Company: Scala Business SolutionsCustomer: MMGSubmitted by: Catalyst PRDate: Unknown(Kasakhstan) MMG is a fast expanding oil and gas company. Rapid growth led to increased demands on already over-stretched IT resources, so MMG looked to take-on a new system to effectively support business processes. The chosen vendor, Scala Business Solutions, has ensured a smooth transition from disparate systems to a fully integrated back office management solution.

The company

In recent years, the states of the former Soviet Union have emerged to become some of the most burgeoning and challenging markets in the world.

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Kazakhstan is no exception, and it is here that Scala has implemented its Scala Global Series business management solution for Kazakh oil and gas company, Mangistau Munai Gas (MMG).MMG (meaning Mangistau oil and gas) is the largest oil and gas production and transportation company in the former Soviet Republic, responsible for 15% of the country’s oil production. It produces 28 billion barrels of oil and 2.3 trillion cubic metres of natural gas every year, amounting to between 94,000 and 140,00 barrels a day. MMG has 9,000 employees in eight offices spread across Western Kazakhstan, as well as seventeen affiliates involved in activities such as catering and drilling services. Also, the company has recently acquired one of Kazakhstan’s three oil refineries, the Pavlodar Oil Refinery Factory, where it will now provide management for the plant.

Old … new

MMG had always relied on a home-made software package written by its own programmers to meet all IT needs. The programme was based upon Clipper & Fox Pro, but functionality was limited to consolidation, fixed assets management, payroll calculation, accounts payable and accounts received, and a limited general ledger. The system was so user-unfriendly that the accounts department had to give data to IT staff for collation in the database. Also, MMG’s merger with CAP (Central Asian Petroleum) highlighted the need for a fully integrated business management solution.Anvar Yaushev, Financial Director at CAP, explains, “By 1997 this system had become totally insufficient for our growing requirements and our team of IT programmers found it was too difficult to keep it up-to-date with our constantly changing needs and specifications.”A major consequence of MMG’s merger with Indonesia’s CAP was a need for multi-lingual and multi-currency capabilities.

MMG now needed to generate reports in English for the investing company, as well as continuing to produce them in Russian for the local Kazakh authorities. Furthermore, MMG sells crude oil to both local and foreign markets, and has to purchase most of its oil and gas equipment and spare parts from abroad. Increased overseas sales and purchases meant MMG’s previous system could no longer provide satisfactory support.The advanced multi-lingual and multi-currency capabilities offered by Scala Global Series were crucial in it being chosen over competing vendors. Yaushev says, “We needed a cost-effective solution that could offer local support.

We looked at proposals from SAP, Systems Union, Solomon and Galaktika (a Russian software provider) but were not convinced that they had enough experience of working in Kazakhstan. The Russian and Kazakh systems are completely different since independence, and Kazakh legislation changes so regularly that it is imperative for us to get support from people who understand our needs.”Yaushev continues, “Scala, on the other hand, impressed us with their local presence and knowledge, and the level of local support they could offer. They had a proven track record of successful implementations in the Kazakh and Central Asian area, and offered a flexible, modular design that couldn’t be matched by the rival bids.”

The business management solution evolves

MMG’s old system had been in use since the Soviet era, and the practices surrounding it – many of which were manual – were firmly established with the staff as part of every working day. During implementation, Scala consultants advised on how their technology could support many common business processes, as well as the adoption of best-practice scenarios.

Yaushev explains, “Before Scala Global Series was implemented, all the accounting records were kept manually – literally by pen and paper. It took some time before our IT and finance staff got used to the idea of using a fully integrated system, and after more than 20 years of paper-based records, it was not an easy jump for them to make.”To aid the transition to the new system, Scala worked closely with MMG to design a number of new reporting formats and applications to imitate the environments that accounts and IT staff were used to working in. “As soon as our users realised that by using Scala they could avoid double, sometimes triple data entries, and analyse activities on a daily basis, compared to a monthly analysis in the previous system, they immediately saw how they would benefit from it every working day.”

Successful implementation ensures further integration

Scala Global Series has proved to be a great success at MMG, with plans to expand the current user base within many departments. “We are planning to roll out Scala to company affiliates and to remote branches,” says Yaushev.

“Our offices are spread over 200km of totally uninhabited semi-desert with very poor communications. Our future plans are to overcome this by working with Scala to ensure we harness the full capabilities the Internet offers us.”Anvar Yaushev is in no doubt that implementing Scala’s solutions has transformed the company: “In Scala Global Series we now have a fully flexible system and a first class reporting tool, which helps MMG to meet the difficult and constantly changing demands of business legislation in Kazakhstan. In addition to that, we have been able to reduce costs and improve the efficiency of our workforce, allowing us to become even more competitive, and we look forward to the opportunities that working with Scala offers us.”