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Running head: SAUDI ARAMCO UPGRADE TO SAP R/3 SYSTEM
SAUDI ARAMCO UPGRADE TO SAP R/3 SYSTEM
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SAUDI ARAMCO UPGRADE TO SAP R/3 SYSTEM
2
Analyzing Aramco System Upgrade Using Porter’s Model
Saudi Aramco is the leading petroleum company in the world owned by the Saudi Arabia
government. Due to exponentially growth of the company, managing data and process using the
old technology became difficult which accelerated need for new improved data management
systems. In 1997, this company upgraded to SAP R/3 System that was implemented in two
phases. For phase-one, systems for human resources, finance, domestic sales, supply-chain
management, and plant maintenance were upgraded. In phase-two, hydrocarbon systems, supply
chain management, and drilling were improved (Al-Mudimigh, 2007, 871). This change brought
changes such as; six million person-hours were invested in the project, improvement in customer
responsiveness and increased overall productivity.
Porter's Competitive Model Analysis identifies competitive intensity and attraction of a
market. It is made of five forces namely: supplier power, the threat of substitution, competitive
rivalry, buyer power, and the threat of new entry. These forces influence Saudi Aramco in the
following ways: For supplier power, Saudi Aramco has no supplier issues since it drills its oil.
Bargaining power of buyers is low s...