INTRODUCTION TO ERP

Information technology has transformed the way we live in and the way we do business. Since last decade, I.T. has made a drastic change in our life. As compared to earlier stage, when computer was used just as a typewriter, nowadays users have become more intelligent and IT literate. Now the user knows that a PC can do many more things rather then just typing a letter in a word processing software or making balance sheets in excel. They expect more things out of their PC. During this phase of industry, every one of us must have heard the word ERP in one or the other form. It may be in title of any IT magazine or may be a point of discussion in any IT Seminar or may be in an advertisement of big IT Company. Thus in any form, we all have been through this word. This paper explains precisely the concept of ERP software SAP and the strategies involved in implementation of SAP in a mid-sized organization.

WHAT IS ERP?

ERP is one of the most widely implemented business software systems in a wide variety of industries and organizations. ERP is the acronym of Enterprise Resource Planning. ERP is just not only software. ERP definition refers to both; ERP software and business strategies that implement ERP systems.

ERP implementation utilizes various ERP software applications to improve the performance of organizations for

Resource Planning Management Control Operational Control

ERP software consists of multiple software modules that integrate activities across functional departments - from production planning, parts purchasing, inventory control and product distribution to order tracking. Most ERP software systems include application modules to support common business activities like finance, accounting and human resources.

HISTORY OF ERP

TIMELINE SYSTEM DESCRIPTION

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1960s Inventory management & control

Inventory management and control is the combination of information technology and business processes of maintaining the appropriate level of stock in a warehouse. the activities of inventory management include identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status.

1970s Material requirement planning(MRP)

Material requirement planning(MRP)utilizes software applications for scheduling production processes.MRP generates schedules for the operations and raw material purchases based on the production requirements of finished goods , the structure production system, The current inventories levels and the lot sizing procedure for each operation.

1980s Manufacturing requirements planning(MRP II)

Manufacturing requirements planning or MRP II utilizes software application for coordinating for manufacturing processes, from product planning, parts purchasing, inventory control to product distribution.

1990s Enterprise resource planning(ERP)

Enterprise resource planning or ERP uses multi-module application software for improving the performance of the internal business

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processes .ERP systems often integrate business activities across-functional departments, from product planning, parts purchasing, inventory control ,product distribution, fulfillment, to order tracking. ERP software systems may include applications modules for supporting marketing, finance, accounting and human resources.

ERP SYSTEMS

ERP is much more than just computer software. An ERP System includes ERP Software, Business Processes, Users and Hardware that run the ERP software. An ERP system is more than the sum of its parts or components. Those components interact together to achieve a common goal - streamline and improve organizations' business processes. Most important factor for ERP system is the users. Successful implementation of any ERP System more depends on intelligent users who are going to use them, because any standard ERP Software would consist hundreds of input information for any particular business activity. Thus good knowledge of each entity of system to the users is most important factor in ERP Software.

BENEFITS OF ERP

ERP software attempts to integrate business processes across departments into a single enterprise-wide information system. The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business. The implementations of ERP systems help to facilitate day-to-day management as well. ERP software systems are originally and ambitiously designed to support resource planning portion of strategic planning. In reality, resource planning has been the weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration of ERP with Decision Support Systems (DSS).

ERP systems are great to help your company streamline your processes.  In order to have a successful implementation of your ERP system, you need to make sure you have your information in line to help make the process swift.  It doesn’t matter whether or not your company deals with paper or plastics, ERP provides

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your company with the right system and performance that you need. ERP can help your company reduce operating cost and it is a benefit when running company analytics.  It improves the coordination of your company’s process into one streamlined process where everything can be accessed through one enterprise wide information network. 

Additionally operating costs are reduced by being able to control inventory costs, lower production and marketing costs, and help lower help desk support. ERP systems can also benefit the company by facilitating day-to-day management activities.  It encourages the establishment of backbone data warehouses and allows employees to access the information in real time.  This helps with research, decision making, and managerial control.  It tracks actual cost of the daily activities and can perform activity based costing functions. 

Strategic planning is also benefited in that the ERP system is designed to support resource planning in the strategic planning process.  This is traditionally the weakest portion of the process and it is a complex routine.  But the reports and functions that ERP provides can help employees work through the strategic planning sessions and develop a comprehensive one that will aid in the company’s processes.  

ERP programs are being developed and updated all the time.  With so many different types on the market, companies should make sure they do due diligence and try out different packages before choosing one to use.  Some of the programs even offer mobile capabilities so that you can always have a finger on the pulse of your business activities from your pda.   

