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6: Enterprise Resource Planning

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Q. What is an ERP system?

ERP – Definition: “An Enterprise Resource Planning System is a fully integrated business system covering functional areas of an enterprise like Logistics, Production, Finance, Accounting, and Human Resource”

1) Organizes and Integrates Operation processes and information flows to make optimum use of resources such as Men, Material, Money and Machine (M4).

2) ERP is a global tightly integrated closed loop business solution package and is multifaceted.

3) The ERP solutions seek to streamline and integrate operation processes and information flows in the company to synergize the resources of an organization namely M4 (men, material, money and machine) through information.

4) ERP Promises One Database, One Application, and one user interface for the entire enterprise rather than use of disparate (distinct) systems ruled manufacturing, distribution, finance and sales.

5) ERP provides an integrated information storehouse where information needs to be stored only once and can be further processed and reported to anyone in the value chain.

Benefits:-

1. Assists employees and managers plan, monitor and control the entire business. 2. Assists Modern ERP System enhances a manufacturers’ ability to accurately schedule

production, fully utilize capacity, reduce inventory and meet promised shipping dates Diagram: General Model of ERP System

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Q. What is evolution of ERP system? / How did ERP evolve?

In the ever-growing business environment, following Demands are placed:-

1. Aggressive cost control initiatives 2. Need to analyse cost/revenue on a product/ customer basis 3. Flexibility to respond to changing business requirements

Applications and Planning Systems that have been introduced into the business world for crossing these hurdles are:

a. Material Resource Planning (MRP) b. Manufacturing Resource Planning (MRP II) c. Money Resource Planning (MRP III)

1. ERP has evolved from the MRP II system with the integration of information between vendor, Customer and Manufacturer using networks such as LAN, WAN and Internet

2. MRP II system again evolved from MRP system.MRP is a system which has the following salient features:

3. MRP: -

Objective: Obtain end product demand schedule from Master Production Schedule (MPS) for the given product which is taken from Bill of Material (BOM) into a schedule of planned orders considering the inventory in hand.

Reports that are prepared by MRP System:

o Planned Order Releases (POR) for Purchase Orders o Work Orders

4.MRP II:

o Method of planning of all the resources of manufacturing company. Involves all operational and financial planning and has simulation capabilities to “WHAT IF?” questions.

o Links different functional areas like Business planning, Production Planning, MPS, MRP, Capacity Requirement Planning and Execution System for capacity and Priority.

o Output from these systems is integrated with Financial reports such as Business Plan, Purchase, Shipping, Budget and Inventory for Production etc.

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Drawbacks: Not been able to effectively integrate the different functional areas to share the resources effectively

Q. Distinguish between Traditional Systems and ERP System?

Traditional Systems ERP Treat each transaction separately and are built around the specific boundaries of specific functions that a specific application is meant to cater.

Stops treating these transactions separately as stand-alone activities and considers them to be part of inter-linked processes that make up the system.

No link between the application systems being used by different departments.

Links the application systems being used by different departments.

Q. What is technology used for enabling ERP?

Initially, ERP systems were built only to work with huge mainframe computers. Easy deployment of ERP systems is done by

1. Era of PC ( Microcomputers) 2. Client Server Technology 3. Scalable RDBMS

3-Tier Client Server Architecture:

1) In a Client Server architecture, Server stores the data, maintaining its integrity and consistency and processes the requests of user from client desktops. Data processing and application logic is divided between server and client.

2) The three tier architecture adds a middle stratum, embodying all application logic and the business rules that are not part of application, enforcing appropriate validation checks.

Other Technologies used by ERP: Intranet, Workflow, Work group, Electronic Data Interchange (EDI), Data Warehousing etc.

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Q. What are the characteristics of an ERP system? (Memory Code: F M B B C )

1) Flexibility: Should be flexible to respond to the changing needs of an enterprise. Client Server technology enables ERP to run across various database back ends through ODBC ( Open Database Connectivity)

2) Modular & Open: Open System architecture plus that any module can be interfaced or detached without affecting the other modules. Should support: 1) Multiple Hardware platforms for companies having heterogeneous collection of systems and third – party add-ons.

3) Comprehensive: Should be able to support variety of organizational functions and must be suitable for a variety of business organizations.

4) Beyond the Company: Should not be confined only to Organizational boundaries, rather support on-line connectivity to other business entities of the organization

5) Best Business Practices: Have a collection of the best business processes applicable worldwide. Imposes own logic on a company’s strategy, culture and organization.

