ERP Implementation in the Oil and Gas Sector: A

Case Study in Sultanate of Oman

Ashraf AL Jafari1, Smitha Sunil Kumaran Nair2
1,2
Centre for Postgraduate Studies, Middle East College, Muscat, Sultanate of Oman
1
PG17f1849@mec.edu.om, 2smitha@mec.edu.om

Abstract: Oil and Gas industry in the Sultanate of Oman has a and Gas Sector of Oman and how it can be used to improve the
vital role in the economic growth of the country.At the same time, efficiency and productivity of the sector.
the role of Enterprise Resource Planning (ERP) systems in Oil
and Gas sector cannot be denied. This research aims to study how II. LITERATURE REVIEW
the implementation of ERP system influences the efficiency and
productivity of this sector.The qualitative and quantitative Studies confirm that ERP is an efficient software platform to
researchwerecarried out to assess the influence of ERP system on beutilized in the oil and gas sector to improve its efficiency.
this sector in the country.End-user feedback on the impact of
using ERP has been analyzedin addition to the data collected
However, there are changes related to the big industries and
from the literature.The study suggests that Oil and Gas industries organizationsin the modern communication [3]. The utilization
should implement ERP system to boost its growth in all aspects. of this sophisticated software depends upon the need atlarge
business organizations in Oman.
Keywords: ERPImplementation; Oil and Gas Sector;Oman; SAP
A. ERP implementation in the modern era
I. INTRODUCTION In modern days, some ERP systems are implemented by the
organizations’ own system and software. Many ERP
Oil and Gas sector playsa fantasticand dynamic role in Oman’s applications have been implemented. However, there are gaps
economy. About half of the gross domestic products of Oman in the integration of technology in this industry, due to a
is maintained with oil and gas production. It not only depends market deficiency in Oman [4]. A few leading vendors
on the sources or support of government but also on private including Oracle, Microsoft and SAP act as the key players in
organizations in Oman [1].Oil and gas have remained the implementing of an ERP solution.
pushing force or the most sustainable element to the economy
of Oman since 1967. Oman’s oil market supports the economy The studies made by Alok and his co-workers stress upon the
which is eventually establishing the concept of modern Oman. role of ERP in Oil and gas sector in Oman [5]. The business
Also, it is the backboneof highly developed infrastructure environment has attracted the competition with the help of
supporting massive projects like public education, medical increasing the complex activities in business. It requires
services, and electrical utilities in the country. Low prices of planning and decision making to promote integration and
oil may be pushing firms to improve their efficiency, to optimization of various business, in relevance to the system.
decrease their market base cost and their workforce. Also, The ERP implementation proves a new dimension in the oil
Oman has reserves of natural gas which increases the economy and gas sector because this will help in the smooth transition of
quickly. The natural gas also plays a prominent role in the system between the ERP application in Oil and gas sector
expanding the vision of the country’s ruler towards the in Oman and its effect on the economy.
industrial growth in the upcoming years [2].
Human resource and inventory are linked to the efficient
ERP is a business process management software when being software to control the critical activities in oil and gas sector
implemented in the organizations allows a firm or organization [6]. There are some challenges in the ERP which can generate
to use integrated applications. These integrated application a load of information for the manufacturing companies. ERP
helps to manage the business. ERP software is a modern and consists of the integrated structure where the logistics and sales
well-developed technique which is typically used by are a track with the organization activities. Bigger the sector,
largeorganizations and industry especially having massive bigger the need of ERP system.
numbers of human resource workforce, as well as multiple
functions, merged to facets operation. It also involves B. Oman’s Oil and Gas sector
managing the sales, production planning, marketing and The oil and gas sector of Oman has been under the influence of
accounts in a single database and User-friendly interface. the ERP systems. This system provides integration and
Usually, designed forcustomizing and analyze the data but on optimization to the various business processes which are
small sectors.ERP has the potential to optimize any system. beneficial for the organization. ERP system has gained
This research focusses on how ERP system can affect the Oil popularity in providing the accurate responses to resource
management [7]. It helps to automate companies with the help
978-1-5386-4692-2/18/$31.00 ©2018 IEEE
of client-server system. These systems are widely adopted in whole systems. The primary form is related to the company
the form of a business model which affect the working of oil culture and strategy. If the Oman oil and gas companies are
and gas industry in Oman [8]. The implementation of an ERP motivated towards the ERP activity, then it can form changes
system remains a challenge for the timeline because it is a in the process through the enterprise-wide formation [9]. It
challenge to regulate the oil and gas sector regardingthe helps to include more customers towards the existing
business relationship. workflow and data formats.