With real time capabilities and the ability to be able to see what is going on with your company as it happens, ERP systems are handy when you deal with high volume.  With an ERP system, your company will never have inventory shortages or wasted time spent transferring files.  You can test out an ERP system before buying it and see how it will work with your business. 

OBJECTIVES OF THE STUDY

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The objectives of this study is

To develop implementation method of SAP

To integrate existing models

To improve the business efficiency and effectiveness.

To analyze the existing problem in the Business and finding solution

No one from IT industry will be unknown from the word SAP. SAP is the most successful ERP Software.

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INTRODUCTION TO SAP

SAP was founded in 1972 in Walldorf, Germany. It stands for Systems, Applications and Products in Data Processing. Over the years, it has grown and evolved to become the world premier provider of client/server business solutions for which it is so well known today. The SAP R/3 enterprise application suite for open client/server systems has established new standards for providing business information management solutions.

SAP product is considered to be excellent and perfect to considerable extent. The main advantage of using SAP as your company ERP system is that SAP has a very high level of integration among its individual applications which guarantee consistency of data throughout the system and the company itself.

SAP is table drive customization software. It allows businesses to make rapid changes in their business requirements with a common set of programs. User-exits are provided for business to add in additional source code. Tools such as screen variants are provided to let you set fields attributes whether to hide, display and make them mandatory fields.

This is what makes ERP system and SAP in particular so flexible. The table driven customization are driving the program functionality instead of those old fashioned hard-coded programs. Therefore, new and changed business requirements can be quickly implemented and tested in the system.

Many other business application software have seen this table driven customization advantage and are now changing their application software based on this table customizing concept.

HISTORY OF SAP

SAP's story is one of a steady rise from a small, five-man operation headquartered in southwest Germany's Rhine-Neckar region to one of the

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world's largest independent software providers and an employer of more than 47,598 people in over 50 countries.

Read about SAP's exciting evolution and key milestones:

1972-1981:THE FIRST 10 YEARS - "The First 10 Years" chronicles the highlights of the company's beginnings and subsequent development – from SAP's foundation, its first software modules, and the SAP R/2 system to the company's first-year revenues, first customers outside of Germany, and first trade-show appearance.

1982-1991: THE SAP R/3 ERA- “Four servers with 64MB of memory. Employing 100 employees and signing its 1,000th customer. Reaching the DM100 million in revenues, and expanding abroad. The development of the SAP R/3 product generation. These and other landmark events are the subject of "The SAP R/3 Era."

1992-2001: THE AGE OF E-BUSINESS- “Reaching €6 billion, and employing more than 24,000 employees. Trade shows and conferences. Going public, and developing new technologies and platforms. Learn more about SAP's meteoric rise in "The Age of E-Business."

2002 TO TODAY:SAP TODAY- SAP's story continues with the SAP Net Weaver platform, whose technologies intertwine system landscapes and information flows, integrate companies and their employee teams, and establish connections among markets across virtually any perceived barrier. "SAP Today" describes the most recent technological and entrepreneurial milestones in SAP's continuing development.

WHAT IS SAP?

As mentioned before SAP is an acronym for "System Application & Products" which creates a common centralized database for all the applications running in

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an organization. The application has been assembled in such a versatile way that it handles the entire functional department within an organization. R/2, which ran on Mainframe architecture, was the first SAP version. Sap's products are generally focused on Enterprise Resource Planning (ERP). Sap's applications are built around R/3 system which provides the functionality to manage product operations, cost accounting, assets, materials and personnel. The R/3 system of SAP runs on majority of platforms including windows 2000 and it uses the client/server.

WHAT MAKES SAP DIFFRENT?

Traditional computer information systems used by many businesses today have been developed to accomplish some specific tasks and provide reports and analysis of events that have already taken place. Examples are accounting general ledger systems. Occasionally, some systems operate in a "real-time" mode that is, have up to date information in them and can be used to actually control events. A typical company has many separate systems to manage different processes like production, sales and accounting. Each of these systems has its own databases and seldom passes information to other systems in a timely manner.

SAP takes a different approach. There is only one information system in an enterprise, SAP. All applications access common data. Real events in the business initiate transactions. Accounting is done automatically by events in sales and production. Sales can see when products can be delivered. Production schedules are driven by sales. The whole system is designed to be real-time and not historical.

