ABC OF ERP... IN DIG­I­TAL IN­DIA

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IN­TRO­DUC­TION

In dig­i­tal space, more and more or­ga­ni­za­tions are look­ing greater ben­e­fits and ver­ti­cal and hor­i­zon­tal growth by adopt­ing ERP, but the key chal­lenges are still there, which are not tech­no­log­i­cal lim­i­ta­tions as they grown man­i­fold and are ready to de­liver ser­vices at the door-step of the end-users. The chal­lenges to­day lies with ERP Fit­ment, Com­mu­ni­ca­tion, User’s Ac­cep­tance cou­pled with set­ting re­al­is­tic or­ga­ni­za­tion goals are the key for Suc­cess­ful Roll­out of ERP in Mod­ern Era.

En­ter­prise re­source plan­ning (ERP) sys­tem has been one of the most pop­u­lar busi­ness man­age­ment sys­tems, pro­vid­ing ben­e­fits of real-time ca­pa­bil­i­ties and seam­less com­mu­ni­ca­tion for busi­ness in large or­ga­ni­za­tions. How­ever, not all ERP im­ple­men­ta­tions have been suc­cess­ful. Since ERP im­ple­men­ta­tion af­fects en­tire or­ga­ni­za­tions such as process, peo­ple, and cul­ture, there are a num­ber of chal­lenges that com­pa­nies may en­counter in im­ple­ment­ing ERP sys­tems. In spite of ERP’s sig­nif­i­cant growth from the late 1990s to the present day, there are a num­ber of chal­lenges that com­pa­nies may en­counter when im­ple­ment­ing ERP in ear­lier days. As ERP ma­tures over a pe­riod of time, the num­ber chal­lenges the or­ga­ni­za­tion faced has been greatly re­duced to three broad ar­eas like ERP fit­ment, User Ac­cep­tance, Com­mu­ni­ca­tion.

ADOP­TION: ERP

ERP adop­tion is buzz word and the or­ga­ni­za­tion looks it as heroic tasks over a pe­riod of time and its im­ple­men­ta­tion across the en­ter­prise. How­ever, well de­fined or­ga­ni­za­tion with clear set of pro­cesses, the adop­tion rate of ERP is much bet­ter than the or­ga­ni­za­tion with less process ori­ented. 75% of the ERP project fail­ures at­trib­uted to the facts that the choos­ing and eval­u­a­tion of the right ERP for its in­ter­nal use than the prod­uct it­self. In size­able or­ga­ni­za­tions, they seem to be dis­re­gard­ing ERP sys­tems as an­swer to their busi­ness com­plex­ity. Un­ex­pect­edly, SMEs dis­re­gard fi­nan­cial con­straints as the main cause for ERP sys­tem non-adop­tion, sug­gest­ing struc­tural and or­ga­ni­za­tional rea­sons as ma­jor ones. This is di­rectly dif­fer­ent from what is ob­served in large or­ga­ni­za­tions where the first rea­son for not adopt­ing an ERP sys­tem is or­ga­ni­za­tional. More­over, the de­ci­sion process re­gard­ing the adop­tion of ERP sys­tems within SMEs is still more af­fected by fac­tors in­flu­enc­ing the out­side the or­ga­ni­za­tion and then busi­ness-re­lated fac­tors, con­trary to large com­pa­nies that are more in­ter­ested in man­ag­ing process in­te­gra­tion and data re­dun­dancy / in­con­sis­tency through ERP im­ple­men­ta­tion.

Some are at­trib­uted to high cost and lack of sup­port from se­nior man­age­ment. Adop­tion in the cur­rent dig­i­tal space is much bet­ter than in 1990s as to­day we have mul­ti­ple op­tions in ERP prod­ucts space and tech­nol­ogy space. As of date

many op­tions are avail­able in the ERP space both in the pro­duc­tized, be­spoke, open source, cloud ver­sions. Some of the keys ERP Prod­ucts that are pop­u­lar are as fol­lows:

