Modular Client/Server System Improves Accounting Efficiency Of Texaco Units

Nov. 9, 1998
Texaco is dramatically improving the efficiency of accounting operations at small and medium-size business units by converting them from a home-grown to a modular client/server system. The new system gives Texaco managers quick, easy access to vital information they need for decision-making, as well as improved control over assets.
Robert C. Helm
Texaco Inc.
Texaco is dramatically improving the efficiency of accounting operations at small and medium-size business units by converting them from a home-grown to a modular client/server system.

The new system gives Texaco managers quick, easy access to vital information they need for decision-making, as well as improved control over assets.

The company has over two dozen international business units, as well as several U.S. operations, using proprietary, nonintegrated, character-based applications to support their business operations. These systems, which were developed and modified over many years, are not year-2000-compliant and have become difficult to support.

From a user's perspective, there were other problems. Many of the systems supported only parts of the business requirements and lacked integration between modules. This forced users to maintain "shadow" systems and manually transfer data between systems. Most systems provided basic general ledger and accounts payable functions but lacked operational support for inventory, projects, and customer receivables. In some cases, inventory and sales were tracked via spreadsheets.

Texaco's International Marketing Division shows how the problem of home-grown accounting evolved. The division has about 30 operations in Latin America handling downstream petroleum operations. Each is run as a separate profit center reporting to division headquarters in New York.

Most of these operations are focused on marketing and distribution of gasoline, diesel fuel, jet fuel, and packaged lubricants. All use local personnel to handle their accounting, have 5-25 accounting users, and maintain records in local currency.

In the past, this necessitated use of different home-grown accounting systems. These systems typically handled only parts of the accounting function, lacked integration between different functions, and did not provide an adequate audit trail.

Standard solution

In early 1995, Texaco decided to select a standard application solution for these and other of its small and medium-size business units to replace its various custom systems with a more powerful, flexible, and corporate-supported financial and operational application solution.

In general, the company has found that switching to an integrated client/server system saves a considerable amount of time by providing automatic transmission of data between different functions and eliminating the need for manual tracking. Additionally, this same solution can be used to accelerate entry into new business opportunities worldwide.

The selection process was rigorous. Among its "must-have" requirements, Texaco first wanted a system with an intuitive, Windows-based interface integrated with Microsoft Office. It also required a product that offered multi-currency, multi-lingual, and multi-ledger capabilities.

The system needed to be flexible and easily modified to meet industry and local requirements. And the winning solution needed to feature a client/server architecture and be scalable from a single user to 250 users.

Texaco evaluated 79 applications before concluding that Solomon IV for Windows, from Solomon Software of Findlay, Ohio, met most of its requirements. Built with industry-standard components utilizing Microsoft Back Office, Solomon IV is an easy-to-use suite of feature-rich accounting applications easily localized for international operations.

Pilot implementation

Texaco conducted a pilot implementation of the system at its Bahamas site, where 20 users were running a non-integrated DOS-based system used in several other international business units.

Texaco Bahamas Ltd. handles marketing and distribution of petroleum products from Venezuela to a terminal in Nassau. A leased barge delivers these products to outlying family islands and to the Turks and Caicos islands. The DOS-based, home-grown system handled sales, receivables, and general ledger.

The order-entry and receivables application was separate from the general ledger so journal entries were used to tie the two systems together. Personnel in the outlying islands ran the same system and delivered their sales data on diskettes, which were carried by the tankers along with the fuel. Critical inventory functions were handled on a spreadsheet.

During the pilot, workers and implementers customized Solomon IV's screens and reports to meet Texaco's policies and procedures. For example, the project team added fields to capture physical inventory to aid in the inventory reconciliation process. The team also developed many reports to provide sales and margin analysis in a format unique to the oil industry.

Texaco rolled the Solomon IV pilot out in July of 1995 and began reaping the benefits almost immediately, especially in inventory management.

The previous system maintained an overall inventory total but didn't show how much product was stored in each of the facility's many tanks. As a result, employees had to fill out a paper slip every time inventory was added to or removed from a tank, then transfer those vital figures to a spreadsheet.

Solomon IV automatically updates inventory levels on a tank-by-tank basis. Managers estimate that feature alone saves the company 3-4 days of labor each month related to customer profitability and return on assets never before available.

System adopted

It was on the basis of pilot results that Texaco strategically adopted Solomon as the accounting system for its small and medium-size business units worldwide. It thus has leapt from reliance on outdated accounting software to a position of technology leadership that gives it a competitive advantage.

The new system is far more convenient and flexible than its predecessor. Users now can net out receivables and payables when they involve a customer who is also a vendor, such as a rental car company that both buys gasoline and supplies trucks. In addition, agents answering customer calls now have quick access to a master record that shows the current account balance and lists outstanding invoices.

Texaco approved Solomon IV for use at additional sites early in 1996. Currently running at 15 locations, the system will eventually be used in about 25 business units by nearly 1,000 users.

The Author

Robert C. Helm is manager of the Business Process Consulting Group for Texaco Inc., which is responsible for Solomon implementation worldwide. He holds bachelor's and master's degrees in business administration from the University of Houston. He worked for Getty Oil Co., beginning in 1980 as an upstream accountant until 1984, when Texaco acquired the company. He became assistant controller of Texaco Latin America/West Africa in 1991 and chief director of the Andean Region in 1994 before moving into his current position in October 1996.

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