C. Low Budget for ERP The evidence from the literature shows that ERP systems are
According to the studies, about ninety percent of the systems vital to introduce the IT integrators in the oil and gas sector of
are regulated with the help of low budget for the ERP systems Oman. Ithelps to changes the efficiency of the oil and gas
because the change is only about the industry and processes upstream operations where the drilling operations are
related to Oman business culture. There is some drawback in connected in link with the operation of wells [8]. If the process
the implementation of a software system to the oil and gas is controlled with the help of software management, then the
sector of Oman. It can be related to the complex social issues business decision making efficiency will improve, and this will
which may form the solid bases of inefficiency in the regard the most prominent area for drilling.
organization [9]. The mutual adaption towards the information
The implementation of ERP system helps to provide efficiency
technology is essential for the ERP systems to be implemented
to the sizeable expanding business. Oman Oil and Gas sector is
in the social systems of Oman. This is a difficult point but
also a part of the same chain which provides an increasing
should not be compromised because the oil and gas sector
demand for development [5]. The supplies and the dispatch
requires an infrastructure. In Oman due to similar environment
cannot be controlled with the help of conventional
condition ERP system has a restricted mode of application in
management, and there is a need to imply the ERP system in
the industry.
the business.
The researcher also made a strong point regarding the ERP
F. Lack of Motivation and Commitment
practice and implementation in Oman. It changes the nature of
project implementation and provides a reliable resource for the Literature confirms that ERP project is related to resource
management to underline the common issues present for the consuming activities and it demands motivation and
ERP projects [10]. It affects the planning stage where a commitment from all the sector of business. The first step is
different type of instruments is practised under the same the initial phase of ERP. The package introduced in the
concepts of ERP systems. SMART technique provides the process for the critical steps in
an organization. The other step is related to the development of
D. Management Information System ERP packages in context with the project failures and risk of
ERP systems are categorized in the form of management ERP systems.
information systems. These are sometimes perceived as
According to the work of Maha and co-workers, there are
complex programs to implement in the industry where the
different types of business related to the adoption of E-
system selection and valuation have deemed different for the
commerce [13]. Oman oil and gas area is also a similar
people. A significant implementation plan is maderegarding
example where the ERP system is proposed to provide
the organizational outcomes and people which are relatedto the
improvement and efficiency.
concerned with the department and role [11]. The ERP systems
have brought a revolution in Oman due to the financial The electronic network for buyers and vendors has been made
resources and reduction of risk from the Oil and Gas sector. effective with the help of ERP Systems. The method of
However, there had been implementation difficulties for this incorporating the E-procurement network for the ERP based
sector in Oman. The obstacles which were present in ERP systems is the first step in initiating the real changes in
systems implementation was the technical problems and business process. Now the second area is the ERP systems
people barriers. The technical problems in Oman can be based on the E-procurement [12]. The business with a high
accounted towards the technological advancement and its volume of the transaction can become substantial for whole oil
integration with the ERP. The people also stand as the and gas sector because it will provide innovative features to
prominent barrier because during installation both issues are expand the business.
highlighted in the context of behavioural and organizational
changes [12]. The change in the cost and risk also provide an G. Type of Barriers
