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Saudi Aramco: the worlds most valuable company upgrades its
SAP R/3 system1
Founded in 1933, Aramco is Saudi Arabias national oil company, headquartered in
Dhahran, Saudi Arabia. Aramco is managing the worlds largest reserve of crude oil; a
humongous amount of 260 billion barrels, the worlds 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 worlds largest oil company by production and reserves. The company
manages over 112 oil and gas fields in Saudi Arabia. It is the worlds 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 Aramcos 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,
1
Source: Laudon, Laudon, Elragal (2013), Managing the Digital Firm, AWE, Pearson.
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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 golive 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 Kingdoms land. Aramcos 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 makes 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.
Case study questions:
1. Discuss what were the motivations for this ERP adoption project?
2. Discuss how SAP ERP could help Aramco gain a competitive edge?
3. Reference to the case, explain the importance of information and application integration.
4. What are the lessons learnt in systems upgrade according to the case?
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SBR Guidelines
1. Font: Times New Roman 12pt.
2. 1.5 Line Spacing
3. Left Margin 2,54 cm, Right 1.75
4. Maximum of 4 pages.
5. You can use external resources to build your arguments and follow the Harvard
References Style.
