Technology-Enabled Cultural Transformation: Fostering ... · implementing leading-edge information...

Thought Leadership Series

Technology-Enabled Cultural Transformation: Fostering Citizen Centricity in a Government MonopsonySui Southern Gas Company Limited (SSGC)January 2010

Table of Contents Executive Overview

Introduction: Using Technology to Create a Customer-Centric Focus

Citizen Centricity: Key to Growth and Effectiveness in Public Sector Organizations

Pakistan’s Power Sector: An Industry in Transition

Sui Southern Gas Company: Citizen Centricity in Action

SSGC’s Business and Operating Challenges

Designing a Technology-Enabled Solution

The Solution

Benefits of the Oracle Solution

Key Success Factors

Conclusion: Change Management Powered by Technology

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Governments today are under extreme pressure to deliver more for less. Many public sector entities are adopting “citizen-centric” strategies for developing and delivering services that mirror the customer focus and financial-success metrics typically reserved for private commercial enterprises. Pakistan’s Sui Southern Gas Company did just this, by implementing leading-edge information technology that enabled it to change its culture from a traditional government monopoly in a monopsonistic market to one that swiftly took advantage of new opportunities for innovation and efficiency. Sui Southern Gas Company selected Oracle as its technology partner to support its vision and drive its transformation into a citizen-centric and financially self-sustaining organization that serves as a model for other public sector entities around the world.

Executive Overview

SSGC’s Vision

To be a model utility, providing quality service by maintaining a high level of

ethical and professional standards and through the optimum use of resources.

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SSGC’s Mission Statement

To meet the energy requirements

of customers through a reliable,

environmentally friendly, and

sustainable supply of natural gas,

while conducting company busi-

ness professionally, efficiently,

ethically, and with responsibility

to all our stakeholders, the

community, and the nation.

Introduction: Using Technology to Create a Customer-Centric Focus

In 2001, Sui Southern Gas Company (SSGC), Pakistan’s leading integrated gas company, embarked on a campaign to upgrade its systems. Its goal was to use technology as a strategic business tool to more efficiently and cost-effectively deliver gas to its almost 2 million customers. Aligning its business vision with a technology solution would not only help SSGC improve efficiency and reduce costs, but would also enable the company to adopt a more customer-oriented service culture, as well as recognize and capitalize on emerging opportunities.

Under the leadership of Munawar Baseer Ahmad, who was managing director at the time, SSGC was able to successfully

• Create a customer-centric culture

• Adopt best practices for running the organization as a financially viable business

• Enhance productivity and efficiency

• Improve the quality of services provided to customers

• Set, track, and meet performance targets

• Reduce costs, theft, and wastage

• Achieve global benchmarks of performance

SSGC’s strategy was grounded in a number of goals set by the organization’s senior management. They wanted to adopt and refine best-in-class processes by designing, developing, and deploying leading-edge technologies. In the process, SSGC hoped to motivate, train, and adapt its workforce to align with the organization’s new customer-centric vision and strategy.

By implementing a full suite of Oracle Applications and taking advantage of the training and support services offered by Oracle, SSGC was able to adopt best practices and transform into a citizen-centric and financially self-sustaining organization.

“Oracle was the outstanding choice in [our] three criteria [usability, level

of support, and implementation road map]. The Oracle E-Business Suite

applications integrated every aspect of our operations, making it much easier

for us to assess our performance across the organization. The software was

also easy to use, which ensured it was readily accepted by users.”

Munawar Baseer Ahmed, Managing Director, SSGC

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“Oracle not only provided an outstanding business management platform

but helped us re-engineer our business processes according to best practice

guidelines. The advice given by the Oracle team was extremely valuable in

assisting us to develop a business and technical framework for the future.”

Azim Iqbal, Senior General Manager, Customer Services, SSGC

Citizen Centricity: Key to Growth and Effectiveness in Public Sector Organizations

Governments have long had reputations for providing less-than-stellar customer service. Their “one-size-fits-all” approach to operations has created a dubious legacy of delivering substandard service quality to constituents. Citizen centricity at its most fundamental level addresses this, by driving governments to shift from their current overwhelmingly institution-centered views to citizen-focused ones. In commercial business language, this involves putting the customer first, where the customer is the citizen or business attempting to gain access to the public service.

Citizen Centricity: Putting the Customer First

Source: Department of Finance of Administration, Government of Australia

Public sector organizations can accomplish this by accumulating customer knowledge. With a complete, current, and detailed history of each customer interaction, public service agencies can put processes in place to ensure that their customers’ needs are better met in the future. In addition to boosting the quality of existing products and services, this frequently allows governments to offer a broader array of services and access options to their citizens.

The Expectations

Several factors drive governments to move toward customer centricity. In particular, increased broadband penetration, coupled with the growth of commercial services that leverage the

Citizens required to understand and respond to the complexities of government agency Citizens see a single accessible, responsive government

Citizens Citizens

Agency

INTERGRATION

I N T E G R A T I O N

CHANNEL CHANN

EL

CH

A

N N E L C H A N NE L

INTERFACE

I N T E R F A C E

Agency

Agency Agency

Agency Agency

Agency Agency

B E F O R E A F T E R

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1 The Gov3 Foundation, survey of government CIOs, July–Aug 2005.2 British Council, Info@UK quarterly newsletter, March 2007.

“SSGC is one of 16 utility companies in Pakistan, but we are the only one with

a comprehensive, integrated business management platform, and workflows

that adhere to global best-practice standards. This modern framework will

put us several steps ahead of our competitors in southern Pakistan, where

we have most of our operations, and put us in good stead for expansion

throughout the country.”

Irfan Zafar, General Manager, Technology Innovation, Oracle-Enabled Business Transformation, SSGC

internet, has raised users’ quality-of-service expectations. With expanded choices of how, when, and where they can access services in the commercial sector, citizens are pressuring public organizations to provide the same capabilities.

