PRESENTATION BY,

J.PRACITHAS.RADHIKA

V.SIVARANJANIB.VASUPRADHA

Enterprise Resource Planning (ERP)

is an integrated computer-based system used to manage

internal and external resources, including tangible assets,

financial resources, materials, and human resources.

It is a software architecture whose purpose is to facilitate the

flow of information between all business functions inside the

boundaries of the organization and manage the connections to

outside stakeholders.

Built on a centralized database and normally utilizing a

common computing platform, ERP systems consolidate all

business operations into a uniform and enterprise-wide system

environment.

ERP systems are cross-functional and enterprise-

wide. All functional departments that are involved

in operations or production are integrated in one

system.

In addition to areas such as manufacturing,

warehousing, logistics, and information technology,

this typically includes accounting, human

resources, marketing and strategic management.

Separation of the programme code and the data areas

Command language Screen based flow control Application logic Common service functions such as the currency,

date, editing and help Diagnostic functions Transaction flow control Help functions

Business forecasting for product, groups, markets Target fixing and allocation by the key parameters Business planning in terms of the resources to

execute Strategy formulation and implementation MIS for strategy monitoring and control Business modeling for the strategy development

and testing, DSS for resource planning Information base management for management

applications

Basic data (master) management Order processing Dispatching and invoicing Order analysis, forecasting Sales analysis budgets and control Finished goods stores management Dealer, distributor management system Receivable analysis

Basic master data management Bill of materials, classification Process sheet, routing Work order generation, scheduling and control Production Planning: BOM, MRP, MPS and capacity

planning Interface of CAD/CAM/CAE systems

Purchasing and procurement Goods receipt and issue system Stock management and valuation Inventory analysis Stores ledger, valuation, analysis, disposal Excise/customs interface

General accounting functions Ledger, payable and receivables Subsidiary ledgers Cash-flow management Loan management, funds management Working capital management Budgeting, planning and control Balance sheet processing Tax management, status reporting Assets accounting

Personnel data management Personnel attendance system, time management Payroll Accounting: salary, wages, incentives,

bonus, income tax and other deductions, and contributions to various public and provident funds

Human Resources Management: Planning, recruitment, training and up graduation

Personnel cost, projection and planning

Fixed assets accounting: Inventory, register Depreciation accounting Capital work in progress Fixed assets retirement and disposal Year and processing for balance sheet schedules

Plant maintenance planning Breakdown, preventive, conditional maintenance Maintenance Management: Initiation, planning,

execution, control, and cost accounting Monitoring performances for maintenance actions

as all kinds of productive assets Contract management

System of data gathering to assess quality and measure against standard.

Analysis of quality by process, material, work centre location

Analysis of quality by reasons and actions taken Building quality assurance data for

equipment/process technology selection Monitoring quality across the organization from

input to output for operating decisions and business decisions

Accounting by units and divisions with local focus Consolidation by accounts in corporate functions Bringing out comprehensive reporting system for

business decisions.

♣ Information integration♣ Reduction of lead time♣ On time shipment♣ Cycle time reduction♣ Better customer satisfaction♣ Improved supplier performance♣ Increased flexibility♣ Reduced quality costs♣ Improved resource utilization♣ Better analysis and planning capabilities♣ Improved information accuracy and decision making

capabilities♣ Use of latest technology

Some of the tangible benefits are: Inventory reductionPersonnel reductionProductivity improvementsProcurement cost reductionTransportation, Logistics and cost reductionSome of intangible benefits: New improved process Flexibility Customer satisfaction Information visibility

ERP PACKAGE EVALUATION AND

SELECTION

ERP packages, if chosen correctly, implemented

judiciously and used efficiently have the ability

to raise productivity and profits dramatically.

Selection processSelection committeeHandling the vendorsRole of technologyThe selection criteria

The selection process

The selection process is one of the most important phases of the ERP implementation because the package that you select will decide the success or failure of the project.

Since ERP systems involve huge investment, once a package is purchased, it is not an easy task to switch to another one. So it is a ‘do it right the first time’ proposition.

It is better to limit the number of packages that are evaluated to less than five.

The selection committee

This committee should comprise of people from the various departments (the functional experts), top

management (preferably the CIO or COO), consultants (package experts) and end-users.

The selection committee should be entrusted with the task of choosing a package for the company. Since all business functions are represented and the management is involved, the package that is selected will have company-wide acceptance.