opportunity for the competitors for a reliable place in
technology investments. In applying the ERP systems, there is a different kind of
barriers present. The first barrier comes out in the form of high
E. Improving the Efficiency cost. The oil and gas sector should have remained prepared for
the cost because this will be initial investment for improving
The ERP system is related to improving the efficiency of the the efficiency of the business, the setup cost pertains as the
Oil and Gas sector in Oman. It will have related to the first barrier in applying ERP system to the Oman general
stakeholder’s contribution in providing the flexibility for the business [4]. The competitive bidding and inadequate
849
technology infrastructure are also the supportive problems. Oil and gas sector size in Oman can be understood from the
This can stop the path of software to become a part of the economic levels. Most of the earnings are related to the oil and
industry, the immature business and lack of trust between the gas sector where success rate and results are related to the
supply chain also one of the barriers, hencethis problems implementation.
should be tackledwith more care and experience.
I. Software System
The price of oil has affected the exponential growth in GCC There is another point regarding the ERP system because the
countries. The local population is relatively small, and it is also main change is related with replication of old software as
facing a shortage of technology and computer skills. Applying compared to the new systems [4]. The old software for Oman
the ERP systems will only focus on increasing the companies is not working for the required results, and the
development operation and provide computer related introduction of ERP sources has got the addition of different
information regarding the business and corporate sector. groups in the market. The vendors who provide the facilities
are also prominent for most of the organization depending on
The implementation of ERP system is also related to the Oman
the market size and structure.
vision 2020. This vision is a long-term plan made in relevance
to the sustained oil reserves of the country.The country’s The proposed system can be implemented in large sectors of
future also depends on the economic stability and private Oman. It is an advantage which can aid the overall volume of
sector corporation in development of industry related ERP Oman oil and gas production. The organization which are
systems [4]. connected with oil and gas industry have higher values than
the other organizations of different business, therefore, ERP
H. General Review of the technique
systems are the best possible solution for the companies.It can
ERP analysis is fundamentally dependent on the sharing of increase the demand for ERP system as the products are
databases where the organization have made rules and readilyavailable from the market [10]. The local industries and
regulations for the requirement. The companies in Oman need utilities also focus on product to regulate their production. It
to integrate the technology regarding the management and demands the role of ERP because the consumer has increased
information systems. their circle of activity. The government and organization
require it.
The implementation of ERP models is relatedto the integration
and optimizationof the business processesto improve the The introduction of ERP in the oil and gas market have causes
efficiency of the oil and gas sector [13]. The primary barrier which should be explained to increase the performance level of
was the technology implementation, and this was resolved with the system. Now the bigger circle of production would require
classified ERP models. ERP system is designed to study the the planning of Enterprise in the relation with the resources
effect towards the end to end users, and this is the present [3]. The need for ERP has also exceeded because of the
recommended solution to achieve the business goals. Fig. 1 initiation of more significant projects about the oil and gas
illustrates the proposed model/framework thatcould be adopted extractions. The companies tend to expand the nature of the
when considering ERP implementation within Oil and Gas services to a higher level.
sector.
III. RESEARCH METHODOLOGY

