Nippon Oil Corporation Uses Fujitsu Interstage In Its Mission-Critical Systems

Formed as a result of a merger with Mitsubishi Oil Corporation Limited in 1999, Nippon Oil Corporation is Japan's largest oil and gas distributor, with over 25% market share. The company, known for its "ENEOS" brand service stations, offers its customers a variety of energy options, from Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG) to environment-friendly fuel alternatives such as fuel cells.

The Challenges Involved with Merging Two Companies' IT Systems

A major problem associated with mergers revolves around understanding how to quickly integrate the information systems of the merged entities. Nippon Oil Corporation was faced with the same problem.

In addition, Nippon Oil wanted to embark on a comprehensive restructuring of its mission-critical systems, as it recognized that its existing systems would not be able to respond rapidly to changes in the business environment in the future. The major challenge that they faced was with defining a comprehensive system that managed business processes across the merged organization.

Restructuring Mission-Critical Systems with a Unified Sales and Distribution System at the Core

Following the merger, Nippon Oil quickly put together a team to investigate how to integrate the information systems of the two companies so as to create a unified administrative infrastructure. The goal was to complete the integration project within three years. The integration project was not just targeted at unifying IT systems, but also at creating new business processes that spanned the two companies. The company engaged in an extensive Business Process Restructuring (BPR) initiative that resulted in fundamental reviews of business flows.

Problems with the existing system environments at both Nippon Oil and Mitsubishi Oil gradually began to come to light during the review process. "Up until the merger, both companies had built and operated their mission-critical systems around mainframes," recalls Mr. Shigeru Yokoyama at Nippon Oil's Information Systems Department. "But as a result of repairs and improvements implemented over several decades, the systems had become so complex that large-scale adjustments to these systems were no longer possible."

In an effort to speed up the systems integration process, the team considered migrating everything over to one of the participating companies' systems. However, they quickly realized that it would not be possible to continue to use the existing sales and distribution systems that had previously formed the backbone of the business infrastructure. A decision was made to conduct a complete restructuring.

Interstage Application Server Adopted to Construct a New, Integrated Sales and Distribution System

A new integrated sales and distribution system was put in place. This large-scale distribution system links oil refineries, shipping bases, sole agents, and other distribution businesses. The business flow was restructured to support the new system where orders are now accepted at a centralized, national order receiving center, instead of their being accepted at individual businesses. The new system also links to the accounting system, the production control system and other systems, thereby optimizing delivery operations.

Interstage Application Server was chosen as the infrastructure to support the new sales and distribution system. Nippon Oil Corporation wanted the new system to be built on an open system that would allow it to adapt flexibly to business changes. The system also needed to be able to handle extremely large-scale online transaction processing, which called for a product that would guarantee superior performance and reliability. "Interstage Application Server incorporates Fujitsu's expertise in mainframe technology and promises high performance coupled with total reliability which led us to adopt the Interstage Application Server in the new system," said Mr. Sato of Nippon Oil.

The amount of processing performed by the new system reaches its peak in winter, when sales of products like kerosene increase. The number of orders processed at peak times can be as high as 26,000 transactions per hour. Interstage Application Server was chosen because of its ability to process such huge amounts of data rapidly.

"In addition, the new system uses Java applets on the client side and EJBs on the server side, which creates a new component-based system environment. This has succeeded in dramatically improving the maintainability, development productivity and scalability of the system," Mr. Sato adds.

Interstage CollaborationRing Adopted to Integrate Business Processes Across the Merged Companies

As the new system environment was being created, there was one other issue that needed to be resolved – the need to ensure that the disparate systems in the company integrated smoothly. Nippon Oil decided to engage in a "common infrastructure project" that established fixed guidelines around the way the individual systems linked to the new system in a standardized manner.

Interstage CollaborationRing, designed for process integration, was used at the core of this project. Nippon Oil's sales and distribution systems connects directly to customers. Therefore, it was imperative that the existing systems were kept up and running during the infrastructure overhaul. Nippon Oil relied on Interstage CollaborationRing to ensure that there was minimum impact on their partners, They constructed an Enterprise Application Integration (EAI) environment that linked the new integrated sales and distribution system with the old mainframes. This lets Nippon Oil's clients conduct business operations as usual, using ordering systems located on the old mainframes, until all operations have been transferred over to the new system.

"By using Interstage CollaborationRing, seamless process integration between the new and old systems was achieved quickly and cost-effectively," says Mr. Yokoyama. Nippon Oil will continue to use Interstage CollaborationRing for a variety of inter-system linkage tasks even after the migration to the new system is completed.

The new integrated sales and distribution system started operations in October of 2001, and the integration project was completed with the new system in full-scale operation by April of 2002, exactly three years after the corporate merger. Thus, system integration was achieved according to the original target.

"The real benefits are still to come, but in the area of distribution we anticipate annual cost reductions of one billion yen due to improvements in delivery efficiency," claims Mr. Kozo Harada, with Nippon Oil's Information Systems Department. "After migration to the new system is finished, we can discontinue use of the three mainframes used by the original two companies and close down two centers, so we expect total cost reductions of 4 billion yen annually," he adds.

Mr. Shigeru Minaka, also with Nippon Oil's Information Systems Department, is confident. "An important role of our IT department is to construct an infrastructure that will contribute to business growth, and Interstage is an extremely effective foundation for achieving this goal." said Mr. Minaka.

By adopting Interstage Application Server to support a new sales and distribution system and Interstage CollaborationRing for process integration, Nippon Oil Corporation has built a business infrastructure that is well on its way to catering to the next generation of the company's growth and development.