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A

SUMMER INTERNSHIP REPORT

On

EFFECTIVE UTILIZATION OF ERP AS A CONCEPT AND A PRODUCT

Submitted by

Kalpesh Vinaykumar Bedarkar

Under the guidance of

Mr. Shyam Yadhav

(Aptech Computer)

Submitted to

UNIVERSITY OF MUMBAI

Through

DEPARTMENT OF MANAGEMENT STUDIES (MBA/MMS)

Rajendra Mane College of Engineering & Technology, Ambav (Devrukh)

Academic Year 2011-2012



CERTIFICATE

This to certify that MR.KALPESH VINAYKUMAR BEDARKAR has submitted

Summer Internship Report titled “EFFECTIVE UTILIZATION OF ERP AS A

CONCEPT AND A PRODUCT” at APTECH COMPUTER EDUCATION Khadki

Bazar ,PUNE in partial requirement of the two years full time Masters of

Management Studies (MMS) course of Mumbai University for Semester-III of the

academic year 2011-2012.

Date:

Prof.

(Project Guide)



DECLARATION

I undersigned, hereby declare that the project on “EFFECTIVE UTILIZATION

OF ERP AS A CONCEPT AND A PRODUCT” is developed under the

guidance of Mr. Akash Niranjane. The conclusion in this report is based

on the idea, which is collected by me. I am declaring that this is my original

work. I have not copied any materials, which are useful to my work, or other

reports that are submitted to the “RMCET COLLEGE, AMBAV” this year. I

do undersign that if my work is found to be copied, and then I am liable to

punishment as per the university rule.

DATE:

PLACE: (Mr. Kalpesh Vinaykumar Bedarkar)



ACKNOWLEDGEMENT

I take this opportunity to thank all those who helped me complete this project.

I express my gratitude to Mr. Shyam Yadhav for guiding me for this project.

There are many other people without whom the completion of the project

would not have been possible. Some have contributed towards this directly

while other have provided indirectly.

Any inputs, clarifications and suggestions are welcome.



Executive Summary

Enterprise Resource Planning (ERP) is probably the most prolific concept

ever generated by industrial strength application vendors. Many companies

are willing to “bet their business” on the promise that enterprise-wide systems

will translate into enhanced corporate value, particularly within decentralized

companies that compete globally.

ERP is defines as an integrated software package which integrate all

the department of an organization. Several department of an organization are

marketing, sales, finance, production etc. Since an ERP package integrates

these entire departments, thus the performance of an organization will be

improved. It is used to manage the important part of business includingproduct planning, purchasing, maintaining inventories, customer service etc.

Every department has its own computer system optimized for their

particular work but an ERP system combines them all together into a single

computer through integrated system approach. In short ERP system provides

a single database where business transaction are recorded, processed,

monitored and reported.

ERP system does not replace the computer of a particular departmentrather it integrates all the department of an organization into a single computer

and provides a flexible database.



CONTENTS

1. Plan of Work

Title of the ProjectObjectives

Scope of the study

2. Company Profile

3. System Analysis

Sources of Information

Data collection

4. System Design and Development

5. Utility and Scope For Enhancement

Conclusions

Abbreviations

Bibliography

Web References



PLAN OF WORK

Objectives:

1) To study effective utilization of ERP in an organization.

2) To study business processes of an organizations.

3) Correlate courses of study with the way industry or potential workplace

operates its business.

Scope of the study

This training helps us to understand the whole business process and variousways how an industry works as a whole. It also helps us to develop our skillsaccording to the present market condition. The study also help us t o identifythe practices related to finance in different sectors which was a veryknowledgeable experience to be gained. This training also builds our skills of marketing together with our specialization fields.

1. ERP covers a wide range of business and typically it fulfills all the

business demand.

2. Scope of ERP in the modern business era such as Production

Department, Supply Chain Management, Financials, Projects, Human

Resources, Customer Relationship Management, Data Warehouse.



COMPANY PROFILE

Aptech Limited is a global retail & corporate training solutionsprovider headquartered in Mumbai, India, with a presence across 5

continents.The company commenced its IT training business in 1986. A pioneer in IT andanimation education, over the years, Aptech Limited has trained over 6.4million students. Aptech Computer Education is one of the education brandsof Aptech Limited The IT industry is very large. In India alone, 2 million peopleare employed in this sector. The industry is global & has grown from strengthto strength over the past 50 years.

Improvements in our lifestyles as well as improvements in productivityhappen on a day-to-day basis, thanks to some new IT application or the other.And there are technologies being continuously created, leading to a need for continuous learning. Thus, investing in an IT training business is a soundproposition. And who better to partner with than Aptech Computer Education,the pioneer in the field? Aptech is the pioneer in franchising in education. Our growth is the result of our partnership with hundreds of dynamic businesspartners in every part of the country. IT Education Company to receive theISO 900 1 certification for its Education Support and services.Pioneers of Tele-education. Annual turnover of over US$ 70 million.6,00,000 plus students. Education alliances Partnership with world leaderslike Novell, Oracle, Microsoft, Wave Technologies .and USA.

Courses ranging from 1 week to 3 years, providing academic options for eachand every needs Multi-modal Education-A new Paradigm in learning.

Aptech a pioneering leader in the filed of Computer Education derivesits strength from its well researched curriculum, patented deliverymethodology and its ability to keep pace with changing technology.

The IT industry is characterized by the seep of change in thetechnology and the software versions.

To meet the challenges of such dynamic change, Aptech provides its

students a very strong grounding on the "concepts". To do this, Aptech laysan equal emphasis on Concepts and hands on practice. This instills theconfidence in its students to adapt to the change in technology and versions.To achieve this Aptech uses its patented delivery methodology -AMEDA( APTECH's MULTI-MODAL DELIVERY ARCHITECHTURE )

Aptech Limited, the Global Technology major, today, stands foremostas Asia's largest provider of computer education and training. Our CorporatePhilosophy of staying one step ahead in providing the latest in ITtechnologies, and sustained quality in academic delivery , and placementservices, have been instrumental in our being a major force in IT education in

Asia.