The qualitative and quantitative research methodologies [14]

are used to assess the influence of ERP system in the Oil and
Gas sector of Oman and how this system is influencing the
efficiency of oil and gas sector of Oman. The literature review
of the implementation of ERP system has provided data
regarding the challenges of ERP system and the impact of ERP
system on the efficiency of the organizations. This data is
utilized for the formulation of questions that are usedfor the
survey. A questionnaire is designed to get the feedback from
people about the impact of implementation of the ERP system
in oil and gas sector. The survey is conducted with the help of
a questionnaire.

A. Data Collection and Sampling

Fig. 1. Proposed ERP System implementation model /framework 1) Sample composition
diagram The survey is conductedamong four big oil and gas companies
of Oman. These companies include Petroleum Development
The implementation of the information system is a bit
Oman (PDO), Oman Oil Refineries and Petroleum Industries
complex, and it also depends on the sector scope and size [10].
850
Company (ORPIC), Oman Oil Company Exploration & interpretation. To simplify the process of analysis, SPSS is
Production LLC (OOCEP), Abraj Energy Services (AES) and used as a tool for the quantitative analysis of primary data [18].
Oman Gas Company (OGC). Electronic versions of the
questionnaire are used for the survey. The size of the sample is 2) Qualitative data analysis
200 that targets oil and gas sector of Oman. The managers and There are three steps for the qualitative analysis of secondary
IT experts of oil and gas sectors of Oman were included in this data. In the first step, data is divided into different categories to
sample. The responses of 200respondent from the Oil and Gas increase the subjectivity of qualitative data. This practice has
companies of Oman are recorded in electronic versions for the helped in the quantification of non-quantifiable data. Different
analysis. parameters are identified in each category increase the
objectivity of data. Each category of secondary data is assigned
2) Primary Data sources a specific code to make it more interpretable. Max QDA
The questionnaire is the primary data source for this research. software is used for this purpose. In the second qualitative data
For designing of the questionnaire, an industry visit to analysis, the theme of different categories is identified by
Petroleum Development Oman was conducted to support the critically analyzing each category. Next, the patterns are
information gained through the literature review of ERP observed in different categories and the relationships are
implementation. The industry visit helped in the development developed between different factors [19]. The relationship
of a practical understanding of the issues and challenges faced between various parameters is recorded.
during the implementation of the ERP system. Moreover, the
industry visit has given insight into various parameters that The relationships and patterns are tabulated to make them
determine the impact of the ERP system on the efficiency of more interpretable. Finally, the summary of organized data is
Petroleum Development Oman. The questionnaire is drafted compiled for the critical analysis. The compiled qualitative
with the help of literature review and observations made data is comprehensively and critically analyzed, and its
during the industry visit. The responses of questionnaires have relationship is developed with the quantitative data. The trends
constituted the primary data for research [15]. and patterns of quantitative and qualitative data are compared
to make sure deductions. The comparison of these two
3) Secondary data sources different types of data has helped in the development of
The secondary sources of data include the information from linkage of the findings with the objectives of the research. The
websites, journal articles and reviews of IT experts, reviews of differences and similarities between quantitative and
oil and gas industry experts, and reviews of academia about the qualitative data are observed, andthe relationship between the
influence of ERP system on the efficiency of the oil and gas two makes decisions.
sector of Oman. The annual reports of three of the selected oil
The analysis of quantitative and qualitative data by employing
and gas companies are accessed, toanalyze the influence of
different techniques and soft-wares has converted the raw data
ERP system on the performance of oil and gas companies. The
into an external format. The critical analysis skills are
annual reports of these companies have provided qualitative
employed to deduce the useful findings of the research.
and quantitative data for the research [16].
Finally, the accurate conclusions are madeby findings that
B. Data analysis techniques meet the objectives of the study and imply productive
recommendations for the future research.
