Case-study ECMS Serova Elena

E.G. Serova

Information Technologies for Documentary Support

of a Gas Distribution Company’s Managerial Activities

The case describes an actual situation related to solution of the problem of creation and implementation of an enterprise information system (EIS). The first step taken towards solution of the said problem consisting in document management automation is considered. The case materials enable generation of a conceptual model of the enterprise information system as well as definition of the role played by EDMS (electronic document management system) therein. While discussing the material the students have to formulate platform selection criteria and select an electronic document management system for implementation.

General Characteristic of the Company

The company described in the case (hereinafter referred to as the “Company”) was established in St. Petersburg in 2004 as a result of signature of an agreement on strategic cooperation by the city Government and representatives of Gazprom OJSC in the field of gas supply. Gazprom OJSC mainly specializes in geological survey, production, transportation and marketing of gas and other hydrocarbons. Gazprom OJSC avails of globally the richest gas deposits and owns the largest world gas transportation system – the Russian Unified System of Gas Supply. Enterprises of the Gazprom Group also service 463.4 thousand km (77%) of the country’s distribution gas pipelines. Thanks to centralized management, a highly ramified structure and availability of parallel transportation routes the unified transportation system has a considerable safety margin and in capable to ensure failure-free supplies of gas even under seasonal peak load conditions. Gazprom OJSC is leader in distribution of gas along low pressure networks and has a controlling interest or a participation share in most regional gas distribution organizations. Annual amount of gas transportation to end consumers within the Russian Federation exceeds 200 bln m3.

The case has been prepared based on primary information obtained as a result of an investigation undertaken by the author with the company. The author expresses gratitude to A.V. Petrich, project manager and business analyst of RASoft LLC, for active assistance rendered during the case preparation.

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The Company establishment was mainly aimed at provision for integral development of gas supply systems and failure-free sustainable supply of natural gas to consumers within St. Petersburg. To make it possible one had to solve the following tasks:

transportation of natural gas to consumers within St. Petersburg;

management of the whole of the city as supply system;

pursuance of a unified technical policy in gasification of St. Petersburg and development of the city gas distribution system;

coordination of production activities and complex solution of issues related to operation of the gas distribution system aimed at provision for safe and failurefree gas supply;

reconstruction of the gas distribution system facilities;

construction of the gas distribution system facilities;

The Company being considered took charge of the whole of the St. Petersburg gas distribution complex. Total length of the complex gas networks is equal to 5,300 km. Annual gas consumption of the city exceeds 10,000,000,000 m3.

Meanwhile, according to the date provided by the Committee for Energy and Engineering Support under the Administration of St. Petersburg over 30% of the gas networks have been in operation for 30-40 years, another 30% - for over 40 years.

Based on the inventory having been undertaken the company elaborated a program for complex reconstruction and construction of new gas services of the city gas distribution system. Besides, there are over 1.5 mln gas stoves within the St. Petersburg dwelling stock, depreciation life of approximately 500 thousand of them having expired.

In cooperation with the Committee for Energy and Engineering Support under the Administration of St. Petersburg the gas distribution company elaborated a target program of capital investment per gasification facilities of the suburban districts of St. Petersburg as well as a program for reconstruction and development of the city gas distribution system. Since 2004 the Company has been re-laying gas networks whose depreciation life has expired.

Immediate management of the enterprise’s activities is exercised by the board of directors. Technical Director heads the Administration for Operation of Gas Systems and Installations, the Administration for Prospective Development of Gas Supply Systems and the Gas Safety Administration. The Administration for Operation of Gas Systems and Installations exercises control over operation of gas pipelines, installations thereon, gas control units and gas equipment. The Administration for Prospective Development of Gas Supply Systems is busy with investment planning in accordance with the target programs having been elaborated as well as with design, construction and reconstruction of gas supply facilities and issue of certificates and specifications. The Gas Safety Administration is in charge of provision for gas network operational safety. Deputies of Director General perform management of the activities of the Administration for Economy and Finance, the Contracting Department, the Automation and Communication Department and other subdivisions.