SAP structure embodies what are considered the "best business practices". A company implementing SAP adapts it operations to it to achieve its efficiencies and power.

WHAT IS SAP R/3?

SAP R/3 on a three-tier client/server model.

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1. Presentation Server(GUI) 2. Application Server 3. Database Server

SAP allows the IT supported processing of a multitude of tasks, accruing in a typical company or bank. SAP ERP is differing from R/3 mainly because it is based on SAP NETWEAVER: core components can be implemented in ABAP and in JAVA and New functional areas are mostly no longer created as part of the previous ERP system, with closely interconnected constituents, but as self-contained components or even systems.

1. Presentation Server

The presentation server is actually a program named sapgui.exe. It is usually installed on a user's workstation. To start it, the user double-clicks on an icon on the desktop or chooses a menu path. When started, the presentation server displays the R/3 menus within a window. This window is commonly known as the SAPGUI, or the user interface (or simply, the interface). The interface accepts input from the user in the form of keystrokes, mouse-clicks, and function keys, and sends these requests to the application server to be processed. The application server sends the results back to the SAPGUI which then formats the output for display to the user.

2. Application Server

An application server is a collection of executables that collectively interpret the ABAP/4 (Advanced Business Application Programming / 4th Generation) programs and manage the input and output for them. When an application server is started, these executables all start at the same time. When an application server is stopped, they all shut down together. The number of processes that start up when you bring up the application server is defined in a single configuration file called the application server profile. Each application server has a profile that specifies its characteristics when it starts up and while it is running. For example, an application server profile specifies:

Number of processes and their types Amount of memory each process may use Length of time a user is inactive before being automatically logged off.

The Application layer consists of one or more application servers and a message server. Each application server contains a set of services used to run the R/3 system. Not practical, only one application server is needed to run an R/3 system. But in practice, the services are distributed across more than one

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application server. This means that not all application servers will provide the full range of services. The message server is responsible for communication between the application servers. It passes requests from one application server to another within the system. It also contains information about application server groups and the current load balancing within them. It uses this information to choose an appropriate server when a user logs onto the system.

The application server exists to interpret ABAP/4 programs, and they only run there-the programs do not run on the presentation server. An ABAP/4 program can start an executable on the presentation server, but an ABAP/4 program cannot execute there. If your ABAP/4 program requests information from the database, the application server will format the request and send it to the database server.cvb.

3. Database Server

The database server handles the user's request for addition, retrieval and modifications in the data. It is also responsible for maintaining Concurrency Control.

SAP R/3 SYSTEM

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SAP R/3 pursues a flexible and modular structure of individual components. In previous page you have reviewed the general module groups such financials. If we would like to see them altogether in terms of sub modules, these individual components are as follows:

Basic System: Basic components (BC) Advanced business application programming

(ABAP4)

Accounting System Financial accounting (FI) Controlling (CO) Asset Management (AM)

Production and logistics Sales and Distribution (SD) Materials Management (MM) Production Planning (PP) Quality Management (QM) Plant Management (PM)

Others Project System (PS) Human Resources (HR) Workflow (WF) Industry Solutions (IS)

SAP BASIS

Basis (the blue blob)

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Middleware that enables R/3 to run on various platforms Operating systems

Major UNIX platforms (e.g., AIX) Windows NT IBM’s AS/400 and S/390 platforms

Database Management Systems IBM’s DB2 Oracle Microsoft SQL Server

Functional Modules . . .

SAP R/3 FUNCTIONAL MODULES

THE ARCHITECTURE

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SAP R/3 is software, it particular it is client-server software. This means that the groups/layers that make up an R/3 System are designed to run simultaneously across several separate computer systems.

When office automation software such as Microsoft Excel is installed on to a PC, each component of Excel (printing components, graphing components, word processing components, and etc.) is stored, managed, and processed via the hardware of the PC. When a company installs SAP’s software each component (or "layer” in R/3’s case) is stored, managed, and processed via the hardware of separate and specialized computer systems. Each of the various layers is capable of calling upon the specialty of any of the other installed layers in order to complete a given task.

Those components/layers that are requesting services are called “clients”, those components/layers that are providing services are called “servers”. Thus the term - “client/server” is derived. SAP is ERP (Enterprise Resource Planning) software and ECC is the version of SAP, like 4.6, 4.6c and 4.7 in that series new version is ECC 6.0. It is known as Enterprise core component.