The Challenges

This presents a financial challenge for governments, particularly in developing economies where raising taxes is not a viable option. Indeed, to accomplish these goals, governments must dramatically improve productivity to provide higher service levels, while keeping operating costs contained.

Complicating this further, public sector entities in many developing countries are expected to deploy employment strategies that maximize social welfare. For example, a public agency might be expected to hire citizens who would otherwise be unemployed, or to use employment as a way to support the nationalization of an industry. As a result, many government organizations often need to employ less-skilled workers.

This raises a number of critical questions: How can government make public sector organizations as efficient as commercial enterprises? What is the best strategy for attracting and retaining the best talent? How can such entities improve the skills of less-skilled employees—who are also citizens, and therefore, consumers of public services?

The Solutions

By adopting a customer-centric operating model, the public sector has the opportunity to leverage the benefits of world-class processes and technology. In the process, it can deliver significant benefits to users of government services,1 including improved choices and enhanced convenience, personalization, and integration.

Customer centricity also benefits governments—and, by extension, taxpayers2—by reducing the costs of delivering services, meeting public-policy objectives, and building a stronger sense of trust and confidence in the ability of the government to serve citizens.

Pakistan’s Power Sector: An Industry in Transition

Pakistan’s power industry has had an unsettled history. In recent years particularly, demand has rapidly outstripped supply, but attempts to increase the generation capacity of the Water and Power Development Authority (WAPDA) have been ineffective. Additionally, “demand suppression” and a high tariff policy were causing theft to proliferate.

In 1998, Pakistan created the National Transmission and Dispatch Company (NTDC) to spearhead a new order for the Pakistani power sector. As the single buyer of electricity generated by all of the independent power producers (IPPs) and, ultimately, the single supplier to all distribution companies (DISCOs), NTDC is responsible for effective and economical transmission of electricity from producers to distribution companies. It also plays a key role in the government’s efforts to meet the country’s growing demand for energy.

Eight DISCOs were established in 1998 to serve the then-11.3 million customers of WAPDA, with an annual billing estimated at approximately 135 billion Pakistan rupees (US$2.2 billion). Some of the key issues in future expansions of DISCOs included rural electrification and providing subsidies to targeted groups of customers.

In 1999, the Pakistan Electric Power Company (PEPCO) was set up and entrusted with the task of making WAPDA more commercially viable. This included restructuring WAPDA to emulate utility models used in the United Kingdom and the United States, deregulating the power sector, privatizing select corporate entities, and promoting IPPs.

Most governments recognize that affordable energy is key to sustainable economic growth. Among other advantages, it opens up opportunities for a healthy and satisfying life and facilitates citizen access to adequate nutrition, employment, mobility, and education. Countries with lower energy-consumption rates tend to experience reduced economic opportunities and higher poverty rates; per capita energy consumption in Pakistan is still very low when compared with other developing countries. Specifically, while natural-gas consumption in Pakistan is steadily increasing3—the total annual energy consumption per capita in kilograms of oil equivalent (kgoe) rose from 392 kgoe in 1990 to 444 kgoe in 20004—it is still low in comparison to other countries, leading to concerns that Pakistan could lose ground in the global marketplace.

“We are now manufacturing up to 450,000 gas meters a year under our agree-

ment with Actaris, compared to 300,000 meters before. Greater insight into

stock levels helps us make more-economical use of resources and reduce

inventory costs. More-organized production scheduling, warehousing, and

distribution will also lower costs as we progress further.”


3 BP, BP Statistical Review of World Energy 2007.4 Food and Agriculture Organization (FAO), International Energy Agency (IEA), Population Division of the

Department of Economic and Social Affairs of the United Nations Secretariat, World Bank.

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Sui Southern Gas Company: Citizen Centricity in Action

SSGC has an exclusive distribution and sales license in Pakistan’s Sindh and Balochistan provinces. Its distribution system extends from Sui in Balochistan to Karachi in Sindh and comprises more than 3,000 kilometers of high-pressure pipeline. The distribution network covers more than 120 towns and villages in the Sindh and Balochistan provinces through a distribution network of more than 30,000 kilometers.

SSGC History

SSGC in its present form was created on March 30, 1989, following a series of mergers of three pioneering energy companies: Sui Gas Transmission Company, Karachi Gas Company, and Indus Gas Company. Organized into regional offices, SSGC also owns and operates the only gas-meter manufacturing plant in the country, under an agreement with Actaris (a former division of Schlumberger). Today, SSGC’s infrastructure supports nearly 2 million customers. Domestic consumers comprise the overwhelming majority of those users (98.8 percent), with commercial (1.1 percent) and industrial (0.2 percent) customers representing very small segments of its constituency.

SSGC Business Strategy

SSGC’s core business is to buy natural gas in bulk from exploration and production companies, forward it to “load centers” using a high-pressure transmission system, and distribute and sell it to consumers and businesses through its supply network. In addition to being a monopoly for the region, SSGC is also a monopsony, as it is the sole buyer of natural gas from a wide range of suppliers. Although, for this reason, the organization possesses near-absolute market power, it nevertheless decided to strive to dramatically improve customer satisfaction by providing superior service and a high-quality product at affordable prices.

SSGC forged a business strategy with two equally important and interrelated goals: to foster citizen centricity while achieving profitability. The stakes were high, as creating a customer-focused and economically viable independent energy business was perceived as directly impacting Pakistan’s ability to compete in global markets.

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“We are now manufacturing up to 600,000 gas meters a year under our

agreement with Actaris, compared to 300,000 meters before. Greater

insight into stock levels helped us make more-economical use of resources

and reduce inventory costs. More-organized production scheduling, ware-

housing, and distribution will also lower costs as we progress further.”