For the enterprise’s general organizational structure see Fig. 1.

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Director General

Fig. 1 Company’s organizational structure

Enterprise Automation Degree

Since commencement of the enterprise’s operation major importance was attached to creation of an infrastructure required for support of current activities. The whole enterprise is encompassed with a LAN with PCs used virtually at any workplace. For exchange of information corporate e-mail was used as well as a highly-developed system of net folders. Major data volumes were processed with the help of MS Office tools, primarily - MS Word and MS Excel, for accounting support purposes 1С:Enterprise based software was used. A considerable amount of data was contained in separate varied format databases. For support of economic activities several in-house software products were developed.

Meanwhile, the enterprise development and extension of its activities areas resulted in critical increase of the flow of documents received from both entities and

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individuals. All kinds of reports, summaries and certificates grew in number, their generation requiring much effort. One had to spend increasingly longer time on search for and approval of documents required. A specific peculiarity of a gas distribution company's activities consists in step up requirements to documents harmonization contents and procedure witch are conditioned by one having to follow gas safety rules.

Accordingly, the enterprise management set a task for the Automation and Communication Department to create an enterprise information system for management of the enterprise’s contracting, financial and engineering activities. The system was to provide the management with reliable and timely information required for managerial decision taking. Unavailability of readymade information systems capable of ensuring solution of the tasks sets with due regard for the enterprise’s activities specificity necessitated EIS development. Meanwhile, there are a great number of readymade electronic document management systems commercially available that could provide for document flow management after certain adjustment and adaptation. Thus, due to document management issues taking up increasingly more work time, the priority requirement was to provide for document flow management and to define the structure of an general requirements to the enterprise information system.

Main Business Processes Description

The gas distribution entity provides for transportation of natural gas from the gas supply source (gas-distribution station - GDS) to the shutdown device on the end consumer’s inlet gas pipeline. The Company’s main business process is provision for transportation of gas to consumers (see Fig. 2). Main result of the enterprise’s activities consists in provision for maintenance of network gas parameters at the preset parameters of the gas supplied at the gas-distribution station which enables the consumer to use gas in the quantity required, In this case gas pressure and volume of gas consumed may be taken as basic parameters.

Gas safety requirements

Network gas parameters

Gas services

Supplied gas parameters

Gas transportation

0

Services Payment for services

Profit

Fig. 2. “Transportation of gas to the consumer” context dia gram

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To maintain operability of the gas distribution network one has to continuously perform operational management of the network, its maintenance and operation, reconstruction and further development of gas facilities as well as new sites gasification. Operational management of the network results in operability of the gas distribution network equipment (facilities). All the equipment and the works performed shall comply with the sectoral norms and standards and to gas safety rules requirements.

During connection of new consumers and the network reconstruction the enterprise provides services of specifications harmonization, project development and construction of facilities.

Contractors provide for performance / provision of the complete array of works / services immediately related the gas distribution complex operation, the works being funded by the enterprise (“ Payment for services”, Fig. 2).

Settlement of accounts in connection with gas transportation proceeds in accordance with the applicable gas transportation tariffs; after payment for tee contractors’ services some profit remains at the enterprise’s disposal.

The whole of the enterprise’s activities are carried out by the subdivisions (administrations and departments) according to their functional responsibilities.

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Diagram of the business process of gas transportation along the gas distribution network

Gas distribution network development (see Fig. 3), gasification of new sites and new facilities commissioning are critically important activity areas. The major sources of funding for the gas distribution network development and reconstruction are the city budget, special surcharge to tariff and investment. In the course of development new facilities are being constructed within the gas distribution network. The Administration for Prospective Development prepares target lists for reconstruction of gas pipelines and gas distribution units, negotiates their approval (target coordination program) with regard to gas pipelines and provides for design, construction and reconstruction of gas supply facilities additionally rendering other services to individuals and entities in connection with issues of design, construction and reconstruction of gas supply facilities.

