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MIS & ERP

Advantages of MIS & ERP

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What can ERP do for the SME?

Management can act confidently

Improve operational efficiency

Give the enterprise the edgeit needs to succeed

Even small and medium business (SMB) units are using

ERP software to achieve a competitive advantage.

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Better control & Higher profits

ERP compels the staff to be organized and

disciplined, as it does not accept any shortcuts

Thus, it can provide online MIS for the

management to know the exact status of the

business at a click of the mouse and enables it

to take timely business decisions

Cost control and cost reduction at every stageand improvement in profitability.

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Efficiency is improved

Reduce manual work

No more inefficient paper-based

business processesERP makes the organization paperless, or

shall we say less-and less paper. Thus

becoming more efficient.

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What is the benefit of the supply chainmanagement module in ERP?

By deploying ERP, companies have been able to

closely integrate their business processes with

those of their trading partners

Faster order processing.Extending the market reach.

Increase sales.

Better tracking of inventories.

More accurate order fulfillment.

Better customer service.

Vendor relationship management (VRM)

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FG inventory control

ERP has resulted in a faster response / delivery time.For example, in the legacy system the Invoicepreparing was cumbersome and was taking lot oftime

In ERP, now users are making CCI (Challan-cum-Invoice), in a very efficient manner, which is not onlyfaster but also ensures accuracyStock is updated automatically when the item is purchased andsold. This results in ensuring that the stock figures are always

up-to-date. Correct response to customer about deliverycommitment is now possible.

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Pre-sales

Quotation Automation has resulted inproper costing and capturingoverheads

The Sales Order is automaticallycreated after the quotation approvaland subsequently the Work Order isprinted for the Production givinginformation about the proper rawmaterial (or child items) requirement.

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BOM

The Bill Of Material (BOM) master is

automatically updated in the Sales

Order stage resulting into greater

accuracy of Item Master and very useful

for MRP Material Requirement

Planning.

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Smart business operations

The Inspection Report is automatically printed after theInvoice saving lot of time in documentation, which in turnassures high Quality standards and customer satisfaction.Better customer reach has resulted into increased revenue.Customer master data and actual sales data are now

available online.Purchase is entered online which gives the vendor wisepurchase informationSerial number or batch number tracking keeps track of the rawmaterial.The Digital Nervous System provides top management, theautomated paper-less flow of information between

departments.Affordable client / server software eliminates data corruptionand RDBMS (e.g. MS SQL Server) increases the reliability ofdata.

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ERP Implementation

How and why of ERP failure & tips for

successful implementation

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Education

z Not understanding what the new 'system' is designed

to achieve). At least 100 hrs of training is required for keyusers. Preparing masters / transaction on practice

databases to get the comfort level and singing off is highlyrecommended. The CEO can make this happen, if he /she personally take interest, otherwise if left to users, thequality training does not happen and then chances ofsuccess are reduced

In one company, the training was given after the systemwas live. Users were busy with ISO implementation and most

people saw the data entry screen for the first time when the

legacy was removed.

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Lack ofTop Management commitment(managementbeing involved but not dedicated).

z If the owner is not spending enough quality

time, then the ERP project is likely to beunsuccessful

z In one organization, the MD hardly took part

in the discussion with ERP vendor and delegated

the task to the General Manager, who in turnnever wanted the ERP system, so he created all

the roadblocks, and the vendor got frustrated andfinally left

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SRS

z Inadequate SRS or System RequirementsSpecification: Current processes are not adequatelyaddressed. User must write down the

requirements, which means taking out time andextra effort. The user usually explains casually,verbally, and hurriedly, then how the ERP cansucceed?

z If sufficient time is not given for preparing the

SRS, ERP is likely fail

z Chopping and changing of program codes afterthe ERP goes Live is observed, if SRS exercise isnot done properly

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Select ERP Package carefully

z Invest lot of time in the ERP selection process. It is not likebuying a mobile. If you do not like a cell phone, you can discard,and buy new one. ERP is like a long-term partnership (marriage,shall we say). There are going to be difference of opinion with thespouse. This can be sorted out.