SSGC Vision

The SSGC vision was not without its challenges: SSGC cuts across many industries and has many diverse stakeholders. As a public sector organization—with the Pakistani government holding more than 70 percent ownership—SSGC has social as well as policy-based responsi-bilities. Although SSGC’s primary mandate is to provide utility services to citizens, it also is charged with creating jobs, continuously improving the skills of its employees, helping the Pakistani government fulfill its vision for citizen quality of life and business productivity, and—not least—running an efficient enterprise to ensure that oil and gas consumers get access to the country’s energy resources at affordable rates.

Moreover, as a business within the oil and gas industry, SSGC must efficiently manage the purchase of gas from a significant number of exploration and production (E&P) companies, which operate the gas fields. Furthermore SSGC must operate as a successful commercial enterprise in the oil/gas sector. This means being profitable and self-funded rather than government subsidized. Finally, as a utility company, SSGC is responsible for the cost-effective distribution of high-quality natural gas to industrial, commercial, and household consumers in its operating regions while providing stellar customer service.

SSGC’s Business and Operating Challenges

Even as a government monopoly, SSGC was facing many of the same challenges that commercial enterprises around the world must confront every day. In particular, SSGC was struggling to cope with two difficult but common situations. First, because the organiza-tion had been created through the merger of three companies —two from the public sector and one a commercial, multinational enterprise—three uniquely distinct cultures needed to come together if the organization as a whole was to function smoothly and productively.

The second challenge was technological. SSGC’s legacy platform—an aging mix of standalone databases and business applications from different vendors—was not integrated and lacked the scalability SSGC needed to support its mission. Because these legacy systems were based on obsolete technology, they were inordinately costly to maintain. Moreover, there were significant

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“Since we are growing rapidly during some very difficult economic times, we

wanted to make sure we wouldn’t have to replace a tier-two solution that ran

out of gas down the road. We have been extremely successful with Oracle

because there have been frequent and clear discussions between the two

organizations, not as vendors, but as partners.”


data-compatibility issues arising from siloed systems that impeded the organization’s ability to disseminate accurate and consistent information throughout its operations.

The challenges that arose from these two situations—cultural and technical—fell into the following categories: marketing, sales, customer service, product/service management, asset management, regulatory compliance/quality, supply chain, analytics, financials, human resources, and policy.

Marketing. Due to the fragmented nature of its technology infrastructure, SSGC lacked a holistic view of its customers. This limited SSGC’s ability to market new products and services effectively, and also prevented it from gathering sufficient intelligence to make effective decisions about pricing, new services, and other strategic moves.

Sales. The same lack of visibility into operations created delays in signing up new customers and booking new orders. Additionally, it was difficult for the organization to access timely and accurate data on credit evaluations. This impacted SSGC’s ability to provide quotes to new customers and to commit to service-delivery dates for its field resources.

Customer service. Because interdepartmental systems were not integrated and there was no centralized customer database, the firm took unacceptably long to respond to customers’ queries. It also lacked the capability to quickly create field-service orders and dispatch technicians in a timely manner. Moreover, because it was adding more than 80,000 new customers annually, SSGC faced a number of critical business challenges related to metering and billing. Standalone, siloed applications and databases hampered its ability to consistently and accurately generate customer billing, resulting in numerous customer errors and complaints.

Product/service management. This same lack of systems integration made it difficult to gather sufficient intelligence to create innovative new products and services.

Asset management. SSGC’s records of its assets existed mostly on paper, and processes to manage those assets were mostly manual. In addition, the organization’s “tribal” knowledge about asset management had never been documented, but instead resided within the expertise of individual employees.

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“Because we no longer have to manually reconcile facts and figures, it’s

become much easier and quicker to produce reports. For example, it now

takes a day to deliver month-end reports, compared to 60 to 70 days in the

past. There’s also less chance of errors, so senior managers feel secure

making decisions based on the data.”


Regulatory compliance/quality. Regulatory reporting was performed manually and there were no controls ensuring the accuracy of the data used to generate reports.

Supply chain. Excess inventory tied up valuable capital, preventing SSGC from being able to invest in much-needed infrastructure expansion. Additionally, sourcing took an inordinate amount of time—as long as nine months—which also limited SSGC’s ability to make capital expenditures in other key areas.

Analytics. SSGC had put few metrics in place for monitoring integrated process performance and had no discernable starting point from which to benchmark any kind of progress.

Financials. Because SSGC lacked a sophisticated financial system, it took as long as two months to close its books every quarter. This created a bottleneck for managers seeking timely information on organizational performance.

Human resources. Employees were not held accountable for fulfilling their job duties. SSGC’s nonaggressive personnel-management style failed to inspire employees to innovate. Additionally, there were no formal programs to develop their skills and no attempt to implement a performance-based reward system.

Policy. Global regulatory requirements put pressure on SSGC to produce auditable performance and quality records that showed it was financially self-sustaining. Yet inefficient operations meant that it was surviving financially, primarily through higher tariffs and cross-subsidies from other public sector agencies. SSGC needed to establish and rigorously adhere to policies that dictated its financial autonomy.

Designing a Technology-Enabled Solution

To address these and other challenges, SSGC partnered with Oracle to create a strategy that would transform its culture into one more in tune with market dynamics. This strategy focused on developing the infrastructure and capabilities to support innovation, leveraging those capabilities to swiftly and continuously develop new products and

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services, building a sense of employee ownership, and putting strong management and governance mechanisms in place.

The guiding principles for the technology-driven transformation were to

• Implement consistent processes, business rules, and problem-escalation procedures across all geographies served

• Consolidate many disparate and incompatible databases into a single application that unified financial and customer data into a centralized data store

• Create a 360-degree view of all customers

• Build a comprehensive call center capable of responding quickly to customers’ inquiries, requests, and complaints

• Automate all workflow, both within and across departments

• Develop flexible reporting capabilities for both internal and external uses

The framework of the operating model for addressing these challenges and fulfilling SSGC’s newly forged mission focused on five key areas: channel management, customer management, business management, management and control functions, and technology.