Instead of just listening to presentations made by vendors, company should be prepared with the questions. The questions should be prepared beforehand and should address all the concerns. The responses that you get for your questions will help you in either eliminating a vendor or strengthening its case.

The questions, if properly prepared and asked will expose the weak/problem areas that exists in the vendors’ products.

Prepare the minutes of the meeting and make the vendors sign it.

The vendors should be asked to show testimonials and practical demonstrations of the system. The vendor should provide references of organisations where the system has been implemented successfully.

All vendors will have customers for whom their products have failed.

It is important to ask about failed implementations. The vendor will usually send two representatives to visit you—a marketing agent and a technical expert.

Most of the questions should be directed to the technical expert.

The marketing expert should be asked about warranties, licenses, cost, support, training, etc

The technical expert should be asked about the functionality and capabilities of the system they are offering.

The role of technology

The existing technology will play a very important role in the ERP selection process. Each organisation will have its own technological environment. The management must decide whether the ERP systems will be selected keeping in mind the existing infrastructure or not.

It is always a better idea to find a package that is compatible with the hardware, software and technology that the company already has in place.

If the organisation has the necessary infrastructure then it can think of buying the required components from the vendors and integrating them with the existing system.

For example, if an organization is using an HR management system and is quite satisfied with it, then it can go in for the other modules and not for the complete offering from the vendor.

It is not imperative that all the components offered by the vendor be bought. The evaluation committee in association with the vendor can select the required components and then integrate them with the existing infrastructure.

Get the vendor’s assurance (in writing) that the existing system will integrate smoothly and seamlessly with the purchased components.

ERP packages come in all sizes and shapes. Hence, it is a good practice to specify selection criteria for evaluating the packages that survive the pre-evaluation screening.

The criteria can be in the form of a questionnaire and a point system can be implemented. This will help in making the selection process more objective.

The questions should address the company’s business needs and concerns and each issue or question should be given a weight according to how critical that function is for the company.

For example, if the company has offices in different countries, then the capability of handling multiple languages and currencies becomes an important criterion.

The best method for preparing the selection criteria is to conduct a requirements analysis—find out what the company needs. The requirements must reflect those factors that the company considers indispensable for the successful running of the business according to the company’s work culture and practices.

The package should have multi-language and multi-currency support.

The package should have the facility to do an incremental module addition.

For example, the company should have the facility to buy the core modules initially and then go in for the additional modules as and when desired.

The vendor should provide implementation and post implementation support.

The vendor should give a commitment on training the company employees on the package.

Whenever a decision is made, the committee should discuss it and a consensus must be reached to ensure commitment and avoid conflicts.

The functional experts (who know the business process well) and vendor representatives (who know the ERP package well) can tell areas and issues that should be given more importance, the aspects that should be scrutinized more thoroughly and how the company’s current business practices could be replaced with new ones or modified to suit the package.

Another source from which the evaluation committee can get information about the tools is independent research agencies and companies.

These sources supply information, comprehensive analyses and comparison reports about the leading tools.

Once the committee has reached a decision on a package, it is a good idea to visit a few companies that have installed the particular package and see it in action.

If the committee members feel that their decision is right and what they have thought is what they have seen, then the company can proceed with the purchasing and implementation.

The most critical factor that determines the success of any ERP implementation is the support of the people who use the system. Even the best ERP systems will fail if there is no user support.

So the decision of the committee should be a consensus decision. If there are some people whose views are overridden by majority vote, then the management should take every effort to make them understand the reasons for the decisions

Company will need everyone’s goodwill and support to achieve success during and after implementation. _

ERP IMPLEMENTATION STRATEGIES

Big Bang Phased Parallel Process line Hybrid

The installation of ERP system of all modules happens across the entire organization at once.

This approach is used to reduce the integration cost in the organization of thorough and careful execution.

The implementation is done through large scale information system which usually follows SDLC

This automates the existing business process and also transforms the business process.

All the business functions performed in the existing system are transformed within a day or weekend.

The overall cost of implementation is less. It eliminates the sequencing and decision-

making of implementing one module at a time.

It is well designed for rapid implementations. It creates a central focus for all the ERP team

members. It can avoid complex integration issues.