Two fundamental techniques of data analysis are employed to
organize, inspect and model the primary and secondary data. IV. RESEARCH SURVEY FINDINGS AND ANALYSIS
The data is analyzed by both quantitative and qualitative data
analysis for the deduction of reliable results of the study. The The questionnaire designed for the survey of the impact of the
results obtained through data analysis has formed the base of ERP system in the oil and gas sector of Oman consists of
the conclusion of this research. In this research, the primary sixteen questions (Fig. 2). These questions investigate the
data consists of quantitative data and secondary data integration of the ERP system with the existing system of the
comprised of qualitative data. The quantitative data analysis oil and gas companies. These questions asked for the opinions
technique is usedfor the analysis of primary data, and the of the participants of this research about the influence of the
qualitative data analysis technique is used for the analysis of ERP system on the operational performance and efficiency of
secondary data [17]. oil and gas sector of Oman. The questionnaire takes the
responses from the participants in the form of affirmation or
1) Quantitative data analysis negation of the statement of the corresponding question. The
The responses of the questionnaires are tabulated in two questionnaire also provides the option to add the opinion other
different formats. The first format contains frequency than the affirmation or negation of the statement.
distribution of data. The second format contains percentage
distribution of the survey responses. The tabulation of data in The analysis of data depicts that approximately 67 percent of
frequency and percentage distribution formats has helped in the participants believe that advancement in technology has
the inspection and interpretation of the primary data. significantly influenced the oil and gas sector of Oman and
Moreover, the primary data is plotted to make it easy for ERP system is beneficial for the oil and gas sector of Oman.
851
They believe that ERP can remove all flaws of the resource of new and existing projects. It seems that all participants
management system of an organization. The acceleration in agree that oil and gas sector of Oman should upgrade the
technology advancement has introduced many software and database approach and implement the ERP system to
hardware applications that can reduce the operational cost for optimizetheir resource planning, as this sector demands
the organizations. The oil and gas sector of Oman makes a efficient planning of resources to improve the performance. All
significant contribution to the country’s economy. The are convinced that most of the companies operating in oil and
incorporation of advanced technology in the oil and gas gas sector are aware of the ERP system. The competitive
industries has improved the efficiency and reduced the environment in the oil and gas industry of Oman has forced the
operational cost. Others responded that the ERP system is not companies to seek approaches that can improve positioning
beneficial for the oil and gas sector as the implementation of and give them a competitive advantage over their competitors.
ERP will complicate the existing systems of the oil and gas Many oil and gas companies of Oman are aware of the
industries. However, most of the participants believe that the significance of the ERP system. Moreover, all of the
issues in the implementation of the ERP system can be respondentsrecognize that the ERP system can help in the
mitigated and the desired outcome of this system can be growth of oil and gas sector of Oman. Majority of the
achieved in shorter time. The literature review of the efficiency participants think that the implementation of this system is
of the ERP system implies that the ERP system can improve economical for this sector. The employment of ERP system is
the resource planning, but it cannot absolutely remove the economical for the oil and gas sector owing to its minimal
flaws in resource management system. The complexity of expenses and maximum output. However, they all confirm that
resource planning depends on the size of the organization. If the employee satisfaction is crucial for the successful
the organization is large with complex infrastructure, there is a implementation of the ERP system. It is crucial to overcoming
high probability that the ERP system will perform at maximum the internal resistance for the complete absorption of change in
efficiency. In the small organizations, the ERP system has the the organizational structure and culture. The will of employees
greater capability to minimize the weaknesses of resource is significant for the integration of the ERP system with the
management system. existing organizational mechanisms. All of the respondents
believes that the ERP is not a simple method to be
RESEARCH SURVEYFINDINGSAND ANALYSIS implemented.
100%