Value Chain for Citizen-Centric Government

• Internet• Walk-in (including kiosk and

intermediated internet)• DiTV• Phone (and mobile devices)• Mail• Channel management strategy

• Customer-needs intelligence• Service proposition and design• Marketing communication

• Delivery vision• Portfolio management• Performance monitoring• Delivery architecture

Channel Management

MANAGE AND CONTROL

Customer Management Business Management

ANALYTICS | GOVERNANCE | SKILLS AND EXPERTISE

SERVICE-ORIENTED IT ARCHITECTURE

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“Vendor support was highly important to us. We wanted assurance that

we would have access to advice and assistance before, during, and after

implementation. Oracle delivered on its promise to provide help at all

times, especially in the preplanning stage when we were reviewing

internal processes.”


Channel Management

SSGC’s customers reside across a large land mass and its customers range from the uneducated masses in rural areas to very sophisticated users in urban areas. In order to make SSGC “easy to do business with,” it had to provide its customers with a variety of interaction channels.

One of the first actions SSGC took was to create several channels for customers to pay their bills, including customer facilitation centers, banks, ATMs, post offices, gas stations, payment kiosks, and online. Within these various channels, SSGC made other innovations, such as opening multiple collection windows at bill-payment outlets to reduce lines, as well as building shelters and shades to make citizens waiting in lines more comfortable. It also created programs that promoted check payments, extended bill-collection days and hours, and placed payment drop-boxes at multiple locations. On the payment-processing side, all financial transactions were outsourced to banks, to facilitate faster and more cost-effective internal collections activities.

Customer Management

In the private sector, customer relationship management (CRM) has long been recognized as key to successful sales, marketing, and customer service operations. SSGC decided to implement a centralized customer information system (CIS) to drive its citizen relationship management processes throughout 10 different departments.

The CIS is responsible for identifying and analyzing all the customer-facing functions that need to be completed so that SSGC can successfully distribute its products and services to end customers. By implementing a CIS, SSGC hoped to eliminate the duplication of effort and inefficient business processes caused by the merger of the three companies. SSGC also hoped the CIS would help it close the gaps between various departments that impeded efficient and effective service delivery to customers.

SSGC also effectively transformed its customer-billing activities from a cost center into a revenue-generating profit center by selling advertising space on its physical bills. These ads covered all of the costs associated with creating them, including paper, ink, and postage. To save even more money, SSGC outsourced the labor component of processing bills—stuffing envelopes, applying postage, and more—to a third-party vendor.

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5 The 7th Global Forum on Reinventing Government, Building Trust in Government, “Overview of Knowledge

Management in the Public Sector.”6 National University of Singapore (NUS), “Managing Knowledge to Build Trust in Government” workshop.

“We value our partnership with the Oracle team and look forward to working

with them to implement further Oracle E-Business Suite modules and

develop ways to improve our approach to work.”


Business Management

SSGC provides gas to some of the most inaccessible and remote parts of Pakistan. The potential for acts of terrorism that disrupt delivery has accelerated the need to have reliable and central-ized controls in place to monitor the integrity of the network, increase system reliability, and ensure consistent throughput of gas through the pipeline. By building a distributed and platform-independent supervisory control and data-acquisition system based on an open architecture, SSGC was able to ensure the operational security of the pipeline. It also developed a geographical information system (GIS) that gave it fast and easy access to spatial data, providing viewing, querying, reporting, charting, and mapping of distribution and transmission networks.

Management and Control

With the explosion of digital connectivity, government agencies all over the world are using technology to increase productivity, improve accountability, enhance transparency, and facilitate public sector reform by implementing knowledge management applications.5 SSGC hoped to leverage knowledge management to increase productivity, while improving the efficiency of delivering products and services.

Other benefits of knowledge management initiatives SSGC hoped to achieve included6

• Maximizing efficiencies across all public services by connecting silos of information across different levels of government and across borders

• Developing new systems, or consolidating existing systems, to improve overall performance and capitalize on a broader, more integrated, and more easily accessible knowledgebase

• Improving accountability and mitigating risk by making informed decisions and resolving issues faster, supported by access to integrated, transparent information across all organizational boundaries

• Delivering better and more cost-effective constituent services and enhancing partnerships with, and responsiveness to, the public

“Seeing the Oracle solution in action was very beneficial for us. It gave us an

understanding of the capabilities of the software. The site visits also gave us

ideas on how we could merge business processes with the technology.”


Technology

The organization increasingly viewed technology-enabled Lean principles as a way of accomplishing its goals. A rare concept outside of factories and production-oriented commercial entities, Lean principles—also known as Lean manufacturing—are now being employed by the service industry and, recently, by public sector entities. Indeed, under unprecedented pressure to provide citizens with better value for their tax funds, governments are finding that Lean strategies can help them deliver more and higher-quality services on smaller budgets.

Lean principles are based on the concept of eliminating waste, with the goal of achieving the highest possible quality at the lowest cost. Created by Sakichi Toyoda (founder of Toyota), his son Kiichiro Toyoda, and Taiichi Ohno, Lean principles draw heavily on the work of W. Edwards Deming and the writings of Henry Ford, and focus on bringing stability to operations by separating manual processes from automated ones and identifying and rectifying “abnormalities.” Contrary to popular belief, Lean is not about cutting things “down to the bone,” but instead about maximizing the potential of an organization.

The management team at SSGC decided that to apply Lean principles, SSGC needed to centralize its technology structure while still providing different departments with the flexibility they needed to run their operations. As a result, SSGC created a road map to completely revamp its technology infrastructure.

The Solution

With Oracle’s help, SSGC implemented a technology road map that included these components.