The amount of time and cost for careful planning and preparation

Factors like lack of funds,non-availability of professionals during implementation

The recovery process; it is a do-it-right-the-first-time project

It may be because of huge financial loss to the company.

Three type of variants: Mini Big Bang Multi Big Bang Mega Big Bang

It takes a single bang approach and breaks into two or more sections.

Each section consists of several software modules.

It contains some phasing strategy. It is quite popular for the Big Bang’s degrees

of success.

It refers to a large company with muliple sites.

Corporations have taken this as a ‘do or die’ factor for lingering ERP projects

It uses multiple Big Bangs sequenced in order for different geographical studies.

It can be used for large corporations that have multiple facilities performed by a IT group.

It will implement the new ERP system for one geographical location.

The phased approach also goes by the names of modular, functional and sequential.

The method of modular implementation goes after one ERP module at a time.

This limits the scope of implementation usually to one functional department

This approach suits companies that do not share many common processes across departments or business units.

Independent modules of ERP systems are installed in each unit & integration which take place at a later stage of the project.

ADVANTAGE: Implement one module at a time Feel more comfortable in moving to the next

approach Total no.of.resources needed at any one given point

in time may be less

DISADVANTAGE: Need large amt of technical resources High cost & time Higher turnover rate

This approach keeps both the legacy system and the new ERP system active simultaneously length of time

Amt of time the systems are both in operation ranges from one day to several months.

Advantage is good recovery options In this approach, it see to the most realistic number-to-

number comparisons to validate that the new ERP system is performing the necessary business process flow.

It provide san exact number comparison in real world condition.

It needs more resources than other techniques during the transition.

This process of investigation to determine where the error occurred often exceeds an ERP team’s resources during a go-live situation.

The parallel approach is ideally suited for mission critical situations that cannot survive a major malfunction of an ERP system

Process line strategy is conceptually similar to the mini big bang

It implement strategy to manage parallel business process flows or product lines

It focuses on the support of one or a few critical business process, which involves a few business units.

The initial customization of the ERP system is limited functionality closely related to the intended business processes

Tend to have less complex internal business processes The same concept can be applied for service org except that

it would be implemented along focused service lines instead of product lines.

It is a combination of above 3 process

They are seldom predicted precisely at the beginning of an ERP implementation

They tend to evolve into the needed configuration as ERP team members learn and analyze information

It flexible in adapting.

A great deal of communication is required, combined with strong leadership, for these to be effective.

The factors that could cause a company to choose one ERP strategy over another are:

Technical resource availability, no. of. users, consultants availability, structure of a ERP team, deadlines, reliability.

For a global process model a big bang approach is extremely beneficial .

There are many vendors and all packages are not the same.

Study strong points and week points of each packages. Short list according to the requirement of organisation Check the years of existence of the vendor and the past

experience Search for a perfect packet Compare the cost Compare the time required.

Most important phase as will decide failure and success of project.

Require huge investment so switching to another ERP package is not easy.

“DO IT RIGHT THE FRIST TIME” No package is perfect – (keep in

mind before analysis) Do not require perfect fit, should

be flexible enough for the company needs.

Develop selection criteria.

Points to be kept in mind while evaluating ERP:

Functionally fit with the company’s business processes. Degree of integration between the various components

of the ERP system. Flexibility and scalability Complexity User friendliness Quick implementation Ability to support multi-site planning and control. Technology-client/server capabilities, database

independence, security

Cont…

Availability of customization required Local support infrastructure Availability of reference sites Total costs, including cost of license,

implementation, maintenance, customization and hardware requirements.

Better to form evaluation/selection committee for evaluation process

This is not a one-man-decision.

All the departments are involved.

Thus it should have company wise acceptance

Discuss the pros and cons.

Designs implementation process Determine- ‘how to go about’- time

schedule, deadline, etc- PROJECT PLAN IS DEVELOPED

Roles are identified and responsibilities are assigned

Everyone’s scope of work defined and Heads of implementation identified

Team members are selected and task allocation

How-When-What to do??? Phase is controlled by committee and

meets periodically

Crucial phase Create complete model of where

they are now and in which direction they will head in future.

Even the best ERP package can cover 80% of the companies functional requirement.

The remaining 20% of these requirements present a problematic issue for the company’s BPR.

One of the most painful solution is to change the business process to fit the ERP package.

Human factors are taken into account.

