BHP Billiton, one of the world’s largest diversified mineral resource companies, operates in over 30 countries and recently reported market capitalisation of US$31 billion and revenue of US$19 billion.
Prior to the BHP Billiton merger, BHP management sought collaboration with Capgemini in order to transform the way that BHP provides services to its operating businesses globally.
The transformation initiative successfully achieved the creation of a new Shared Services organisation, coupled with the implementation of common business processes and a global SAP system affecting some 11,000 employees. The result supports the company’s lines of business and operating units and is now a key component of BHP Billiton’s business model.
In response to the rapid consolidation and globalisation of the resources sector, and with fund managers demanding industry leading investment choices, BHP Limited and Billiton Plc merged to form the unified entity BHP Billiton.
The merger makes BHP Billiton one of the largest diversified resources companies in the world, operating in over 30 countries. Latest results report market capitalisation of US$31 billion and revenue of US$19 billion. Headquartered in Melbourne, Australia, it has a significant management presence in London, as well as corporate centres in Johannesburg and Houston.
BHP Billiton manages operations in some of the most remote places on earth including a diamond mine inside the Arctic Circle in Canada, a copper mine operating at 12,000 feet above sea level in Chile, thermal coal operations in South Africa and iron ore operations in the Australian outback.
BHP Billiton holds an industry leading position in major commodity businesses including aluminium, iron ore, copper and coal – ‘energy’ (thermal) and metallurgical. It is the world’s largest exporter of energy coal, hard ‘coking’ coal for the steel industry, and one of the largest producers of iron ore. In addition, BHP Billiton has substantial interests in oil, gas, liquefied natural gas (LNG), nickel, diamonds and silver. It was also one of the world’s leading steel producers before BHP Steel was created as an independently listed company.
Prior to the merger, BHP had identified a need to introduce standardised systems and processes across the organisation. This would reduce the cost of maintenance activities as well as back office activities around procurement, finance, payroll and human resources. Coupled with the requirement to access data globally and automate many processes, these factors supported the business case to proceed with the transformation.
The Program aimed to drive significant cultural and behavioural change by:
- removing non-core functions from operations and consolidating them into a new shared services organisation supporting finance and accounting, purchasing and HR, and payroll activities
- consolidating 60 different systems for support functions via a single, integrated system approach
- leveraging the purchasing power of the organisation through strategic sourcing
- enhancing the competitiveness of BHP via lowered support costs through adoption of common global processes and the application of leading practices
- improving systems to deliver substantial cost savings in maintenance activities.
- positioning BHP to take advantage of e-commerce initiatives.
Capgemini was involved in assessing the feasibility of this transformation opportunity. After approval of the business case and further exploration of partnering models (including outsourcing and joint venture options), BHP appointed Capgemini as its strategic business transformation partner based on demonstrated thought leadership, commitment to BHP objectives and a collaborative working style.
Capgemini took a leading role in partnership with BHP in conceiving and delivering a portfolio of inter-related projects. This portfolio of work was delivered in a collaborative manner using resources from BHP, Capgemini and Computer Sciences Corporation. These initiatives included:
Centres for Shared Services
Consolidating support processes of procurement, finance and accounting, payroll and human resources into three regional Shared Service centres located in Australia, North and South America. These support processes were then delivered as a service back to 19 operating units globally through formal Service Level Agreements.
Optimising Support Processes
Support processes for finance, supply, human resources and payroll, together with maintenance work practices, were re-engineered and implemented to achieve best practice business processes and standardisation across 12 geographically dispersed operating units.
Global SAP Solution
An existing BHP Project Team was integrated into the program to design, build and implement a global SAP business solution. Including materials management, plant maintenance, finance and costing, knowledge management, data warehousing, e-procurement, payroll and human resources, the solution was deployed to 12 operating units.
In addition to the global SAP solution, suitable technologies to support implementation of processes that needed to be re-engineered were selected and implemented. Examples included Hyperion, together with CRM, catalogue management systems, and a global billing and time management system.
Impacts of organisational change were actively managed to minimise disruption to the business and maximise adoption of the solution. This included activities related to education and training programs, sponsorship development, change impact analysis, targeted multi-channel communication programs to employees and external stakeholders, and workforce transition programs.
In summary, a major transformation was delivered against quality targets and an aggressive schedule. The implementation involved over 900 BHP, Capgemini and Computer Sciences Corporation employees, as well as contractors. Delivered over 2.5 years, the solution touches upon 19 operating units consisting of 44 site locations, and affecting over 11,000 BHP employees and contractors.
During the course of the Program, BHP (and later BHP Billiton) made two key business decisions. These were:
- Merger to create BHP Billiton
The program of work for heritage BHP continued during the merger with Billiton. It is anticipated that heritage Billiton business units will adopt the global SAP solution and standard processes on a case-by-case basis. The merger has also resulted in the development of an additional Shared Service centre in South Africa.
- Divest BHP Steel
BHP Billiton divested its steel businesses into an independent company trading as BHP Steel. As BHP Billiton did not wish to provide services to third parties through the Shared Service centres, Capgemini was awarded a five-year contract to operate a 130-people centre for BHP Steel.
Together, a single integrated system based on SAP and the re-engineered processes has introduced consistency into the business model. It facilitates the identification and implementation of company-wide improvement practices and business-specific initiatives that help improve the efficiency of working capital, increase productivity and raise margins.
BHP Billiton now has a proven platform to support future migrations of heritage Billiton assets to a common operating business model.
The Program will deliver a commercial business return on investment by conclusion of the 5-year business case time horizon. But already the company is deriving tangible benefits including:
- consistent and standard financial information across the group (costing models, data definitions, asset register, Chart of Accounts)
- significant reduction in system support costs by decommissioning over 60 legacy systems and replacing with a single, integrated system running SAP
- reduction in maintenance costs in collaboration with initiatives sponsored by the Global Maintenance Network
- centralised cataloguing system achieving benefits through enhanced global commodity management, vendor leverage, common search techniques, information sharing, inventory optimisation and reduced data maintenance
- shared service centers in Australia, North and South America providing consistent back-office support services
- single, globally accessible repository for procurement spending
- consolidated payrolls for Australian operations in one system, and processed in the Australian shared service centre.
Written in co-operation with BHP Billiton