Similarly, one cannot keep on changing ERPz The package does not address the basic business functions of

the clientz The package should be totally integrated, including

accounts

z Some organizations are so comfortable with their Rs.10,000/-wala account-centric package that they do inventory and

other functions in ERP but ask for data transfer from ERP to suchaccounting package!

z Please do not connect bullocks to the car!!

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Internal Resistance

z Resistance to changing the 'old' processes. This is

perhaps human nature

z Unless proper confidence building is done (during

training) the user will still want to use the old method

(or the legacy way)

z One ERP user (in a company) was

so adamant that the MD had to ask him to resign (and

he was the works manager who was expert in firefighting, but MD wanted topreventfire altogether).

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Give me moon

zUnrealistic Expectations of the

Benefits

zA user starts expecting moon

zOne must draw a line, be

satisfied, at least in the firstphase, and let the system takeoff.

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Return on investment. ROI?

z Unrealistic Expectations of the ROI. People forget

to quantify the intangible benefit or they simplyexpect returns overnight

z Most users do not know even, what the ROI is

z For example

ROI can be reducing inventory level by x percentage or ROI can be preparing of Excise (TAX) Invoice quicklyand accurately

or ROI is to get the correct material requirementplanning.

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Time Frame

z Unrealistic Time Frame Expectations.ERP is like changing the wall itself (andnot changing merely the paint of the

wall)z CEO / CFO expect things to happen

overnight when they have not takentrouble to define (in writing); to whatextent customization will be allowed

z One has to learn to put a full stop tochopping and changing.

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TCO - Money

z Total Cost of Ownership is notunderstood

z ERP vendor money is not paid in timez The ERP implementing company is

treated like any other supplier and ERPproject goes into a kind of negativecyclez

E.g., Think of a mobile phone:When the SIM card charge is over it stopsworking and needs to be charged by payingadditional amount.

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Budget is not sanctioned.z In one company (Rs.40 Crore turnover), the MD was

from old school. He never sanctioned the moneyrequired for the Server, etc. for nine months even after

going live. His vice president was keen, but project didnot take off, because MD was not convinced

z TCO of ERP (Total Cost of Ownership) is not

understood.

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.By-the-way we will do ERP also.

z User / top management safely assume that certain procedure

should be present in ERP. If the procedure is not explained in the

beginning, legacy is not given which it may not reflect in the

Business Blueprint (these reference guidelines) or in the POC

z If it is not in the Business Blueprint, it will not be there in ERP

program

zERP project is taken as by-the-way project; whereas in

true sense it should be the only priority during implementation

phase.

Do not take ERP casually

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A Bottom-Up approach is employed (the Process

is not viewed as a Top management priority).

z In other words if architect has not shown the door and window, theroom will not have them. Due importance to these documents should begiven. For instance, ERP has many different types of sales invoice andseveral types of purchase vouchers, but which one is applicable in a

particular business is known to that businessperson only. Some timeshould be spent in the test run known as CRP run. Later, modification willnot only cost in term of money but also time.

Moreover, that time blame game starts and project suffers. It is stronglyrecommended that all key users take the POC (Proof of Concept) seriously

z System Requirement Specification (SRS) should be reflected in thereference guidelines. Every page of this Business Blueprint document

should be signed.

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ERP is long term investment

z Another reason of ERP failure is that userignores the long-term business goals to beachieved and only focuses on the immediate

needs. As a result asks for unnecessarycustomizations. For example, it is necessary toenter correct opening stock for each item foreach location (including third party inventory)

z However, user takes a unilateral decision thatthis can be done later. Users will start entering

various transactions and goes live. Even asks toremove the negative issue lock from the system

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Tight linking (integration) is good

z Another example, one user from marketing,

did not appreciate the link of quotation and thesales order

He asked implementer to remove the link. Later,after six months, he realized his mistake and asked toprovide for the link

z Sometime Director or CEO of the company

does not share his or her long-term vision of thecompany, with the middle management or lowermanagement.

