2. Team A
2
Lucrecia Siman
Class of 2017
Management
Consulting
Political Science
Kyle McHugh
Class of 2017
Finance
Economics
Monica Barboza
Class of 2017
Management
Consulting
Portuguese
3. Team A
3
Tiphaine Delepine
Class of 2017
Finance
Elizabeth Principe
Class of 2017
Finance
Applied Math
Lake Heckaman
Class of 2017
Finance
Mathematics
5. Solving Atlas’s ERP issues will position
Atlas for future success
Atlas
Energy
(Oracle)
Alberta
Oil
(SAP)
Our
solution
Deloitte’s
Task
Standardize business processes
Enhance business continuity
Minimize change impacts
Increase operational efficiencies
Retain top talent
Cut costs
Employees : 7,000
Annual revenue : $9 billion
Region: Canada
Alberta Oil
Employees : 12,000
Annual revenue : $13 billion
Region: Canada, US Eastern
Europe and North Africa
Atlas Energy Inc
6. What is an ERP system?
ERP
Business process
management
software
Enterprise
Resource
Planning
Automation and
integration of
data
Improves
effectiveness
and
productivity
ERP modules include: HR, financials, supply chain,
manufacturing, among others
8. ERP Deployment Options
Multiple sites or geographic locations
Single Tier becomes too large and costly to
customize, maintain and upgrade
Increasing number of M&A’s
entering or leaving the organization
Two-Tier
Drivers
9. What is a two-tier ERP system?
Two-tier ERP
Corporate level ERP system
acting as global standard
Other subsidiary level ERP
systems for divisions
1
2
10. 27%
32%
48%
0%
10%
20%
30%
40%
50%
60%
2009 2010 2011
Companies considering a two-tier
strategy
Trend towards two-tier ERP
According to Constellation Research, the amount of buyers
considering two-tier ERP strategies is increasing consistently
Two-tier ERP strategies have been gaining popularity since the
2008 recession
Ventana Research found that 2/3 of companies with over 1000
employees use ERP systems from more than one vendor
11. Our solution: a two-tier ERP
Maintain Tier 1 ERP system at corporate level and continue operating multiple Tier 2
ERPs at the secondary level. This simplifies future acquisitions and sales of divisions.
Oracle Hyperion Financial
Management
Atlas Energy
(Updated
Oracle)
Alberta
(SAP)
Future
Acquisitions
Future
Acquisitions
External
reporting
Senior Management
reporting
12. 12
Many companies have already
successfully adopted two-tier strategies
Support for big
and small business
units
•Solved a $2B problem –
domestic and foreign
subdivisions were in
need of ERP
•Lower TCO, under
$100,000/year to
operate
Rapid global
expansion efforts
•140 locations
worldwide running on
different software
systems
•Streamlined
management
•Support for future
expansion
Fast growing
company
•$670 million between
2009 & 2010
•Two-tier ERP went live
in 6 months
•Plans for 26
international markets
in 3 months
14. 14
Use comprehensive suite to merge
Oracle and SAP repositories
Oracle Hyperion
Financial
Management
Close Suite
Data
Relationship
Management
Administration
tool
Patches
Hyperion
Disclosure
Management
xBRL
“Hyperion is the latest move in
our strategy to expand Oracle’s
offerings to SAP customers.”
Charles Phillips
Oracle President
16. 16
Benefits of a two-tiered solution
Minimal
Disruption
Human
Resources
Lower
overall
costs
Mergers &
Acquisitions
Trends in
Global
Economy
17. 17
Two-tier helps maintain culture and
retain top talent
Retain Atlas’ top
talent
Take care of local
issues
Maintain unique
culture of companies
18. Two-tier increases efficiency and savings
Minimal Disruption
Training only for
high-level
management
Business operations
continue and
improve
Cost Savings
Massive reduction in
training costs
Lower purchase
price
No lost revenue
19. Our solution will streamline future M&A
activities
Lower
cost
Shorter
time
Ease of
acquisition
33% reduction in implementation costs
50% decrease in full implementation time
Large-scale ERP systems cannot keep pace with
a changing environment
20. 20
Global economic trends will yield
increasing revenue streams for Atlas
Canadian
Dollar
Weakens
GDP’s
increase/stay
the same
Foreign
Countries
Import
Canadian Oil
0
5
10
15
Barrels per day (millions)
Oil imports by country United States
China
Japan
Germany
Netherlands
Canada
There will be more revenue at stake, so more is saved when
business operations are not halted
21. 21
Potential drawbacks of a two tier system
Complexity
Operating
systems from
different
manufacturers
Upkeep
Both systems
will need
periodic
updates
Industry
Precedent
First to deal
with potential
issues
22. Two-tiered solution addresses concerns
•Implementing a two-tier
ERP system is less costly
than converting all
divisions to a single
system
•The unique culture of
each division is not
compromised and
local issues are easily
resolved
•Standardizing top
management while
divisions remain
separate facilitates
future M&As
•Low-level operations
are not interrupted
while high-level
management is in
training
Disruptions
are
avoided
M&A is
prevalent
in the oil
industry
Costs are
minimized
HR remains
division-
specific
A two-tier ERP system creates standardization that promotes growth while
facilitating interaction between divisions.