Our tie-ups with prestigious National and the International universities(Formal and Open) during the last few years have helped us to provide thebest in quality computer education.

The Company stands proud as India's only focused Training

Organization with- ranging Training products and Brands spanning across theworld's largest training Network of over 2456 Training Centers in 52 countries



SYSTEM ANALYSIS

SOURCES OF INFORMATION:

PRIMARY DATA – The primary data are those, which are collected for the first

time hence they are fresh and thus happens to be original in character.

Primary data pertain to demographic and socioeconomic characteristics of the

consumer, attitudes and opinion of the respondent, their awareness and

knowledge and other similar aspects.

SOURCES OF PRIMARY DATA COLLECTION

Observation

Opinions

The primary data for the present research work was obtained through

the observation

SECONDARY DATA - It includes those data, which were collected for some

earlier research work and are applicable in the study the researcher has

presently undertaken. The data collected from the websites and eBooks was

good enough to be included in the study analyzed and concluded.

SOURCES OF SECONDARY DATA COLLECTION

Internet.

Company Website.

Other Websites

eBooks



ANAYSIS

Start with an understanding of Critical Success Factors (CSFs)

CSFs are defined as those things that you must do well in order to be

successful. You can use CSFs as a way to determine whether a requirement

sis really critical. If a requirement can't be mapped directly to a CSF, then it's

not critical.

Define measurements of success

Before starting any project, you should know how to measure success

in terms of saving money by streamlining operations, increasing revenues,

increasing market share... Measurements of success act as a motivator for

staff during the implementation, help keep the project on track and focus effort

on attaining important business objectives.

Understand existing business process and seek opportunities for

business process improvement

Until you have understood the existing business process, you are not

ready. Employees may not know that what they are doing is atypical. Roll up

your sleeves and talk to the people who do the work. Remember the devil is in

the details. Along the way, your value-add may be in identifying ways to

improve business process.

Don't be ambiguous in the definition of requirements

The more ambiguous the requirement, the more interpretation is

needed in whether a particular vendor meets the requirement. You need to beprecise so that you can compare apples to apples.



Don't waste time on basic functionality

Systems have matured to the point where the basics are done well.

Focus only on the requirements that are unique or could vary by vendor.

Prioritize

Not all requirements are created equally. Use a numbering system

such as "5" for critical, "4" for high, "3" for medium, "2" for low, "1" for N/A. If

you have mostly "5"s, there is something wrong.

Manage scope, budget and timing

Project management is the key factor in predicting success of any

project. Project management includes management of scope, budget and

timing. Rather than using the school of hard knocks, you should consider

working with a structured methodology such as published by the Project

Management Institute (PMI).

Get employee involvement

Recognize the significant amount of employee knowledge and the

potential contribution of the employees. Unfortunately, the knowledge is

typically in the heads of the employees and care must be taken to include

their input. At the same time, you are effectively including them in the process

and securing their buy-in for the process.

Assign an internal champion An internal champion should be allocated to the

project. Even the most difficult projects can become successful when you

have an internal champion who is ready to do whatever it takes to get the job

done. It is best to assign the internal champion at the beginning of the system

selection project to ensure their commitment and agreement with the system

selected.



Manage the risks

Seek out potential risks, their impact, and their likelihood of occurring.

Encourage all interested parties to develop strategies to mitigate the risks.

Every organization has at least 1 naysayer, who can cause a lot of problems,

but who is also very knowledgeable. The naysayers must be included in the

risk management process. By getting their input

early, you can avoid problems and you effectively limit their negativity.

Ensure management buy-in

Communicate scope of project and get sign off at critical steps along

the way. Management should develop or ratify the measurements of success.



SYSTEM DESIGN AND DEVELOPMENT

Introduction to ERP

The initials ERP originated as an extension of MRP (material

requirements planning; later manufacturing resource planning) and CIM

(Computer Integrated Manufacturing). It was introduced by research and

analysis firm Gartner in 1990. ERP systems now attempt to cover all core

functions of an enterprise, regardless of the organization's business or

charter. These systems can now be found in non-manufacturing businesses,

non-profit organizations and governments.

To be considered an ERP system, a software package must provide the

function of at least two systems. For example, a software package that

provides both payroll and accounting functions could technically be

considered an ERP software package

Examples of modules in an ERP which formerly would have been stand-alone

applications include: Product lifecycle management, Supply chain

management (e.g. Purchasing, Manufacturing and Distribution), Warehouse

Management, Customer Relationship Management (CRM), Sales Order

Processing, Online Sales, Financials, Human Resources, and Decision

Support System.

Some organizations — typically those with sufficient in-house IT skills to

integrate multiple software products — choose to implement only portions of

an ERP system and develop an external interface to other ERP or stand-alone

systems for their other application needs. For example, one may choose to

use human resource management system from one vendor, and perform the

integration between the systems themselves.

This is common to retailers, where even a mid-sized retailer will have a

discrete Point-of-Sale (POS) product and financials application, then a series



of specialized applications to handle business requirements such as

warehouse management, staff roistering, merchandising and logistics.