The software is highly customizable using SAP's proprietary programming language; ABAP/4. SAP R/3 is based on various hardware and software architectures, running on most types of UNIX, on Windows NT and OS/400. Also SAP R/3 runs on several databases Oracle, ADABAS D, Informix, DB2 for UNIX, DB2/400, and Microsoft’s SQL Server 6.0.

SAP FOR BUSINESS

SAP R/3 is designed to handle all of the business management tasks of a company. Some particular examples that you'll see are: the payment of invoices, the management of production resources and the control of financial accounts. SAP R/3 handles these tasks using application modules, usually known simply as modules. Their initials often refer to the modules. For example, SD is Sales and Distribution. MM is Materials Management.

The modules process information from all parts of the organization. Since R/3 works within one system, this information is shared between modules despite any existing organizational limitations of a company.

ERP consists of common global processes and systems integrated across all business units. With SAP R/3, all units like Manufacturing, Order Management, and Product Delivery are linked together across business units with greater

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speed, accuracy, and service to the customers with utmost satisfaction. A key outcome from SAP R/3 implementation will be more robust processes which in turn increase the Operating Excellence and also help in facilitating easier integration of new businesses and acquisitions. A sample like SAP R/3 process helps in generating invoices that are easier to read and understand.

As everyone know a very good information systems is expensive to build and difficult to maintain or expand. This realization has lead many companies to purchase integrated software applications rather than try to build their own. Such implementations of integrated applications are what have produced massive sales of large application suites for companies such as SAP because R/3 integrates many application and some to name are:

Financial applications Distribution applications Human resources applications Manufacturing applications

Indeed, so broad is SAP's R/3 that it offers virtually every common business application needed by a typical enterprise.

SAP R/3's applications are modules. They can be used either alone or combined with other solutions. The integration capability of these applications increases the benefits derived for any company. Some of them are namely:

MM - This stands for Materials Management. MM optimizes all purchasing processes, helps in accurate inventory and warehouse management and so on.

PP - This stands for Production Planning and Control. This helps in the management of all process and all types of manufacturing like assemble-to-order production, supply chain management and so on.

SD - This stands for Sales & Distribution. This helps in all sales and distribution activities namely pricing, on-time delivery, profitability analysis and so on.

FI - This stands for Financial Accounting. This module helps in gathering all accounting information and documenting and thereby helps in producing a report and information that can be used for analysis and control and planning.

CO - This stands for Controlling. This helps in the control of complete controlling system, internal process of company and so on.

PA - Stands for Payroll Accounting and this helps in centralizing the payroll process and helps in giving a global view and maintaining the data securely.

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OM - This stands for Organizational Management and this helps in giving an accurate picture of organization structure and also helps in cost planning even in the individual level.

Apart from this there are many more modules available that include highly technical components that compete with business software in the market. Some of the popular new generation components are,

PDM – Product Data ManagementTR – TreasuryEC – Enterprise ControllingAM – Asset ManagementPS – Project SystemsAPO – Advanced Planner and OptimizerSRM – Supplier Relationship ManagementCRM – Customer Relationship ManagementBIW – Business Intelligence Warehouse

EP – Enterprise PortalSAP NW MI – SAP Mobile InfrastructureSAP XI – Third Party Software Interface Tool

R/3 works with a common database. This means that information, which is entered into the system by one part of the organization, is immediately accessible to all other parts of the organization. Everyone is always up to date.

The R/3 System is designed primarily to meet the needs of mid-sized businesses up to large corporations. However, the adaptability of R/3 makes it a sound investment for smaller businesses, enabling them to grow without ever having to change their system. R/3 works with a company's existing computer system. This will have developed as the company has grown and is likely to be made up of a large number of different types of computer.

SAP R/2 was designed primarily for the mainframe environment. R/3 is used mainly in the open system or client/server environments. Both R/2 and R/3 use the ABAP/4 programming language. This means that data can be moved easily between mainframe and open systems.

The SAP modules are grouped into three main areas: Logistics, Accounting and Human Resources. So, for example, Materials Management module is within Logistics group, and Controlling is a module within Accounting. The modules are all linked. So, as a user enters or updates data on-line using one module, the information is immediately accessible to all modules. The result is that up to

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date information is available to all parts of the company, regardless of any organizational limitations, which may exist.

The R/3 system is adaptable in a range of ways. Modules can be customized to meet the specific technical requirements of a company. The R/3 modules can transfer data from a company's existing programs.

