SIBC Deloitte Final

Fall 2014 Deloitte Consulting Project
December 5th, 2014

2
Team Leaders
Neil Jones
Class of 2017
IT Management
Entrepreneurship
Raina Kim
Class of 2016
Finance
Chinese

SIBC
3
1989 2000 2014
Founded by Father
Hesburgh & Frank
Potenziani with the
vision “Peace Through
Commerce”
Officially known as the
Student International
Business Council at the
University of Notre
Dame
The largest student run
organization
500+ members
30+ client companies
10+ international
internships

4
Agenda
1. Defining the Situation
2. Team A Solutions
3. Team B Solutions

Situation: Two merging oil and gas firms
are operating on different ERP systems
5
Location
Canada, US, Eastern
Europe, North Africa
Annual Revenue
$13 Billion
Total Employees
12,000
Location
Canada
Annual Revenue
$9 Billion
Total Employees
7,000

Industry overall
Oil and gas industry is capital intensive
• Imperative to control operational costs, given high
costs of exploration
Unscheduled downtime will hinder growth
• High exploration costs must be offset by continuous
production
Must stay focused on gaining competitive
advantage
• Minimizing change impacts from ERP integration will
keep Atlas’ competitive edge

7
Deloitte Project Goals
Minimize change
impacts on
employees and
day-to-day
operations
Enhance
business
continuity
across the
merger
Develop and implement a consolidated ERP system
across the new company, post merger

Team A
8
Lucrecia Siman
Class of 2017
Management
Consulting
Political Science
Kyle McHugh
Class of 2017
Finance
Economics
Monica Barboza
Class of 2017
Management
Consulting
Portuguese

Team A
9
Tiphaine Delepine
Class of 2017
Finance
Elizabeth Principe
Class of 2017
Finance
Applied Math
Lake Heckaman
Class of 2017
Finance
Mathematics

Presentation Outline
Solution
Implementation
Benefits
Conclusion

Solving Atlas’s ERP issues will position
Atlas for future success
Atlas
Energy
(Oracle)
Alberta
Oil
(SAP)
Our
solution
Deloitte’s
Task
Standardize business processes
Enhance business continuity
Minimize change impacts
Increase operational efficiencies
Retain top talent
Cut costs
Atlas Energy Inc
Employees : 12,000
Annual revenue : $13 billion
Region: Canada, US Eastern
Europe and North Africa
Alberta Oil
Employees : 7,000
Annual revenue : $9 billion
Region: Canada

What is an ERP system?
ERP
Business process
management
software
Enterprise
Resource
Planning
Automation and
integration of
data
Improves
effectiveness
and
productivity
ERP modules include: HR, financials, supply chain,
manufacturing, among others

13
Potential Solutions
Translate Alberta to Oracle
Translate Atlas to SAP
Alternative Option

ERP Deployment Options
Multiple sites or geographic locations
Single Tier becomes too large and costly to
customize, maintain and upgrade
Increasing number of M&A’s
entering or leaving the organization
Two-Tier
Drivers

What is a two-tier ERP system?
Two-tier ERP
Corporate level ERP system
acting as global standard
Other subsidiary level ERP
systems for divisions
1
2

Trend towards two-tier ERP
According to Constellation Research, the amount of buyers
considering two-tier ERP strategies is increasing consistently
Two-tier ERP strategies have been gaining popularity since the
2008 recession
Ventana Research found that 2/3 of companies with over 1000
employees use ERP systems from more than one vendor
Companies considering a two-tier
27%
strategy
32%
48%
60%
50%
40%
30%
20%
10%
0%
2009 2010 2011

Our solution: a two-tier ERP
Maintain Tier 1 ERP system at corporate level and continue operating multiple Tier 2
ERPs at the secondary level. This simplifies future acquisitions and sales of divisions.
Oracle Hyperion Financial
Management
Atlas Energy
(Updated
Oracle)
Alberta
(SAP)
Future
Acquisitions
External
reporting
Senior Management
reporting
Future
Acquisitions