Ideally, ERP delivers a single database that contains all data for the software

modules, which would include:

• Manufacturing Engineering, bills of material, scheduling, capacity,

workflow management, quality control, cost management,

manufacturing process, manufacturing projects, manufacturing flow

• Supply chain management Order to cash, inventory, order entry,

purchasing, product configurator, supply chain planning, supplier

scheduling, inspection of goods, claim processing, commission

calculation

• Financials General ledger, cash management, accounts payable,

accounts receivable, fixed assets

• Project management Costing, billing, time and expense, performance

units, activity management

• Human resources Human resources, payroll, training, time and

attendance, roistering, benefits

• Customer relationship management - Sales and marketing,

commissions, service, customer contact and call center support

• Data warehouse - and various self-service interfaces for customers,

suppliers, and employees

• Access control - user privilege as per authority levels for process

execution

• Customization - to meet the extension, addition, change in process

flow



ERP IMPLEMENTATION PLAN



The flowchart in depicts several activities that must be performed

before implementing an ERP system. First, managers must conduct a

feasibility study of the current situation to assess the organization’s needs by

analyzing the availability of hardware, software, databases, and inhouse

computer expertise, and make the decision to implement ERP where

integration is essential (2). They must also set goals for improvement and

establish objectives for the implementation, and calculate the break-even

points and benefits to be received from this expensive IT investment. The

second major activity involves educating and recruiting end users to be

involved throughout the implementation process.

Third, managers will form a project team or steering committee that

consists of experts from all functional areas to lead the project. After a

decision is made, a team of system consultants will be hired to evaluate the

appropriateness of implementing an ERP system, and to help select the best

enterprise software provider and the best approach to implementing ERP. In

most situations, the consultant team will also recommend the modules that

are best suited to the company’s operations (manufacturing, financials, humanresources, logistics, forecasting, etc.), system configurations, and Business-

to-Business applications such as supply-chain management, customer

relationship management, e-procurement, and e-marketplace.

The importance of adequate employee and manager training can never

be overestimated. IT analysts usually recommend that managers reserve 11%

of the project’s budget for training. Different kinds and different levels of training must be provided to all business stakeholders, including managers,

end users, customers, and vendors, before the system is implemented. Such

training are usually customized and can be provided by either internal or

outside trainers.

The system installation process will address issues such as software

configuration, hardware acquisition, and software testing. Data and

information in the databases must be converted to the format used in the new

ERP system and servers and networks need to be upgraded. System



maintenance will address issues and problems that arise during operations. A

post implementation review is recommended to ensure that all business

objectives established during the planning phase are achieved. Needed

modifications are tackled during this phase too.

Vendor Selection

Identify potential vendors

Type Advantage

Typically have more customers and more resellers, which means moreaccess to Generic/Horizontal - apply across support. The generic systemsusually different industries shine when it comes to financials anduser interface. Additional functionality for the specific Vertical - apply to a

specific industry industry as well as more knowledge of best practices for thatindustry. Custom - built to your specification These vendors start with a baseproduct and will build exactly what you want.

There is typically more risk associated with vertical and customvendors. However, the benefits could outweigh the potential risks. To obtainlists of potential vendors:

• use internet searches• contact your accountant• contact colleagues• contact consultants• contact industry associations• look at trade journals for articles and advertisements• attend trade shows

Find a good reseller

The reseller or Value Added Reseller (VAR)/implementer can make abig difference. Often, companies selecting new systems spend a lot of timeanalyzing the product and the vendor but not enough time analyzing the

capabilities of the VAR.

Issue a Request for Proposal (RFP)

An RFP is a good tool to communicate your needs uniformly to vendorsand to create a short list of vendors. Ask vendors to answer questions relatedto cost, technology, customer base, developer and implementer qualifications,and similar customers. Have the vendors respond to each requirement with anumber such as "7" in current release and quoted in estimate, "6" in currentrelease, "5" available in 6 months, "4" minor modification or workaround, "3"third party, "2" available in a year, "1" major modification or workaround, "0"

not available. By extending the priority of each requirement times the vendor



response, and then summing the results, you get a score that will give you anindication of closeness of fit for each vendor.

Attend demonstrations

The vendors should now know your Critical Success Factors and keyrequirements, and should be given an agenda so that time is allocatedproperly. You should attend no more than 4 demonstrations, and limit the timeto 2-3 hours. There will be time for a more detailed review later. Ask eachattendee to identify major strengths and weaknesses, as well as score (-10 to+10) how well they did for each topic on the agenda as well as indicate itsimportance (1 to 10).

Call references

You will be amazed at how much you learn and how little some of thevendors know their customers. Have a checklist of questions to ask so thatyou don’t forget anything. See below for a more detailed discussion onreference checking. Tell the reference a little about yourself before asking anyquestions so that they have a level of comfort with you.

Prove that the system will work for you

Prepare a script that contains sample transactions that should beprocessed through the entire system. The script is a day in the life at your company will contain the most important business processes with sampledocuments and reports. You could ask 1-2 vendors to prepare a proof of concept. This is a time consuming task for the vendors as well as for you inattending the demonstration. But you are only focusing on the vendors mostlikely able to win your business.

Know the Total Cost of Ownership (TCO)

You need to understand all the costs including license fees, implementation,support, hardware, networks and communications before making a decision.There should be no surprises later. See below for more about TCO.Do a Boardroom Pilot

You need to work with the system to understand the many options. You maythink that a customization is required until you better understand the variousworkarounds. The vendor has an idea of the customizations, but has probablynot created a specification or given you a firm quote. Use the boardroom pilotas a way for the vendor to understand your requirements and for you to better understand the system before signing a contract and purchasing the software.

You will need to pay the vendors for their time. You should get a fixed price asone of the deliverables of the boardroom pilot.



Vendor Demonstrations

Be prepared. Before you have scheduled a demonstration, you shouldhave already completed a preliminary vendor analysis that evaluated each

vendor’s degree of fit to each of your requirements. This means that youshould already have eliminated any systems from the demonstration if thereare major problems with the system related to functionality, cost, technologyand support.

Keep the 1st one brief. The first demonstration should be anintroductory session for approximately four vendors. Share the priority of your requirements with each vendor. Each vendor will want to spend time with youto better understand your business. Just as important from their perspective,they will want to establish a relationship with you. Resist their request at thispoint. The vendors also have a lot to show you. They will want to spend as

much time as you can give them during the demonstration. Keep the firstdemonstration up to 2 hours. Tell the vendors they can forget abouteverything except your highest priority requirements. There’s no pointspending a lot of time with each vendor at this point as you hardly know them

Over the internet

Consider doing the 1st demonstration over the internet especially if some of the vendors are not local. There are great tools to demonstratesystems over the internet. In this way, it’s a level playing field for all thevendors. And it’s faster.

