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West Bengal University of Technology

Summer Project Report

McPower - An ERP Implementation Scenario

At

McNally Bharat Engineering Company Limited

By

Abhisek Roy

WBUT Regn No: 071360709101035 of 2007 - 2008

WBUT Roll No: 071360709035

Army Institute of Management, Kolkata


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Executive Summary

Enterprise resource planning (ERP) is a method of using computer technology to link variousfunctionssuch as accounting, inventory control, and human resourcesacross an entire

company. ERP is intended to facilitate information sharing, business planning, and decisionmaking on an enterprise-wide basis. ERP enjoyed a great deal of popularity among largemanufacturers in the mid-to late-1990s. Most early ERP systems consisted of mainframecomputers and software programs that integrated the various smaller systems used in differentparts of a company. Since the early ERP systems could cost up to $2 million and take as long asfour years to implement, the main market for the systems was Fortune 1000 companies.

"Throughout the 1990s, most large industrial companies installed enterprise resource planningsystemsthat is, massive computer applications allowing a business to manage all of itsoperations (finance, requirements planning, human resources, and order fulfillment) on the basisof a single, integrated set of corporate data,"Dorien James and Malcolm L. Wolf wrote in TheMcKinsey Quarterly. "ERP promised huge improvements in efficiencyfor example, shorterintervals between orders and payments, lower back-office staff requirements, reduced inventory,

and improved customer service. Encouraged by these possibilities, businesses around the worldinvested some $300 billion in ERP during the decade."

By the late 1990s, however, sales of ERP systems began to slow. Some large manufacturersencountered problems implementing the systems, and others felt that ERP did not live up to itsbilling as a planning tool. Larger economic factors also influenced sales of ERP systems. Forexample, many companies developed close relationships with customers and suppliers andbegan conducting business over the World Wide Web. In addition, a growing number ofcompanies came to value the speed and flexibility of smaller, interconnected computer systemsand no longer wanted to rely on a mainframe to run ERP software. In response to these issues,the vendors of ERP systems have evolved to focus on smaller companies, develop Web-enabledsystems, and expand their offerings up and down the supply chain.

As of 1998, according to Loizos, there were five leading ERP vendors that accounted for 62

percent of the market: SAPof Germany; Oracle;J.D. Edwards; People Soft; andBaan of theNetherlands. For the most part, these vendors focused on large business clients andconcentrated on automating manufacturing, distribution, human resources, and financialsystems. The remaining 38 percent of the ERP applications market was comprised of numeroussmaller vendors which served smaller business clients and focused on niche applications.

ERP systems may have felt like an albatross to companies that have expensively and painfullyinstalled them. Nonetheless, they constituted a valuable foundation for a wide range of new value-enhancing applications. In hindsight it appears that much of the value of these large systems layin the infrastructure foundation they created for future growth based on information technology.

Scope of Study:

Here this project tries to throw some light on how ERP systems work, their nuisances regarding

their implementation and their overall virtues.


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Acknowledgements

Before we get into the thick of things I would like to add a few heartfelt words forthe people who were a part of this project in numerous ways people who gaveunending support right from the stage the idea of the project was conceived.

I thank Mr. Anupum Basu, CIO, MBE for giving an unending support during thetime of formulating the project and finding time from his busy schedule to answerany kind of queries when and where they occurred.

Mr. Bidyut Ghosh, MBE for keeping a tab on the proceedings of the project andsolving any problems or answering queries in unknown waters.

To my internal guide Mr. Sudipto Bhattacharya who has always been a key-stonewhile formulating this project and checking it for any discrepancies and giving thefreedom of thought to formulate the project.

Thanks to all and many more unnamed people who have stood beside to make this

project a reality.


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Contents

Topics Pages

1.McNally Bharat Engineering : A Bird-EyeView

2 8

2.Enterprise Resource Planning 9 22

3.ERP Implementation 23 31

4.McPower Powering MBE to ERPSolutions Era

32 36

5.Research Results on Different aspects ofERP

General Results McPower A Corporate View

37 43

6.Conclusion 44 45

Appendix iii


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McNally Bharat Engineering:

A Bird-Eye View


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Overview

McNally Bharat Engineering Company Ltd. (MBE) is one of the leadingEngineering Companies in India engaged in providing Turnkey solutions in theareas of Power, Steel, Alumina, Material Handling, Mineral Beneficiation, Coal

washing, Ash handling and disposal, Port Cranes, Civic and Industrial water supplyetc. Over 250 plants have been constructed on turnkey basis by MBE till date.

The company, headquartered at Kolkata, is owned jointly by the WilliamsonMagor group and the G. P. Birla group and was a pioneer in India in the field ofcoal washing, Mineral Beneficiation and Material Handling with several first to itsname.

The turnkey construction activity of the company is managed by its Projectsdivision also based at Kolkata through separate SBUs that assume responsibility

for each activity from concept to commissioning.

MBE also manufactures a range of equipment largely employed in the aboveactivities, which are undertaken at two factories under the Products division ofthe company. One factory is based at Kumardhubi, 200 kms. north of Kolkatawhere large equipments are manufactured and the other factory is located atBangalore where process equipments are manufactured.

MBE has technical collaborations with some of the worlds leading firms for each oftheir activities. Some of our associates include Outokumpu Technologies- Finland,Soleus- France, Poltegor- Poland, TPE- Russia, Aubema- Germany, Sieb Technik-

Germany, Eriez- USA, Krebs Engineers- USA etc.

MBE also has two subsidiary companies EWB Kornyezetvedelmi Kft., Hungary, afully owned subsidiary which is a world leader in ash handling systems and Eriez-MBE India Ltd. (EMIL) in Bangalore, a joint venture with Eriez Magnetics, USAthe world Authority in Magnetic, Vibratory and Metal Detection applications.

The Projects divisions at Kolkata as well as the Products division are both ISO9000 certified.


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VISION

MBE will emerge as one of the best-in-class organizations in the area oninfrastructure development, continuing to consolidate the ongoing process ofexpansion and venturing into new areas of business maintaining all the way, a high

standard of corporate governance.It will rapidly enhance its growth in turnover & net worth, sharing benefits amongall its stake holders and assuring customers of quality in all its product & services.

MISSION

Our Mission will be to achieve

1. Enhanced effectiveness of our peoplein all functional areas.

2. Long tem co-operation & partnershipwith vendors & associatesto expand the base for productionof goods & services.

3. Adequate R&D facilitiesto provide innovative designs& methods of production.

4. Excellence in all our business operationsthrough an all-pervasiveTotal Quality Management Programme.

5. Improved communication internallyas well as with customers & other stake holders,through appropriate useof information technologyand an effective

information security management system.


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Historical Background

MBE commenced business as McNally Bird Engg. Co. Ltd. in a serene township atKumardhubi (near Dhanbad) as the Indian arm of McNally Pittsburg, USA one ofthe then leading companies in the world engaged in the construction of coal

washeries and Mineral Beneficiation plants with the erstwhile Bird & Company, aBritish Managing Agency acting as secretary and managers. The company startedwith expatriate Americans taking care of major Engineering, Design andManufacturing functions.

MBE was a pioneer in the country in its initial areas of business, viz Coalpreparation, Mineral Benficiation and Bulk Material Handling and there areseveral firsts attributed to MBE. Some of the major milestones in the history ofMBE are given below:

Some benchmarks

1961- Company was established as a joint venture between McNally Pittsburg, USAand Bird & Co.

1968 Designed and built the longest Cross Country Conveying System in Indiafor 800 TPH Coal Handling Plant of Thermal Power station at Talcher, Orissa.

1970 - First indigenously designed Mineral Beneficiation Plant in India forbeneficiation of fluorspar was built for Gujarat Mineral Development CorporationLtd. at Kadipani, Gujarat.

1970 - First Carbon Paste Plant built indigenously, for Indian Aluminum.

1972 Name changed to McNally Bharat Engineering Company Limited.

1979 Built the first indigenously designed 700 TPH Coal Washery for BharatCoking Coal Ltd. at Sudamdih, Jharkhand.

1980 - Company taken over by the Williamson Magor Group.