18
Many companies have already
successfully adopted two-tier strategies
Support for big
and small business
units
•Solved a $2B problem –
domestic and foreign
subdivisions were in
need of ERP
•Lower TCO, under
$100,000/year to
operate
Rapid global
expansion efforts
•140 locations
worldwide running on
different software
systems
•Streamlined
management
•Support for future
expansion
Fast growing
company
•$670 million between
2009 & 2010
•Two-tier ERP went live
in 6 months
•Plans for 26
international markets
in 3 months

How we will implement our solution
Update Oracle
base system in
Atlas
Establish Oracle
Hyperion Financial
Management System
Map data from
SAP to Oracle

20
Use comprehensive suite to merge
Oracle and SAP repositories
Oracle Hyperion
Financial
Management
Close Suite
Data
Relationship
Management
Administration
tool
Patches
Hyperion
Disclosure
Management
xBRL
“Hyperion is the latest move in
our strategy to expand Oracle’s
offerings to SAP customers.”
Charles Phillips
Oracle President

40%
35%
30%
25%
20%
15%
10%
5%
0%
% ERP USERS EXPERIENCING SAVINGS
SAVINGS FROM CLOUD USAGE
SAVINGS AMOUNT
0-20% 21-40% 41-60% 61-80% Over 80%
21
Use cloud storage and computing to
handle big data
Lower
ownership
cost
Higher
return
Total cost
savings

22
Benefits of a two-tiered solution
Minimal
Disruption
Human
Resources
Lower
overall
costs
Trends in
Global
Economy
Mergers &
Acquisitions

23
Two-tier helps maintain culture and
retain top talent
Maintain unique
culture of companies
Retain Atlas’ top
talent
Take care of local
issues

Two-tier increases efficiency and savings
Minimal Disruption
Training only for
high-level
management
Business operations
continue and
improve
Cost Savings
Massive reduction in
training costs
Lower purchase
price
No lost revenue

Our solution will streamline future M&A
activities
Lower
cost
Shorter
time
Ease of
acquisition
33% reduction in implementation costs
50% decrease in full implementation time
Large-scale ERP systems cannot keep pace with
a changing environment

26
Global economic trends will yield
increasing revenue streams for Atlas
Atlas will capitalize on this market growth by not halting
15
10
5
Oil imports by country
Canadian
Dollar
Weakens
Canadian
exports seem
cheaper
Foreign
Countries
Import
Canadian Oil
0
Barrels per day (millions)
United States
China
Japan
Germany
Netherlands
Canada
business operations

27
Potential drawbacks of a two tier system
Complexity
Operating
systems from
different
manufacturers
Upkeep
Both systems
will need
periodic
updates
Industry
Precedent
First to deal
with potential
issues

Two-tiered solution addresses concerns
• Implementing a two-tier
ERP system is less costly
than converting all
divisions to a single
system
•The unique culture of
each division is not
compromised and
local issues are easily
resolved
• Standardizing top
management while
divisions remain
separate facilitates
future M&As
•Low-level operations
are not interrupted
while high-level
management is in
training
Disruptions
are
avoided
M&A is
prevalent
in the oil
industry
Costs are
minimized
HR remains
division-specific
A two-tier ERP system creates standardization that promotes growth while
facilitating interaction between divisions.

Recap
Enhance
business
continuity
Increase
operational
efficiencies
Minimize
cost
Minimize
change
impacts
Retain top
talent

Canadian M&A Energy Trends
Resistance to proposed pipeline projects will
continue
Increase in consolidation and M&A of smaller
companies expected to continue in 2014
Low natural gas prices and oversupply have led
many industry leaders to sell assets
Source: Stikeman Elliott 2014 Energy M&A Trends in Canada 32

Energy Trends – Industry Overlook
To 2019, industry revenue of global oil
and gas is forecast to grow at an
annualized rate of 4.3% to $5.6 trillion
A steady increase in price of energy
production is expected, as the world
economy recovers from recession
Industry employment is projected to
increase over next 5 years, a sign of
positive growth
Source: IBIS 33

