ERP Implementation Life Cycle A CASE STUDY FORM HM / AVTEC l Pre evaluation screening l Package...

ERP Implementation Life Cycle

A CASE STUDY FORM HM / AVTEC

Pre evaluation screening Package evaluation Project planning phase /

milestones Team / team leader finalization Vendor / implementation partner

finalization Requirements / gap analysis

Re Engineering System Configuration / System

Integration Implementation Team Training Data Migration / Verification System testing Trails / user walkthro’ End User Training GO LIVE Post implementation metrics

ERP Implementation Life Cycle

A CASE STUDY FORM HM / AVTEC

ENTERPRISE RESOURCE PLANNING –FOR HMPPDENTERPRISE RESOURCE PLANNING –FOR HMPPD A PERSPECTIVE ANALYSISA PERSPECTIVE ANALYSIS

HMPPD / MIS / 03-01-05SA

AGENDA

Executive Summary HM-PPD - Present I T Status , Issues and risks. Present Business Need / HM PPD Challenges Alternatives evaluation and related SWOT analysis Comparison in ERP and related SWOT analysis.

Oracle / Peoplesoft S A P

Action plan / CFT for Implementation Phased Implementation Methodology / suggested benefits Proposed Recommendation Proposed New System Arch.


Executive Summary

Also the present Market Conditions demand a GLOBAL MARKET REACH,

supported by a SECURE, RELIABLE & STABLE IT ARCHITECTURE, with

very high availability. As such these are now a “ De-facto” organizational needs.

In the present context of global competition, it is imperative that Organization adapt current technology trends in Information Management for an improved Business AGILITY and competitive edge in Business.

Current Business Needs in I T :

Current Issues in I T in HM-PPD :

Obsolete I T Systems Hardware / Network / RDBMS Support for Database ( INGRES) withdrawn from Party M/s Mastek Manpower Crisis due to very high attrition.. reduced from 8nos to just 3 ( 70 % ) Support for Database Alpha SERVER being withdrawn by H P from Sep ’05 Overall a serious risk in ongoing maintenance of both Hardware& Database A clear ‘end-of-the-road’ crisis situation and needs immediate change / action


Executive Summary

Evaluation & Comparisons were made between S A P and Peoplesoft E R P In the process of evaluation parties M/S ‘S A P’ and PEOPLESOFT had made presentations on Product features, ease of Configuration, Support Commitment implementation Cycle Time etc.

Emphasis was also laid on our Specific needs as TCO, Skills availability, adaptability Market leadership etc. A detailed RATING POINTS is enclosed

PPD had also initiated in house ERP development with Vendor M/s LINC SW & designed Prototype, which is now put on hold in view of ERP Evaluation.

Overall in terms of Rating comparison ‘ S A P ’ appear to have a clear EDGE as Compared to Peoplesoft ( Subject to negotiation of TCO ). Rating comparison & SWOT analysis are indicated separately,with tips on effective implementation.

Briefing on evaluation of alternative ERP :


With the increasing Criticism on ERP Vendors on HIGH TCO , prices are

expected to be lesser than before and would be around one Crore for 60

Users License and also for Implementation. To this the cost of Network,

communication and Hardware is to be added which is expected to be

identical and Overall Cost Outlay is estimated to be around TWO Crores.

DETAILED PERSPECTIVE ANALYSIS IS ENCLOSED

Executive Summary


General General High Manpower Attrition over 70 % Ingres crashed when a Export Sales was

being Invoiced. Declining enhancements ./ low uptime due to

Obsolescence.

Present Status & issues in Manpower / Database / Server

0

5

10

15

I II III IV V

Manpower

RDBMS ( Ingres)RDBMS ( Ingres) Product Related : Ingres is also not upgraded or updated for the past several months & \

GUI, web / XML features is not supported.. Service Related : There is no direct support from Mastek, Needs high AMC Cost

SERVER ( Dec Alpha 800)SERVER ( Dec Alpha 800) Dec Alpha, though a reliable architecture, is not OWNED by any one due to regular

take over and NOW OBSOLETE No clear road map for future growth .. Clearly “ end-of-the-road” situation.

Potential risks of down time, as Support is withdrawn from Sep’05.