Q. What are the features of an ERP?

1) Supports Multi-facilities: Provides Multi –platform, multi-facility, multi-mode manufacturing, multi-currency, multi-lingual facilities

2) Support to Business: supports strategic and business planning activities, operational planning and execution activities, creation of Materials and resources. All these functions are effectively integrated for flow and update of information immediately upon entry of any information.

3) End-End: Has end-end supply chain management to optimize the overall demand and supply data

4) Company Wide: Integrated Information System covering all functional areas 5) Corporate Image: Performs core activities and Increases customer service 6) Information Gap: Bridges the information gap across organizations 7) Integration: Integration of systems not only across departments but also across companies

under the same management 8) Better Project Management 9) Latest Technology: supports the introduction of latest technologies like Electronic Fund

Transfer (EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video Conferencing, E-Commerce etc

10) Eliminate business problems: Example: Material shortages, Customer Service, Inventory Problems

11) Decision System: Provides intelligent business tools like Decision Support System (DSS), Executive information System (EIS)

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Q. Why do Companies Undertake ERP?

1) Integrate Financial Information: Example: Revenue, Finance will have its own set of numbers whereas Sales will have its own version. ERP creates a single version where nothing can be questioned as everyone uses the same system

2) Integrate Customer Order Information: Companies can keep track of orders more easily, and co-ordinate manufacturing, inventory and shipping among many different locations simultaneously

3) Standardize and Speed up manufacturing process: Multiple business units across the company make the same transaction/ recording/report using different methods and computer systems. ERP comes with a standard methods of automating some of the steps of manufacturing process. Standardizing those processes and using a single, integrated computer system can save time, increase productivity and reduce headcount.

4) Reduce inventory: Improves Visibility of order fulfillment process inside the company. Leads to both reduced work-in-progress inventory and finished goods inventory along with helping users to plan deliveries to customers

5) Standardize HR Information: In Organization with multiple business units, HR may not have a unified, simple method for tracking employees time and communicating with them about benefits and services.

Q. What are the benefits of ERP?

1) Reduce Paperwork 2) Improves Timeliness of Information 3) Improves Cost Control 4) Faster response and follow-up on customers 5) Efficient cash collection, say material reduction in delay in payments by customers 6) Quick response to change in business operations and market conditions 7) Achieve Competitive Advantage by improving its business processes 8) Helps supply-demand linkage with remote location and branches in different countries 9) Unified Customer Database 10) Improves International Operations ( by following a variety of tax structure, invoicing

schemes, multiple period accounting etc) 11) Improves Information Access and Management throughout enterprise 12) Provides solution like Y2k and Single monetary unit (SMU)

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Q. What is Business Process Reengineering (BPR)?

“Re-engineering the processes within ERP in one form or another is known as Business Process Re-engineering”

Typical Processes where BPR is used:

1) Forecasting 2) Fund Management 3) Price Planning 4) Budget Allocation 5) Material Requirement Planning 6) Quality Control

Definition:- “BPR is the fundamental rethinking and radical redesign of processes to achieve dramatic improvement in critical, contemporary measures of performance such as cost, quality, service and speed.”

Radical design means BPR is reinventing and not enhancing / improving

Rethinking means eliminating business process altogether if it does not add any value to the customer. BPR thus aims at major transformation of business processes to achieve dramatic improvement. Business objectives are achieved by “Transformation” of business processes which may or may not require the use of Information Technology

Dramatic improvement is possible by making only major improvements rather than making small incremental changes

Q. Short Note on Business Engineering?

Business Engineering: Information Technology + Business Process Reengineering = Business Engineering

Definition: “Business Engineering is the rethinking of Business Processes to improve speed, quality and output of materials or services.”

The objective of Business Engineering is the concept of Process Oriented Business Solutions enhanced by Client Server Computing in Information Technology

Value Added Chains: Series of Connected steps running through a business which when efficiently completed add value to enterprise and customers

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The main point in business engineering is the efficient redesigning of company’s value added services; Information Technology helps to develop business models, which help in redesigning of business processes.

Business Management: ERP merges very well with common business requirement issues like Business Process Reengineering, total quality management, mass customization, service orientation etc.

