Ramón Álvarez
Director General

Information Management for Organizational Change

Wed, 01/22/2014 - 12:45

Being one of the largest software companies in the world, SAP is no stranger to the oil and gas sector. Ramón Álvarez, Director General of SAP, believes 2014 will see opportunities arise in the Mexican oil and gas sector, mainly in the engineering and construction areas. He says these opportunities will naturally come from PEMEX, but also from SMEs, which Álvarez says are very important to SAP. “These players constitute 76% of our client base and 74% of our revenues. In fact, the firm has a special range of solutions for small companies,” says Álvarez. “In Mexico alone, SAP has between 2,500 and 3,000 clients with less than 30 employees that use our solutions. For US$40,000, they can acquire the SAP solution and the hardware, while an additional US$15,000 buys them our cloud solutions for one year. As companies grow, they can migrate to all-in-one solutions.” The Energy Reform is widely touted as offering new opportunities for Mexican players, including SMEs, in the oil and gas sector. With competition shaping up to be fierce, SMEs must be able to focus on their core business without worrying about extraneous elements. For that very reason, Álvarez explains that SAP’s solutions are tailored to tackle the three usual priorities of small enterprises: reaching double-digit growth, expanding their physical presence through new offices, and transferring the business to the next generation of management. SAP’s software solutions offer business owners more control over costs, technology, and managing the business in real time, advantages that are not insignificant for an SME trying to make it up the ladder.

PEMEX remains SAP’s main client in the oil and gas industry, which it serves in many areas where enterprise resource management is needed. In fact, all four PEMEX subsidiaries have implemented SAP solutions. The ERP software solutions serve as an institutional database that allows for efficient personnel and resource management in the production, commercialization, and transportation of oil, natural gas, their derivatives, and basic petrochemicals. “They allow each subsidiary to have better control over its operations through reduced data processing times. The software also allows people within the subsidiaries to use additional tools to streamline their tasks while delivering more information for a timely decision-making process,” explains Álvarez. However, the oil company has currently halted many projects with SAP, given the restructuring process it is undergoing.

Relevantly, Álvarez points out that PEMEX is facing numerous challenges, with the question of how exactly it will be split up and reorganized not fully answered. “The new PEMEX will be facing corporate governance and restructuring challenges while simultaneously preparing itself for competition with private firms. Such a major change in the company’s hierarchy will bring it face to face with talent management challenges. When the likes of Chevron, ExxonMobil, and Petrobras expand in Mexico, they will need engineers and will provide a competitive career option for them. PEMEX executives are worried that if their engineers are not well taken care of, many will jump ship,” says Álvarez. SAP aims to help the Mexican oil company transfer the knowledge of veteran engineers on the verge of retirement to the younger generations, while reforming its hiring practices. “Regulations imposed by the PEMEX union have created a problem when it comes to hiring the right talents from the right places. For instance, the union mandates that if somebody takes a vacation, another union employee with the same skills and experience must be on hand to take over. It is incredibly complex for PEMEX to manage its talent, particularly regarding all the replacements that are mandatory for places such as platforms where production simply cannot sway or be affected,” Álvarez points out. “PEMEX needs a tool to help its human resources specialists to select the most valuable talents, create a career path for them and train them to compete against private competitors. It must start this process immediately, as it cannot afford to lose time,” Álvarez warns. “SAP’s cloud solutions for talent management would make sense for PEMEX, as the company does not want to waste a year in implementing each of its procedures. It needs a mechanism that can be up and running in two to three months.”

Another recurring and significant subject for PEMEX has been the certification of its employees. Álvarez says the obstacle here does not lie in figuring out how to manage information concerning the skills of its staff but putting said information together. “PEMEX does not have a single database charting its employees’ skills. We are trying to understand where to start, as the company is currently hard at work on many different aspects, such as the secondary laws or which of its fields are going to be transferred to third parties,” comments Álvarez. He mentions that PEMEX already has a defined idea about the way things will work in the near future but it cannot yet disseminate that information to start working with SAP’s solutions. “We have many non-disclosure agreements with PEMEX executives and SAP is deeply involved in a full study of how best to work with the new PEMEX.”