Customer information system. In 2004, SSGC began its CIS project. Prior to this project launch, SSGC’s billing, utilization, customer care, and sales functions were supported by completely disjointed system silos and could not scale to meet an increasing surge in customers. SSGC initiated an extensive re-engineering effort based on Oracle Utilities customer care and billing. This solution, which included sales, billing, utilization, recovery, measurement, and stores modules, was selected based on its ability to scale to

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accommodate SSGC’s almost 2 million customers. By leveraging specialist resources from Oracle and developing implementation capabilities within its own staff, SSGC was able to implement the complete solution under the estimated budget totals and ahead of schedule. SSGC’s CIS went live in December 2006. Currently, among the 16 utilities in Pakistan, SSGC is the only one with this level of sophisticated customer-care capabilities.

Enterprise resource planning. Although SSGC had used Oracle enterprise resource planning (ERP) solutions since the late 1990s, the implementation had been performed by a local Pakistani consulting firm and was not capable of supporting SSGC’s growing business needs. Among other problems, the seven financial modules the firm had installed all ran independently of one another.

SSGC focused on reimplementing the seven Oracle financial modules, using Sidat Hyder Morshed Associates,7 a Pakistani Oracle partner. This time around, the implementation was a success. Prior to implementation, SSGC traveled to Singapore and Australia to evaluate the capabilities offered by Oracle for a human resources management system (HRMS), as well as project management, and became convinced that Oracle had the breadth and depth of solutions to cater to the utility’s expanded business needs.

SSGC then decided to procure the following products from Oracle:

• Oracle Human Resources Management System

• Oracle Payroll

• Oracle Project Management and Oracle Project Costing

• Oracle Enterprise Asset Management

• Oracle Enterprise Planning and Budgeting

• Oracle Balanced Scorecard

• Oracle BPEL Process Manager

• Oracle Sourcing

• Oracle Purchasing and Oracle Contracts

• Oracle Manufacturing

• Siebel Employee Self-Service

• Oracle iRecruitment

• Oracle Business Intelligence, Standard Edition

7 www.sidathyder.com.pk.

“We now have a clarity of vision, having created a willingness to change,

established commitment at all levels, developed skills for change agents,

empowered people to manage change resistance, realigned organizational

culture, managed the environment, embedded change elements in the project

plans, and ensured open and honest communication.”

Zuhair Siddiqui, Chief Information Officer, SSGC

• Oracle Human Resources Intelligence

• Oracle Business Intelligence Applications

• Oracle User Productivity Kit

• Oracle Hyperion Strategic Finance

• Oracle Hyperion Planning

• Oracle Hyperion Capital Asset Planning

• Oracle Hyperion Performance Scorecard

• Oracle Database, Enterprise Edition

• Oracle Application Server

Geographical information system. The GIS was developed in-house using standard, commercially available products. All data was stored within Oracle. The comprehensive level of geographical detail that SSGC has been able to collect with the GIS is currently unmatched by any other organization in Pakistan.

Business process management. All functionality not covered by Oracle ERP solutions and the Oracle-based CIS was developed using IBM business process management solutions.

Value-added services. As enabled by its new technological foundation, SSGC was able to roll out a variety of value-added services, including

• Advertising. SSGC places advertisements on its bills to customers. Using Oracle Purchasing and Oracle Contracts, the “real estate” on the bills is sold in bulk to outsourced advertisers, who then resell the space. By proceeding in this manner, the advertisement revenue is predictable, yet SSGC does not stray from its core competency by getting into the advertising business.

• Alternate payment channels. SSGC has contracted with banks to manage the numerous bill-payment channels available to its customers. The ERP system is connected to all major banks in Pakistan, and SSGC pays a fee for every bill collected via the banks. SSGC has also negotiated agreements to allow customers to use prepaid “fleet cards” to pay SSGC bills at petrol stations. Most merchant outlets in Karachi now have the capability to accept SSGC bill payment at the point of service.

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“Instead of customizing the Oracle software to fit our needs, we decided to

revamp our business processes to comply with best-practice guidelines. The

Oracle team was instrumental in helping us in this area. We also undertook

training at Oracle University and visited multiple Oracle customer sites to see

firsthand how the software works.”

Munawar Baseer Ahmed, Managing Director, SSGC

• Prepaid gas. SSGC has recently launched a program that allows customers to buy prepaid gas cards by inserting a physical card into the meter on their premises. This card can then be “topped-up” at any SSGC customer fulfillment center.

Electronic data management system/IT governance. SSGC is currently using Rational software from IBM.

Silicon sensor systems (S3). S3 devices are attached to meters, and any pressure change is transmitted to SSGC monitoring points by radio frequency. For security reasons, cyber-locks have been installed at many industrial and commercial installations. These locks have encrypted soft keys and any attempt to bypass the system is tracked and logged. All logs and meter reads are stored within Oracle Applications.

Telecom. A state-of-the-art telecommunication system connects SSGC’s various source, compressor, metering, and administrative sites. Providing voice, data, and video connectivity, the system has a 99.99 percent reliability rate. Among other key features, the system possesses

• An 8MBIT digital microwave network

• Intelligent network-management system

• Low-capacity digital spur links

• Packet-switching network

• Electronic exchanges

• Cellular stem

• Solar- and battery-powered systems

• Video conferencing support

E-mail. SSGC uses IBM’s Lotus Notes for its e-mail and knowledge management.

Customer contact center. SSGC uses Alcatel technology for its customer contact center and uses the CIS to access customer records.

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“With the completion of the implementation of Oracle Utilities Customer Care

and Billing, we are better able to maintain customer records, handle credit

and collection activities, track service orders, and interface better with our

customers. This system has reduced billing errors and helped us resolve

customer queries faster through real-time tracking of these queries.”


Bill-printing facility. The bill-printing function is outsourced to IBM, and has the capacity to print 660 pages per minute. As a fully self-funded unit of SSGC, the bill-printing facility generates revenue from two sources: by using excess capacity to print bills for the Pakistan Water Board and by selling advertisements on its bills. Bill delivery is outsourced to a third party.