Africa is the next big thing in natural
gas
160%
140%
120%
100%
80%
60%
40%
20%
0%
Natural Gas Production Projection
2012 2015 2020 2025 2030 2035
North America Europe & Eurasia Africa
Drawbacks
• Lack of infrastructure
and stability
Highlights
• Africa shows over 140%
growth by 2035
Conclusion
• If infrastructure can be
secured, investment
recommended
Bp.com 34

Share of Total Oil Consumption and
production (2013)
34%
Consumption
10%
Production
Source: http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-report.
pdf
25%
7%
4% 9% 21%
North
America
South &
Central
America
Europe &
Eurasia
Middle East
Africa
19%
9%
20%
32%
10%

Oil Change 2013 over 2012
North
America
South &
Central
America
Europe
&
Eurasia
Middle
East
Africa
Asia
Pacific
WORLD
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
Percentage
Production 8.70% 0.20% 0.20% -0.70% -5.70% -1.70% 0.60%
Consumption 1.30% 4.40% -0.40% 2.20% 3.20% 1.50% 1.40%
Source: http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full- 36
report.pdf

Oil and Gas Industry New Technologies
Focus on
developing
technological
solutions,
increasing
the world’s
producible
reserves.
Development of the Subsea Oilfields
Moving processing to the ocean floor reduces
infrastructure costs and production costs, greatly
improving return on investment.
The Shale Play
Exploitation of shale basins using hydraulic fracturing
and horizontal drilling techniques has increased U.S.
crude output.
Enhanced Oil Recovery
Boosting oil recovery could unlock around 300 billion
barrels of oil, reducing the risk and the infrastructure
cost.
http://www.srr.com/article/trends-and-challenges-oil-and-gas-industry 37

38
Comparing Oracle and SAP ERP systems
Oracle
•Low market
share
•Need more
through
vetting
SAP
•Customization
cumbersome
•High personnel
requirement
90% of users realize ROI in
5 years
Software is trending
towards cloud and big
data
Projects have a larger
scope and scale
Moving toward increased IT
capabilities

Need for Minimal Disruption
Atlas Net daily production of 261.3
million equivalents per day (6%
increase over 2014 Q1)
33% Increase in Q2 to 2,100 barrels
per day
20% increase in production capacity
Alberta Strong economic growth with an
expected trend of 3% growth
Massive spending on oil sands projects
is now translating into sharply higher
production and exports
With more takeaway capacity (given
by Atlas) Alberta can raise prices and
turn a higher profit margin
With low volatility, North American oil is primed for high
sales, meaning minimal disruption is a must
Source: http://www.eia.gov/todayinenergy/detail.cfm?id=15251 39

40
Two-Tier Systems Lower Costs and
Implementation Time
Average Tier 1
Oracle
Implementation
Time frame:
22.5 mos
Cost: $2.25 M
50% of users
reported
operational
disruption
Disruption
lasted 3 months
Average 2 Tier
Implementation
50% decrease in
time frame
33% reduction
in cost

Team B
41
Lauren Janek
Class of 2017
Finance
Cynthia Qu
Class of 2017
Economics
Liberal Studies
Kevin Schmitt
Class of 2017
Accounting
Theology

Team B
42
Taryn Stamper
Class of 2017
Finance
Applied Math
Paulina Eberts
Class of 2017
Chemical
Engineering
Niki Dirksen
Class of 2017
Marketing

43
Atlas and Alberta Oil will become
united through an ERP implementation
Atlas Energy Inc.
-ERP System: Oracle
-Employees: 12,000
-Annual Revenue: $13 Billion
-Regions: Canada, US, Eastern
Europe, and North Africa
Alberta Oil
-ERP System: SAP
-Employees: 7,000
-Annual Revenue: $9
Billion
-Regions: Canada

