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Swedish fuel supplier replaces multiple systems with single ERP application to free up IT

Preem is in the middle of a project that will see it replace about 40 business systems with off-the-shelf ERP

Swedish fuel company Preem is consolidating its business systems onto Infor’s M3 ERP (enterprise resource planning), replacing about 40 existing systems.

Once the two-year project is complete, the firm’s IT department will be freed up to work more closely on business issues.

Preem owns hundreds of petrol stations in Sweden as well as two oil refineries. Its business is divided into three parts: refining, retail, and supply and trading.

The 20-year-old company has grown through mergers and acquisitions, integrating parts of several other oil fuel companies, including BP and Texaco.

As a result, it has amassed some 300 different systems in its business application portfolio, including mainframe and .Net systems as well as some of the latest technologies.

A few years ago, the company realised it had reached “a dead end”, said CIO Claes-Håkan Johansson.

“We were starting to see cracks in our reporting and stops in our production and when we looked into it, we realised there was a lot of integration between different systems,” said Johansson. “As a result, it was difficult to have good-quality information.”

Although the company retained the skills to understand the different systems, there were risks attached, he said. “We depended on key individuals who knew the systems inside out. Although these people remained with us, we wanted to move away from the risks associated with losing knowledge and instead rely more on standard systems.”

Patchwork of systems

Also, ERP was taking up too much of the IT department’s time, so the company decided to seek an alternative to its patchwork of systems, said Johansson.

“As an IT team, we do not want to be unique in how we support systems like ERP,” he added. “We looked at the demands and requirements of the business and decided standard systems would be OK.”

Preem has about 60 internal IT staff and uses around 40 external consultants.

At the beginning of this year, the company chose Infor’s M3 ERP to replace 40 different systems mainly related to the mainframe platform.

Read more about business applications

Preem’s IT team will complete the project with support from Infor. It is currently in the design phase and expects to complete it in late 2017.

Johansson said the project is complicated because the IT team must ensure the existing systems the company will retain are not duplicated, and that they integrate with the new ERP system.

“Because we are not replacing all our applications, we have to adjust the surrounding systems that will remain,” he said. “We have to understand the functionality of these systems because we don’t want to duplicate them in the new ERP system.”

More involved with the business

In the long term, the project will enable Preem’s IT department to get more involved with the business rather than just keeping it running.

“We will be able to understand the business much better and support it,” said Johansson. “In the past, the IT department has been very much technology-driven and not so much on the business side.

“For example, very recently we developed an IT strategy alongside the business to see what areas are most important to the business and how IT can support this.”

Johansson said the IT team could also focus more on supporting business strategy and less on technology support through partnerships with IT suppliers.

“We will buy more services from outsourcers and start more joint operations with third parties,” he said. “We will look to our partners and decide which one we will do different technologies with.”

Read more on Enterprise resource planning (ERP) software