POTENTIAL BUSINESS RISK … MANPOWER / HARDWARE / SOFTWARE


The following are the focus areas as per HM PPD’s IT Strategy Development & Implementation of State of Art Web & XML enabled RDBMS

in a

current Business Server offering flexibility, Security & high reliability /

availability. Full Migration to GUI & OPEN STANDARDS of FRONT END ( IBM lBasic /

Web

sphere)

To fulfill this objective it is STRATEGICALLY IMPORTANT to have a stable, reliable & secure Database / Server Arch.with high availability, supporting web interface, XML / GUI / WEB technology, OLAP, Business Intelligence etc. The present database of INGRES does not support this.

POPULAR ERP AS ‘SAP ’ or ‘ PEOPLESOFT ‘ FULLY SUPPORT THIS BUSINESS NEED & I T STRATEGY

HM PPD – IT Strategy and Focus Areas


Business Challenges clearly demand high AGILITY and response to

contain cost, improve cycle time, better retention of customers etc

through a better and Improved Business functionality with ERP.

Present Business Need

ERP in useUnder ImplEvaluationNo eRP

As indicated in this chart a VASTAs indicated in this chart a VASTMAJORITY HAD RESPONDED THATMAJORITY HAD RESPONDED THATERP is already in Use ( in SMB / MFG /ERP is already in Use ( in SMB / MFG /AUTO Sector )( SAP/ BAAN / Peoplesoft)AUTO Sector )( SAP/ BAAN / Peoplesoft)


To meet Business Challenges VAST majority of Organizations in &

around HOSUR / BANGALORE have a better & Improved Business

functionality with ERP Applications Software.


ERP in useUnder ImplEvaluationNo eRP

Percentage of Companies in Discrete MFGPercentage of Companies in Discrete MFGSector who have Implemnted ERP packageSector who have Implemnted ERP package


Aberdeen report for SMB / AUTO sector summarizes following as key

Concerns


• Pressure to REDUCE Operating Cots• Need to improve Productivity / Cycle Times• Concern for Topline growth / Customer growth / retention• Commoditization of Products and Services• Product Innovation / enhanced R & D• Improved Retention / Hiring of Key talents

Response as to what BEST STRATEGY is adapted to meet these needs

posed to Leading FORTUNE Companies, the responses are as under…

• 21 % responded that SIX SIGMA / LEAN MFG as key success Strategy• 49 % responded that ERP / CRM / SCM / SRM as key success Strategy• 30 % responded on other strategies


The following are perceived as PPD issues / challenges in terms of I T solution

** High / Imbalanced Inventory / High operating Cost

** Productivity / Cycle time/ Lead time Improvement

** Cash to cash Cycle time high – High receivables

HM-PPD CHALLENGES

** Dynamic / immediate response to planning / changes in planning

** Dynamic response /compliance to STATUTORY / TAX related changes etc. THESE CHALLENGES ARE BEST MET BY ERP PACKAGE

The following is also a MAJOR CHALLENGE in ERP Implementation in HM-PPD

** With the BPR enabled Streamlined and proven Business Process, with

a clear Process MOPs, value added, quality certified processes /, etc., ADAPTABILITY of this process and CONFIGURATION of the Business Process in ERP System would be a complex task.

** We may need to Compromise some proven Functionality to fall in line with

the ERP package. However the matter MUST BE RESOLVED by related

Implementation Consultant


Alternatives & SWOT analysis

Functionality / SWOT

In-House ERP

Packaged (SAP / Peoplesoft)

Remarks

High IntegrationWeb/ Net EnableWorkflow enabledWorld Class Bench Mark / Business

Process

Weak Strong Packaged ERP is better

T C O( total cost

of ownership) Strong Weak In House ERP

less by 75 %, in terms of TCO

BI Capability ( Business Intelligence)

Weak Strong Opportunity in SAP

Attrition Weak Weak Common ThreatOTHER THAN A HIGH TCO … PACKAGED ERP IS SUPERIOR FOR BUSINESSOTHER THAN A HIGH TCO … PACKAGED ERP IS SUPERIOR FOR BUSINESS


0

10

20

30

40

50

60

S A P

Peoplesoft

OTHERS

Many benchmark comparisons and white papers rate S A P as superior product. Though they

are Criticized for high T C O. Overall they enjoy a high Market Share of nearly 50 % in

the

Engineering Industries / AUTO Sector as shown above.