When an Enterprise does not have optimized business processes, the ERP implementation needs a process reengineering which enable to capture knowledge of experts into system thus gaining considerable benefits in productivity.

Business Modeling:

1) A model consisting of core business processes or activities of the business is to be developed

2) We can model Business as a System making the processes managing their facilities and material as their resources

3) Data model consists of two elements: a. A diagram describing various business processes and their interactions b. An underlying data model

The reference model can be used by various companies to list their processes and data entities and if required can be subsequently modified to suit specific nature of requirements.

Q. What is role of Implementation Consultants in ERP implementation?

Role of Implementation Consultants?

Implementation Consultants have to understand the needs of the users, understand the prevailing business realities and design the business solutions keeping in mind all these factors.

Who Drives the implementation? – Users (Thus active involvement of users at all stages of implementation is vital for critical success of implementation

Can ERP undergo changes? – Yes, during course of implementation, the standard package may undergo changes which may be a simple one or a major “functionality” change. Implementing such changes is known as customization. Contents of package are known as Module and modules are further divided into components

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Employees: Roles and responsibilities of the employees have to be clearly identified, understood and configured in the system. The employees will have to accept new process and procedures laid down in the ERP system. At the same time, these processes have to be simple and user friendly\

“Ability of ERP to manage and support dynamically changing business processes is a critical requirement for the organization and therefore the package must be expandable and adaptable to meet these changes.”

Q. What are the Key Planning and Implementation decisions:

1) Should I implement ERP or not? - Answer depends on business cases that involve:

1) Technology: Need to address Y2K problem ( in most cases not applicable), integrate the functions of disparate systems, replace poor-quality existing systems and merge acquisitions with new capabilities such as web accessibility into the business environment

2) Process Improvements: Actions that reduce personal and IT cost 3) Productivity improvements: Need to close the financial cycle and increase the overall

production from an enterprise standpoint. 4) Strategic Considerations: Ability to implement new strategies not supported by the

current software, improve customer service, respond to competitive pressures

Follow Software Processes or Customize?

Process of Software: Organization will follow the best practices within its sector, thereby giving it a chance to improve and standardize their processes; this approach will also provide a future change to the ERP module

: Create significant turmoil by requiring employees to change their ways of doing business

Customize: No pain and stress associated with changing the process.

Costly to customize and maintained the software over time

Inhouse or Outsource?

In house: Better match between software and the business; Applications optimized for the organization and better maintained security

Cannot be accomplished if there is a lack of internal expertise and personnel to support such an effort

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Outsourcing: Allows the organization to continue to focus on its core mission , avoid a relative substantial financial commitment ( in some cases) and minimize the impact on MIS department.

Providing opportunities to those external to organization may poorly impact on employee morale and may give rise to security issues

“Big bang” or Phased Implementation?

Big Bang: “It involves having all modules at all locations implemented at the same time”

1) No need for temporary interfaces 2) Limited requirement to maintain legacy software 3) Cross- module functionality

Phased Implementation: “ One or a group at a time, often a single location at a time”

1) Smoothing of resource requirements 2) An ability to focus on a particular module 3) Availability of existing legacy system as a fall-back 4) Reduced risk 5) Knowledge gained with each phase 6) Usefulness of demonstrable working system

Note: There are other approaches also to implement ERP like:

1) Wave Approach: Applications of different waves of change to different business units or regions

2) Parallel Implementation: Involves both an ERP and an existing system running together for a period of time.

a. Basis of comparison b. Existing system as a backup c. Rewires more computing and human resources

3) Instant cutovers (flip-the-switch) – Lower in cost and motivates users to seriously convert to the new system and reduces the need for redundant systems. Tends to be risky and requires high level of contingency planning.

Q. What are the steps in ERP Implementation?

Or

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Q. Why does an organization implement an ERP package and evaluate the various available ERP packages for assessing suitability? Mention the various evaluation criteria that are required to assess the suitability of an ERP package on implementation? [Nov 2010, 5marks]

1) Identifying the Needs for implementing an ERP package: a. Why should ERP be implemented? b. Will it improve profitability? c. Will it help reduce cost of products etc. d. Other requirements are:

i. Need for quick flow of information between business partners ii. Effective MIS for quick decision making iii. Elimination of manual working

2) Evaluating the “As is” Situation of the business: a. To understand the strength and weakness prevailing under existing circumstances b. Processes used to achieve business transactions must be listed in detail c. Details of business process can be obtained by mapping processes to function:

i. Total time taken by the business processes ii. Number of departments/locations iii. Flow of information and its routing iv. Number of reporting points currently available

3) Deciding the “ Would be “ Situation for the business i.e. the changes that are expected after the implementation of ERP

a. Concept of Benchmarking used to see that processes are the best in the industry (Benchmarking done on factors like cost, quality, service etc.)