BEN­E­FITS: ERP

The likely ben­e­fits ex­pected from ERP Cost can be seen depend­ing on the in­dus­try and the faster adop­tion of the or­ga­ni­za­tion. In FMCG in­dus­try, On-line in­for­ma­tion of item wise stocks avail­abil­ity vs. Or­der­ing items and fore­cast­ing of sales based on plan­ning com­pu­ta­tions, cus­tomer base, seg­men­ta­tion of cus­tomers etc are the key to suc­cess of the or­ga­ni­za­tion. In man­u­fac­tur­ing in­dus­tries the syn­chro­niza­tion be­tween re­sources like man­power and ma­te­ri­als, plan­ning the ma­te­ri­als ver­sun the mar­ket re­quire­ments etc. Fur­ther dis­patches from fac­tory would be com­plete in qual­ity, quan­tity & se­quence re­sult­ing to re-work, re-or­der, re-se­quence and the cen­tral­ized pro­cure­ment of ma­te­rial like Fab­ric would bring down the cost and then con­tin­u­ous mon­i­tor­ing of slow mov­ing stock and de­fec­tive stocks etc are the key pa­ram­e­ters to be mon­i­tored and this would help in dis­pos­ing of stocks & quick re­al­iza­tion of money. In mar­ket­ing or­gan­i­sa­tion, ERP fa­cil­i­tates sales process & cus­tomers in his ter­ri­tory faster rate and All In­dia view of sales fig­ures (prod­uct wise, Project wise, sales type wise, re­gion etc) and In­crease con­ver­sion Rate, Re­duce Cost of sales, Re­duce Lost Sales, avoid late de­liv­ery penal­ties. Track In­ven­tory and ma­te­rial from re­quire­ment to de­liv­ery

CHAL­LENGES: ERP PROD­UCT FIT­MENT

In late 2000 to till to­day, there are lot of ERP prod­ucts in the mar­ket both branded; un­branded, open source & cloud based ERP etc but all are not the right fit everywhere. The small and medium seg­ment has many fail­ure sto­ries and causes of dis­sat­is­fac­tion over suc­cess­ful im­ple­men­ta­tion across these busi­ness seg­ments. There are two schools of thought pre­vail­ing in this seg­ment of in­dus­try ie One school of thought is for big in­vest­ment for ERP and the other school of thought is not to in­vest in ERP

How­ever, to­day or­ga­ni­za­tional suc­cess and fu­ture growth lies in be­ing able to de­liver at the “mo­ment of truth” – i.e., hav­ing the right prod­uct made avail­able to the cus­tomer at the times the con­sumer wants it. More­over, as the com­pe­ti­tion is build­ing up in the mar­ket, more and more cus­tomiza­tion re­quire­ments are also in­creas­ing and hence need to build flex­i­ble sys­tems and pro­cesses in or­der to meet the cus­tomer re­quire­ments.

Most of ERP sys­tems present on the mar­ket of­fer a large num­ber of fea­tures, es­pe­cially in the case of Open source so­lu­tions. How­ever, as the ERP works as a mir­ror of your busi­ness, some cus­tomiza­tion might still be re­quired as each com­pany has a spe­cific or­gan­i­sa­tion and busi­ness model. Be­fore de­cid­ing to cus­tomise some fea­tures or to de­velop a new mo­d­ule, makes sure with your ERP con­sul­tants that these fea­tures will re­ally bring some value in your busi­ness, in or­der to not de­velop an ex­pen­sive mo­d­ule that your em­ployee will never use.