Supervisory control and data acquisition (SCADA). Moseley Associates has supplied and installed a telecommunication and SCADA network for SSGC. This project also included revamping integration of the Badin gas-field integration pipeline and Indus left-bank pipeline telecommunication systems, and covers 8MBIT digital microwave radio, electronic exchanges, IP-based video-conferencing systems, an open architecture SCADA system, flow computers, a cathodic protection system, an intrusion-detection system, and numerous other ancillary subsystems. The SCADA system is based on the use of open-architecture distributed intelligence and platform-independent systems.

Benefits of the Oracle Solution

The rollout of these services from SSGC has resulted in significant benefits across a broad swath of functions and stakeholders, including customers, channels, business operations, management and control, analytics, finance, governance, technology, and business operations.

Customers. SSGC’s customer service is now an end-to-end process from initial connection to final disconnect. Because customers’ profiles—including 13 months of billing history and customer service calls—are available online, SSGC can provide fast and efficient customer care. Physical on-premise work is now typically completed in less than two hours and the billing-segment error rate has dropped to less than 0.5 percent—a figure that is almost unheard of in a public sector utility.

Customers of the new CIS receive both monetary and nonmonetary benefits. The monetary advantages include reduced travel costs due to the ability to pay bills online and in more-convenient locales, greater transparency, and decreased cost of services due to more-efficient operations. Nonmonetary benefits include the availability of premium services made possible by cross-agency integration, a choice of bill printing and distribution options, and reduced

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“The customer information system (CIS) combines the right blend of IT

infrastructure, well-trained personnel, customer-centric business processes,

and software applications. It also provides a technology platform integrating

business processes that are aligned with leading industry benchmarks, to

enable more-accurate billing, improved customer service, and business

practices that enhance customer value.”


Channels. SSGC no longer performs any financial transactions with customers. Instead, SSGC has outsourced all management of customer transactions to major financial-services institutions across Pakistan.

Business operations. The GIS has reduced the time SSGC takes to respond to customers, from approximately two weeks to just five minutes. The GIS also gives SSGC the capability to more-precisely plan the resources required based on routing. Recently, while laying a 40-inch gas pipe in Karachi, the initial length estimate—performed manually—was 36 kilometers. The GIS, however, accurately predicted 33 kilometers, resulting in a savings of millions of Pakistan rupees.

Management and control. Under the previous system, SSGC had not defined any key performance indicators (KPIs). By implementing an Oracle ERP solution, SSGC derived tangible benefits in the form of improved productivity and order management and reduced procurement costs. Intangible benefits included greater visibility into operations, new and improved processes, greater responsiveness to customers, and improved supply chain management.

Analytics. Today, the integrated Oracle E-Business Suite applications give SSGC control over every aspect of its business. Its finance department was first to experience efficiency improvements, as the automated system replaced paper-based processes and introduced a single point of data entry. This ensured that information was more accurate and presented in a consistent format. Moreover, electronic accounting procedures mean it is easier for staff to authorize and issue payments; follow up on outstanding invoices; reconcile budgets against actual spending; and produce daily, monthly, and quarterly reports.

time spent interacting with SSGC. Additionally, SSGC has managed to greatly reduce its billing errors and improve the reliability of its service. The table below provides more detail about the benefits obtained through use of various functions of the CIS, along with the performance indicators used to measure and track these benefits.

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“We implemented Oracle ‘vanilla,’ out-of-the-box, with zero customizations.

Oracle is like Play-Doh. You can shape it any way you like through

configurations. We did a current assessment, gap analysis, future-state

assessment, and then deployment.”


Specific Benefits from the CIS

CIS Function Benefit Key Performance Indicator

Account and contact management

Seamlessly integrate customer information and systems into one application and screen to provide quick access to vital customer information

Reduce call-handling time

Automated call handling Provide voice-enabled service interfaces for routine and transactional questions and issues, thus providing faster service that is available 24/7

Reduce service costs

Channel management Leverage various channel capabilities, such as the Web for customer self-service, to better serve customers and reduce costs

Reduce service costs

Complaint management Resolve complaints quickly and effectively to maintain customer loyalty and satisfaction, and track and analyze complaints to prevent future problems

Reduce customer churn

Order management Automate order management by integrating systems, enabling workflow, and streamlining processes to reduce the number of manual hand-offs, duplicate data entry, and other unproductive activities

Reduce error rate

Performance tracking and reporting

Access data in real time to run reports and measure performance so proactive steps can be taken to correct issues and prevent problems

Increase productivity

Revenue generation Provide interactive scripting and screen pop-up capabilities based on customer segmentation data to help customer service representatives up-sell and cross-sell

Increase revenue

Training Give employees tools and training through e-learning courses focused on helping them succeed in their jobs, and therefore increase productivity and reduce turnover

Reduce training costs

SSGC Benefits from the

Oracle-Based Customer Care

and Billing System

•Development of a centralized CIS

with a 360-degree customer view

that caters to the specific needs of

all user departments

•Availability of centralized information

about SSGC’s service network,

resulting in more-consistent, efficient,

and effective responses to custom-

ers’ queries

•Maintenance of comprehensive

customer-account profiles,

including up-to-date demographic,

geographic, credit, equipment, and

load information to help employees

deliver quality customer service

•Real-time status tracking of all

customer requests and related

activities, making it easy to dis-

seminate information to customers

in a timely manner

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SSGC Benefits from the

Oracle-Based Customer Care

and Billing System (continued)

•Efficient back- and front-office

operations that facilitate proactive

responses to all customer concerns

•Automated bill processing that

reduces billing errors and customers’

billing complaints

•Online ordering for new gas con-

nections and move-in/move-out

transfers of service, enabling quicker

processing of new customer orders

•Online billing correction, resulting in

fast credit to customers’ accounts

•Multiple channels for customer

communication, including cus-

tomer facilitation centers (CFCs),

phone, fax, e-mail, and sales

meter stations (SMSs), resulting

in more-convenient, efficient, and

productive service delivery

•Higher customer satisfaction

Specific Benefits from the CIS—Continued

CIS Function Benefit Key Performance Indicator

Campaign management Organize campaigns on a central data platform based on targeted customer segments, and provide value-added products and services to satisfy the needs of the targeted segment