1981 - Designed and built the first indigenous 5500 tph High Speed Rapid LoadingSystem with Silo at Jayant Coal Handling Plant, U.P.

1989 - G. P. Birla Group acquires 24% stake in the Company.

1995 to 1998 Projects and Products Divisions awarded ISO 9001 certification byRWTUV, Germany.


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1998 Entered into Open cast mining sector and secured an order for 20,000 tphshift able conveying system followed by orders for conveyors and Bucket wheelexcavator, Spreader etc from Neyveli Lignite Corporation, Tamil Nadu.

1999 - Joint Venture formed with Eriez Magnetics, USA, worlds leading

manufacturers of magnetic, vibratory and metal detection equipment formanufacture of their products in India.

2000 Received order for first Dense phase pneumatic conveying system for ashhandling in India from Neyveli Lignite Corporation, Tamil Nadu.

2001 - Obtained our first major order for Water Management in a joint ventureproject for combined water supply to 674 habitations in Tiruchirapally District,Tamil Nadu.

2002 - The first Indian Company to manufacture and commission a 700L capacityBucket Wheel Excavator.

2002 Designed, manufactured and successfully commissioned the worlds largestApron Conveyors for aluminum industry at Angul for Nalco.

2002 Entered into a licensing agreement with Kone-cranes Heavy LiftingCorporation VLC Corporation for technology transfer for design, engineering,manufacture, erection & commissioning of a range of Port Handling Equipment.

2002 Acquired 100% control over Eroterv-Waagner-Biro, Hungary, now known

as EWB Kornyezetvedelmi Kft., world leader in Pneumatic conveying Technology.

2004 Designed, built and commissioned Indias largest capacity Level luffingcranes at Kandla Port.

2005 - Built and commissioned in global record time of 14 months a complete lead-zinc beneficiation plant for M/s Hindustan Zinc Agucha mines.

2005 Built and commissioned again in global record time of 19 months a GreenAnode plant for Bharat Aluminum Company at Korba.

2005 Built and commissioned Indias largest capacity Goliath Crane (300 MT) forCochin Shipyard Ltd.

2005 First indigenously designed, built and commissioned Container HandlingCrane in India at Haldia Dock Complex.


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Subsidiary Companies

MBE has two subsidiary companies:EWB Kornyezetvedelmi Kft. Hungary: a 100% subsidiary of MBE. EWB Kft. isone of the leading ash handling solution providers in the world.

Eriez-MBE India Ltd. - Bangalore: a 60:40 joint venture company between EriezMagnetics, USA and MBE. Eriez Magnetics based in Erie, Pennsylvania is theWorld Authority in Magnetic, Vibratory and Metal Detection applications.

EWB Kornyezetvedelmi Kft. - Hungary

EWB Kft. is one of the leading Pneumatic conveying and ash handling solutionproviders in the world and has over 45 years of experience in Bottom ash, coarse

ash and Fly ash handling technologies.

EWB Kft. originated from Eroterv Power Plant Engineers, a company formed bythe Hungarian government to set up power plants on turnkey basis in Hungaryand elsewhere in Europe. The Ash Handling Division of Eroterv was formed in1955. In 1990, Wagner Biro, Austria one of the leading companies in Europeacquired 50% stake in the ash handling division and a new entity Eroterv Wagner-Biro Ltd. was created. By 2000, Wagner-Biro increased its stake to 90%.Subsequently, following a corporate decision to hive off the power plantmanufacturing business, Wagner -Biro sought to divest its stake in EWB.

MBE had a collaboration agreement with EWB since 1997 for setting up ashhandling systems in India. When the sale of EWB came up, MBE acquired theshares of EWB from Wagner Biro and thereafter the balance 10% from thegovernment and today EWB Kornyezetvedelmi Kft. is a 100% subsidiary of MBE.

Over 75 plants of various types have been executed by EWB Kft. till dateemploying either the hydraulic wet system or pneumatic dry system. EWB hasbuilt plants in Germany, Hungary, Austria, Czech Republic, Yugoslavia, Romania,Turkey, Greece, and Indonesia etc.

EWB is a pioneer in the field of Dense Phase Pneumatic conveying systems and hasbuilt 40 such plants all over the world.

EWB works closely with the Budapest Technical University on technologydevelopment and testing. A 30 tph pilot plant is also installed at the University byEWB Kft. to undertake tests on difficult material prior to designing the handlingsystems.


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Eriez - MBE India Ltd.

Eriez-MBE India Ltd. (EMIL) is a 60:40 joint venture company between EriezMagnetics, USA and MBE.

Eriez Magnetics based in Erie, Pennsylvania is the World Authority in Magnetic,Vibratory and Metal Detection applications. Eriez was started in 1941 by OrangeFowler Merwin, a salesperson for grain milling equipment, as a solution to hiscustomers who often complained about damage to their Milling equipment fromTramp iron. Today Eriez is a USD 100 million company with plants in USA,Mexico, Australia, Brazil, China, Europe, Japan, Mexico and India andmanufactures a range of products that may be largely categorized as

i. Separation Productsii. Vibration and Screening

iii.

Magnamationiv. Metal Detectionv. Minerals and Materials Processing

Applications for Eriez products can be found in power, cement, material handling,Mineral Processing, aggregate, coal as well as other sectors as food, ceramics,sugar, flour milling, plastics, glass, pharmaceuticals, etc.

MBE were selling agents for Eriez for close to 15 years. As the economy opened andopportunities grew, it was felt a plant that could provide Eriez' products at Indianprices would help immensely in penetrating the market to a greater extent. The

agency blossomed into a joint venture and EMIL was formed in 1999. It is engagedin the manufacture of almost the entire range of Eriez products in India while theBangalore office of MBE takes care of the marketing of EMIL manufacturedproducts.


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Enterprise Resource Planning


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Enterprise Resource Planning

Enterprise resource planning (ERP) systems attempt to integrate several data

sources and processes of an organization into a unified system. A typical ERPsystem will use multiple components of computer software and hardware toachieve the integration. A key ingredient of most ERP systems is the use of aunified database to store data for the various system modules.

The two key components of an ERP system are a common database and a modularsoftware design. A common database is the system that allows every department ofa company to store and retrieve information in real-time. Using a commondatabase allows information to be more reliable, accessible, and easily shared.Furthermore, a modular software design is a variety of programs that can be addedon an individual basis to improve the efficiency of the business. This improves the

business by adding functionality, mixing and matching programs from differentvendors, and allowing the company to choose which modules to implement. Thesemodular software designs link into the common database, so that all of theinformation between the departments is accessible in real time.


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Origin of the Term

MRP vs. ERP - Manufacturing management systems have evolved in stages overthe past 30 years from a simple means of calculating materials requirements to the

automation of an entire enterprise. Around 1980, over-frequent changes in salesforecasts, entailing continual readjustments in production, as well as theunsuitability of the parameters fixed by the system, led MRP (MaterialRequirement Planning) to evolve into a new concept : Manufacturing ResourcePlanning (or MRP2) and finally the generic concept Enterprise Resource Planning(ERP).

The initials ERP originated as an extension of MRP (material requirementsplanning then manufacturing resource planning). ERP systems now attempt tocover all basic functions of an enterprise, regardless of the organization's businessor charter. Non-manufacturing businesses, non-profit organizations and

governments now all utilize ERP systems.

To be considered an ERP system, a software package must provide the function ofat least two systems. For example, a software package that provides both payrolland accounting functions could technically be considered an ERP softwarepackage.

However, the term is typically reserved for larger, more broadly based applications.The introduction of an ERP system to replace two or more independentapplications eliminates the need for external interfaces previously requiredbetween systems, and provides additional benefits that range from standardizationand lower maintenance (one system instead of two or more) to easier and/orgreater reporting capabilities (as all data is typically kept in one database).