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It is necessary to identify yourself and map

the same with the scope of ERP modules.

Follow the checklist given below:What vertical (s) are you involved in? List them. E.g.,Make to stock or make to order. E.g. Continuous process

production or discreet production

What ERP modules are you looking for? Write it downfrom the scope list of ERP modules given by ERP vendor.

Are you planning on replacing legacy software

applications? Within the next 3 years? Which ones?Make list and plan to phase out out-dated software

ASAP.

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What is the big picture?z Write your expectations - all of them. What objectives

that you wish to achieve by deploying ERP? List them outin detail and discuss with users. Make department wiselist of reports expected from ERP. Once the list is ready,share with the ERP vendor

z ERP vendor should meet more then 80% of youressential requirements. Be informed that rarely ERP willmeet 100% of your wish list

z There are some areas, which are not automated and

will have to be done manuallyz May be in second phase, after one or two years, you

can plan to automate some additional business processes.

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Information Technology and IT

infrastructure

z What databases and operating systems do we have

expertise? What will the IT department agree to and whatis the long-term plan? List them

z If you are not sure, consult I. T. expert. For instance,in one corporate company EDP manager was asked toselect ERP. She was trained by Red Hat on Linux. Sheinsisted that ERP should be on Linux platform. During theERP deployment, seven moths down the line, she left theorganization for greener pasture. Nobody knew anythingabout Linux. ERP project was abandoned

One year later the company deployed ERP on Microsoftplatform.

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Look at all of your optionsz In the implementation phase, we must educate users

not to become greedy and ask for everything. Becausethis will effect his or her satisfaction level!

z What is the impact of ERP on your organization? The impact is tremendous. It is like using a car instead ofbullock cart. A poor implementation could end up with

major delays in outbound shipments or even stoppages

An excellent implementation on the other hand is ablessing. However, this comes only when all stakeholders(users) and ERP implementation team follows proper

implementation methodology.

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Learn about Technology

z Technology has advanced, therefore the selection teammembers will need to learn about workflow, TCP/IP, and manyother issues involved. ERP coordinator should be trained in thefollowing areas: basics of SQL. ERP can give intelligent alerts

automatically by email. It is expected that ERP coordinator or I.T. support person knows about networking of computers (LAN)

z If necessary, plan a separate training for the InformationTechnology and new techniques that are akin with ERP. E.g.,UPS can be connected to Server computer to give messages tousers, automatically, that battery backup is low, so users canlogout and shutdown properly

z E.g., Embrace technology with both hands. Do not be afraidof using new technology. May be attending seminars and trainpeople continuously

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DAILY BACKUP

z Make a disaster management plan. Nobody wishes that

accident should happen. Nevertheless, it is necessary to have a

written document in place. Especially, mention about the

backup and restore procedure. Do a rehearsal exercises.

z Keep backup CD (or DVD) in physically separate location, e.g.

take to another office or another building (safe deposit locker)

z User may have to enter data all over again in case of server

breakdown

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DO YOUR HOME WORK WELL. COMPARE ERP MODULES OFFERED

BY VARIOUS ERP COMPANIES

z Do not get carried away by impressive PowerPoint

presentations. Marketing people are trained to giveRosy picture. The chief of ERP (main sponsor)

should know the limitation of ERP and itscustomization

z ERP implementers cannot deliver Moon. Although

sales team will promise Moon and Jupiter also.

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ERP is not bed of roses.

z Business transformation is a painful

process. Do not underestimate. It is like

that scene of Jurassic Park II movie. Sheis amused when she is looking at theDinosaurs for the first time. She is told thatin beginning, it is always wah wahbut itends up in screaming!

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It is said that ERP implementation is ajourneyand not the final destination