Create a team

You need to have a team of people to attend the demonstration thatrepresent all the major business processes in the company. They don’t needto stay for the entire demonstration. However, you should let all your peopleinvolved in the demonstration attend the introduction session as well as thesession on generic features.

Keep a tight schedule

Provide a schedule, which shows exactly how much time they have oneach section. In this way, you won’t run out of time. As well, you will be able toschedule certain people to attend the sections that apply to them.

Keep score

You need a way to evaluate each vendor. Each person from your company attending the demonstration should be keeping score. Have eachperson complete the following chart identifying any strengths andweaknesses. Each person could score the vendor for each of the criteria (from



1 to 10) and its importance (from 1 to 10). Result = Score * Importance. Therewill always be follow-ups, so these should be recorded too. At the end of thedemonstrations, you need to bring all the participants together to decide whichvendor should be evaluated in more detail.

Follow-Up

Strengths Weaknesses Score Importance ResultrequiredVendor and Developer Qualifications/backgroundFunctionality - GenericFunctionality - DistributionFunctionality - Production

Functionality - Financial

Total Costs of Ownership

Implementation / Support

Technology

Total

Proof of ConceptThe idea is to narrow the field to only two vendors and focus your attention onthem.Send them a script of a day in the life of your company. The script shouldcontain thebusiness processes that you want to see. Attach forms and reports to give thevendors a better understanding. Give them a tour of your facilities and answer all their questions before the proof of concept demonstration. Give them

enough time to do justice to do the proof of concept. The vendors will do thisat no charge to you. It’s a significant investment and you don’t want to wasteanyone’s time on vendors that are unlikely to win the day.

That’s not all

You’re not finished yet. You will also want to do reference checking. Thevendors don’t want to give you references too early in the sales cycle. This isunderstandable as they don’t want to bother their clients unless they are onyour short list and have a decent probability of being successful. Other activities include contract negotiation and even more demonstrations if

necessary.

How to select and implement an ERP SystemBe honest

The vendors may have invested a lot of time with you. The least you can do isto tell them the real reason they have been eliminated. As well, you may havemade a mistake in your evaluation. By telling the vendors the real reasons,you give the vendors a chance to come back with perhaps a differentapproach or clarification.



Reference CallsGet the right references

Make sure that you are talking to a company in the same or similar industry, at about the same size as your company and implemented by the

same company, which will be responsible for your implementation. It’s notenough that the reference company be in the same or similar industry – theyshould also be using the same software as proposed to you. Size matters –performance can be different as you increase the number of users or thevolume of transactions.

Schedule it in advance

Be respectful about the time of the reference. Call the reference toschedule a good time for him/her to take you call.

Keep it brief

Let the reference know approximately how much time it will take and tryto keep it within the allotted time – unless of course the reference loves totalk…

Work from a checklist

It’s easy to be sidetracked during these calls, but you don’t want toforget about key questions.

Introduce yourself

The reference call should always start with a short description of your company. This helps personalize the conversation, which becomes another reason for the references to be reluctant to lie or leave out important facts.

Ask the right questions including• Reference Company Background• Modules installed and when• Implementer

• Database• # of users• Why software chosen• Has software met your needs• Any areas not met• Software ease of use ok• Flexibility/ability to modify ok• Any modifications• On-time and on budget• Performance/response time• Any problems

• Implementation process ok• Support ok



• Overall satisfaction• Do it again• Any recommendations or things to avoid

Be specific

The above questions are all generic. You should also ask specificquestions on the areas of most concern.

Be appreciative

The reference took time out of their busy schedule to take the call.

Bottom Line

You may be wondering what’s in it for the company taking the call.

Most people do it to show their appreciation and support of the vendor. Theydo it because they feel obliged to help considering all the times they havebeen helped. They do it because they once made a reference call and now it’stheir turn. They did it because it’s the right thing to do. Whatever the reason,they are not about to compromise their integrity if asked a direct question bysomeone who they may meet them down the road.

Total Cost of Ownership (TCO)

TCO is a very good way to evaluate the costs related to a new system.You need to include not just the software license costs, but also all the other direct and indirect costs. Sometimes vendors will give a low-ball cost for software, but will make up for it in later charges. You don’t want any costsurprises part way through an implementation. What can you do?

Avoid ambiguity

You need to be very specific about your needs so that there is aminimum of ambiguity. If there is ambiguity, the vendors will be able to saythat the needs were not communicated clearly enough, and that additionalcosts are required.

Avoid time and material quotes

The vendors would prefer to bill you on a time and material basisespecially when there are unknowns. For example, they may tell you that theydon’t know how much training is required as they don’t know the aptitude of the staff. This particular concern can be dealt with by taking a train the trainer approach, whereby the vendor only trains key people over a defined number of hours, and the key people train the rest of the staff. However the bigunknowns are in conversion, customization and integration. The vendors havea legitimate inability to fix costs for these activities. Get the vendors to prepare

specifications, which will enable them to provide a fixed price. The



specifications should be prepared before the purchase of the software. Thevendors are entitled to be paid for the time to prepare the specifications.

Boardroom Pilot

Consider doing a board room pilot before you purchase the software.One objective of the board room pilot is to ensure that all costs are definedbefore purchasing the software. This would be a good time to have thespecifications prepared for conversion, customization and integration.

Include all direct costs

The vendor could be involved in many implementation activities. Makesure you have quotes on all the costs. In the higher end systems, theimplementation costs could easily be twice the costs of the software license.

Maintenance costs

Maintenance costs are usually charged on the list price and not adiscounted price. You should also get a quote to maintain any customizationsif there are upgrades to the core product. Same goes for third party products –you want to know the costs of upgrading the third party products.