Examples of modules in an ERP which formerly would have been stand-aloneapplications include: Manufacturing, Supply Chain, Financials, CustomerRelationship Management (CRM), Human Resources, Warehouse Managementand Decision Support System.


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Overview

Some organizations typically those with sufficient in-house IT skills to integratemultiple software products choose to implement only portions of an ERP

system and develop an external interface to other ERP or stand-alone systems fortheir other application needs. For example, one may choose to use human resourcemanagement system from one vendor, and the financial systems from another, andperform the integration between the systems themselves.

This is very common in the retail sector, where even a mid-sized retailer will havea discrete Point-of-Sale (POS) product and financials application, then a series ofspecialized applications to handle business requirements such as warehousemanagement, 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, QualityControl, Cost Management, Manufacturing Process, Manufacturing Projects,Manufacturing Flow

Supply Chain Management

Inventory, Order Entry, Purchasing, Product Configuration, Supply Chain Planning,Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation

Financials

General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets

Projects

Costing, Billing, Time and Expense, Activity Management

Human Resources

Human Resources, Payroll, Training, Time & 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


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Enterprise Resource Planning is a term originally derived from manufacturingresource planning (MRP II) that followed material requirements planning (MRP).MRP evolved into ERP when "routings" became a major part of the softwarearchitecture and a company's capacity planning activity also became a part of thestandard software activity. ERP systems typically handle the manufacturing,

logistics, and distribution, inventory, shipping, invoicing, and accounting for acompany. Enterprise Resource Planning or ERP software can aid in the control ofmany business activities, like sales, marketing, delivery, billing, production,inventory management, quality management, and human resource management.

ERP systems saw a large boost in sales in the 1990s as companies faced the Y2Kproblem in their legacy systems. Many companies took this opportunity to replacetheir legacy information systems with ERP systems. This rapid growth in sales wasfollowed by a slump in 1999, at which time most companies had alreadyimplemented their Y2K solution.

ERPs are often incorrectly called back office systems indicating that customers andthe general public are not directly involved. This is contrasted with front officesystems like customer relationship management (CRM) systems that deal directlywith the customers, or the e-Business systems such as eCommerce, e-Government,e-Telecom, and e-Finance, or supplier relationship management (SRM) systems.

ERPs are cross-functional and enterprise wide. All functional departments that areinvolved in operations or production are integrated in one system. In addition tomanufacturing, warehousing, logistics, and information technology, this wouldinclude accounting, human resources, marketing, and strategic management.

ERP II means open ERP architecture of components. The older, monolithic ERP

systems became component oriented.EAS Enterprise Application Suite is a new name for formerly developed ERPsystems which include (almost) all segments of business, using ordinary Internetbrowsers as thin clients.


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Before

Prior to the concept of ERP systems, it was not unusual for each departmentwithin an organization to have its own customized computer system. For example,the human resources (HR) department, the payroll department, and the financial

department might all have their own computer systems.Typical difficulties involved integration of data from potentially different computermanufacturers and systems. For example, the HR computer system (often calledHRMS or HRIS) would typically manage employee information while the payrolldepartment would typically calculate and store paycheck information for eachemployee, and the financial department would typically store financialtransactions for the organization. Each system would have to integrate using apredefined set of common data which would be transferred between eachcomputer system. Any deviation from the data format or the integration scheduleoften resulted in problems.

After

ERP software, among other things, combined the data of formerly separateapplications. This simplified keeping data in synchronization across the enterprise,it simplified the computer infrastructure within a large organization, and itstandardized and reduced the number of software specialties required withinlarger organizations.

Best PracticesBest Practices were also a benefit of implementing an ERP system. Whenimplementing an ERP system, organizations essentially had to choose betweencustomizing the software and modifying their business processes to the "BestPractice" function delivered in the vanilla version of the software.

Typically, the delivery of best practice applies more usefully to large organizationsand especially where there is a compliance requirement such as IFRS, Sarbanes-Oxley or Basel II, or where the process is a commodity such as electronic fundstransfer. This is because the procedure of capturing and reporting legislative orcommodity content can be readily codified within the ERP software, and thenreplicated with confidence across multiple businesses that have the same businessrequirement.

Where such a compliance or commodity requirement does not underpin thebusiness process, it can be argued that determining and applying a Best Practiceactually erodes competitive advantage by homogenizing the business as comparedto everyone else in the industry sector.


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Implementation

Because of their wide scope of application within a business, ERP software systemsare typically complex and usually impose significant changes on staff workpractices. Implementing ERP software is typically not an "in-house" skill, so evensmaller projects are more cost effective if specialist ERP implementationconsultants are employed. The length of time to implement an ERP systemdepends on the size of the business, the scope of the change and willingness of thecustomer to take ownership for the project. A small project (e.g., a company of lessthan 100 staff) may be planned and delivered within 3-9 months; however, a large,multi-site or multi-country implementation may take years.

To implement ERP systems, companies often seek the help of an ERP vendor or of

third-party consulting companies. These firms typically provide three areas ofprofessional services: consulting, customization and support.

Data migration is one of the most important activities in determining the successof an ERP implementation. Since many decisions must be made before migration,a significant amount of planning must occur. Unfortunately, data migration is thelast activity before the production phase of an ERP implementation, and thereforereceives minimal attention due to time constraints. The following are steps of adata migration strategy that can help with the success of an ERP implementation:

1. Identifying the data to be migrated

2. Determining the timing of data migration

3. Generating the data templates

4. Freezing the tools for data migration

5. Deciding on migration related setups

6. Deciding on data archiving

Process preparation

ERP vendors have designed their systems around standard business processes,

based upon best business practices. Different vendor(s) have different types ofprocesses but they are all of a standard, modular nature. Firms that want toimplement ERP systems are consequently forced to adapt their organizations tostandardized processes as opposed to adapting the ERP package to the existingprocesses. Neglecting to map current business processes prior to starting ERPimplementation is a main reason for failure of ERP projects. It is therefore crucialthat organizations perform a thorough business process analysis before selecting


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an ERP vendor and setting off on the implementation track. This analysis shouldmap out all present operational processes, enabling selection of an ERP vendorwhose standard modules are most closely aligned with the establishedorganization. Redesign can then be implemented to achieve further processcongruence. Research indicates that the risk of business process mismatch is

decreased by:

linking each current organizational process to the organization's strategy;

analyzing the effectiveness of each process in light of its current relatedbusiness capability;

Understanding the automated solutions currently implemented.

A disadvantage usually attributed to ERP is that business process redesign to fitthe standardized ERP modules can lead to a loss of competitive advantage. While

documented cases exist where this has indeed materialized, other cases show thatfollowing thorough process preparation ERP systems can actually increasesustainable competitive advantage.


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Configuration

Configuring an ERP system is largely a matter of balancing the way you want thesystem to work with the way the system lets you work. Begin by deciding whichmodules to install, and then adjust the system using configuration tables to

achieve the best possible fit in working with your companys processes.Modules - Most systems are modular simply for the flexibility of implementingsome functions but not others. Some common modules, such as finance andaccounting are adopted by nearly all companies implementing enterprise systems;others however such as human resource management are not needed by somecompanies and therefore not adopted. A service company for example will notlikely need a module for manufacturing. Other times companies will not adopt amodule because they already have their own proprietary system they believe to besuperior. Generally speaking the greater number of modules selected, the greaterthe integration benefits, but also the increase in costs, risks and changes involved.

Configuration Tables A configuration table enables a company to tailor aparticular aspect of the system to the way it chooses to do business. For example,an organization can select the type of inventory accounting FIFO or LIFO itwill employ or whether it wants to recognize revenue by geographical unit,product line, or distribution channel.

So what happens when the options the system allows just arent good enough? Atthis point a company has two choices, both of which are not ideal. It can re-writesome of the enterprise systems code, or it can continue to use an existing systemand build interfaces between it and the new enterprise system. Both options willadd time and cost to the implementation process. Additionally they can dilute the

systems integration benefits. The more customized the system becomes the lesspossible seamless communication becomes between suppliers and customers.