CHALLANGES: USER AC­CEP­TANCE

Many com­pa­nies have re­al­ized im­pres­sive ben­e­fits by im­ple­ment­ing ERP sys­tems; how­ever, the suc­cess of an ERP im­ple­men­ta­tion is in­flu­enced by a great many fac­tors. User in­volve­ment is one of the most cited, crit­i­cal suc­cess fac­tors in ERP im­ple­men­ta­tion projects. Gen­er­ally, when users are in­volved in the im­ple­men­ta­tion, the end re­sult will de­liver a bet­ter fit in re­la­tion to busi­ness pro­cesses and ac­cep­tance be­tween the end users and the ERP Sys­tem. In tech­ni­cal terms, the prepa­ra­tion comes in the form of user ac­cep­tance test­ing (UAT). User ac­cep­tance test­ing is of­ten used as a project mile­stone for con­trac­tual rea­sons; com­plet­ing UAT sig­ni­fies that the so­lu­tion has reached an ac­cept­able level of sta­bil­ity and this in turn can be linked with the is­sue of who is go­ing to pay for fix­ing de­fects. UAT is ac­tu­ally far more im­por­tant than that — it is your key to project suc­cess. It’s im­por­tant to iron out the is­sues in a safe en­vi­ron­ment first, and for an ERP im­ple­men­ta­tion the safe en­vi­ron­ment is UAT. Ev­ery is­sue that is found dur­ing UAT is one less is­sue that will need to be solved af­ter go live, and the thing about go live is­sues is they can be re­ally dan­ger­ous. When an is­sue oc­curs in a pro­duc­tion sys­tem in a go live en­vi­ron­ment, it needs to be fixed quickly, and there is typ­i­cally a great deal of stress as­so­ci­ated with the is­sue. Be­ing hur­ried in a stress­ful en­vi­ron­ment does not make for good pro­gram­ming and it cer­tainly doesn’t al­low for well thought out de­sign. CHAL­LENGES: COM­MU­NI­CA­TION Ef­fec­tive im­ple­men­ta­tion of ERP so­lu­tions re­quires good com­mu­ni­ca­tion, which is es­sen­tial across the or­ga­ni­za­tion. This need to be ex­plained to the dif­fer­ent stake­hold­ers of the project why the old sys­tem is not ef­fi­cient any­more, and what they will get from the new sys­tem. The main idea be­hind com­mu­ni­ca­tion is to avoid the cre­ation of a group of re­sis­tant’s to the ERP project, in or­der to mit­i­gate the risk. Two main risks per­ceived by end users need to be erased: first the risk the ERP will do the work done by the end user. You need to be clear that the ERP is not in­te­grated to do the job of em­ploy­ees but to help them to be more pro­duc­tive by sim­pli­fy­ing the pro­cesses. Se­condly, some em­ploy­ees can be afraid to not have the abil­i­ties to work on this new sys­tem be­cause of their lim­ited com­puter lit­er­acy. Hence, need to ex­plain to them that train­ings will be done to help them to un­der­stand the new ERP sys­tem. Build­ing con­fi­dence among the all stake-hold­ers through com­mu­ni­ca­tion chan­nel all along the project, to be sure peo­ple will be fa­mil­iar­ized with the so­lu­tion, and will sup­port its in­te­gra­tion.

Set­ting re­al­is­tic ex­pec­ta­tions re­quires an in­vest­ment of time, re­sources and money, but the pay­off oc­curs when your or­ga­ni­za­tion achieves all its ex­pected ben­e­fits and ex­pe­ri­ences ERP suc­cess. ERP so­lu­tions are of­ten seen as the magic stick which will solve all the prob­lems of a com­pany, and will en­hance all pro­cesses in­stantly. But the re­al­ity is a bit dif­fer­ent; a high per­cent­age of ERP im­ple­men­ta­tion project fails be­cause they have not been care­fully thought up­stream in terms of or­gan­i­sa­tional ben­e­fits, bud­get, and time­lines of the project. How­ever, one of the most im­por­tant as­pect to en­sure the suc­cess of an ERP de­ploy­ment project is the abil­ity to set re­al­is­tic ex­pec­ta­tions. Hav­ing re­al­is­tic ex­pec­ta­tions will al­low the com­pany of any size, an ERP is achiev­able project, which re­spects the busi­ness ob­jec­tives in the short time to long-time. CON­CLU­SION Though the adop­tion of ERP are grad­u­ally gain­ing mo­men­tum, the fail­ure rate seems to be equally com­pa­ra­ble to the chal­lenges stated in this ar­ti­cle. Hence or­ga­ni­za­tion which is look­ing for adop­tion of ERP for achiev­ing or­ga­ni­za­tion level ben­e­fits, need to eval­u­ate all the chal­lenges be­fore go­ing for se­lec­tion and fi­nal­iza­tion of ERP for the im­ple­men­ta­tion. To­day there are no ERP prod­uct lim­i­ta­tions or tech­no­log­i­cal lim­i­ta­tions, but fit­ment of the prod­uct, users ac­cept­abil­ity and com­mu­ni­ca­tion to all stake-hold­ers in the project are to be ad­dressed by the se­nior man­age­ment for ef­fec­tive ERP roll­out ir­re­spec­tive of the or­ga­ni­za­tion size / in­dus­try ver­ti­cal. BY SHRI RAMAJEYAM SEKAR, MCA., MPhil., IACSIT, IAENG, MCP, DBA and cur­rently work­ing as PROJECT DI­REC­TOR in CMS Com­put­ers Ltd, Chen­nai im­ple­ment­ing the In­te­grated Dairy Project Man­age­ment So­lu­tion for AAVIN @ TamilNadu and prior to this worked as Head (De­liv­ery) with Inspace Tech­nol­ogy Pvt Ltc, Chen­nai.

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