison between regions, business units, and companies based on legal and regulatory requirements.

Dr. Marco Sisfontes-Monge

Dr. Marco Sisfontes-Monge is managing partner of Arellius Enterprises based in New York City and for more than 15 years has supported SAP implementers, direct clients, and other customers in Europe, North America, Latin America, Asia, and Africa in the following industries automotive, insurance, pharmaceutical, logistics, software, utilities, chemical, oil and gas, exploration and natural resources, discrete and process manufacturing, retail, and financial services. His background includes project management and performance measurement, product- and activity-based costing, design optimization, discrete and process simulation, system dynamics, and structural equations modeling. He also has finance specializations from the London Business School and Said Business School from Oxford University. He wrote the SAP PRESS books CPM and Balanced Scorecard with SAP, Controlling-Profitability Analysis (CO-PA) with SAP, Implementing SAP Business Objects Planning and Consolidation (SAP BPC): Volume I: Foundations, and Implementing SAP BusinessObjects Planning and Consolidation (SAP BPC) Volume 2: Advanced Concepts.

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