Increase revenue

Automated review and validation

Provide online review and validation of billing data based upon tolerances and plausibility

Reduce transaction costs

Credit and collections Provide real-time integration into the credit and collections system so performance can be tracked and reported and remedial action can be taken when necessary

Reduce days receivables outstanding

Flexible billing Automate billing and enable complex billing arrangements, such as large-interval billing and Web-based billing

Increase customer satisfac-tion and loyalty

Integrated financial management

Integrate seamlessly with financial systems to reduce the number of manual touchpoints and journal entries and to provide a solid audit trail

Reduce transaction costs

Asset management Eliminate manual processes by tracking and reporting from a central platform on assets customers have on premise, such as meters and additional feeds, and determine when these need to be serviced

Improve productivity

Field service dispatch Leverage electronic-scheduling functionality to optimize dispatch and routing and allow for the scheduling of appointments to improve customer service and reduce costs

Reduce personnel costs

Fulfillment/logistics management

Integrate with supply chain systems to track and report on inventory levels to make sure that proper levels are being maintained

Reduce inventory

Service analytics Monitor the effectiveness of service performance in real time to understand what actions need to be taken proactively to prevent problems and maintain customer satisfaction levels

Improve performance

SSGC expects similar improvements in managing procurement and warehousing processes at its gas-meter manufacturing facility once the Oracle materials and project management modules have been implemented.

Finance. Finance is SSGC’s “business conscience.” Taking this a logical step further, SSGC realized its finance function must be an independent business partner to the organization, offering objective views of the financial health of operations to the board, shareholders, employees, analysts, regulators, and auditors, and ensuring that the facts, figures, and opinions fairly represent the corporation’s performance.

Recognizing that finance cannot operate in a vacuum, SSGC chose Oracle Financials, which has enabled it to manage its people, finances, business assets, and operations more effectively and to better respond to and meet changing customer needs. Today, Oracle Financials is an integral tool for helping SSGC improve efficiency and realize significant bottom-line benefits.

Corporate governance. Oracle Financials also enabled SSGC to comply with national and international legal requirements, such as the Basel II Accord and the Sarbanes-Oxley Act. Because the solution supports external as well as internal business, system, and tax audits, it helps SSGC’s controls managers perform tasks more efficiently, and enables its risk managers to elucidate the consequences of potential risks to business targets.

Oracle Financials also helped SSGC define financial targets, develop a commensurate business plan, and monitor costs and revenues. Indeed, Oracle Financials enabled SSGC to meet the three primary objectives of business today: increase shareholder value, identify new growth opportunities, and improve the bottom line. Furthermore, with Oracle Financials, SSGC was able to increase financial control and accountability, deliver business insight, and reduce the cost of the finance operation.

22

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Technology. Within its IT operations, SSGC derived tremendous benefit from the Oracle solutions. For example, SSGC was able to

• Eliminate costly and inflexible legacy systems. Prior to the initiation of Oracle ERP, SSGC possessed multiple, aging, legacy databases. Replacing these difficult-to-maintain systems with a single integrated and updated application was not only cost effective, but will allow SSGC to be more competitive in the future, in case of privatization.

• Improve work processes. The ERP system incorporates new and improved best-practice business processes that ensure customers get swift and effective service.

• Upgrade IT infrastructure. SSGC was able to eliminate the aging hardware and software configurations that required support by multiple vendors. Fewer technologies and vendors significantly reduce costs and streamline maintenance, support, and training.

• Increase control of work processes by staff. Because the Oracle solutions are easy to learn and use, employees require less support from IT staff, resulting in higher productivity.

• Reduce paper documents. By automating data collection, processing, and retrieval, SSGC was able to cut back on use of paper, which reduces costs and increases employee productivity.

Business operations. There were many quantifiable benefits in business operations accruing from the implementation of Oracle ERP, including improved profitability, faster asset turnover, and higher stock value. The most significant quantifiable benefits involve reductions in inventory, material costs, and labor and overhead costs, as well as improvements in customer service and sales.

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Key Success Factors

By focusing on people, processes, and technology during its transformation process, SSGC was able to embrace change and drive rapid success.

People. Studies have shown that the most difficult challenge of making a major organizational change centers on the people involved. SSGC was simultaneously trying to install a corporate culture, initiate a sustainable change-management process, introduce innovations, improve technical operations and management, and set up human resource management systems. At the same time, SSGC was attempting to attain commercial viability and profitability so it could obtain finances for expansion and growth. Employees thus had much to absorb.

As a result, SSGC decided that training personnel was a critical first step and invested considerable resources into helping them understand the process of change, become comfortable with technology as key to a cultural business transformation, and understand the benefits and rewards of meeting business objectives.

Processes. Early on, SSGC identified the key process challenges that could inhibit its ability to meet its goals and objectives. This was critical for achieving best-in-class business processes. (See table on next page.) Indeed, a critical success factor for SSGC was that it adopted the world-class business processes built into Oracle solutions. This not only enabled faster rollout, but helped SSGC leverage the experience of other global companies that had already implemented Oracle solutions.

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“SSGC’s biggest strengths are our people, technology, management

commitment, and a structured, Oracle-enabled re-engineering methodology

that took us through the implementation successfully.”


SSGC’s Key Process Challenges to Achieving Best-in-Class Business Processes

KEY PROCESS CHALLENGES

Challenge No. 1 Lack of a central repository to view customer information across the organization led to extended research times and lower service levels

Challenge No. 2 Lack of end-to-end automated processes created the need for extensive coordination and manual intervention

Challenge No. 3 Limited reporting and business intelligence inhibited customer segmentation and proactive service-management capabilities

Challenge No. 4 Lack of a centralized knowledge management repository resulted in extended response times and inconsistent service

Challenge No. 5 The absence of a formal performance measurement program inhibited decision-making and ongoing performance improvement

Technology. SSGC’s information technology department has been at the forefront of the organization’s efforts to transform itself into a cost-conscious, citizen-centric, and performance-based culture. It also is a primary beneficiary of this effort. (See table on next page.)