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Consulting Services

Many organizations did not have sufficient internal skills to implement an ERPproject. This resulted in many organizations offering consulting services for ERPimplementation. Typically, a consulting team was responsible for the entire ERP

implementation including planning, training, testing, implementation, anddelivery of any customized modules. Examples of customization includesadditional product training; creation of process triggers and workflow; specialistadvice to improve how the ERP is used in the business; system optimization; andassistance writing reports, complex data extracts or implementing BusinessIntelligence.

For most mid-sized companies, the cost of the implementation will range fromaround the list price of the ERP user licenses to up to twice this amount(depending on the level of customization required). Large companies, andespecially those with multiple sites or countries, will often spend considerably

more on the implementation than the cost of the user licenses -- three to fivetimes more is not uncommon for a multi-site implementation.


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Customization Services

Customization Services involves any modifications or extensions that change howthe out-of-the-box ERP system works.

Customizing an ERP package can be very expensive and complicated. Some ERP

packages are not designed to support customization, so most businessesimplement the best practices embedded in the acquired ERP system. Some ERPpackages have very generic features, such that customization occurs in mostimplementations. It is also often possible to extend the standard ERP package bypurchasing third party software to provide additional functionality.

Customization work is usually undertaken as bespoke software development on atime and materials basis.

Customization can be further classified into: Core system customization or customextensions in custom libraries

Core system customization is where customers change the software vendorsproprietary code. This means that the software will no longer be supported by thevendor for the particular function that was customized as the code would bemodified to the customers need. The customers IT department will then normallysupport the code in-house or subcontract a consulting organization to do so.

Custom extensions are where a customer build bolt on custom applications thatrun parallel to the standard system i.e. custom extended applications. Modulesthat are extended but core code not changed remain supported but the extensionswill have to be supported by the customers IT department or subcontractedconsulting organization

Maintenance and Support Services

Maintenance and Support Services involves monitoring and managing anOperational ERP system. This function is often provided in-house using membersof the IT department, but may also be provided by specialist external consultingand services companies.


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Advantages

In the absence of an ERP system, a large manufacturer may find itself with manysoftware applications that do not talk to each other and do not effectivelyinterface. Tasks that need to interface with one another may involve:

design engineering (how to best make the product)

order tracking from acceptance through fulfillment

the revenue cycle from invoice through cash receipt

managing interdependencies of complex Bill of Materials

tracking the 3-way match between Purchase orders (what was ordered),Inventory receipts (what arrived), and Costing (what the vendor invoiced)

the Accounting for all of these tasks, tracking the Revenue, Cost and Profiton a granular level.

Change how a product is made, in the engineering details, and that is how it willnow be made. Effective dates can be used to control when the switch over willoccur from an old version to the next one, both the date that some ingredients gointo effect, and date that some are discontinued. Part of the change can includelabeling to identify version numbers.

Some security features are included within an ERP system to protect against bothoutsider crime, such as industrial espionage, and insider crime, such asembezzlement. A data tampering scenario might involve a disgruntled employee

intentionally modifying prices to below the breakeven point in order to attempt totake down the company, or other sabotage. ERP systems typically providefunctionality for implementing internal controls to prevent actions of this kind.ERP vendors are also moving toward better integration with other kinds ofinformation security tools.


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Disadvantages

Problems with ERP systems are mainly due to inadequate investment in ongoingtraining for involved personnel, including those implementing and testingchanges, as well as a lack of corporate policy protecting the integrity of the data in

the ERP systems and how it is used.Disadvantages:

Customization of the ERP software is limited.

Re-engineering of business processes to fit the "industry standard" prescribedby the ERP system may lead to a loss of competitive advantage.

ERP systems can be very expensive leading to a new category of "ERP light"solutions

ERPs are often seen as too rigid and too difficult to adapt to the specificworkflow and business process of some companiesthis is cited as one ofthe main causes of their failure.

Many of the integrated links need high accuracy in other applications towork effectively. A company can achieve minimum standards, and then overtime "dirty data" will reduce the reliability of some applications.

Once a system is established, switching costs are very high for any one of thepartners (reducing flexibility and strategic control at the corporate level).

The blurring of company boundaries can cause problems in accountability,lines of responsibility, and employee morale.

Resistance in sharing sensitive internal information between departmentscan reduce the effectiveness of the software.

Some large organizations may have multiple departments with separate,independent resources, missions, chains-of-command, etc, and consolidationinto a single enterprise may yield limited benefits.

The system may be too complex measured against the actual needs of thecustomer.


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ERP Implementation


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IntroductionERP applications are becoming increasingly complex. With an aim to cover allaspects of an enterprise, ERP Vendors are looking at finding solutions for highlyniche areas in enterprise management or acquiring products to find solutions.Integration of additional features to improve enterprise management is alsofuelling the complexity. From basic document publication solutions to trackinginventory movements using RFID all types of features are getting embedded intoERP applications. Implementing an ERP product involves huge financial outflowand effort because of the impact it can have across the Organization. Industryspecific and region specific requirements together with basic business functionsadd to the complexity of implementation. Business process changes, increasedtransparency in executing various business functions and strict time monitoring ofexecution of tasks bring in major change in the way employees operate. Often ITprofessionals confront situations of managing ERP projects either from theimplementation part team or from the Organizations IT team that is

implementing ERP product. This document is aimed at providing a high levelintroduction to a typical ERP implementation project covering various phases,deliverables of each of the phase and issues to watch. This may help as a basicguideline to start understanding your role as a project manager on either side foran ERP implementation project.


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Phases of ImplementationVarious ERP products use different methodologies which are more of variants of abasic model. The implementation methodology explained below is a basic model.This covers each of the phases relevant for ERP implementation. If you areimplementing a specific ERP product such as SAP or Oracle eBiz, please align thiswith the prescribed application implementation methodology used for theapplication.

Fig: Phases of ERP Implementation


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Project InitiationDuring this phase all important structures for the implementation will be built.The strength of these foundations will determine the success of theimplementation.A few of the foundations to be created during this phase includes

Team Building Very critical activity before starting of an implementationproject. This involves different levels of team building. If you are managingthe implementation team of a consulting partner then you need to buildyour team first because people join your project from different teams andyou may not have emotional relationships built with all the team members.If you are managing the IT team of the Organization in which ERPImplementation project will kick off then, ensure that your IT team workslike a team. You also need to take up team building activity involving yourIT team and key users identified by the business.If you are managing the overall program, ensure that all the teams involved

in the implementation including the team from the implementationpartner, IT team to be involved in the implementation project and the keyusers from the business.

Communication Protocols Second critical activity for the success ofimplementation project is setting up communication protocols. During thisphase try to identify the influential members in each of the teams involvedin the implementation partner team, IT team and key users team who canexert influence on other members of their teams because of theirknowledge, capability or nearness to the top management and channel theformal and information communications from those members.

Project Charter As a project manager it is important for you to publish therules of the project and publish a list of key stakeholders and key membersof the project. Create and publish a project charter covering the roles andresponsibilities of all stakeholders and members of the project,communication and reporting structures, activity out of scope, high leveltimelines and major risks with mitigation plans.This activity is critical for the project manager who is in charge of thewhole project delivery. This may be from the implementation partner teamor from the implementing Organization team.

Recasting the Project Plan Being the project manager, you should take are-look at the project plan you have inherited. The first project plan

normally created during the evaluation phase and may form part of thepresales cycle when you are choosing the implementation partner. Thisplan will not be accurate because good amount of facts will not be clearduring evaluation/presales phase and so it has to be reviewed and updatedbefore starting the project.

Hardware and Software Requirements - Since the project plan gets updated,the project impact will be much clearer at this phase and hence hardware


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and software requirements arise during the project implementation shouldbe planned and published at this level. This helps the stakeholders to plantheir capital outflows appropriately.

Instance Planning - Number of instances of the application required duringthe implementation cycle should be planned at this level.