4) Re-engineering the business process to achieve the desired results in the existing processes: a. Reduce the business process cycle time b. Reduce the number of decision points to minimum c. Streamline the flow of information and eliminate unwanted flow of information

5) Evaluation of various ERP packages: (Explain the evaluation of various ERP packages?) a. Flexibility: Does it enable organization to Respond quickly by leveraging changes b. Comprehensive:

i. Should be applicable across all sizes, functions, and industries (with an in-depth feature in accounting, production, quality management, HRM etc.)

ii. Should have information and early warning systems for each function and enterprise –wide business Intelligence system

iii. Should embrace an architecture that supports components / modules , which can be used individually, and be expandable in stages to meet specific requirements of the business

c. Integrated:

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i. Overcome the limitation of traditional hierarchical systems ii. Operational functions like Financial accounting, HRM, sales , production should

be integrated into a workflow of business events to receive right information at right time

d. Beyond the Company: i. Should support and enable inter-enterprise business processes with customers ,

suppliers, banks , governments and create complete logistical chains covering the entire route

e. Best Business Practices: i. Should enable integration of all business operation in an overall system for

planning, controlling and monitoring and offer a choice for best business practices that reflect experiences

ii. Should have a rich wealth of business and organizational knowledge base f. New technologies:

i. Incorporate cutting-edge and future proof technologies such as object orientation into product development

g. Other factors: i. Price of package ii. Obsolescence of package iii. Market Targeted by package iv. Ease of implementation v. Cost of Implementation vi. Post-implementation support availability

6) Finalization of ERP package: Make a comparison of critical factors through a matrix analysis 7) Installation of Hardware and Networks:

a. Work carried out in phase manner depending on schedule implementation and need of hardware components

8) Finalizing the Implementation consultants: Factors for selection are: a. Skill set b. Industry specific experience c. Cost of hiring the consultant

9) Implementation of ERP package:

d. Formation of team e. Preparation of Plan f. Mapping of Business Processes to package g. Gap Analysis (deviation)

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h. Customization i. Development of user –specific reports and transaction j. Uploading of data from existing system k. Test runs l. User training m. Parallel run n. Concurrence from user o. Migration to new system p. User documentation q. Post-implementation support r. System monitoring and Fine tuning

Q. What are the implementation guidelines for ERP?

General guidelines which are to be followed before starting the implementation of an ERP package

1) Needs: Understanding the corporate needs and culture of the organization and then adopt the implementation technique to match these factors

2) BPR: Doing a Business Process Redesign ( BPR ) prior to starting the implementation 3) Communication Network: Establishing a good communication network across the organization 4) Leadership: Providing a strong and effective leadership so that people down the line are

motivated 5) Project Manager: Finding an efficient and capable project manager 6) Implementation Consultant: Creating a balanced team of implementation consultants who can

work together as a team 7) Implementation Methodology: Selecting a good implementation methodology with minimum

constraints 8) Training: Training end users 9) Migration to new System: Adopting the new system and making the required changes in the

working environment to make effective use of the system in future

Q. What are the expectations of Management from ERP implementation?

The management expects the following from ERP implementation:

Process/ Productivity:

1) Improvement in Process 2) Increased productivity 3) Improvement of all KPIs ( Key Performance Indicators)

Automation:

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4) Total automation and elimination of all manual processes 5) Real Time information systems 6) Total integration of all operations

Q. What are the fears associated with ERP implementation?

Users may fear ERP implementation, due to the following reasons: 1) Change in job Profile 2) Job redundancy 3) Organizational fear of loss of proper control and Authorization 4) Increased stress caused by greater transparency 5) Individual fear of loss of authority 6) Loss of importance as information is no longer an individual prerogative

Q. What are the major challenges faced during implementation of ERP system? / drawbacks of ERP?

1) Extra Effort: ERP is only an enabling tool, which makes one to do his job better. Hence, additional efforts are required on part of users

2) Increase in workload: ERP upon implementation improves the flow of information, formalizes and standardizes all business processes. Hence workload of users might increase

3) Time consuming: ERP implementation involves considerable amount of time 4) Changing nature of Business: Any change in functional module will affect other modules 5) Implementation v/s results: A well managed and implemented ERP will give good results but

not otherwise.