26. 26The Economist, EIA
Energy Trends in the Near Future
Proven reserves
of natural gas
up by ~30
trillion cubic
feet
Consumption of
coal
Consumption of
oil
Coal preserves
Price of natural
gas
Growth
Decline
27. 27Source: Stikeman Elliott 2014 Energy M&A Trends in Canada
Canadian M&A Energy Trends
Resistance to proposed pipeline projects will
continue
Increase in consolidation and M&A of smaller
companies expected to continue in 2014
Low natural gas prices and oversupply have led
many industry leaders to sell assets
28. 28Source: IBIS
Energy Trends – Industry Overlook
To 2019, industry revenue of global oil
and gas is forecast to grow at an
annualized rate of 4.3% to $5.6 trillion
A steady increase in price of energy
production is expected, as the world
economy recovers from recession
Industry employment is projected to
increase over next 5 years, a sign of
positive growth
30. Areas for growth
Development of midstream
infrastructure
Crucial for efficient delivery of
growing supplies to markets
Atlas Pipeline Partners
Leading MLP operating 14 plants
Increasing global demand for oil and natural gas
Global oil consumption grew by 1.4%
in 2014
US natural gas consumption grew by
2.4% (larger than the global increase
of 1.4%)
Global oil production
increased by .6%
Global natural gas production
increased by 1.1%
BP, The Energy Collective, INGAA Foundation
Energy Trends
31. 31
Oil production is growing rapidly in
North America
2012 2015 2020 2025 2030 2035
North America 0% 16% 30% 33% 35% 37%
Europe & Eurasia 0% 0% -2% -4% -6% -5%
Africa 0% -3% 5% 4% 3% 4%
-10%
0%
10%
20%
30%
40%
Oil Production Projection
North America Europe & Eurasia Africa
New deposits
found in Canada
37 % growth by
203
High growth
investments
32. 32Bp.com
Africa is the next big thing in natural
gas
0%
20%
40%
60%
80%
100%
120%
140%
160%
2012 2015 2020 2025 2030 2035
Natural Gas Production Projection
North America Europe & Eurasia Africa
Drawbacks
• Lack of
infrastructure
and stability
Highlights
• Africa shows
over 140%
growth by 2035
Conclusion
• If infrastructure can be
secured, investment
recommended
33. Share of Total Oil Consumption 2013
Source: http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-
25%
7%
21%9%
4%
34%
Consumption
North America
South & Central America
Europe & Eurasia
Middle East
Africa
Asia Pacific
34. Share of Total Oil Production 2013
Source: http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-
19%
9%
20%
32%
10%
10%
Production
North America
South & Central America
Europe & Eurasia
Middle East
Africa
Asia Pacific
37. 37http://www.srr.com/article/trends-and-challenges-oil-and-gas-industry
Oil and Gas Industry New Technologies
Focus on
developing
technological
solutions,
increasing
the world’s
producible
reserves.
Development of the Subsea Oilfields
Moving processing to the ocean floor reduces
infrastructure costs and production costs, greatly
improving return on investment.
The Shale Play
Exploitation of shale basins using hydraulic fracturing
and horizontal drilling techniques has increased U.S.
crude output.
Enhanced Oil Recovery
Boosting oil recovery could unlock around 300 billion
barrels of oil, reducing the risk and the infrastructure
cost.
