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ENTERPRISE SOFTWARE SYSTEMS : Concepts & Implementation Experiences

ENTERPRISE SOFTWARE SYSTEMS : Concepts & Implementation Experiences. Session in Management Development Programme for Power Grid Corporation Indian Institute of Management, Lucknow December 2003. IN PERSPECTIVE .

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ENTERPRISE SOFTWARE SYSTEMS : Concepts & Implementation Experiences

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  1. ENTERPRISE SOFTWARE SYSTEMS:Concepts & Implementation Experiences Session in Management Development Programme for Power Grid Corporation Indian Institute of Management, Lucknow December 2003

  2. IN PERSPECTIVE ... • “There is nothing more dangerous nor doubtful of success than implementation of a new system.” • Paraphrased from Machiavelli • “Computers make it easier to do a lot of things, but most of the things they make easier to do may not need to be done.” • Andrew Rooney, Journalist • “Technology is dominated by two types of people: those who understand what they don't manage, and those who manage what they don't understand.” • Putt's Law

  3. INFORMATION TECHNOLOGY'S ROLES IN VALUE CHAIN MANAGEMENT • Data Capture • Data Transmission • Data Organization & Display • Transaction & Business Process Execution • Planning & Decision Support • Creating New Business Models

  4. Enterprise IT Applications Enterprise Resource Planning Supply Chain Planning E Commerce E Commerce Customer Relationship Management Logistics/Supply Chain Execution CIM Engg & Design

  5. ENTERPRISE RESOURCE PLANNING • A Short Definition • Software solutions for integrating and dynamically managing all the enterprise processes, functions and resources

  6. ENTERPRISE SOFTWARE ANATOMY W O R K S & B A C K O F F I C E F R O N T O F F I C E C U S T O M E R E N D S U P P L I E R E N D Finance & Accounts Reporting Applications Sales & Delivery Central Database Operations/ Manu- facturing Service Supply & Inventory Human Resource Mgmt.

  7. Enterprise Resource Planning (Contd) • More Specifically, • Integrated suites of business application software • Automate business functions (e.g. Manufacturing, Finance) and processes (e.g. Order Fulfillment) • Assist in planning, executing, coordinating, and monitoring entire enterprise • Keep track of transactions (computerized records of events), e.g., receipt of material or issue of a work order • Serve as data source/ backbone for other IT solutions (e.g., Supply Chain Management software) • Promise common database, application and user interface across the entire enterprise

  8. ORDER MANAGEMENT IN ERP For processing & fulfillment of customer orders through the enterprise Sample Order Flow Process Proposal Promising Commercials Configure Delivery Billing Collection ERP Modules Involved Sales & Delivery Production Planning Sales & Delivery Production Planning Sales & Delivery Sales & Delivery Financials Materials Management Financials Financials

  9. WHY ERP: CEOs’ PERSPECTIVE • Improve information availability & accuracy (67%) • Improve management decision making (61%) • Reduce cost/ improve efficiency (51%) • Upgrade technology (38%) • Resolve a tactical issue e.g. Y2K (31%) • Grow Revenue (24%) • Not done it yet (15%) • Other (4%)

  10. WHY NOT ERP ? • Inflexibility to incorporate business peculiarities • Capabilities may be inferior to "best of breed" • Impose "Command and Control" structure • Difficult to "tinker" around, may even be discouraged • Expensive, and difficult to assess monetary payback • Long implementation periods • Availability of skilled personnel and support could be an issue

  11. ERP INSTALLATION COSTS • Major elements (with purely indicative ranges): • Computer hardware & infrastructure (15-20%) • Computer Software (10-15%) • Consulting Services (10-40%), depends on internal expertise • Internal implementation costs (15-50%), varies as above • Internal disruption costs (10-15%), through wasted time, business losses, delays etc. • Altogether may run into crores for large company-wide deployment

  12. ERP IN INDIA

  13. EARLY ERP’s IN INDIA:SOME REPORTS • Average implementation cost overrun ~ 178% • Average schedule overrun ~ 230% of original expectation • 55% of ERP implementation overrun on every sphere • The packages cost like hell, take ages to implement and at the end of the day deliver little. (Adapted from a Gartner group study, 2001)

  14. THE ERP SCENARIO NOW • More success stories, e.g.: • BPCL’s SAP R/3 implementation has resulted in annual savings of 40 crores (claimed) • Fosters India brought down inventory from 20 days to less than a week with QAD MFG/PRO etc. • Emergence of consultants implementing third party vendor solutions • Growth of e-business in India with ERP incorporating SCM and CRM