90%
Approximately 52percent of the participants of the survey
80%
responded that the ERP system is too sophisticated to be used
70%
Q1.Advancement in technology has
affected the oil and gas sector?
for the oil and gas industries. About 66percent of the
60%
Q2.Advancement in the IT field has
changed the industries? respondents of the survey believe that the ERP system is an
Q3.Development of databases has
affordable option for the oil and gas sector. The oil and gas
Axis Title

made the operations easier? Q4.ERP

50%
systems can revolutionize every field

40%
of life? Q5.ERP can be beneficial for
the oil and gas sector? Q6.Oman oil
sector of Oman has enough capability to bear the expenses of
30%
and gas needs up gradation in
database approach? Q7.Oil and Gas
the implementation of ERP system. There is a greater
20%
sector in Oman needs ERP system
approach? Q8.Is ERP system too
probability of higher rate of return in the implementation of the
10%
sophisticated system to be used for
oil and gas? Q9.Is ERP system an ERP system.On the other hand, about 64percent of the
affordable
0% participants thinkthat the ERP system is not the answer to all
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Survey Question
the problems related to resource handling in the oil and gas
industry of Oman. The ERP system can only assist the
resource management. It can only minimize the problems
Fig. 2. Survey Findings and Analysis Chart related to resource planning. The strategies of the oil and gas
companies can maximize the efficiency of resource handling.
All participants in this survey believed that the information The ERP system can only complement the functioning of the
technology has changed the industries and has transformed the resource management.
mechanisms of industries. The IT has introduced a paradigm
shift in the operations of many industries and accelerated the The analysis of the annual reports of Petroleum Development
operational efficiency of many industries. Information Oman depicts that the implementation of the ERP system has
technology has facilitated the effective management of all increased the productivity and the profitability of the company.
activities in the industries. They believe that the development The annual reports of two other selected oil and gas companies
of databases has reduced the complexity of many operations show that these companies have experienced a reduction in the
and have minimized the cost and time of operations. Moreover, production cost and improvement in the operational efficiency.
facilitated the management of huge data that is required for the The analysis of journal articles and the perspectives of
day-to-day activities of the companies. Majority think’s that different scholars and IT experts depicted that the ERP system
the ERP has revolutionized every industry. All is beneficial for the large organizations. The reviews of experts
industriesdemand efficient resource planning to optimize its show that the implementation of the ERP system in the oil and
resources and to improve its performance. The ERP system gas sector of Oman will positively influence the efficiency of
helps the organizations in meeting their goals and objectives this sector.
by facilitates the organization for the smooth implementation
852
 V. DISCUSSION that included the participants from four different oil and gas
companies of Oman. The secondary data was collected from
The importance of ERP systems in Oil and Gas sector of Oman the journal articles and the reviews of industry experts about
cannot be denied. This industry has been an attraction from the the impact of ERP system on the organizational performance.
future vision of Oman. The main thought for integrating the
small and medium industries under one platform was to enable The qualitative and quantitative data analysis techniques are
the companies in Oman to have a competitive edge over the employed for the interpretation of primary and secondary data.
human resource development part. The sources in Oman are The analysis of primary data shows that the managers and IT
linked with the private organization which have added towards experts of the five oil and gas companies of Oman encourage
the role of improving efficiency for market cost and workforce. the implementation of the ERP system in the oil and gas
This change is related to the Sultanate industrial growth industry of Oman. They viewed ERP system as of extreme
forecasted for the next five to ten years. importance for the efficiency of oil and gas companies. The
analysis of secondary data shows that the implementation of
The primary objective of the study was to affect the oil and gas the ERP system has improved the profitability of oil and gas
sector and steps which can increase the efficiency of the companies of Oman. The findings of this study suggest that the
system [6]. If there is a need for productivity in the oil and gas oil and gas sector should implement the ERP system to boost
sector, ERP should be implemented under the business its growth.
context. It affects the banking operating because the
technology and services in Oman are closely linked with the VII. RECOMMENDATIONS
oil and gas sector.
During the study, it has been found that the implementation of
ERP software are the modern tools which control and manage the ERP system is a complicated process. The selection of
the operations regarding the efforts of the industry as well as technology for the ERP is a challenging task as no universal
the human resource workforce [5]. It is potentially viable as model can satisfy the demands of every organization.
the research shows that in implementing the ERP there are Moreover, it is challenging to make the ERP system
some potential challenges and difficulties. These can only be compatible with the organizational structure. However, these
removed with the help of professional knowledge and business challenges can be reduced by formulating an appropriate
standpoint. The projects which have been spotted in Oman mitigation plan. This research can be further extended by
have a higher nature of responsibility which can only be comprehensively studying the challenges faced by the
controlled with the help of ERP initiative. Petroleum Development of Oman during the implementation
of the ERP system. By analyzing those challenges, the
The research carried out in the form of quantitative and mitigation plan for minimizing the challenges could be
qualitative analysis were used to calculate data regarding the proposed for other oil and gas companies that are seeking the
ERP systems. It involved collecting Data form journal articles implementation of the ERP system.
and website. The main point was to learn standard techniques
regarding ERP and provide a comparison between the The mitigation plan of PDO for the implementation of the ERP
technologies available in the market [6]. The importance of system can be analyzed to assess its performance. The robust
ERP systems was also investigated with the help of strategies from the mitigation plan of PDO can be adopted, and
quantitative method of research. In this portion surveys and the weak strategies can be improved. An efficient model can
questionnaires were carried out to find the information about be developed for the oil and gas companies that support the
Oman companies and their counterparts.This main advantage successful implementation of the ERP system. A model can be
was related to the business improvement and aligning the developed for the evaluation of the ERP implementation plan
changes in the culture of Oman. and the assessment of the mitigation plan. Comprehensive
research could be conducted on the efficiency of the mitigation
VI. CONCLUSION plans adopted by different organizations for the
implementation of the ERP system.
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