Q. ERP is not the solution to all the problems. Comment. “Implementing an ERP system has more to do with changing the way an organization does business than it does with technology"

Ans. Successful ERP implementation is not the end by itself. Continuous improvements are required to reap its fullest benefits

1) Levels of Change: Changing the organization involves three level of changes a. Business Process Change b. Strategic Change c. Organization Change

2) Mental Revolution: Changing the organization requires a mindset change. Without willingness it would result in being an old organization with new technology

3) Change in Attitude: Many process related KPI’s have not been measured due to company’s indifferent attitude or non-availability of sources

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4) Nature of Packages: ERP packages cater to the specific needs of an organization as a whole. Hence, user specific packages should be avoided

5) Manual Processes: ERP is not the solution to all requirements, some processes are effective if done manually rather than automated

Q. What are the risk and governance issues in an ERP?

Organizations face several new business risks when they migrate to real-time, integrated ERP systems.

1. Single point of failure: All Organizations data and transaction processing is within one application system

2. Structural changes: Personnel and Organizational structures changes associated with BPR (Business Process Reengineering)

3. Job Role Changes: Transition from traditional user roles to roles with much greater access to enterprise information in real time and point of control shifting from back-end financial processes to front-end point of creation

4. Online, Real-time: Requires continuous business environment responding quickly to any problem requiring of re-entry of information

5. Change Management: Tightly integrated environment when different business processes have existed among business units; actions or inactions of users have a direct impact on other users. Considerable training is therefore required for large number of users

6. Distributed Computing experience: Inexperience with implementing and managing distributed computing technology may pose significant challenges

7. Broad system access: Increased remote access by users and outsiders and high integration among application functions allow increased access to application and data

8. Depending on external assistance: Organization accustomed to in-house legacy systems may find they have to rely on external help. If external help is not properly managed, it could an introduce an element of security and resource management risk that may expose the organization to greater risk

9. Program Interfaces and Data conversions: Extensive interfaces and data conversions from legacy systems and other commercial software are often necessary

10. Audit expertise: Specialist expertise is required to effectively audit and control an ERP environment. The relative complexity of ERP systems has created specialization such that each specialist may know only a relatively small fraction of entire ERP’s functionality in a particular core module

11. Additional Risks: a. Single sign on: Reduces the security administration effort associated with administrating

web-based access to multiple systems, but simultaneously introduces additional risk in that an incorrect assignment of access may result in inappropriate access to multiple systems

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b. Data content quality: Enterprise applications are opened to external suppliers and customers, the need for integrity in enterprise data becomes paramount

c. Privacy and confidentiality: Regularity and governance issues surrounding the increased capture and visibility of personal information i.e. spending habits.

Q. Explain the concept of 1) Critical Success Factors 2) Performance Measures 3) Key Performance Indicators

Change Integration has to be embedded in the task list for any ERP implementation. The main tool for this is the process of communication in all forms-written, oral workshops, meetings etc. Process should start early at all layers of organization

1) Critical Success Factors: At the start of the project, the Critical Success factors (CSF) should be listed

a. Company as a whole b. Respective functionalities / departments

2) Performance Measures: From the CSF, Performance Measures required to address/meet these CSF should be derived

3) Key Performance Indicators (KPIs): Numeric figures against these performance measures can be classified as Key Performance Indicators

4) Post-implementation phase: To ensure wide acceptance during post-implementation phase: a. Involvement of end-users in evolving the process b. KPIs and CSFs should be given significance too

5) Preparing for Post-implementation: Having evolved the processes while the configuration, construction, implementation are in progress, the organization needs to ready itself for post-implementation period. Some of the tasks are:

a. Develop new job description and organization structure to suit the post ERP scenario b. Determine skill gap between existing jobs and envisioned jobs c. Assess training requirements, and create and implement training plan d. Develop and amend HR, financial and operational policies to suit the future ERP e. Develop a plan to workforce logistics adjustment

Q. What are the problems that are encountered during Post – implementation scenario?

Or You are entrusted with the duty of implementing an ERP in your office. You have taken care of all the preparations during the implementation. However, during post implementation, there will be a need for course correction many times. What would be the reason for them?