  15. ENTERPRISE SOFTWARE IN INDIA • COMPANY L • Early adopter of IT as well as ERP • Low-end Mfg-Pro software • Strong Sales & Distribution capabilities • Less expensive to buy and implement • Fast implementation • Extensive Customisation, esp. Excise and Indian peculiarities • Hard-core Manufacturing (e.g. MRP) under-implemented • Now implementing Supply Chain Planning software

  16. ENTERPRISE SOFTWARE IN INDIA .. • CONTINENTAL PAINTS • Good homegrown ERP-like legacy software • Complex Supply Chain structure and decision-making • First adopted SCM software from i2 (first in India) • Implemented module by module, claimed complete in 6 months • Faster implementation and quicker payoffs than ERP • Later adopted SAP as well

  17. ENTERPRISE SOFTWARE IN INDIA .. • NATIONAL AUTOMOBILE COMPANY • IT-pushed MAPICS software in 1988 - only 10% utilised • Major BPR effort in early-mid 1990's • Changed to user driven team initiative • Massive computer literacy drive • SAP chosen and India version developed here • Five modules implemented in 3-phase approach • Much process adaptation, configuration, and add-ons • Several benefits in aggregate, but not appropriate to isolate benefits of ERP and BPR

  18. ENTERPRISE SOFTWARE PERILS • HANUMAN INDUSTRIES • Delphi ERP package in 1997-98 • Strong IT group, several legacy features better than ERP • At end of training, only 4 out of 40 persons trained on the software remained in the company • Software still unused ("yet to be implemented") • IT Head in-charge of project, left after a year and presently reported to be Delphi consultant in US

  19. ENTERPRISE SOFTWARE IN INDIA .. • GODREJ TELECOM • Mid-sized company, live on Baan in 122 days • Motivation: bottlenecks posed by stand-alone software, and change to Make-to-Order scenario • Foundation for Supply Chain Management & E-Business • HR Manager as Team Leader • Full-time team • No formal BPR, processes mapped to software models • Multi-level training and benefits explanation • ISO 9001 helped to create process orientation • Sacrosanct deadline • Total employee involvement, including CEO

  20. THE USA PRINCIPLE

  21. SAP Utilities Solution Functionalities

  22. ENTERPRISE SOFTWARE PERILS ... • DELL COMPUTERS • Began SAP in 1994, abandoned in 1996 • Business model changed from worldwide to segmented regional focus • SAP too monolithic to alter to business needs • Later, chose i2 for Materials Management, Oracle for Order Management, Glovia for Manufacturing • Implemented one piece at a time, each delivering quicker value than one huge ERP system

  23. ENTERPRISE SOFTWARE PERILS ... • FOXMEYER DRUG, USA • Filed for bankruptcy in 1996, citing failed ERP implementation • Claimed that system crippled the business - messed up orders and could handle max. 10,000 orders per night (manual system could apparently do up to 420,000) • Blamed SAP and Andersen Consulting, who allegedly claimed annual savings of $50 million • Dismissed as "preposterous" by SAP and Andersen

  24. ENTERPRISE SOFTWARE PERILS ... • ANOMYMOUS (from Wall Street Journal) • Project more challenging than beneficial • Considering human factors, functionality gaps, and costs incurred • Short in Systems and Process expertise • Under-estimated amount of business change required for implementation • Environment ill-defined for ERP

  25. THE VALUE CHAIN • Business is about creating value through products/ services • The process of creating these products/ services is the Value Chain • A collection of primary and supporting activities that result in customer and/ or business value

  26. VALUE CHAIN PERSPECTIVES Supply Chain View Supplier Manu- facturer Distri- butor Retailer Customer Order Flow View Order Design Procure- ment Manu- facturing Delivery/ Service Factory Material Flow View Recei- ving Storage Manu- facturing Ware- housing Shipping

  27. SUPPLY CHAIN CHALLENGES TODAY • Visibility into entire supply chain status • Instant recognition of end-item demand • Quick replenishment & order response • Network-wide, inter-process plan optimization • Quick replanning

  28. SUPPLY CHAIN PLANNING SOFTWARE FUNCTIONALITIES • Forecasting & Demand Planning • Advanced Planning Systems • Supply/ Demand Chain Network Design • Supply/ Demand Chain Master Planning • Manufacturing Planning • Dynamic Manufacturing Scheduling • Sourcing/ Supply Planning • Enhanced Order Fulfillment • Collaborative Planning & Replenishment

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