Management of the gas Distribution Network

Operational management of the gas distribution network (see Fig. 3, Fig. 4) involves facilities accounting, control of facilities technical conditions, equipment repair and replacement planning and supervision overworks on the gas distribution network. Management results in operability of the network facilities.

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Fig. 4. Diagram of the business process of management of the gas distribution network

Maintenance and technical operation are immediately performed by contractors under contracts. The enterprise controls facilities condition and quality of the works being performed which requires knowledge of the current conditions of all the gas facilities. To provide for facilities condition control one maintains comprehensive accounting of the facilities disposed of by the Administration for Operation of Gas Systems and Installations. Additionally, one generates lists of equipment subject to repair or replacement due to expiry of its service life. The Industrial Engineering Department prepares target lists for design, construction, reconstruction and capital repair of gas networks and installations negotiating their approval with the Technical Inspectorate and committees under the city Administration. Based on this information equipment repair and replacement planning is done. Works on the gas distribution networks are performed by the contractors’ specialists with the enterprise supervising the works performance. The Dispatcher Service issues permits for performance of work with the Gas Safety Administration controlling its performance.

Financial Flows Management and Accounting

Main financial flows of the enterprise (see Fig. 3, Fig. 5) originate upon payment for gas transportation. The supplier performs transfer of cash funds due to actually performed transportation of gas to the consumer in accordance with the applicable tariffs. Process losses of gas during transportation are calculated from formulae (defined with regard to the gas pipelines length, number of joints etc.) with the amount of loss charged to the enterprise’s expenditures. Included in the tariff are expenditures related to the contractor's performance of an array of works providing for failure-safe transportation of gas.

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Fig. 5. Diagram of the business process of financial flows management and accounting

Management of financial flows (see Fig. 5) involves financial activities planning, budget administration and control thereof. The Administration for Economy and Finance prepares the company’s budget based on gas transportation tariffs and with due regard for scheduled gas transportation volumes. Cash funds due for actual gas transportation (gas consumption under supply contracts) are provided by the supplier while payment for services is effected by relevant service customers. Payment for the contractor’s services is effected by virtue of a contract. The Department of for Economy and Finance monitors budget fulfillment, provides reports for managerial control and generates reports for superior entities. In case of necessity budget is corrected.

Major Document Flows

The business processes decryption reveals that the enterprise actively interacts with governmental authorities, contracting, construction and controlling entities. That is why, no matter how voluminous the incoming correspondence flow might be, each letter must be timely considered and, whenever required, responded to.

Fig. 6. Incoming correspondence processing process

All letters received by the entity are submitted t the Administrative Office (see Fig. 6). They are registered in the logbook wherein one enters brief information on the letter and assigned an incoming number to. After registration the addressee (usually it is Director General or deputies of the latter) forwards the letter to the executive in charge (head of an administration) who prepares a response. In case of necessity the executive in charge may have other employees involved in preparation of a response or materials required. A prepared answer is returned to the Administrative Office and upon signature sent to the addressee.

A great number of documents are generated during provision of services for preparation of specifications, projects etc. and negotiating approval thereof.

Fig. 7. Document management process in case of a service provision

The request is primarily registered by engineering departments. Requests may be submitted by both individuals and entities. The executive entrusted with the task performs the work and generates a package of documents submitting the latter for approval by one’s immediate superior (head of department). A document finally approved of is registered in the logbook and assigned an outgoing number to. After that the document is ready for issue to the customer. Simultaneously the request is registered by the Contracting Department, on the grounds thereof a contract is drawn wherein one enters data related not to the engineering, but to the contractual aspect of the process. Those may be an individual’s passport details or banking details of an entity. After performance of works and payment under the contact the package of documents is handed over to the customer. The Department for Financial Analysis controls correctness of documents execution and maintains a register of contracts (see Fig.8).