Attributes of Successful Leaders

Major organizational changes

require employees to face many

new challenges. SSGC found that

successful leaders are

•Adaptable

•Value-focused

•Committed to transparency

•Focused on governance

•Accountable

•Conscious of return on investment

(ROI)

•Open and ethical in business

practices

•Technically innovative

•Highly communicative

•Focused on quality

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Impact of Oracle Solutions on the SSGC IT Department

Before Oracle ERP After Oracle ERP

Information systems Standalone systems Integrated systems

Coordination Lack of coordination among business functions

Supports coordination across business functions

Databases Nonintegrated data; data have different meanings (customer); inconsistent data definitions

Integrated data; data have the same meaning across multiple functions

Maintenance Systems maintained on a piecemeal basis, inconsistencies result, and it is costly to maintain separate legacy systems

Uniform maintenance, changes affect multiple systems

Interfaces Difficult to manage interfaces between systems

Common interfaces across systems

Information Redundant, inconsistent information Consistent real-time information (for example, about customers or vendors)

System architecture May not be state-of-the-art Relies on an internet architecture

Processes Incompatible processes Consistent business processes based on best practices

Applications Disparate applications (for example, many different purchasing systems)

Single applications (for example, a common purchasing system)

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Conclusion: Change Management Powered by Technology

SSGC went live with Oracle Financials, Oracle Purchasing, and Oracle Inventory modules in April 2005. The company is in the process of implementing Oracle Manufacturing, Oracle Project Costing, Oracle Project Management, Oracle Human Resources Management System, Oracle Payroll, Oracle Enterprise Planning and Budgeting, Oracle Balanced Scorecard, Oracle Enterprise Asset Management, Oracle Sourcing, Oracle Purchasing, Oracle Contracts, and Oracle Order Management modules. It is also implementing a range of business intelligence (BI) tools to facilitate more-effective management reporting and control.

SSGC has achieved significant traction and is now working with Oracle to evaluate the next wave of innovation. Oracle products and solution areas SSGC is investigating further include

• Oracle Fusion Middleware

• Oracle Business Activity Monitoring

• Oracle Enterprise Service Bus

• Oracle Application Server High Availability

• Oracle TimesTen In-Memory Database Manager

Recognition for SSGC

•2006 Special Achievement in GIS

Award from ESRI

•2006 Disease Management

Leadership Award from Disease

Management Leadership

Association (DMAA), U.S.

•National Excellence Award 2005 from

Employees Federation of Pakistan

•Environment Excellence Award

for 2004 and 2005 from National

Forum for Environment and Health

•Best Utility Services Award, pre-

sented by Governor Sindh on behalf

of Defence Residents Society in

June 2005

•Excellence in Management by 21st

Century Business and Economics

Club, December 2005, awarded

to Mr. Munawar Baseer Ahmad,

Managing Director

Recognition for SSGC (continued)

•First utility in the oil and gas sector

to obtain ISO 9001, ISO 14001,

and OHSAS 18001 certification

• ICAP/ICMAP Corporate Award

for Best Annual Report for Public

Sector Companies

•Recognized by Oracle Corporation as

a flagship for technology applications

and best business practices

Additionally, the change management initiatives SSGC has launched over the past three years have provided for technology-centric business processes and have been recognized by major business and industrial associations within and outside the country. SSGC has made significant investments in people and technology by creating opportunities for its employees to learn technology-enabled business solutions, perform against precisely defined performance measures, and re-engineer business processes based on leading industry practices. Additionally, SSGC has introduced a well-structured empowerment, reward, accountability, and performance-measurement mechanism that it is continuously fine-tuning.

With its new, technology-enabled clarity of vision, a willingness and commitment to change, realigned corporate culture, and open and honest communication between all stakeholders, SSGC has been transformed into a citizen-centric and financially self-sustaining organization that serves as a model for other public sector entities around the world.

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This case study contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based upon Sui Southern Gas Company (“SSGC”) management’s current expectations, estimates, beliefs, assumptions, and projections about SSGC’s business and industry. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “potential,” “continue,” and variations of these words (or negatives of these words) or similar expressions, are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are for-ward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results and SSGC’s could differ materially and adversely from those expressed in any forward-looking statements as a result of various risk factors. Important risk factors that may cause such material differences for SSGC, include, but are not limited to: the anticipated benefits are not realized, the macro and micro economic slowdown; the ability of our customers to manage operational changes; the loss of a key customer; the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; the effectiveness of SSGC’s expense and product cost control and reduction efforts; the risks inherent in acquisitions; changing relationships with customers, suppliers, and strategic partners; potential contractual, employment, and intellectual property issues; risks of not securing regulatory approvals; accounting treatment and charges; and the risks that the acquisition cannot be completed successfully, or that the anticipated benefits of the acquisition are not realized; intellectual property disputes, customer indemnification claims, and other litigation risks; SSGC’s ability to develop, market, and transition to volume production new prod-ucts and technologies in a timely manner, as well as other risk factors. These forward-looking statements are made only as of the date of this communication and SSGC undertakes no obligation to update or revise these forward-looking statements.

CONTACT US

For more information, please visit oracle.com/insight or send an e-mail to

[email protected]

Authors: Irfan Zafar, General Manager, Technology Innovation, Oracle Enabled Business Transformation, Sui Southern Gas Company; Harry Ghuman, GVP, Oracle Insight and Industry Marketing, Oracle Corporation; and Sharad Sinha, VP Oracle Insight JAPAC, Oracle Corporation

Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Published in the U.S.A. This document is provided for information purposes only, and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission.

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