Main Activities during the Project Initiation Making of Project Charter and Reviewing and updating the Project Plan

Building strong implementation team involving all members of theimplementation project

Defining and establishing the project infrastructure such as hardware andsoftware

Planning and establishing the application environments to be used by theproject teams

Main Deliverables during these Phases

Project Charter covering the team structure, responsibility charters and

communication protocols Project Plan duly updated considering the new conditions and risks Infrastructure requirements document

Application EnvironmentsKey Challenges

Establishing a communication protocol that is acceptable for all stakeholdersin the project user community, IT team members and implementation team.During the initial phases of an implementation project, the Customers willbe very watchful and try to understand the capabilities and responsibilitylevels of the implementation team members. The implementation team

from the partner should try to establish their credentials quickly, buildstrong relationships with the project team members including the key userswhich will pave way to the success of the project.

Planning and establishing application instances to be used by different projectteam members. Striking consensus here is a bit challenging considering thebalancing to be dong between budget availability and team requirements.


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Business Process AnalysisBusiness Process Analysis is the first critical phase of the implementation project.During this phase the implementation team will document the current businessprocess which is very critical to map the business process with the ERP deliveredprocesses. This phase often overlaps with the Project Initiation phase becausewhen the stakeholders are busy establishing the infrastructure etc. the users andthe implementation team members will work on documenting the businessprocesses.

Current business processesIt is important to bring up all possible scenarios for discussion during this phaseand find required answers relating to all questions the implementation team bringup for each of the business process. Any error in documenting a specific processmay lead to huge rework during later phases which can be very expensive from theproject perspective.While recording the current business process, it is important to document the

business process flows covering all possible scenarios. Appropriate examples todescribe each of the scenarios will help improving the fitment with the deliveredbusiness process. In addition to building a strong foundation for the project byestablishing all requirements in detail, this phase also is very critical from theperspective of establishing the relationship between the implementation and userteams. The amount of business knowledge and flexibility to understand industryspecific practices displayed by the implementation team is a key factor for successduring this phase.Main Activities during the Business Process Analysis Phase

Making the implementation and business user teams working together

Studying each of the business process and documenting the critical flows Making business process diagrams with appropriate examples

Main Deliverables during this Phase Business Process Diagrams Current Business Practices or As-Is process document

Key Challenges Making the teams to think through all possible scenarios

Building the business process diagrams covering all possibilities andexceptions

Making the business and implementations strike a balance to build a strong

relationship which will be critical during next phases of implementation project


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Solution DesignDuring solution design phase, the implementation team together with the userteam will establish the required business processes to be configured in the ERPproduct. These processes might be existing business processes or changed businessprocesses defined after a brainstorm between the implementation and user teamsconsidering the features offered by the ERP product.During this phase all those features not covered by the delivered features of theERP product will be identified and documented. Solution for all the requirementsthat can be configured within the ERP product will be created and workarounds ofcustomizations for all those requirements which are identified as gaps consideringthe delivered features of the ERP product.Interface designs, security architecture and initial configuration of the applicationwill be planned and documented.

To Be Business ProcessesDuring an ERP implementation, implementing organizations always attempt to

utilize the best practices to streamline the existing business process. This exercisewill lead to a new business process from existing process which will lead to thefinal solution design for the organization.Though the attempt is not to lead towards a complete re engineering of thebusiness process, certain amount of process corrections and streamlining theprocesses will be attempted.

Final Solution DesignDuring this phase a complete solution of the finalized business processes theimplementing organization attempts to create for running their businessoperations will be created.

The solution maps will drive the configuration of the initial set up data andconversion of data for reaching a desired state of the system.While making the solution maps from business processes mapped into the ERPapplication, the implementation team should attempt to find a near completesolution fitment within the application for all business processes.All the scenarios for which a direct solution is not available within the ERPapplication should be recorded as gaps before attempting the workarounds. Ifworkaround solutions are attempted at the time of initial solution mapping thecompleteness of solution will suffer.

Conference Room PilotDuring this activity, all the agreed business processes and their respective mappinginto the ERP applications will be discussed in detail by the implementation andthe users teams.The implementation team will present each of the business process maps in theERP application and bring up the clear gaps of the business requirementsdiscussed and agreed upon.The implementation team can bring up the alternate/workaround solutions fordiscussion during this phase.


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Conversion PlanWhile designing the solutions, data from existing application should be planned.

Main Activities during the Solution Design phase

Defining the future business process or To-Be scenarios for the business Creation of detailed design books covering mapping of existing business

processes with the delivered business processes of ERP product Writing of functional specifications for all the features found to be not

mapped with the delivered business processes. Application Configuration for Conference Room Pilot

Planning and designing interfaces and reports

Designing application and user security matrix Identifying the qualified flows and planning Batch Schedules for auto

executionMain Deliverables during this Phase

Required or To Be Business Process Document Design Books showing the solution plans and sample configurations

Functional Specification Documents for Customizations, Interfaces andReports

Application and User Security Matrix Batch Schedule Plan

Key Challenges Key and feasible mapping acceptable to all stakeholders is very critical It is important to cover all possible scenarios including exceptions. Any

wrong mapping at this level can be found only during the UAT phase which

can lead to project delays All business process fitments in the ERP application should be showed to

the users and allow them to check and get a signoff at this level Any workaround solutions to be agreed during Conference Room Pilot for

finding solution to any to be business process should be documentedclearly and signed off to avoid conflicts during later phases


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DevelopmentDuring the Development phase, most critical activities of the project will takeplace. Creating configurations to map the fit business processes, development ofcustomizations and interfaces, creation of conversion scripts are the criticalactivities.During configuration the master configurations should be created to make theorganization structure and other set ups. All required data relating to countries,currencies, chart of accounts, budgets, invoice types, voucher types and so onshould be created in the configuration instance.A copy of the finally configured instance should be archived before progressing forthe next phase.

Data ConversionDuring this phase the existing customers transaction data will be converted intothe ERP application. The best practice for conversion is to convert the openingbalances of the year and the open items up to the date of conversion using the data

conversion scripts. The data should be provided by the user teams in a requiredformat which can be used as input for the data conversion scripts.Main Activities during the Development Phase

Creation of master and transaction configurations

Development of Customizations, Interfaces and Reports

Unit testing of all newly developed components Creation of conversion data and conversion scripts

Main Deliverables during this Phase Configurations Developed Components/Objects for Customizations, Interfaces and Reports

Data Conversion Files Data Conversion Scripts

Key Challenges While creating Configurations it is important to explore optimum solutions

else the solutions will not be convincing for the users. It is important to execute functional unit test carefully to confirm the

developed feature is confirming to the functional design.

If huge amount of data has to be converted, few important aspects shouldbe considered

The users should be aware of the impact of huge amount of data conversion

on their involvement for creation of data files and verification of data afterconversion

If the more than one year finance data as to be converted important risk isto convert one full year data and have the finance books tallying in thefinancial year to populate the correct opening balances.


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TestingDuring the testing phase complete system testing with new customizations,interfaces and reports and User Acceptance Testing will have to be executed.

System and Integration TestingIf your implementation project have good amount of customizations it isimportant to test entire business flow including the customized piece to ensurethat the customization is not impacting the overall business process.Once all customizations tested, then the integrations among different modulesand applications should be tested. If the implementation involves any modulesthat will be used by a huge number of users then load testing should also beperformed. If the application should be accessed remotely or though a networkthen it is important to perform the network testing as well.

User Acceptance TestingDuring this phase the finally configured system with converted data should becopied into a new instance to create the Test Environment. The test environment

represents the possible live scenario and the testing by users on this instance canbring up the actual issues that need resolution to reach the Go Live phase.The users team should provide a list of scenarios they believe to be very criticaland complex for their business and the implementation team should bring up thetest cases to facilitate the testing of these scenarios. The test cases show asystematic flow showing which screen after which screen to be used, what data tobe inserted and what is the expected outcome.This helps the users to navigate through the ERP system for testing the focusedscenarios faster and the results will be reliable as well because this can reduce theknowledge issues to a large extent.