Hardware costs

You could be surprised by additional hardware costs. Make sure youknow the recommended configuration for your workstations and server. Youcould also have additional costs if you require remote access. Most systemstoday are not web-based (i.e. you need more than a browser on aworkstation). These systems often use Terminal Services or Citrix as a way toget good remote performance. But you may need to invest in additionalhardware and software.

Include all indirect costs

There will be internal costs. You may need to hire additional resources.Many key employees will be spending time on the project, and will not be able

to complete their normal work activities.

Talk to references

Don’t just ask about the software. You should also ask about theimplementation costs.

Include future costs

By doing a present value calculation (it’s assumed all Bottom Linereaders know how to do this), you may find that the solution with the higher

license costs is less expensive after 3 years.



Put it in writingYour contract should include details on what is included in the

implementation.

License costs

Beware of license costs that go up with more users. You may find thatthe 1st 15 concurrent users cost much less than the next 15.

Avoid customization

Don’t automatically think you need to customize something that you’recurrently doing, but does not exist in the software. There could be aworkaround that will present itself after you have better understood thesoftware. There could in fact be a better business process available with thenew software. Many companies are stuck with old versions of software

because of all the customizations that have been done. They are reluctant toupgrade to the most current release because the customizations need to beredone, which 14 will be costly. There will be situations where customizationsdo make sense, but you should understand the total costs before proceeding.

Business Process Improvement

You have a big opportunity to improve business process whenimplementing a new system. Don’t simply just re-implement your existingprocesses. You may be able to not only save costs during implementation, butalso achieve significant benefits from an improved business process on an on-going basis.

Phased Implementation

One effective way to deal with heavy up-front costs is to break out theimplementation into phases. Do the essentials in phase one. Get the vendorsto quote for each phase. In a year or so, you may find that some of the thingsyou thought you required are not really necessary after all.

IMPLEMENTATION PROCESS

The Process characteristic of the system implementation is equallyrelevant. At this point it is relatively well understood that the choices of implementation strategies available to firms adopting ERP systems constitutea spectrum bounded by the sole use of business process-driven systemcustomization efforts at one extreme, and the sole use of system-driven BPRat the other. This spectrum is depicted in Figure 1. The basic reasons behindthe existence of this spectrum stem from the fact that no two business use theexact same business model, and therefore a vendor’s design of a system thatprovides a simultaneously natural fit to all potential corporate clients isimpractical. When firms are confident that the business processes they

currently utilize are correct and in fact provide them with a competitiveadvantage over their competitors, they may be unwilling to change. Instead,



the system adopted may require extensive customization to fit these uniquebusiness processes. At the other extreme, businesses convinced of the meritsof the ERP system in question, and already dubious of their own legacybusiness processes may encourage internal restructuring to fit the proposed“best practices” that some ERP systems claim to represent. The majority of

reportedly “successful” implementation strategies fall somewhere betweenthese extremes.

System Implementation Process

A number of benefits may be naturally inherent to the Process of implementation. Of course the most obvious stem from the elimination of redundant or unnecessary processes, improved resource allocations andsystem-wide standardizations.

The Product of an ERP implementation is most often characterized bya reduction in both the diversity of information storage mechanisms (e.g., onecentral database) and the interfaces necessary for conducting businesstransactions. Standardization inherent to the design of enterprise-wide

applications permits user interfaces to remain comparable regardless of whatbusiness units are involved. This allows processing times to be moreaccurately estimated and hence improves the firms’ ability to effectivelyallocate resources. Such variance reduction may also increase the ability of individual employees to communicate regarding critical business issues andthe ability of technical personnel to make adjustments and maintain thesystem as a whole. From a mechanical standpoint, the standardization of computer-computer interfaces, besides eliminating unnecessary datatranslation protocols, simultaneously increases the ability to predict theamount of time required to transfer large packets of information and reducesthe potential for discrepancy

Among reports.

The Process of an ERP implementation, notably any reengineeringeffort involved, is also often associated with variance reduction with regards toa rationalization of the total number of processes used and the diversity of employee interpretations of corporate goals and operational requirements.These in turn assist in the reduction of variance in transaction processingtime, especially non-value added components, that have been cited countlesstimes as notable benefits to firms adopting ERP systems.



ImplementationBusiness Case FoundationDon't forget what you should have known during the selection process. You

should have already understood Critical Success Factors (CSFs). CSFs aredefined as those things that you must do well in order to be successful. Aswell, you should have defined measurements of success. Before starting anyproject, you should know how to measure success. Measurements of successact as a motivator for staff during the implementation, and help keep theproject on track and focused on CSF's. Even if you have not done it for system selection, it's not too late.

Business Process ImprovementDon't assume that your existing business process is the best way to get the job done. Even worse, don't insist on modifying the new system to do exactly

what was done before. First, ensure there is an understanding of existingbusiness process. Roll up your sleeves and talk to the people who do thework. Ask them to tell you how much time is spent on activities. It may notseem serious if 1 person wastes 15 minutes per day - but what does it cost if there are 10 people doing the same thing throughout the year? Assuming arate of $25/hour and 1,800 hours or work per year, that little problem has costthe company $112,500 for the year.

Project Management

Project management is a key factor in predicting success of any

project. Project management includes management of scope, budget andtiming. Rather than using the school of hard knocks, you should consider working with a structured methodology such as published by the ProjectManagement Institute (PMI). A good project manager has support of upper management, and can be tough. If the project manager wants to pleaseeveryone, he/she is not the right person.



Internal Champion

An internal champion must be allocated to the project. Even the mostdifficult projects can become successful when you have an internal championwho is ready to do whatever it takes to get the job done. It is best to assign

the internal champion at the beginning of the system selection project toensure their commitment and agreement with the system selected.

