Located in Surgut, western Siberia, Surgutneftegas is a top-flight Russian oil company and one of the world’s ten largest privately owned oil-producing enterprises. It identifies and develops oil fields, extracts and processes oil and gas, markets crude oil products, and conducts research in various areas. In 2010, the company’s 109,000 employees, who are distributed over 16 regions in Russia, garnered revenues of almost 16 billion dollars.
To keep a firm grip on its broad spectrum of business activities, Surgutneftegas requires effective logistics support. All of the company’s departments and managers need to obtain up-to-date information and analyze available supplies and materials on a day-to-day basis. With up to 75,000 articles in circulation and requiring distribution, this is a major challenge.
Searching for a better solution
Rinat Gimranov, CIO of Surgutneftegas, spent some considerable time searching for a solution to the problems his company faced in processing its material inventory data. “Material analysis had been our weak point for ages. The functions in our existing reporting tool were highly complex, and we had a lot of company-specific special features,” explains Gimranov. “These complex models generated mammoth volumes of data, which meant that even minor structural or logical changes entailed a major investment. In short, working with our old reporting tool was like trying to move a mountain.”
To make effective use of information supplied by the SAP R/3 Logistics Information System (LIS), Surgutneftegas needs to categorize data by plant, warehouse, revenue value, party, G/L account, and usage. In the SAP Business Warehouse solution, this took two hours, while the ETL (extract, transform, load) process took five times as long. It was impossible to update the data instantaneously or to conduct simultaneous reporting. To make matters worse, the material availability reports were not particularly detailed. All in all, the solution did not match up to today’s business requirements.
One day, Gimranov was reading an article by SAP co-founder Hasso Plattner about in-memory technology. He realized straight away that this technology would help Surgutneftegas solve all the problems it faced with gathering and processing vast quantities of data. Even though SAP HANA was still in ramp-up phase at the time, Gimranov decided to deploy the in-memory technology at Surgutneftegas. Simultaneously, SAP was in the process of developing the architecture for a real-time material inventory analysis solution.
Surgutneftegas’ IT department differs from its peers in the oil and gas industry in that it takes an innovative approach and develops its own products. Thus, Surgutneftegas put together a four-person-strong IT team to work with SAP on the project. The teams from Surgutneftegas and SAP began working on a proof of concept at the end of 2010.
From Siberia to Walldorf
In this first proof of concept, the Surgutneftegas team started by identifying the areas that were most in need of improvement and defining a range of criteria for selecting an appropriate business scenario. The aim was to ensure that material availability reports were returned within seconds and that they were available to users in real time. Other objectives of the business scenario for the SAP HANA-powered solution were to deliver current information every one to two hours, enable weekly post-processing, and store information for analysis in SAP Data Warehouse at a later date.
From the outset, the team from Surgut worked actively with the team from Walldorf, taking part in joint workshops and deep dives. SAP specialists spent time in Siberia, and experts from Surgutneftegas traveled to Germany. The toughest challenge the teams faced was posed by the fact that the project and the development of SAP HANA were taking place in parallel. There were also difficulties with data transfer in Surgutneftegas’ SAP R/3 System. However, the teams installed the SAP LT (SAP Landscape Transformation) replication solution to allow greater flexibility and solved the data transfer problem once and for all.
The benefits of switching to SAP HANA were apparent to the Surgutneftegas team from the word go. For one thing, says Gimranov, reporting was significantly faster: “In the past, when a user entered a request, a standard SAP R/3 report was returned within 40 minutes. With the SAP HANA solution, the response time is between six and eight seconds. The bulk of this time is required to visualize hundreds of pages, not to calculate the result. Users can analyze huge amounts of data in real time, sort the data according to material or warehouse, and even enter three letters from the material name – as in the Google search engine – to obtain a material list.” The new reporting tool is already in operation at Surgutneftegas; the old one has been deactivated.
But the benefits of the new solution go much further than high-speed data results. Thanks to the new in-memory technology, SAP R/3 will use less capacity and less memory. The company is planning to reduce its IT investments, says Gimranov. “We need to take a methodical approach to thinking about how we can leverage the new functions that this technology offers to change our business processes,” explains the CIO. “The changes are tangible. Plus, you get a rapid return on your investment.”
Jumping on the HANA train
Following the second proof of concept, Surgutneftegas decided to base all new analysis solutions for business activities exclusively on SAP HANA. After a year’s collaboration on the project, Surgutneftegas and SAP set up a Lead Innovation Customer Hub in Moscow. Experts from the two companies meet here once every three weeks to work on follow-up projects. This year, for example, SAP Business Warehouse will be migrated to SAP HANA. In other projects, investigations are taking place into energy and environmental resource management. And, adds Gimranov, Surgutneftegas is also looking at trying out SAP HANA on ERP.
Companies that are interested in implementing SAP HANA, says Gimranov, need to prepare themselves for a new way of thinking; developers and designers must adjust their mindset to ensure that the solutions are effective. For those who have not yet deployed SAP HANA, Gimranov’s message is clear: “The train’s pulling out of the station – jump on while there’s still time.”