Main Activities during the Testing Phase Functional Unit Testing

Stress and Network Testing Creation of Test Scripts for User Acceptance Testing

Execution of User Acceptance TestingMain Deliverables during this Phase

Test Scripts for User Acceptance Testing Issue Logs

Fixes and Patches for solving the problems found during testingKey Challenges

Building extensive scenarios in the Test Scripts for complete testing toestablish completeness of testing

Participation of users in the User Acceptance Testing is a critical factor


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ProductionThis is the preparation for Going Live. Production Instance should be created andinitial configurations should be created in the system. The configured ProductionSystem should be used for configuring the Security as per the agreed SecurityMatrix. Opening Balances should be populated and the data conversion should beexecuted.Main Activities during the Production Phase

Creation of Production Instance

Execution of Security matrix

Final Data conversionMain Deliverables during this Phase

Final Production instance with configurations, security and dataKey Challenges

Security should be planned and executed considering all constraints andcompliance requirements such as SOX

TransitionDuring this phase the users team will be prepared to take over the fully configuredERP system to run for their business. The final configurations created in the

production system will be documented for the purpose of user reference. The userswill be trained on the application to understand and execute their businesstransactions comfortably.Training documentation including presentations and user guides will be createdfor the purpose of current and future users.Main Activities during the Transition Phase

User Training

Training Documentation Final configuration documentation for future reference

Main Deliverables during this Phase Final production configuration document

Training DocumentationKey Challenges

User Training should cover practical scenarios to make the usersunderstand and follow the training

Training documentation should be simple and exhaustive


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McPower Powering McNally Bharat

Engineering to ERP Solutions Era


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On 6th May, 2008 at a launch meeting the McPower project was launched withmuch anticipation and eagerness and excitement. It was decided after muchprocess and setup study that Oracle ERP Apps R12 be chosen as theimplementation medium for ERP empowerment of MBE. Price WaterhouseCoopers were given the task of project implementation as vendors of the software.

It was decided the real-time information link being the main essence of thisproject. Furthermore it was decided that McNally Bharat Engg would go with Bigbang implementation of all the modules from initial stages itself. This was decidedso as to stay ahead of competitors by ensuring less cycle-time in softwareimplementation in business process changes.The list of modules to be implemented is given below:

ORACLE PROJECT COSTING ORACLE ORDERMANAGEMENT

ORACLE PROJECT BILLING ORACLE PURCHASING

ORACLE PROJECT

MANAGEMENT ORACLE SERVICES

PROCUREMENT FOR ORACLEPURCHASING

ORACLE PROJECT CONTRACTS ORACLE DISCRETEMANUFACTURING

ORACLE PROJECTINTELLIGENCE

AUTO VUE ELECTR-MECHANICAL PROFESSIONAL

ORACLE PROJECT RESOURCEMANAGEMENT

i-SUPPLIER PORTAL

ORACLE SUPPLY CHAIN &

ORDER MANGEMENT

INTERNET EXPENSE

MANAGEMENT ORACLE PROCUREMENT

INTELLIGENCE HUMAN RESOURCE

MANAGEMENT

ORACLE FINANCIALSINTELLIGENCE

PAYROLL MANAGEMENT

ORACLE ENTERPRISE ASSETMANAGEMENT

PERFORMANCEMANAGEMENT

ORACLE PROPERTY MANAGER SELF-SERVICE HRMANAGEMENT

ORACLE FINANCIALS TIME & LABOUR

MANAGEMENT ORACLE FIELD SALES ENTERPRISE CONTENT

MANAGEMENT SUITE

ORACLE SOURCING PWC PROJECT SITESOLUTIONS

It is planned that in the post ERP implementation era, entire business process forall functions will be carried out through ERP and the project planning and


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scheduling, including resource leveling, will continue to be carried out throughPRIMAVERA which will be integrated with ERP through OP3 AND feedback dataon actuals in can be collected through ERP for regular monitoring andrescheduling PRIMAVERA.All other specialty engineering software will also be integrated with ERP so that

the Bill of Materials can be directly transferred from this engineering softwares toERP.The project that commenced on 6th may, 2008 is scheduled to Go Live in all thedivisions on 1st April, 2009. In the meantime, all the requisite hardware includingserver, networking connections to Kumardhubi, Bangalore and project sitesthrough leased line/VPN/VSAT are being ordered.The schedules of completion of the milestones in fulfilling ERP implementation isas follows:

MILESTONES DAT

Launch Meeting 06.05.2008

As-Is Process Study & Sign-Off 31.05.2008

Overview Training to complete 07.06.2008

To-Be Process Finalization 30.07.2008

Design & Build for Pilot CRP1 22.10.2008

CRP2 13.11.2008

User Acceptance Test 18.12.2008

Go Live Projects Division & 3 PilotProject Sites

14.01.2009

Go Live Products Division(Kumardhubiand Bangalore)

11.02.2009

Roll out six(6) more Project Sites 31.03.2009

Total System Go-Live 10.04.2009


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Present Status

As-Is Process StudyAs-Is Process Study is a thorough description of the processes existing in theenterprise to the ERP implementation consultants. It is a document that presentsan unambiguous set of existing processes to the company as a part of deliverablesby the consultants. It is a clarifying document which would give a clear idea to thereader of the existing processes, how the processes are performed , what are thereports generated in the company , etc. The participants then review thisdocument and this leads to As-Is process document sign-off.The As-Is Process Study commenced on May 12th and continued through May 23rd.

To-Be Process StudyThe To-Be Process Study figures out what are the processes that can beimplemented through ERP software. As this is done three scenarios come to theforefront,

1. Processes that can be implemented through ERP straight away the mostdesirable scenario.

2. Processes that need to be changed so that they can be implementedthrough ERP which is quite a manageable scenario.

3. Processes that cannot be implemented through ERP by any means otherthan software customization this being the most undesirable situationas, This approach will have impact on time, cost and effort

It is very difficult to maintain customization once Oracle ERPversions/patches are applied.

Functional AreasCore process owners and super users from all key operational areas wereidentified. Functions to be covered in ERP implementation are:

Finance Purchasing

Supplier Contract Material Management

Order Execution Material Shipments

Customer Contract Business Development

Tender Estimation Production Planning &Manufacturing

Maintenance Project Execution

Document Management Resource Planning Project Billing Receiving of Goods

Service & Inspection Site Activity

HR Payroll


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Overview TrainingThe Overview Trainings main objective is to give first-hand feel of the would-besystem to the participants. The core process owners, super users and functionalexperts come to know the processes and their working. It is important, interestingand pleasing also to see how their processes and workflows would be actually

performed in the ERP system.The Overview Training would help visualize the business processes in the light ofthe ERP system. This perspective indeed would have added more value to the To-Be Process identification endeavor.Closely following the As-Is process, the Overview Training started on May 31st atPWC premises objective being the first-hand feel of the would-be system to theparticipants.

Item CodificationIt is a critical aspect of ERP implementation project. In MBE heterogeneouscodification scheme is in place for the brought-out items and the manufactured

items across Project and Product divisions. It is challenging, time taking and abrainstorming exercise to figure out a uniform codification scheme that will beimplemented through the ERP and used across the enterprise. Figuring out a newcodification scheme is followed by the mammoth task of changing the existingscheme to the huge new scheme. Having these facts in mind the work on ItemCodification has been started proactively.

Activities taking place in Current Month1. To-Be process Study

(Envisioning end-state process as gap-fitment & training needs analysis forthe following functional areas:

Finalization of organizational structure and COA and reportingrequirements

Business development

Customer contract Order booking and shipment Finalization of Item Codification structure

Integration with X-Steel*AutoCAD

Document management

Purchasing, Supplier contract and Materials management(ProjectsDivision)

Project execution Project resource planning & integration with PRIMAVERA

Site activity Production, Planning & Manufacturing

Purchasing, Supplier contract & Material management(ProductsDivision)

Receiving of goods and services

Inspection


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Maintenance Financials

HR Time and Labor HR, Preference management, Self-service(To-Be Process)

Payroll )

2. As-Is study for HR and Payroll3. Overview Training for HR and Payroll4. Finalization of item codification structure


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Research Results on Different Aspects

of ERP


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Many commentators think that the dot com bust of the late 1990s broke theEnterprise Resource Planning (ERP) bubble. The boom is back. This surge ofinterest must be met with analysis of its root causes and market implications. ITmanagers need to recognize what is driving ERP implementation and whether ornot it is an appropriate solution for their enterprise.