Employee Involvement

You need their involvement for many reasons. Without it, you could riskmissing critical business process that only they know about. And just asimportant is the psychological component. People are often threatened bychange. By getting them involved, they are more likely to be supportive.

Best People

You want your best people involved in the implementation. They havethe confidence of their colleagues, know the business well, and usually havethe right attitude. The implementation is going to take time. You must reducetheir normal workload.

Risk Management

Seek out potential risks, their impact, and their likelihood of occurring.Encourage all interested parties to develop strategies to mitigate the risks.Every organization has at least 1 naysayer, who can cause a lot of problems,but who is also very knowledgeable. The naysayers must be included in therisk management process. By getting their input early, you can avoidproblems and you effectively limit their negativity.

Communicate

Don't keep people in the dark. Communicate formally, informally andfrequently.

Train the Trainer

This is a good way to cut training costs, and force employees to know

the system. The best way to learn a subject is to teach it.

Extensive Prototyping

There are many options in the setup of a new system including setupoptions, conversion, integration, and customization. An iterative process isrequired until the prototype is completed. It may take a few times before youget it right. Take a small, representative sample of transactions through thesystem including reports and controls. Don't go live before everyone is ready.

Beware of Customizations



Customizations can bite. The first bite is that it slows down theimplementation and the costs soar. The second bite occurs when you want toupgrade to the newest release. This is not to say that some customizationsare warranted and have a compelling business case.

Phased in approach

There is also what is called the big bang theory, when you do it all atonce. Big Bang could able be so named because everyone on theimplementation shot each other out of frustration. Small and midsizedbusinesses especially don't have the manpower to do it all at once.

Post Implementation Review

Learn from your mistakes and there's always room for improvement.

UTILITY AND SCOPE FOR ENHANCEMENT

ISSUES AND CHALLENGES:

Though the market for ERP seems to be growing, there are severalissues and challenges one has to contend with when implementing an ERPsystem in the SME segment. Some of these are:

Awareness:

There is a low level of awareness amongst SMEs for ERP vendors,applications etc.Most of the time they do not even know what ERP systemsare and what they can do. They consider ERP systems to be a magic wand,which will help solve all their business problems, be it in terms of quality, or process defects. ERP brings in a more disciplined execution of businessprocess giving More transparency and visibility to the working of theorganization.

Perception:

SMEs have the perception that ERP is meant only for large firmsmainly owing to the high costs of acquisition, implementation andmaintenance as also the complexity. Some of the SMEs even feel they do notneed ERP. Earlier Implementations: SMEs have heard of the much-publicizedfailures in ERP implementation, which have led firms to bankruptcy. SomeSMEs who have implemented ERP earlier have failed. This has led SMEs tobelieve that ERP implementations are a waste of time and effort and can evenlead to the demise of company.

Approach to implementation:



ERP vendors advice SMEs to mould the business to ERP’s way of working. Considering that ERP systems will bring it best business practices.This is the plain vanilla approach that was mentioned earlier, which wouldbring down the cost of implementation. But most SMEs have processes thatthey have evolved over time and hold very dear to their hearts. As a result,

SMEs are having the entire ERP system customized to meet their requirements. This would increase the overall cost of implementation. A goodapproach would be to keep the customization to a minimum.

Cost:

SMEs have less of capital than their larger counterparts. Changemanagement: One of the major reasons why ERP implementationsnationwide have been known to fail is due to the implementation beingconsidered as an automation project instead of one that involves changemanagement. This results in the system being put in place but not being used

effectively due to people not ready to accept the change.

Limited resources:

Most SMEs do not have an in-house IT team. Due to this they have torely on external agencies to help them and this adds to the implementationcosts.

FACTORS AFFECTING ERP IMPLEMENTATION:

The major factors can be classified into four subheadings namely, thetop management, training, the data collection & Software design and Testing.The 8 factors affecting the ERP implementation are determined. Theconsensus among the ERP team and top management is very important toindicate the need for application framework. The factors are can be illustratedas fallows-

Data provided:

Adequate and correct data should be provided it had to be collected

from the distributed Tally 7.0 Servers, had to be reconciled, mapped into theERP System in its standard format and finally the data had to be uploadedinto the system. A strong management Journal of Arts, Science & Commerce■ E-ISSN 2229-4686 ■ ISSN 2231-4172 International Refereed ResearchJournal ■ ■ Vol.– II, Issue –2,April 2011 83 direction is needed for themanagers at each of the branches so that adequate and appropriate data isduly provided.

Parallel systems:

When issues began to crop up after implementation of ERP in Finance

module, sales and distribution module was completely ignored, they shiftedwork with these modules back to the old system. This hampered the proper



integration of organization data and led to data mismatch in other modules aswell. As a result, support system provided by the vendor became obsolete anddifficult to implement. Hence, use of parallel systems should beavoided outright.

Training and testing:

Training and testing of the system should be done properly by the ERPConsultants, that is, the vendor is provided as part of the implementationprocedure to only a 30% group of people from the clients’ side known as theCore Team. This core team in turn trains a rest of people who are actuallyresponsible for day-to-day transactions called the End Users. It was observedthat the 50% second leg of training which is provided to the end userswas not carried out mainly due to lack of computer literacy, not will to acceptthe responsibility this triggered a strong resistance to change for the newsystem being installed and caused reduction in employee motivation.

Expectations from the ERP System:

Clarity in management objectives and expectations from the ERPSystem are clearly stated to the vendors. This led to a belief of the systems’power to integrate the company actual functions. According to the vendor,management expected a quick return on investment which was not practicalsince it takes around three to four months to notice any significant returns.Hence, top management should be patient with the new system and any fear of failure should be done with for a successful running system.

Employee Retention:

It was observed that after the completion of ERP training provided tothe staff and within some days of the system going live, many of the traineesfrom the organization quit the company causing great losses to organization inthe form of shortage of key resources i.e. trained staff. This was a bigpercentage of employee attrition rate and it is not possible for a company tohold back any of its employees even with the most stringent contract.