Two different connotation: Downsizing efforts (controversial) -Reduce significant no of

employees Business process re-engineering(two

separate but closely linked implementations are: )

-Technical implementation -Business process integration.

Business should be mapped according to goal of company

Prototype is created before implementing it live.

Testing is done on prototype

Configuring not only reveals strength but also weakness.

Explains what wont fit and what the gap is.

Implementation team is trained i.e. connotations how to implement

Later employees are also trained to run the system

Vendors and consultants will leave after implementation is over.

Good in-house must be there to handle system.

So there should be right selection of employee.

o willing to change, learn new things and

o Not afraid of technologies and good functional knowledge.

Try to break system Testing real case scenarios While testing- come up with

extreme case scenarios:o System overloado Multiple users logging at same

timeo User entering invalid datao Hacker and so on Test case must be designed to

find weak links and bugs should be fixed before going live.

“Lights On, Switches Thrown, Gloves Off”

Technical side, work is almost completed

Functional side, prototype is fully configured and tested ready to go operational

Once system is ‘live’ old system is removed and new system is in use.

Actual user is given training on how to use the system.

Starts much before system goes live.

This is very crucial phase as there are no vendors and consultant at this stage.

So employees must be trained thoroughly to handle problem in system.

There should be employees who must have the knowledge to enhance the system in future.

System should be upgraded and new technologies are introduced.

ERP Implementation

WHY ERP IN TISCO TISCO faced two major problems from the systems

that existed for a long time.

Firstly they were not customer friendly. The whole system was tuned to the process and very little attention was paid to the customer demands.

Secondly the systems were outdates and the modalities of operation were too complex and not error free.

Instigated by the concerned departments. Leading consultants were hired and the business structure was studied and suitable plans were drafted accordingly.

Implementation Process At Tata Steel

After an in-depth study of functionality, cost, time, compatibility, esteem, operability, support and future organizational requirements was done, SAP topped the list of contenders.

The implementation of SAP software was associated with certain strategic goals in mind. With this implementation, TISCO wanted to bring forth a culture of continuous learning and change.

'TEAM ASSET' an acronym for Achieve Success through SAP Enabled Transformation.

Preparatory task forces activities were conducted and core business processes were mapped to SAP modules.

Also another parallel activity called 'Change Management' was initiated within the company.

The prime objective of 'Change Management' was to reach out to people involved non-directly in the project to apprise them of the developments taking place.

Tata Steel planned a big-bang approach of going live with all the modules at the same time, in just a span of eight months.

On 1st November 1999 Tata Steel pulled off a big bang implementation of all SAP modules at one go across 46 countrywide locations, as per the set deadline.

The period set for implementation seemed to be a major challenge. The time granted for the process was 8 months.

The business process was divided into two main segments.

The core functions were denoted to be major ones.

Similarly the supporting functions were named minor ones.

A plan of action on the proposed ERP's impact was drafted depicting their relation to one another and to the business process.

They went ahead with associating and implanting TISCO to all the stakeholders so that they become compatible. These ideas also contributed to the success.

The company took all efforts to ensure that the change did not produce any sort of resentment in the organization. This was done by educating everyone on the need and desirability of change.

TISCO's ERP implementation completed within eight months.

The existing technology was a simple replication of the manual system.

The reliability of information obtained was questionable because of inconsistency and duplication of data from different departments.

THE OUTCOME

SAP ERP solutions produced a remarkable result to the company in terms of financial technical and managerial parameters. The effective handling and speed delivery resulted in greater sales

Post the introduction of the ERP solution, the results have been terrific. Tisco has spent close to Rs 40 crore on its implementation and has saved Rs 33 crore within a few months

With SAP's solution Tata Steel can now update their customers on a daily basis and provide seamless services across the country improving customer management.

The availability of online information has facilitated efficient decision-making.

The Company

TISCO is Asia's first and India's largest integrated private sector steel company. It is present in 46 nationwide locations.

The Need

The company wanted to keep its lead in the competitive steel industry through constant learning, innovation, and refinement of its business operations. It had to transit from a production-driven company to a customer-driven one.

The Solution

An ERP SAP R/3 was deployed in a 'big bang' approach across all its locations nationwide.

The Benefits

The company now has efficient business processes, enhanced customer service, reduced costs, improved productivity, accelerated transaction time, workflow management and reduction in the number of credit management errors.

There have also been significant savings in manpower, inventory levels, and resources