The data points to particular trends regarding business drivers, project structure,budgets, and implementation concerns.

Outdated Technology Drives ERP InvestmentThe recent upsurge in ERP interest is the legacy of the 1990s boom. Manyenterprises are in the process of upgrading and replacing earlier investments.

Fig:Business Motivators for ERP


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There are many reasons for ERP projects but replacing outdated technology is astandout.

Almost 50% of enterprises note that their primary purpose for acquiringERP technology is replacing outdated technology. This observation suggeststhat there are very few true green-field implementations and that every ERP

project must consider existing data and processes. Related to replacing outdated technology is reducing the complexity of

existing technology. Almost 20% of enterprises implementing ERP solutionsnote that reducing complexity is the primary business driver for theimplementation.Technology complexity is linked with process complexity. As the speed ofbusiness increases and issues such as order frequency or reporting criteriabecome more onerous, legacy technology becomes difficult to support andextend.

The emphasis on replacing outdated technology and reducing complexity

stands in contrast to other types of popular initiatives such as portals or e-mail archiving.


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Financials, Procurement, and Analytics Are the Core ModulesEvery ERP project is different because every enterprise has specific needs. Thereare, however, certain core modules that are present in most ERP implementations.

Fig:Modules Involved in ERP ImplementationCertain modules currently demonstrate a dramatic increase in popularity:

The most crucial module is also the most basic. Some sort of financial module already exists in 85%of enterprises undergoing ERP implementations and represents a task for over 70% ofimplementations.

Other important modules include procurement, analytics, and order management. Modules that are dramatically increasing in popularity include those for corporate management,

workflow and forms, quality management, and enterprise change management.


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IT Manager Concerns: Process and TrainingSuccessful ERP projects address implementation concerns early in the planningcycle.Issues concerning business processes and business user training are the two mostfrequent implementation concerns.

Fig: Implementation Concerns for ERP

Most IT managers are less concerned about technology issues than business issues. Business processes are a concern in almost 85% of ERP implementations. This concern involves

various aspects of business processes such as capturing them, modeling them, and adapting systemsto support them. A key issue for many IT managers is how to get the business to adopt new businessprocesses to avoid expensive system customizations.

The second primary concern is training business users. Training emerges as a key concern in over60% of ERP implementations. This observation is strongly related to the concern about businessprocesses.

Other concerns such as IT governance (3%) and IT processes (12%) are infrequently listed asimportant concerns for ERP projects.


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Prediction by Trends in Demand for ERP productsIn the short to mid-term, Info-Tech expects that demand for ERP products willcontinue to be strong and that service offerings will evolve to meet customerdemand:

1. The replacement roadmap will become more refined. Many IT managers

are currently in the position of replacing legacy client-server applicationsfrom the late 1990s. They are looking for new products that will help themavoid this Sisyphean task in the future. Recent product innovations fromvendors like SAP and Oracle are demonstrating the importance ofupgradeability and seamless transition to new versions.

2. Cost variability will drive transparent pricing. Many vendors engage ina constant shell game of pricing that inflates costs and frustrates buyers.New ERP platformsparticular for small and mid-sized enterpriseswilladd transparency to costs.

3. The integrators will continue to be the key link in the ERP delivery

chain. The implementation concern for enterprises relates to high touchactivities such as modeling business processes and training business users.Successful accomplishment of these tasks depends not on the technologyvendor but on implementation partners.


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McPower A Corporate viewWe have till now seen the various facets of ERP implementation in industries andcorporate world. To draw a parallel with all of these facets and the current ERPimplementation in McNally Bharat Engineering here is presented some excerptsrelated to these facets, from the point of view ofMr. Anupum Basu, CIO, MBE.Q.ERP A requirement for MBE?A. To have an enterprise wide integrated and automated business system, ERP was found to be afeasible, economical and maintainable solution.

Q. Presence of any glitches in pre-implementation stages?A. Initially there were some doubts about the new and relatively alien system, but they were clearedonce our consultants presented the pros and cons of the system and it long-term benefits, and rightnow there are no such issues.

Q.Aid to MBE by this implementation in issues ofa.Customer satisfactionA. New modules to be implemented that would address the customer handling part andwould be augmented as such.b.ProductivityA. Database would be integrated and referential information will be handy and lot of semi-

automatic processes would now be completely automated leading to increased productivityby reducing the turnover time.c. CompetitorsA. Higher Productivity, Customer satisfaction and point-in-data would aid in getting furtherahead of competition.

Q. Computer proficiency programs required by the users to be at par with ERP implementation?A. The training pertaining to ERP for the users is in

a. Operational aspects for day-today users.b. IT department people would be trained in DBMS and System Management specific toOracle ERP.

Q. Expected product life-cycle of ERP?A. MBE has entered upon an agreement with Oracle so that the system would be updated as andwhen required by patches, add-ons, updates and if required version change from time to time.

Q. Choice of ERP Oracle and not SAP?A. Some of the most important factors that tilted the choice of ERP from SAP to Oracle are,

a. Existing enterprise system is based on Oracle.b. Comparative analysis of the products.c. Commercial viability of the product.d. Availability of Oracle professionals is higher than that of SAP

Q. Expected network platform?A. MIPL VPN technology would be used in all the units across the country mainly pertaining to

- Mailing- Video Conferencing- ERP

Q.Maintenance and support services?A. It would be a mix of two where the Site maintenance would be overseen by in-house professionalsand the System & Software maintenance would be done by the vendor consultation, here Oracle.

Q. Reason for going through with Big Bang approach?A. The main and foremost reason for this approach is to ensure lesser time-cycle time in softwareimplementation in business process changes and hence stay ahead in competition.


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Conclusion


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Concluding RemarksWith rapid business expansion, CIOs are being asked to ramp up the ITinfrastructure and clearly put in place a clear enterprise apps deployment plan which is indeed a daunting task. This task becomes more compounded by the factthat most IT solution providers claim that their products are the best.

In brief thepre-implementationsolution for ERPcan be summed up as, Core or Contextual: Target fitment to processes that makes one competitive

and contribute most to ones organizations success

Flexibility to Change: Flexibility to meet changing business, market,regulatory and environment needs.

Scoping the product: Avoidance to overbuying.

Building the Team: People to champion the product, deflect internalconflicts and bring domain value to the project.

Approach: Success or failure has less to do with the product, but lot todo with implementation approach and usage.

Moreover the other important aspect that comes to the forefront is the selection ofthe softwarewhich itself has several parameters which if not kept in mind wouldlead to far-reaching consequences,

Integrate Business Planning

Proactive Needs Assessment

Seeking Professional Advice

Plan, Plan, Plan

Total Cost of Ownership(no hidden costs)

Partner(Implementer) Selection Change in Management Grid

Right Technology Investment

Assessment of Intangibles

Decision is for once and is to be Final

Bottom LineERP has been here for years. Enterprises must now replace the systems they

acquired during the exuberance of the late 1990s. ERP is still a challengingtechnology and not the knockout solutions that vendors promise. So anyorganization going for ERP implementation must assess their requirements and gofor it for once and for all because ERP is like two-edged blade which if used toprecision would give high results but if implemented with miss-matchedintentions may have far-reaching irreversible consequences.


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Appendix


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1. Oracle E-Business Suite

The Oracle E-Business Suite is an integrated suite of business applications that connectsand automates the entire flow of business processes across both front and back officeoperations, and addresses the needs of a global enterprise. Because Oracle E-BusinessSuite products are engineered to work together; users can streamline the setup process bysharing common setup data across applications.