Design & Testing:

Is a very important part of software testing and should not be neglectedthe computer work stations are set up in a room to represent each of themajor tasks of customer service /order entry, planning, goods-in, stores andfinance. A simplified data set is loaded and the company operations runthrough. The data is gradually increased as first the project team, thenmanagers and finally users get more familiar with the software. This isconducted just before the ERP becomes fully functional in the organization.

Customization should be less than 30%-



Customization Services involves any modifications or extensions thatchange how the out-of-the-box ERP system works. Customizing an ERPpackage can be very expensive and complicated. Some ERP packageshave very generic features, such that customization occurs in mostimplementations. Customization work is usually undertaken as "changes

requested beforehand" software Journal of Arts, Science & Commerce ■ E-ISSN 2229-4686 ■ ISSN 2231-4172 International Refereed Research Journal■ ■ Vol.– II, Issue –2,April 2011 84 development on a time and materialsbasis. But ideally, experts in the ERP implementation field have suggestedthat customization should be less than 30%. The level of customizationin the case of Multiplex exceeded beyond this and posed a great deal of problems when key applications were run and found to be not working as theywere intended to.

Stakeholders shall be identified in the initial phase including customersand vendors:

Stakeholders are all those who are directly or indirectly affected by acompany implementing any new ERP system be it organizations like those of the supplier as well as the vendors. A failure to identify the stakeholders givesthe implementing company a major setback when the concerned people or organizations work against the new system. So identification of allstakeholders has to done in advance.Maintenance, Support, and Upgrades

The maintenance includes all post-implementation activities that arerequired to keep the application operational under normal and stressedconditions. It includes on going support, upgrades (patches and minor andmajor upgrades), all diagnostics and tuning activities managed byadministrators to maintain the application running in optimal conditions, andthe archiving of historical data. Maintenance costs have an important impacton the overall ownership experience, due to the traditionally labor-intensiveand repetitive nature of these activities. Diagnostics and tuning facilitate theupgrade process by staying current on releases, while poor diagnostics toolslead to unpredictable downtimes and business disruption. Seven criteria wereinvolved in the expertise assessment of the maintenance phase:

1. Diagnostic and technical support

2. Remote and online support

3. Performance diagnostics and tuning

4. Patch management

5. Automated upgrade process and toolsets

6. User-centric performance testing

7. Data archiving.

In this phase, PeopleSoft offers the fullest feature sets covering diagnosticand technical support, performance diagnostics, patch management, user centric performance testing, and data archiving. PeopleSoft, Oracle, and SAP



all offer full performance diagnostics and tuning. And PeopleSoft, Microsoft,and Siebel fully address patch management, while only PeopleSoft and Siebelfully address the issue of user-centric performance testing. All vendors havebasic automated upgrade tools, and all have shown progress in addressingmaintenance improvements to the ownership experience.

Let's examine each of the seven feature sets in the maintenance, support andupgrade category.

Diagnostic and technical support

Microsoft, SAP, Oracle, and Siebel support is delivered the "traditional"way: a knowledge base on the web and phone calls with technical support.PeopleSoft is the only vendor to provide a built-in diagnostic frameworkthrough embedded diagnostics scripts that let customers send secure,realtime production system snapshots to PeopleSoft's support center. Thisunique capability ensures faster issue diagnosis and resolution. With SAP,Oracle, and Siebel, diagnostics and resolution information is exchangedbetween the customer and the vendor through tailored emails that depend onthe availability, the responsiveness, and the knowledge of the vendor'ssupport staff. In some cases, support requires extensive communication andexchange of files such as log files that contain the exact configuration of thecustomer implementation.

Remote and online support

All vendors provide some form of a remote support and onlinecapabilities to help customers self-diagnose issues. Both PeopleSoft's andOracle's online support databases are rich in content but can be timeconsuming to navigate. Siebel provides some support content over the webbut, once a problem has been logged online, always promotes interaction with

the customers over web self service support. SAP has recently introducedmultiple web sites to provide better post implementation information to itscustomers, but the efforts remain fragmented across various interaction pointswith customers.

Performance diagnostics and tuning

Oracle, PeopleSoft, and SAP provide a built-in, instrumentedperformance monitoring tool that tracks the application performance in realtime as well as by component. The tool provides comparisons to average

performance levels to proactively identify and troubleshoot non-performingcomponents. Siebel supports industry-standard application response-time



management that implifies performance tuning across all tiers of the SiebelSmart Web Architecture and supports proactive performance monitoring by athird-party ARM-compliant monitoring application. Because it requires third-party software, Siebel is not rated as highly. With Microsoft, performancemonitoring is done at the platform level (Windows/NT); no specific application

performing tools are available.

Patch management

Applying patches to enterprise applications can be a very timeconsuming and disruptive activity. SAP, Oracle, and Siebel make their list of patches fully available on the web but provide limited guidance and automatedtools to select which patches are relevant to a specific configuration.PeopleSoft has streamlined this task by offering a Change Assistant toolsetthat supports the automatic checking of pre and post- requisites and byautomatically selecting which patch should be applied for the customer to be

current. Microsoft releases new versions of patches for its applications veryinfrequently (less than once a year), so the features with respect to patchmanagement are well suited.Automated upgrade process and toolsets

SAP offers tools to identify pre-requisites and guide technical staff through the various steps of an upgrade. The SAP upgrade process is onlypartially automated, with many complex tasks to be performed manually.PeopleSoft provides Upgrade Assistant, an automated upgrade tool with welltested and complete upgrade scripts. Starting with Enterprise Human CapitalManagement 8.9 customers, PeopleSoft has re-engineered the upgradeprocess from eight steps to five with Accelerated Upgrades. Now customerscan use a visual compare tool to identify customizations and an ETL-baseddata migration tool to ensure downtime is less than a day. Oracle offersupgrade scripts and tools but with a lesser degree of automation. Microsoftprovides basic upgrade automation tools that are adequate for Microsoft's lowfrequency of releases.