RATING COMPARISON IN TERMS OF SWOT ANALYSIS IS ENCLOSED FOR SAP / Peoplesoft

ERP : Comparison between S A P / Peoplesoft

Source : CIO magazine

SA HMPPD / MIS / 03-01-05

ERP : S A P / Peoplesoft – ComparisonHMPPD/ HMCCP / HMPUP Team rating

Criteria KR ML SA VRB SKJ AKM Total Av SAP PS

Statutory Compliance - Response 9 10 9 9 9 9 55 9.2 7 5Support - Product 8 9 9 9 9 9 53 8.8 8 6Population - Market Share 10 9 7 8 7 9 50 8.3 8 2Implementation Time 8 8 9 8 9 7 49 8.2 8 8Total Cost of Ownership 8 8 9 6 8 5 44 7.3 7 8People / Skill availability / Attrition 8 6 8 6 6 6 40 6.7 8 5Ease of Configuration 7 7 7 6 7 5 39 6.5 7 8Product Enhancement 5 6 6 6 5 7 35 5.8 8 5Adaptability / Suitability to business 4 6 5 5 6 6 32 5.3 8 6

69 53

Implementation Partner: BS IBM BC

Track Record 5 8 7Skills availability 5 8 7Commitment 10 8 8Cost 8 5 7Total 28 29 29

SoftwareVoting by Team Members in 0-10 Scale

(KR- K Ramesh, ML- MurariLal, SA- S Appan,VRB-V Rajeshbabu,SKJ- S K Joseph,AKM-AK Mathur ) BS = Birlasoft , BC = Bristle Cone

HMPPD / MIS / 03-01-05

ERP : S A P / Peoplesoft – Comparison SWOT ANALYSIS

CRITERIA PARTICULARSS A P PeopleSoft REMARKS

a) STRENGTHTRACK RECORD 8 6 SAP Market presence for over 14 yrs.MARKET SHARE- AUTO SECTOR 8 6Bench mark World class PROCESS 8 7Product Enhancements 8 7

WEB Services / Web enabled process 7 8Peoplsoft developed in WEB SPHERE

SW24x7 World wide product support 8 6 SAP is rated better

b) WEAKNESSConfiguration Complexity 6 7 Peoplesoft Relatively simplerSkills Availability / Attrition 5 5 Common ProblemHIGH TCO / AMC COST 5 7 SAP is more expensive

SWOT ANALYSIS RATING ( 1 to 10 )

HMPPD / MIS / 03-01-05

ERP : S A P / Peoplesoft – Comparison SWOT ANALYSIS

c) OPPORTUNITY S A P Peoplesoft RemarksIndustry Vertical Solution 7 5 S A P is rated betterBusiness Intelligence feature 7 5 …do…

d) THREATAcquisition threat 8 2 Peoplesoft taken over by Oracle

Support withdrawal / product fading 8 5Peoplsoft product support withdrawal a

distinct possibility

AGGREGATE RATING 93 76

NETT RARING ( 1 to 10 SCALE) 7.2 5.8Source : IDC BENCH MARKS

HMPPD / MIS / 03-01-05

S A P (VS) PEOPLESOFT

** S A P has offered to transfer ‘FREE OF COST’ unutilized / excess licenses available

at ‘ HM-CCP’, to other divisions. This would be beneficial in terms of TCO.,and saves

COST.

** Recent take over of “PEOPLESOFT” by ORACLE, would mean that the Commitment for

Product Support and enhancement would suffer as ORACLE may pursue their own range

of “ORACLE ERP ‘. This would be a definite RISK in the long term period, for customers of

‘PEOPLESOFT’ and fading of this product range by ORACLE may be a distinct possibility.

We also have positive feedback in terms of Product Support Commitment by S A P

from HM-CCP and regular Product enhancements by S A P.

Overall the above SWOT analysis makes S A P a preferred choice.

ERP : S A P / Peoplesoft – Comparison / SWOT

HMPPD / MIS / 03-01-05

PRIMARILY ERP IMPLEMENTAION STARTS WITH THE

FOLLOWING BASIC NEEDS

a. TOP Management / Executive Sponsor / Commitment

b. CFT Formation – Various Function for FULL TIME

c. ERP BENEFITS / GOAL Targeting / Brain Storming

d. Partner selection – CFT to involve to target ERP goals

e. PHASED IMPLEMENTATION PROJECT PLANNING

( Indicated in the enclosed pages )

ERP : ACTION PLAN – CFT FOR IMPLEMENTATION

HMPPD / MIS / 03-01-05

Number of other white papers have clearly stated and users also have confirmed that

ERP System is a Company Wide, top driven Change Management Commitment. Over 66 % of ERP efforts are SOFT SKILLS as TEAM Commitment, TOP EXECUTIVE

support, CFT formation & FULL TIME Involvement in implementation,users commitment etc.

