Mitsui Babcock

Plans to offer project management skills to client organisations

The problem

Chief characteristics of the Mitsui Babcock implementation was the need to meet the requirements of two distinctive business environments - one covering large, long term, new build projects and the second, more varied short term activities supporting repair, maintenance and day-to-day operating contracts.

“Each of these business streams involves different requirements and levels of complexity, says Richard Waring.  “Newbuild probably involving just a single customer and relatively few suppliers, whilst conversely, repair and maintenance work has a large number of customers and many more suppliers with multiple projects being executed simultaneously.”

The group had operated previously with bespoke systems based on a mainframe computer.  Whilst this fulfilled the requirements of the business then, it offered limited scope for future development and expansion needed to support a wider network of users.

The implementation of a new generation of systems has enabled Mitsui Babcock to expand access from a few hundred users, to a distributed network covering 1400 users in many locations.  The new system uses IFS Applications software installed on a central server and information repository, located in the group’s offices in Renfrew near Glasgow, Scotland.

“All of the company’s business operations, in the UK and overseas access the Renfrew server by way of thin-client technology and this has proven to be a great benefit in terms of mobility of users and administration of access and executables.  We have increased communication to Mitsui Babcock personnel located on customer sites.  Currently there can be between 40 and 70 sites in the UK alone.  Ultimately this capability will be extended to provide 24x7 on-line access to any authorised users across the entire extended enterprise,” says Richard Waring.

The solution

Significant effort went into defining requirements and evaluating competitive proposals for upgrading the group’s business management system.  The initial decision to choose IFS Applications was further reviewed and confirmed by a leading management consultancy, following a change of senior management at Mitsui Babcock.

“Benefits are now feeding through to the business in terms of information quality, speed, visibility irrespective of geography, and overhead reduction.  Where once events would take several weeks to show through in reports, these are now captured virtually in real time, as they occur.  The link between project and financials is very significant and of course cash flow is key.  In choosing the software, the Mitsui Babcock team looked at all the options, both for best-of-breed (selecting multiple packages or “point solutions”) and a one-stop ERP (enterprise resource planning) packaged integrated solution.  Best of breed was rejected because although an attractive concept, it was considered to be far too expensive to buy, integrate and maintain over the long term.”

“We did not expect any of the ERP solutions would cover all our requirements, and we recognized the need for a development environment to give us the capability to develop applications for ourselves.  The decision to choose IFS was made partly because though there was a close match to our statement of requirements, the system was still relatively young and growing in functionality, and partly because it was an economic proposition.”

“The need for a system to cover all the group’s overseas operations was also an important deciding factor.  Mitsui Babcock has subsidiaries in the USA, India and China all of which involved on-going construction sites as well as office operations, and whilst again there were various options, the IFS offering gave us the functionality and visibility that we wanted.”

The overseas divisions are now using IFS by way of an Internet tunnel from Renfrew and it works very well.  “If we need to add any future locations we expect to operate these from the Scottish server.  It is proven,we do not have to do anything different other than hook up the communications and cater for any specific local requirements and a key advantage of our thin client approach is that it simplifies global system administration and upgrades,” says Richard Waring.

Mitsui Babcock makes provision for continuous improvement, recognising that the system will be evolving continuously to keep in step with changes in the business.

“The implementation is not a one-off exercise,” says Richard Waring. “There is a constant need to innovate and adapt.  If you do not do that and re-launch functionality and training periodically, the advantages gained will erode with time.”

Implementation

Mitsui Babcock first installed the Financials modules, which effectively replaced the key functions of the previous mainframe system.  The opportunity was taken to combine the ledger systems of what were previously multiple subsidiary companies and business units, into a single database.  The rollout program allowed for phased implementation across the functionality range and took into account different business cycles, seasonality and the need to replace non-IFS related mainframe functionality.

The next stage introduced Project Management functionality, covering most of new-build requirements.  The third stage was the replacement of a Unix based system for materials, consumables, plant and non-project expenditure.  Focus here was the company’s logistics support centre based in Tipton in the West Midlands.

Mitsui Babcock is more complex than most implementations in that it has a much broader spread of activities.  At any one time the group can be operating from a large number of sites, each of which will have personnel raising purchase orders and recording goods received planning etc, and each site may also have particular client invoicing requirements.

There is also a degree of transience, depending on the nature of the work.  Some projects run over years while others may be completed within a few weeks.  As well as new-build programmes, Mitsui Babcock provides contract management services and a wide range of support operations, covering test, refurbishment and upgrades of control and instrumentation.  Most power stations and petro-chemical plants in the UK have a Mitsui Babcock presence, and potentially, many of those will be users of the IFS system.

At each site there may be anything from one PC to 50 or 100 PCs used for various activities.  Mostly these are configured with a local server and networking to support electronic mail and planning/engineering systems as well as the IFS business management applications.

The Mitsui Babcock group has three main office locations: Crawley is corporate head office, marketing and administration.  Renfrew is UK Head office and manufacturing site and Tipton which is the heart of the procurement and logistics for the UK.  This site has a warehouse and provides a distribution service supplying anything from toilet rolls to welding rods and any other consumable & materials required by the site project teams.

Overall most of Mitsui Babcock’s requirement tends to be project orientated.  Cash flow to an organisation like this is very important.  It is therefore critically important to know the status of every project, at any point in time.

One of the group’s biggest cost-out elements in the UK is man-hours, hence the significance for capturing this information, to feed it back into the project, as well as staff payment.  For a new-build construction project, roughly 70 per cent of the cost is in bought out components and material, such as steel plate and pipes, pumps, fans and instrumentation and control.

Logistics support from Tipton involves procurement, shipping and warehouse inventory activities.  So in this area the business is more akin to repetitive manufacturing, in that there will be inventory, minimum stock levels and the need for an MRP (materials requirement planning) system to drive material replenishment.

Integration

Effectively IFS provides the backbone system, into which and from which other systems are integrated.  Any functionality provided by non-IFS systems have been easily integrated into IFS.

Benefits

Immediate payback from the implementation came from a number of areas.  Firstly although the previous mainframe system offered good functionality, it had become very expensive to support.  Other benefits relate more from the improved cash flow as a result of faster reporting.  Overall, Richard Waring believes that the cautious and pragmatic approach has resulted in a much better implementation.

Richard Waring stresses the need for inhouse expertise.  “We have gained a lot in terms of depth of knowledge of the IFS software and how to implement it into a number of different business streams, under different exigencies and logistical requirements.”

“We have also undertaken upgrades to later versions and each time we have been able to improve our knowledge and get better at using the software.  Our in-house investment includes a strong Oracle database administration capability.  This has provided several key advantages, in particular with the way we organise our databases.  We have all the skills necessary to manage live, test and development situations.  We can also undertake software migrations and produce scenarios, to prove applications will work before we release them to the users.”

“The recent implementation at Tipton was aligned with the business time table and seasonality and although it may have been a long process, I am pleased to say that a difficult and critical project phase went completely without a hitch.  With this track record and our resource strength in depth, we are now ready to look for new challenges,” says Richard Waring.

Currently the Mitsui Babcock IT department has 26 staff distributed between the three UK business locations.  Plans are now being drawn up to provide expertise to others and to seek consultancy work on behalf of Mitsui Babcock.

Richard Waring concludes: “If we hadn’t implemented IFS and opted instead for a best-of-breed approach, I doubt that we would have ever have got to the end of the process.  Certainly we would never have got to the position where we could be thinking about offering services to outside clients.  We would more likely be spending all our time maintaining, enhancing and performing upgrades of the various different modules and more importantly not adding any value.”