Saudi Aramco: The World’s Most Valuable Company Upgrades its SAP R/3 System
SBR 1 Saudi Aramco: the world’s most valuable company upgrades its SAP R/3 system 1 Founded
in 1933, Aramco is Saudi Arabia’s national oil company, headquartered in Dhahran, Saudi Arabia.
Aramco is managing the world’s largest reserve of crude oil; a humongous amount of 260 billion
barrels, the world’s 4th largest gas reserves with 279 trillion cubic feet. It is the world leader of oil
exploration, production, refining, distribution, shipping and marketing. Aramco is the world’s
largest oil company by production and reserves. The company manages over 112 oil and gas fields
in Saudi Arabia. It is the world’s top exporter of natural gas liquids (NGL) with over 316 million
barrels in 2010. Aramco is owned by the government of Saudi Arabia. In 2005, Aramco was
estimated to be worth $781 billion in 2005 which makes it the world's most valuable company.
Aramco manages a lot of operational activities that are connected to numerous business processes.
Therefore, it would have been very hard for Aramco to go without an integrated system that is able
to understand the oil and gas industry as well as Aramco’s complicated operations. Furthermore,
other operational activities need to be integrated and monitored e.g., healthcare, fleet of aircraft,
telecommunications, real estate, etc. Saudi Aramco depends on an enterprise resource planning
(ERP) system from SAP. To get benefit from the latest releases from SAP, Saudi Aramco decided
to upgrade their R/3 system to benefit from the functional enhancements which have the potentials
to render competitive advantage. However, a decision was made to start with the upgrade of the
hydrocarbon business and then other units and department will follow. The upgrade project faced
many challenges, but mainly the need to manage a 24x7 global business in different operational
areas and the need to ensure operational excellence. Further, the aim was to upgrade without
disrupting day-to-day business activities and to demonstrate the value of upgrade to the other
divisions. The SAP ERP upgrade project had to be accompanied with two other services from
SAP: SAP Safeguarding for Upgrade and SAP Active Global Support. IT aimed at a minimized
downtime in order to comply with the stringent business requirements, and that is why the project
relied on SAP Safeguarding for Upgrade portfolio of services, which was provided by the SAP
Active Global Support organization. As a result, SAP managed to finish the project, one month
ahead of time. “SAP Active Global Support worked closely with us throughout the project, SBR
#1 helping us define requirements, draw up plans, and optimize the environment to ensure rapid
implementation”, said Adel Aldoulab, SAP Hydrocarbons Management Division Head at Aramco.
The upgrade team at Aramco planned a twelve hour go-live process. It was planned to go-live
through the night and early morning during the weekend. To make sure that no disruption occurs,
Aramco installed a small-scale version of the R/3 to a limited number of users and partners so that
they are able to maintain critical data which will be migrated to SAP ERP upon go-live. The
upgrade took 9 hours and remaining 3 were used in system health check. The project resulted in a
number of benefits including: reduced maintenance costs, enhanced integration between different
business units and functions, enabling Aramco to seize new opportunities as they emerge. It also
facilitated flexible application deployment an improved collaboration via the new portal
capabilities supported by the SAP NetWeaver® platform. It was reported that Aramco estimated
the maintenance costs savings to reach nearly USD 2 million over the next 3-4 years, as a result of
the SAP upgrade. Recently, Aramco extended their SAP ERP system by adding Land Management
System. Aramco corporate land, including concessions and reservations, is truly enormous
reaching more than one tenth of the Kingdom’s land. Aramco’s operations are connected via a
wide network of over 5000 KM of utility and pipelines. The company expansion has resulted in
land reservations increasing three folds since 1980. As a matter of fact, the oil and gas industry
make extensive use of GIS information in support of daily operations and decision making. GIS
information is used in production and exploration, site selection, routing, resource allocation,
planning and land management. The Land Management System is an integral part of SAP ERP.
The system integrates GIS information with SAP ERP information. The system integrates 17
separate business processes as well as 3 systems into a single screen, which one SAP authorized
user could maintain through SAP. The Land Management System is able to remotely monitor the
land through a change detection algorithm which utilizes satellite imagery to detect changes in
land use. Together with onsite filed inspection, the system helped Aramco to prevent unauthorized
access and/or utilization of its land.
I will post the case study in different file.
Each question should be in separate page and each question should on page length and should have the
4-font : Times New Roman
5- font size:12 point
6- Harvard Reference style
*Phase 2: *Analyze the case using Porter’s competitive forces model.
Porter's Competitive Forces Model
Five competitive forces shape fate of firm
•Competitors in market space continuously devise new products, new efficiencies, switching costs.
2.New market entrants
•Some industries have low barriers to entry:
•E.g., food industry versus microchip industry
•Newer companies may have advantages:
•Newer equipment, younger workforce, and
1- Substitute products and services
•Substitutes customers can purchase if your prices too high.
•E.g., Internet music service versus CDs.
•Can customers easily switch to competitor's products?
•Can customers force firm and competitors to compete on price alone (transparent marketplace).
•The more suppliers a firm has, the greater control it can exercise over suppliers.
Phase 3: How MIS techniques and concepts (that were applied in this case study) were utilized to
enhance business process?
———Phase 4: Explain two main security breaches that the system in your case study can have. Discuss how
and why they may happen.
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