38. 38International Journal of Production Economics, An AHP-based approach to ERP System selection, Wei, 2004
Components of Enterprise Resource
Planning
Human Resource
Management
Customer
Relationship
Management
Manufacturing
Resource
Planning
Supply Chain
Management
Financial
Resource
Management
• Cloud Data Storage
• Social Media
• Mobile Accessibility
• Two-Tier
Trending
Towards
39. ERP Global Advantage
Integrated ERP systems allow access to real time data and the
ability to standardize metrics to find inefficiencies faster and
easier
Integration of Supply Chains with ERP allows Atlas to see
where their inventory is throughout the entire supply chain
(allows for planning and resupply more quickly)
Connecting to cloud computing ERP services would allow global
connection throughout company, reducing necessity for the same
job roles in differing location (allows a reduction in employees)
40. 40
Comparing Oracle and SAP ERP systems
Oracle
•Low market
share
•Need more
through
vetting
SAP
•Customization
cumbersome
•High personnel
requirement
90% of users realize ROI in
5 years
Software is trending
towards cloud and big
data
Projects have a larger
scope and scale
Moving toward increased IT
capabilities
41. 41http://www.futurismtechnologies.com/blog/benefits-erp-software-energy-oil-gas-industries/
Competitiveness through ERP
Oil and gas
exploration and
production is an
extremely
expensive
enterprise.
ERP
Easy
integration:
costs and
schedules
Risk
management:
contingency
plans
Efficient project
management:
within the
budget and on
time
Simplification of
large projects:
like joint
ventures and
international
Provides
assistance in
new employee
training: critical
and technical
To reduce this
heavy burden, a
variety of
methods are used
to improve
management of
oil and gas
production.
42. 42
Instillation of High-Level System
A high level system allows for vital operations to be
integrated, while day-to-day operations are fully functional
How
Does it
Work?
Companies essentially act as independent
and separate entities
Maintain current ERP systems while
making necessary upgrades and patches
Use the high-level system to manage vital
operations like accounting software,
financial systems, and production planning
43. 43Source: http://www.eia.gov/todayinenergy/detail.cfm?id=15251
Need for Minimal Disruption
With low volatility, North American oil is primed for high
sales, meaning minimal disruption is a must
Atlas Net daily production of 261.3
million equivalents per day (6%
increase over 2014 Q1)
33% Increase in Q2 to 2,100 barrels
per day
20% increase in production capacity
Alberta Strong economic growth with an
expected trend of 3% growth
Massive spending on oil sands projects
is now translating into sharply higher
production and exports
With more takeaway capacity (given
by Atlas) Alberta can raise prices and
turn a higher profit margin
Editor's Notes
Still needs to be updated
Add profit margin to not confused canadian vs USD
Business process management software
Automation and integration of data
Improves effectiveness and productivity
Organizations keep their existing Tier-1 ERP systems at the corporate level while allowing divisions or business units to select a second ERP system.
**EXPLAIN DIFFERENCE BETWEEN TWO-TIER AND TIER 2
Maybe move to the appendix
We are keeping both ERP systems, but will identify the core (primary) system that will be used to consolidate the financials and other key elements into. The other ERP system stays in place as a secondary and information is fed periodically from the secondary system to the primary system. We chose Oracle as the core/primary based on our analysis of the two systems and companies.
The financials will all be flowing though the Oracle Hyperion Financial Management system. For HR, we will currently keep the modules as is within each company allowing them to each fit their specific needs and clients. In the short term, we will do reporting in a reporting database and ensure that information is formatted in a standardized way, but in the long term we will move HR to a cloud-based system called WorkDay that many divisionalized companies (such as Danaher and Trimble) are adopting. With other operations and modules, we will continue running them as they are, but continually asses them and determine the best decisions from there.