User-centric performance testing

PeopleSoft allows customers to submit test cases, which are used aspart of the application testing and release process. PeopleSoft is the onlyvendor to test functionality and performance using real customer data onvolume database systems. Oracle relies mostly on its database performancetest to validate the performance of its application. SAP offers test servicesreported to be so expensive that very few customers opt to use them. Siebelhas been focused on usability since it released its first CRM application, anduser-centric testing is an integral part of its product development cycle.Microsoft delivers good usability but the functionality delivered is lesssophisticated.

Data archiving



Oracle only provides purge capabilities and does not allow customersto archive or restore/reinstate archived data into production. Both SAP andPeopleSoft provide archive, purge, and restore capabilities natively. Inaddition, PeopleSoft provides rules-based archiving templates enablingadministrators to set up different archiving rules for different regions for better

global compliance support. Siebel and Microsoft do not directly offer archive,purge or restore capabilities.

Advantages of ERP

In the absence of an ERP system, a large manufacturer may find itself withmany software applications that cannot communicate or interface effectivelywith one another. Tasks that need to interface with one another may involve:

• Integration among different functional areas to ensure proper communication, productivity and efficiency

• Design engineering (how to best make the product)

• Order tracking, from acceptance through fulfillment• The revenue cycle, from invoice through cash receipt

• Managing inter-dependencies of complex processes bill of materials

• Tracking the three-way match between purchase orders (what wasordered), inventory receipts (what arrived), and costing (what thevendor invoiced)

• The accounting for all of these tasks: tracking the revenue, cost andprofit at a granular level.

ERP Systems centralize the data in one place. Benefits of this include:

• Eliminates the problem of synchronizing changes between multiplesystems

• Permits control of business processes that cross functional boundaries

• Provides top-down view of the enterprise (no "islands of information")

• Reduces the risk of loss of sensitive data by consolidating multiplepermissions and security models into a single structure.

Some security features are included within an ERP system to protect againstboth outsider crime, such as industrial espionage, and insider crime, such asembezzlement. A data-tampering scenario, for example, might involve adisgruntled employee intentionally modifying prices to below-the-breakevenpoint in order to attempt to interfere with the company's profit or other sabotage. ERP systems typically provide functionality for implementing

internal controls to prevent actions of this kind. ERP vendors are also movingtoward better integration with other kinds of information security tools.



Recommendation for ERP

1) It helps in maintaining the customer database. With the help of customer database organization can make the customers grouping andwill be able to give priority to them according their purchasing power and needs.

2) It enables you to acquire, maintain and retain customers as a part of customers -centric business strategy.

3) Record of business operations are done manually which is timeconsuming It improves the operational excellence. It simplifies business

operation across products and service lines.

4) With the help of ERP good procurement process can be possessed. Itwill helps in keep the record of transporting cost.

5) It helps in keeping of outside dealers and distribution centers of theproducts.

6) It generates auto market analysis report which helps in meeting theneeds of customers as well as helps in making policies.

7) It comprises of Contact Management and Sales Order ProcessingManagement. It is an integrated solution comprising of marketing andsales activities. Organization can act immediately to improve sales,service and marketing effectiveness by using this Module

8) ERP provides a powerful and flexible set of features to help youmanage and report your inventory information.

9) ERP streamlines procurement of required raw materials, packaging

material, sub assembly and other non-inventory materials. It automatesthe processes of identifying potential suppliers, Supplier Evaluation,Supplier Quote Evaluation, awarding purchase order to the supplier,and billing processes.

10) ERP gathers financial data from various functional departments andgenerates valuable financial reports.

11) With the ERP financial reports Financial Manager as well as other Managers within business can review the financial position of thecompany in real time and assist in better decision-making and strategic

planning.



12) It routinely maintains a complete employee database including contactinformation, salary details, attendance, performance evaluation andpromotion of all employees.

Conclusion

An ERP implementation is a huge commitment from the organization, causingmillions of rupees and can take up to several years to complete. However,when it is integrated successfully, the benefits can be enormous. A well-designed and properly integrated ERP system allows the most updatedinformation to be shared among various business functions, thereby resultingin tremendous cost savings and increased efficiency. When making theimplementation decision, management must considered fundamental issuessuch as the organization’s readiness for a dramatic change, the degree of integration, key business processes to be implemented, e-businessapplications to be included, and whether or not new hardware need to beacquired.

In order to increase the chance of user acceptance, employees must be

consulted and be involved in all stages of the implementation process.

Providing proper education and appropriate training are also two important

strategies to increase the end user acceptance rate. The organization is alsogoing through a drastic change, with changes in the way businesses are

conducted, the organization being restructured, and job responsibilities being

redefined. To facilitate the change process, managers are encouraged to

utilize the eight-level organizational change process. Managers can

implement their ERP systems in several ways, which include the whole

integration, the franchise approach, and the single-module approach. Finally,

the paper concludes with a flow chart, depicting many of the activities that

managers must perform to ensure a proper ERP implementation.



References

Book Reference:

1. Class A ERP Implementation: Integrating Lean and Six Sigma

- by Donald H. Sheldon

2. Modern ERP: Select, Implement & Use Today's Advanced Business

Systems

- by Marianne Bradford

3. Maximizing Your ERP System: A Practical Guide for Managers

- by Scott Hamilton

4. Enterprise Resource Planning

- by Bret Wagner

Web Reference:

1. www.wikipedia.org

2. www.sap.com

3. www.oracle.com

4. www.nasscom.com

5. www.google.com

http://www.wikipedia.org/

http://www.sap.com/

http://www.oracle.com/

http://www.nasscom.com/

http://www.google.com/

http://www.wikipedia.org/

http://www.sap.com/

http://www.oracle.com/

http://www.nasscom.com/

http://www.google.com/

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