[Nov 2010, 4 marks]

The problems faced during post – implementation stage are:

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1) No KPI: In some organizations, the KPIs may not be existent before implementation. Hence only attainable goals and a target that can be achieved in phases must be set

2) Monitoring of KPIs: Once the KPIs are set, they should be monitored and correct business decisions must be taken to improve them

3) Reluctance to Change: Users having a choice, display a reluctance to change. Only way to solve this issue is strong management resolve to insist on implementation of new system

4) Post – implementation Changes: There may be a need for changes during the post – implementation changes due to following reasons:

a. Change in Business Environment requires a change in CSFs, resulting in row of changed KPIs

b. Review indicates a need for change in some process c. Vision changes in the ERP and improvements in hardware and communication

technology necessitate changes d. New additions to business

Note: Investment in an ERP system is substantial for any organization while implementation itself is a challenge, the ultimate test is however appropriate usage. A periodic independent audit would be a proper mechanism for an organization to ensure that it gets best return on investment.

gjjkhlQ. Why do ERP projects fail so often?

1) ERP is a set of best business practices for performing the various duties in the departments of your company, including in finance, manufacturing and the warehouse

2) To get the most from your software, you have to get people inside your company to adopt the work methods outlined in the software.

3) Breakdown happens in following cases: a. Resistance by people in departments: Getting people inside your own company to

use the software to improve the ways they do their jobs is by far the harder challenge

b. Political fights c. Customization

Q. Enumerate the sample list of ERP Vendors?

1) Baan ( The Baan Company): a. Established in 1994 b. Sound Technology base and a broad functional scope. c. Offers credible tools for business process analysis linked to implementation of its

software

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2) Business Planning and Control Systems (BPCS): a. Market-leading manufacturing ERP solution in terms of sites b. Offers good functionality for process and discrete manufacturing, but not for Project

management c. Lags in areas of Process-oriented implementation tools and workflow

3) Mapics XA (Marcam Corporation): a. Suite of 40 modules with “ good enough” functionality b. Offers Robustness, easy implementation and reasonable value for money

4) MFG/Pro (QAD): a. QAD’s strength is in repetitive manufacturing

5) Oracle Applications ( Oracle ): a. Internet enabled , Network-centric computing b. Offers database, tools, implementation, applications and Unix operating systems

running on wide choice of hardware 6) Prism ( Marcam Corporation)

a. Specialist Process manufacturing solution for the AS/400 b. Handles Process Industry problems elegantly

7) R/3 (SAP) a. Match business processes to modules b. Offers a wide range of functions c. Complex

8) System 21 (JBA) a. Software license revenues are small compared to those of ERP vendors b. Does not offer Leading –edge technology, but offers a rugged, reliable

manufacturing solution

Discuss the relationship with ERP and E-Commerce?

1. Traditional ERP Systems: Only company’s employees needs information as they are highly trained and are comfortable with the technical jargon embedded in the software

2. Now: Customers and Suppliers are demanding access to the company information through ERP system

3. Facilitate E-Commerce: a. B2C: For Customers b. B2B: For Suppliers and Partners

4. Firms with E-commerce ambitions face a lot of hard integration work to make their ERP systems available over the web.

Case Study:

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1) Videocon: a. Needs:

i. Centralized and consolidated information that is available in uniform manner across organization for a Multi-Branch and Multi-operation company

ii. Share a common Platform with their dealers to access any information pertaining to them or on company as a whole

b. Pre-ERP Installation: i. Factories were working on Legacy Systems using an Intranet ii. Each factory and branch would use different software, varied platforms which did

not speak to each other iii. No Consolidation and Duplication of Data iv. Implication: For a $1bn company, even a 1% change in data entry or analysis

translates into millions and wipes out profits of organization c. Package Evaluation:

i. On Ygyan’s Recommendation ( expert) , SAP’s ERP package was finally selected d. Implementation:

i. Siemens’ Information Services Ltd (IT Company) was roped in for a pilot project at the first site – Videocon Appliances Ltd to implement some modules of package

ii. Phased Implementation: initially factories and then their Marketing Operations (Decided to go worth factories first because they are situated close to each other; compared to branches that are scattered)

iii. Connectivity problem: Mix of ISDN lines, VSATs, internet Connectivity to optimize costs while ensuring enough speed for users

iv. Cost of Implementation : 25 crores (excluding the maintenance charges) v. ERP involves a top-down approach, from a sales person to top management,

everyone is accountable e. Employees: Strong fear of retrenchment among employees; but company tackled it by

providing adequate workshops at central and state level f. Areas of issues:

1. Did not have modules specific to Indian requirements such as taxes, LOC’s, import clearance etc

2. Product evolution module not present g. Future:

1. Implementation in all group companies 2. To integrate with the partners and dealers

Case Study 2: Airtouch Cellulor

Problem

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1. Financial analysts - located in five different geographic regions 2. Could not have timely access to budgeted and actual data resided in different systems 3. Needed to control costs, analyze performance, evaluate opportunities

Implementation

1. Oracle Online analytical processing (OLAP) tools: provided on-site expertise, concept 2. Project completed within budget in 6 months. Few post-implementation changes

Benefits

1. More than $85mn savings. 2. Reduced length of budgeting cycle 3. Analysts access data warehouse for analysis 4. VP get budget data on timely basis 5. Helps them stay on budget / shift business direction

REVIEW QUESTIONS:-

1) Write down the general guidelines which are to be followed before starting the implementation of an ERP package?

2) Write a detailed note on expectations, fears and ground realities that a corporate management faces during post-implementation phase of ERP?

3) List any five ERP vendors and briefly describe the ERP packages offered by them? 4) Discuss the functions and facilities provided by Treasury Cash management module of an

ERP package? 5) You have been asked to assess the total cost of implementing an ERP in your organization.

In addition to direct software cost, what other costs would you include to arrive at the total cost of ownership and implementation of successful ERP system?

6) Upon implementation of ERP every organization stated to migrate to a regime of new risk and governance issues. Identify the major risk and governance issues for an organization that has implemented ERP?

7) What all safeguard would you take to ensure successful implementation of ERP? 8) ABC Ltd has recently migrated to real-time Integrated ERP System. As an IS Auditor, advise

the company as to what kinds of businesses risks it can face?.....................................................................................( 5 marks)

9) XYZ Company, engaged in the manufacturing of several types of electronic goods in having its branches all over the world. The company wishes to centralize and consolidate the

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information flowing from its branches in a uniform manner across various levels of Organization. The factories are already working on legacy systems using an Intranet and Collating Information. But each factory and branch is using different software and varied platforms, which do not communicate with each other. This not only results in huge inflow of data which could not be consolidated analysis but also duplication of data. Even one % change in data 1) What are the problems that company is facing now? 2) Should the company go for ERP solution? If yes, will the company be able to share a

common platform with its dealers to access servers and database to update information of issues of mutual interest?

3) For selection of ERP package, state the issues to be considered? 4) Suggest how to go about implementation of ERP package?

10. Worldwide, a global telecom company is serving to more than 10 million customers in the area of communications through fixed land lines, mobiles, internet services, digital TV and satellite system etc. The financial analysts of the company are located in different functional groups in six geographical regions. These analysts are missing the access to the same data, as well as timely access to the information. Dated budget and actual numbers for each business unit reside in seven different systems, separating critical components of the Profit and Loss account and inhibiting analyst’s ability to assess results. The problem gets further complicated as the field analysts are not able to go to one universal place to retrieve the data themselves and they have to rely upon the home office for the same. The objective of the company is to set some critical financial goals so that the company could remain competitive and increase market share. Read the above carefully and answer the following with justifications:

To overcome the problems which the financial analysts are facing, what kind of software the company should select? 10. ABC Udyog, a leading automobile company is having several manufacturing units, located in different parts of the world and manufacturing several types of automobiles. The units are working on legacy systems using an internet and collating information, but using different software and varied platforms (Operating System) which do allow communication with each other. This results in huge inflow of duplicate data. The company wishes to centralize and consolidate the information flowing from its manufacturing units in a uniform manner across various levels of organization, so that necessary data required for preparing MIS reports budgets, P & L accounts etc,

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The company decided to engage XYZ Consultancy Services for development of new system. Being a senior Project Leader of Consultancy Services, you are entrusted with responsibilities of handling this project. [ Nov 2011, 10 marks]

Which areas are required to be studied in order to know about the present system? Write the problems that ABC Udyog is presently facing? Will you suggest ERP solution to overcome the problems? If yes, explain why?

6: Enterprise Resource Planning - Amazon...

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