In summary various aspects of successful implementation based on survey is shown below


Source : META Group0 1 2 3 4 5 6 7 8 9 10

TOP MGMTSupport

CFT Commitment

Partner Skills

Vendor Support

TeamCommitment

User Involvemnt

ERP Success

HMPPD / MIS / 03-01-05


TRANSACTION /BUSINESS PROCESS

CONTROLS /REPORTING

Strategic Value

It is important to follow the above step FISRT and TARGET ERP GOALS for all the 3It is important to follow the above step FISRT and TARGET ERP GOALS for all the 3Spheres of Management Hierarchy…. for next 3 to 4 years Spheres of Management Hierarchy…. for next 3 to 4 years

CFT TO PLAN STREAMLINING PROCESSPRODUCTIVITY IMPROVEMENT / THRO’PUTTIME REDUCTION ETC & TARGET MANPOWERRATIONALISATION IN SUPPORT AREAS

CFT / HODS TO PLAN CONTROLS / TARGET REDUCEDINVENTORY / REDUCED OPERATING COSTS etc.

TOP MANAGEMENT TEAM TO PLAN STRATEGIC VALUEPROPOSITION WITH ERP.

Time = 3- 4 Yrs

Time = 1-2 Yrs

Time = 6M-1Yr

HMPPD / MIS / 03-01-05

PHASED IMPLEMENTATION METHODOLOGY / BENEFITS

Phased implementation methodology is the most successful approach to ensure effective and Timely ERP Implementation

As indicated in the CHART below a vast majority have implemented FINANCE and the MATERIALS first , though a few have attempted a BIGBANG approach

0

10

20

30

40

50

60

70

Finance/Matls

BIGBANG

OTHERS

HMPPD / MIS / 03-01-05

PHASED IMPLEMENTATION METHODOLOGY / BENEFITS Phased implementation methodology is briefly presented below

I Phase- Sponsor / Plan• Project Scoping/funding• Staffing / CFT Formation• Benefits Targeting • Change mgmnt approach

II Ph: Business Process Mapping

• Business Process Model/design.• Process / Data analysis• Process Modeling for ERP• Data Analysis

III Ph: SW Configuration

• Process Configuration • SW / Process Interfacing• Sizing / Data Cleansing/ Reporting

HMPPD / MIS / 03-01-05

PHASED IMPLEMENTATION METHODOLOGY / BENEFITS Phased implementation methodology is briefly presented below

IV Phase- Data Migration• Data Conversion / Testing• Interfacing / user testing• Integration Testing• End user training• Pre Production run

V Phase – GO LIVE

• HELP DESK .• INTERFACE SUPPORT• Process Improvements Monitor• Data Analysis / Benefits Monitor

HMPPD / MIS / 03-01-05

Conclusion / Recommendations

ERP / I T are presently ESSENTIAL INFRASTRUCTURE for a competitive Business Agility and dynamic response to Customers

It is imperative that we soon adapt a suitable ERP as a part of our overall Business Infrastructure, to stay competitive

In HM-PPD, where we already have a streamlined business process and a in-house ‘near ERP package’ in legacy System, CONFIGURATION of our process for ERP System may pose complex issues. However this is to be fully examined so that we do not compromise proven functionality

Over all the trends strongly suggest that ERP package is becoming quite essential. Propose System Arch. is enclosed

HMPPD / MIS / 03-01-05

Thin Thin ClientClient

Rich Rich ClientClient

BACKENDBACKENDDB2-RDBMSDB2-RDBMS

PROPOSED NEW ArchitecturePROPOSED NEW Architecture

ERP PACKAGE / MIDWARE

ERP PACKAGE / MIDWARE

ERP FRONT END IN WEB

ERP FRONT END IN WEB

BROWSER BROWSER

HMPPD / MIS / 03-01-05

ERP Implementation Life Cycle A CASE STUDY FORM HM / AVTEC l Pre evaluation screening l Package...

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