Implementation ConsiderationsImplementing the E-Business Suite is dependent on many factors and one will want to setit up according to ones industry and business needs. One can optimize his/her legal andcompliance processing by addressing factors like the following in their implementation:

Statutory and legal requirements for legal entity accounting, such as documentsequencing, tax accounting, and inter-company accounting

The number of subsidiaries that use different charts of accounts, calendars,currencies, and sub-ledger accounting methods

Number of subsidiaries that use different charts of accounts, calendars, currencies,and sub-ledger accounting methods

The Oracle Financials sub-ledger applications implemented

The number of Oracle Applications instances

Key Attributes of Oracle E-Business SuiteFour key attributes characterize the Oracle E-Business Suite:

Common Data Model Reduced Number of Instances

Integrated Applications Database Integration

Common Data ModelIn creating a suite that spans a large number of diverse modules, Oracle has taken care toensure that the products share a "Common Data Model" in their architecture. This meansthat any system entity set up in one product (for example "an employee") is used, to theextent possible, by all other products that require a similar entity.Consider customer reference data entered into an application and stored in the commondata model. This customer data can subsequently be accessed by all applications andfunctions that use such customer data. Entry of important entities is minimized andrevisions are entered only once. There is no need for any replication which is a source of

inefficiency and inconsistency. With clean, complete customer data in one consolidateddata model, you have a true 360 degree view of your customer for the best possiblecustomer intelligence.Reduced Number of InstancesEach time one consolidates databases, information increases and costs decrease.Many customers are managing worldwide operations using our unified informationarchitecture on a single instance of the Oracle E-Business Suite. One can consolidate andshare information globally and faster. At the same time, one can eliminate duplicate data


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centers, hardware, and information technology costs requiring multiple databases andseparate reporting infrastructures around the world. A global financial system at thelowest possible cost is now within ones reach.Integrated ApplicationsOracle E-Business Suite is engineered to work together as an integrated system. One canpass information from one application to another without any incremental integrationcosts. While Oracle's applications are integrated, they are also modular. Based on onesbusiness needs, one can implement one module, several modules, or the entire suite.Oracle Business Intelligence systems and the transactional systems use the same data andinformation. There is no passing of data, spinning the facts, or delay; your managers seethe data on their personal machines as it emerges from the business front lines.Database IntegrationOracle Database 10g Release 2 includes dimensionality support, next-generation features,and other features that are exploited by the financial applications.The cumulative effect of having a common data model, all applications on a singleinstance, and the applications themselves fully integrated, is that all of ones informationis in one place. As a result, one receives powerful synergies such as:

A global, unified view into critical information such as sales positions, inventorylevels, headcount, revenue, and expenses-across all organizations, lines ofbusiness, products, and geographies. The information is accurate and up-to-dateas there is integrity in data that is not fragmented.

The Oracle E-Business Suite includes data from business applications frommultiple vendors using our Hubs. For example, Oracle Customer Data Hub givesone a unified, enterprise-wide view of ones customer data, no matter whosesoftware one uses.

Ones corporate financial reports and intelligence will be across divisions andgeographic regions i.e. won't have to request additional information from thosesources. The result is a much smoother and faster closing process.

Ones Shared Service Centers work across worldwide operations, dealing easilywith both local compliance and corporate processes.

Executives and employees, from the officers and directors to line supervisors,receive daily business intelligence revealing the state of the business every day,relative to past, present, and projected performance metrics. The person's decisionmakers will reach more informed conclusions and take more immediate actiontowards achieving individual and group objectives - daily, not quarterly ormonthly.


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2. Major ERP Milestones in Recent Days

Study Method Major findings

Brown & Vessey (2000) Multiple case studies Objective was to determine important

predictors for initial and ongoing ERPimplementation success.

Preliminary findings show that there aredifferences between the value-chain andsupport activity implementations

Askenas & Westelius(2000)

Case study Used the actor-network theory to analyzethe use of ERP systems.

Considered ERP systems to be actors, andexplored the way in which ERP systemsare perceived by their direct and indirectusers.

Chang et al. (2000) Case study Conducted a Delphi study to identify

issues in ERP life cycle management. Identified 10 major issues and 38

subcategories in ERP implementation.

Sarker & Lee (2000) Case study

Studied three key social enablers forsuccessful ERP implementation

Proposed that while all three enablers maycontribute to ERP implementationsuccess, only strong and committedleadership is a necessary condition.

Scott & Kaindl (2000) Action research

Studied seven organizations thatcontributed to the enhancement of the

Treasury module of the SAP ERP software. Identified organizational factors that

enabled the functionality enhancementprocess.

Van Everdingen et al.(2000)

Survey

Examined adoption of ERP by Europeanfirms.

Evaluated the present state of ERPadoption mainly in mid-sizemanufacturing firms

Predicted that this market will constitutea large portion of new ERPimplementations within the next 5 years.

Willcocks & Sykes (2000) Theoretical

Identified several situations where ISpersonnel and CIOs failed to successfullyimplement ERP solutions.

Provided recommendation for ITpersonnel for successful installation.


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3. Primavera

Primavera Systems, Inc. is the worlds leading provider of project, program and

portfolio management software solutions. We provide the software foundation thatenables all types of businesses to achieve excellence in managing their portfolios,programs, projects and resources. It is estimated that projects totaling more than $6trillion in value have been managed with Primavera products.Primavera provides industry-specific solutions to more than 76,000 customers around the

world. Companies turn to Primavera to help them make better portfolio investmentdecisions, improve governance, prioritize their project investments and resources, anddeliver tangible results back to the business. Primavera professional services personnel areequipped to help our customers reduce implementation risk, time and cost, whilemaximizing the return on their software investment.Only Primavera offers a complete selection of best-of-breed project and portfoliomanagement solutions - each one designed to meet the challenges of specific verticalindustries.Primavera aids to:

Select the right strategic mix of projects. Assure project, IT and corporate governance. Enhance processes and methods. Improve project team collaboration. Measure progress toward objectives. Complete more projects successfully and with the intended payback.

Primavera P6 is the most powerful, robust, and easy to use solution for globallyprioritizing, planning, managing and executing projects, programs and portfolios. P6 is an

integrated project portfolio management (PPM) solution comprising role-specificfunctionality to satisfy each team members needs, responsibilities and skills. It provides asingle solution for managing projects of any size, adapts to various levels of complexities

within a project, and intelligently scales to meet the needs of various roles, functions, orskill levels in your organization.P6 provides executives with a real-time view of their organizations project, program andportfolio performance. It equips managers with the right blend of usability, power andflexibility to effectively and efficiently execute on projects, and enables individuals acrossall levels of an organization to analyze, record, and communicate reliable information andmake timely, informed decisions. P6 makes it easy to:

Select the right strategic mix of projects

Assure project, IT and corporate governance Enhance processes and methods Improve project team collaboration Measure progress toward objectives Complete more projects successfully and with the intended payback.


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4. Virtual Private Network

A virtual private network (VPN) is a computer network in which some of the links betweennodes are carried by open connections or virtual circuits in some larger network (e.g., the

Internet) instead of by physical wires. The link-layer protocols of the virtual network are said tobe tunneled through the larger network when this is the case. One common application is securecommunications through the public Internet, but a VPN need not have explicit security features,

such as authentication or content encryption. VPNs, for example, can be used to separate thetraffic of different user communities over an underlying network with strong security features.

A VPN may have best-effort performance, or may have a defined service level agreement (SLA)

between the VPN customer and the VPN service provider. Generally, a VPN has a topology morecomplex than point-to-point. The distinguishing characteristics of VPNs are not security or

performance, but that they overlay other network(s) to provide a certain functionality that is

meaningful to a user community.


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Bibliography

Websites: http://www.mcnallybharat.com http://www.google.co.in

http://www.wikipedia.com http://www.orafaq.com http://www.oracle.com http://epathfinders.blogspot.com

Books: Alleman, Glen B. -Agile Project Management Methods for ERP Dr. Spiekermann, Sarah - Introduction to Enterprise Resource

Planning