44
Oracle ERP will unify Alberta and Atlas
and lead to future success
ERP
consolidation for
Atlas Energy Inc.
and Alberta Oil
Analysis of top
ERP competitors
Oracle
Comparison of
implementation
strategies
Rapid bottom-up
approach
Effects of ERP in
the merger
Minimize
disruptions,
maximize
efficiency
Future market
expansion
Africa, natural
gas

45
ERP System
ERP
Implementation
Strategy
Factors of an
Effective
Implementation
Future Success

- Connects all aspects of
business in a centralized
source
- Creates streamlined
business model and
processes
46
Enterprise Resource Planning promotes
business synergy
Internal Company Relations
- Allows for complete
employee database
- Structures levels of
management and employee
expectations
ERP
Increased Efficiency
- Helps in planning and
optimizing business
operations
- Captures customer
information efficiently
Improved Data Flow
- Creates improved supply
and demand management
- Produces real time insight
for financials
Integration
Mobile Cloud Big Data

• Few locations, simple location structures
• Less customization options
47
Oracle and SAP offer the greatest resources
for expanding Atlas Energy over competitors
Microsoft Dynamics
• Lowest market share of all three
• Mostly used in small and mid-sized
companies
• Less complex ERP system
Vendor Market Share in 2013
11%
32%
26%
17%
14%
Microsoft Dynamics
Tier III and others
SAP
Oracle
Tier II
Tier II and Tier III
• Provide solutions for small to medium
companies
Oracle and SAP’s proven track records lead to more potential
opportunities for the newly merged company

48
Oracle and SAP are the most logical ERP
solutions
ERP System Strengths Weaknesses
• 17% of market share
• Research and development
capabilities
• Highest success rate at 71%
• Oracle implementations
take approximately 4
months longer
• Slow in adapting cloud
services
• 26% market share
• Strong customer support
• Highest short list-rate at
51%
• High licensing costs
• SAP has a 13% difference
between planned and
actual costs
• Implementations have 69%
material operation
disruptions

49
Oracle allows for the most efficient
merger between Atlas and Alberta
Company Size
Smaller implementation needed
due to Atlas’s larger presence
Location
Alberta’s location allows for
reduced training and
implementation costs
International Market
Atlas’s international activity will
not be affected during
implementation
Costs
Oracle has a smaller differential
between planned and actual costs
by 9%

50
Oracle’s implementation led to many
benefits for Southwestern Energy
“ With Deloitte Consulting’s
implementations and Oracle’s
consolidated financial platforms,
SWN can now scale to new ventures
domestically and internationally.”
-CRAIG OWEN, Chief Financial Officer
20% reduction in total
costs
50% increase in
bottom-line benefit
over the next five
years
One of the lowest
operational cost
companies in Oil and
Gas industry within US

51
An effective ERP implementation can
minimize Oracle’s drawbacks
Length of
Implementation
Overall Costs
Future Cloud
Implications

52
ERP System
ERP
Implementation
Strategy
Factors of an
Effective
Implementation
Future Success

53
Phased Roll-out and Big Bang are two
common ERP implementation strategies
Phased Roll-out
Pros:
•Less risk
• Skills and experiences are
gained with each phase
which can help smooth the
process
Cons:
•Taker longer to be fully
converted
•Not as focused as Big Bang
Big Bang
Pros:
•Shorter implementation
time
•Lower costs
Cons:
•High risk
•Failure in one part of the
system may cause problems
in other

A rapid bottom-up approach leads to
success in the oil and gas industry
“Integrate then
transform” vs.
“transform then
integrate”
Necessity of
rapid
implementation
Top down vs
Bottom up
“The ‘integrate, then transform’
strategy…facilitates the process
of creating a single, high
functioning, and
communicative
organization.”
“The business
of actually
creating a single
corporate culture…
depends largely on
Implementing measures
Which prompt participants at all
levels and throughout every business
unit to begin working off the same page”