Land O Lakes
http://searchcio.techtarget.com/news/2240175465/Multi-vendor-ERP-strategy-fixes-2-billion-problem
Qualcomm
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Key-Questions-Executive-Ask-About-Cloud-Computing-ERP.pdf
Groupon Source: http://www.zdnet.com/blog/btl/netsuite-steps-up-large-enterprise-push-lands-qualcomm-groupon-partners-with-accenture/48496
http://www.netsuiteblogs.com/can-erp-keep-up-with-the-speed-of-business
Step 1: Establish the Oracle Consolidation Module, may need to create separation if Atlas already has it
Step 2: Map data to seamlessly transfer from SAP module to the consolidation module
Step 3: Update the outdated Oracle ERP system in Atlas
Oracle.com
Oracle.com
Oracle.com
Oracle.com; panorama-consulting.com
Plan integration of newly merged company (Alberta Oil)
Reducing Costs
Increased Operational Efficiency
Retaining Top Talent
Time Efficient
Eliminates chances of user error
Servicing of local needs
Compliance for a specific product or for a different country
Simplicity when buying and selling companies
Parameterized configuration simplifies any necessary customization
No need for training acquisition with new system implementation
Minimal disruption
Cost Savings
Person-days used instead to generate revenue
Leverages existing systems
Reduces installation and maintenance efforts for IT
Eliminates need for complex and costly integrations
Improves companies' ability to negotiate better licensing terms
Intuitive user interface minimizes training costs
Business operations continue, no lost revenue
Sources: Gartner Research; http://na.sage.com/~/media/category/sna/assets/lp/sagebusinessknows/Documents/resources/Sage_ERP_Two_Tier_Strategy.pdf; http://www.erpsoftwareblog.com/; http://blog.softwareinsider.org
Plan integration of newly merged company (Alberta Oil)
Reducing Costs
Increased Operational Efficiency
Retaining Top Talent
Time Efficient
Eliminates chances of user error
Servicing of local needs
Compliance for a specific product or for a different country
Simplicity when buying and selling companies
Parameterized configuration simplifies any necessary customization
No need for training acquisition with new system implementation
Minimal disruption
Cost Savings
Person-days used instead to generate revenue
Leverages existing systems
Reduces installation and maintenance efforts for IT
Eliminates need for complex and costly integrations
Improves companies' ability to negotiate better licensing terms
Intuitive user interface minimizes training costs
Business operations continue, no lost revenue
Sources: Gartner Research; http://na.sage.com/~/media/category/sna/assets/lp/sagebusinessknows/Documents/resources/Sage_ERP_Two_Tier_Strategy.pdf; http://www.erpsoftwareblog.com/; http://blog.softwareinsider.org
Minimal disruption: Two-tier ERP minimizes disruptions to lower level operations
HR: only top level management
Costs:
M&A: Standardizing top management while divisions remain separate facilitates future M&As
http://www.eia.gov/countries/country-data.cfm?fips=US
Although consumption fo coal is increasing, the preserves are decreasing, leaving natural gas a stronger option.
In the global energy industry, the “shale revolution: has had a significant impact on both the US and Canadian market. Unfortunately, there has been great resistance to pipeline projects in Canada that would be necessary in order to access refineries and expand into new markets that is setting the country behind the US. After the great increase of global energy mergers and acquisitions in 2012, there was a decline in those that occurred globally, as companies chose to focus on their current assets instead of acquiring new ones. Despite this overall global trend of a decline in M&A, there was an overall increase in company consolidation and M&A of smaller energy companies in Canada, which is a trend that is expected to continue in 2014. This upward trend for Canadian energy M&A is particularly surprising as many industry leaders have sold their natural gas assets due to low prices and an oversupply for the market, leading to even greater market overcrowding. While large industry leaders are turning towards light oil, there is still a market for M&A despite the overcrowding that has been occurring.
http://www.eia.gov/consumption/manufacturing/reports/2010/ng_cost/
Highlights decrease of natural gas prices
Pharmacy networks allow the PBM to cut the cost of prescriptions by getting basically “group discounts” on drugs. Plan design is how the PBM sets up your given plan for prescription drugs so that each individual person will have the best financial plan for them. Electronic prescribing gives the clinical professionals lots of information that they can use to better prescribe things to patients and therefore stem costs before they can get out of hand. PBM’s can get their uninsured clients the same price as the insured clients using a pharmacy discount card, to help them out as much as possible. This is due to the large amount of clientele that they can bring in.
http://www.ey.com/GL/en/Industries/Oil---Gas: EY Oil and Gas trends
Oil and gas companies have seen significant increases in drilling, service, production and operating costs over the past decade. More complex operations generally mean more costly operations.
The most common initiatives for companies were to optimize processes and embed controls. Typically, companies in the oil and gas sector seeking to contain costs will focus heavily on third-party spend, headcount, shared services, IT efficiencies and outsourcing.
WORKFORCE CHALLENGES
The oil and gas industry is facing a shrinking talent pool for those with specialized expertise. A large percentage of the individuals who have the institutional and technological “know-how” of their organization’s specific risks and operations are looking toward retirement. Nearly 90 percent of senior human resources executives at 22 top international oil and gas companies believe this problem is one of the top business issues facing their companies1.
ERP is a business management software that a company can use to collect, store, manage and interpret data from various business activities
Five Challenges With ERP Implementations in the Oil and Gas Industry: http://panorama-consulting.com/five-challenges-with-erp-implementations-in-the-oil-and-gas-industry/