55
Rapid bottom-up implementation of
Oracle leads to efficient standardization
3. Allow for integrating business
processes to increase operational
efficiency
2. Reduce culture clash and create company unity in
order to retain top talent
1. Remove overlapping divisions and increase communication in
order to cut costs

56
ERP System
ERP
Implementation
Strategy
Factors of an
Effective
Implementation
Future Success

57
Different sub-divisions have varying
definitions of implementation success
•ERP system is successful when the
company achieves business improvements
and other predetermined goals
Executive
Leadership
•ERP system is successful when the project
is implemented within budget and on time
Project
Managers
•ERP system is successful if there are
smooth operations within the system
Users
An ERP implementation is successful for all parties when there is top
management level support, ERP training and education, Enterprise-wide
communication.

58
Efficient communication is necessary in
carrying out the implementation
Technical
team and
subject matter
Communicate:
experts
Top
management
Project
Managers
Training Staff
• Scope
• Objectives
• Timeline
• Budget

59
Proper ERP implementation correlates
with merger success
Hardware and Software Installation
Programming
User Training
Documentation
Communication

60
ERP System
ERP
Implementation
Strategy
Factors of an
Effective
Implementation
Future Success

61
Canada’s increasing oil production will
positively affect newly united Atlas
Oil Production Projection
2012 2015 2020 2025 2030 2035
40%
30%
20%
10%
0%
-10%
North America 0% 16% 30% 33% 35% 37%
Europe & Eurasia 0% 0% -2% -4% -6% -5%
Africa 0% -3% 5% 4% 3% 4%
By 2019, industry revenue of
global oil and gas is forecast
to grow at an annualized rate
of 4.3% to $5.6 trillion
Canadian Oil Production
expected to increase by 37%
by 2035

62
Successful ERP integration will lead to
future market success
Natural Gas Production in
Africa predicted to
increase by 140%
Integration of ERPs will
increase company’s
revenue in increasing
markets
160%
140%
120%
100%
80%
60%
40%
20%
0%
Natural Gas Production
Projection
2012 2015 2020 2025 2030 2035

63
Unified Atlas Energy Inc. under Oracle
leads to merger and market success
ERP
consolidation for
Atlas Energy Inc.
and Alberta Oil
Analysis of top
ERP competitors
Oracle
Comparison of
implementation
strategies
Rapid bottom-up
approach
Effects of ERP in
the merger
Minimize
disruptions,
maximize
efficiency
Future market
expansion
Africa, natural
gas

66
2014 SAP vs Oracle Data
CLASH OF THE TITANS 2014
An Independent Comparison of SAP,
Oracle and Microsoft Dynamics

67
Implementation Focus
Manufacturing • Increase operational efficiency
Finances • Implement cost-cutting solutions
• Retain top talent and unify the
company
Internal
Organization

68
Oracle’s effect on Manufacturing
Oracle
Production
Scheduling
Maximize
Shop Floor
Throughout
Maximize
Utilization of
Critical
Resources
Maximize
Inventory
Turnover
Minimize
Inventory
Minimize
Unnecessary
Time Usage
Oracle Production
Scheduling
Increase in
Productivity
Optimization

69
Oracle’s effect on Finances
Simplify
Extensive
spreadsheet
integration
across finance
functions
Control
Imaging
integration for
supplier
invoices
Accelerate
Innovative
embedded
multi-dimensional
reporting
platform
Collaborate
Simultaneous
accounting of
multiple
reporting
requirements

70
Oracle’s financial applications cut
down costs
•Oracle allows company
to grow without
worrying about finding
skilled IT staff
• Oracle’s advanced
financial applications
streamline operations
and optimize supply
and distribution
• Oracle’ s financial cloud
turns data received into
information more
quickly
• Oracle’s centralized
accounting engine can
provide real-time
accounting results for
very large data volumes.
Lower
operational
costs in
financial
consolidations
Reduce
wasted
resources on
unpromising
projects
Diminish IT
costs
Decrease
costs in supply
and
distribution

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