A company may install only the modules that it needs at the moment. Additional modules can be added when the business needs grow. Implementation of SAP in an organization is adapting “Best Practice” in the organization at right time for best business benefits.

SAP IMPLEMENTATION @ WENDT(INDIA) LIMITED

COMPANY PROFILE

WENDT (INDIA) LIMITED is a model company that implements SAP. Wendt Company is considered to be a mid-sized falling in the market segment SME (Small and Medium Enterprises) according to SAP’s classification of business.

Wendt is into manufacturing of industrial tools on Make-To-Order basis. As per industry classification wentd. is into “Discrete Manufacturing” considering each Production Process different from others.

The company has one manufacturing facility and 35+ Sales Offices throughout the world. Even though Sales Activities take place from many countries the “Production” and “Billing” is only from one facility.

From financial perspective Model Inc. is a 10 Million USD company with head count around 300. Around 50 employees are operating from branch offices from different parts of the world. All the financial transactions are registered under one Company Registered Code with name “WENTD.”. The financial reporting is as per Accounting Standards under one registered name.

Being MTO Company, the resource planning and optimizing is a key for business, as material is a critical resource and the procurement process decides the delivery of finished products to customer.

Supply Chain Management, Customer Satisfaction and determining Profitability are the key areas that Management considers as Success Factors for Business. In order to have better control and process efficiency in these areas, ERP Implementation was planned.

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Management of WENTD (INDIA) LIMITED. Understands that the automation, control, faster transaction processing, transparency in reporting in the above mentioned areas will improve the business to considerably. To achieve this, an ERP Software is required to be implemented.

CONDITIONS FOR BEFORE IMPLEMENTATION

Prior to SAP Implementation there were discrete un-connected software packages operating in few departments? They were good and sufficient within the department. But Company as a whole, did not reap much benefits of having these Packages. Otherwise, the key areas of the Company Production & Maintenance were operating completely with manual work. This was one of the driving factors for ERP. Condition before Implementation was as follows.

Stand-alone systems [Information and Knowledge remained locally good].

Non-availability of information in real time. Duplication of work due to similar information captured at multiple

locations. Reconciliation of reports at various locations on data entered on same

activity. Enormous amount of energy spent on information gathering. No or less transparency in shop floor operations and business

processes. No support of required information for Critical Business Decisions.

BENEFITS OF IMPLEMENTATION

Finance & Controlling:

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1. Internal Control.2. Time saving due to tight integration – Repetition of work avoided.3. Tracking of expenses – Department wise.4. Product costing.5. Comparatively better WIP, FG Valuation & Working Capital

Management.6. Monitoring of Inventory Level and controlling the same.7. Strong statutory compliance.8. To measure the profitability of the products.

Production Planning:

1. Better Production Planning & Manufacturing Execution2. Shop-floor transparency & Controlling3. Product Costing based on Production Execution4. Capacity Planning & Materials Planning based on Orders in hand5. Accurate evaluation of Activity Costs & Machine Costs6. Better understanding of Product Lead Times7. Control over Material Consumption8. Tracking of Sub-contracting process effectively

Sales & Distribution :

1. Enhanced efficiency due to Integration of manufacturing locations, sales offices.

2. Performance reporting which enables faster decision making.3. Scalability of the SAP to support additional requirements of the

organization.4. On Time Delivery Performance Analysis.5. Shared master maintenance by all Modules.6. On-line status of Sales Orders & Materials.7. Various views of report – sales related.8. Transparency in tracking of FG stock availability.

Materials Management – Purchase :

1. Auto generation of Purchase requisition through MRP process.

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2. Online Reports for viewing Pending Purchase Orders, Requisitions & Stock.

3. Automated Pricing Structure based on past executions.4. Control over creation, release and modification of documents.5. Order release / approval are to follow 3 levels release.6. Accurate Vendor Rating.7. Statutory Compliance

Materials Management – Stores :

1. Inventory control through auto MRP with Minimum, Maximum Safety 2. stock levels.3. Modvat benefits through system.4. Proper accounting of Inventory / Consumption based on material codes.5. Internal control in booking the consumption against proper documents.6. Manual intervention avoided. 7. Reports on consumption and inventory are available at any point of time.8. Periodic report on Non-moving / Slow moving materials to take suitable

action.

Quality Management:

1. Correct automated Quality Plans for all the materials.2. Maintenance of Quality Parameters & Characteristics.3. Analysis and elimination of frequent quality problems.4. Better Rejections tracking & Performance Evaluation.5. Reports & MIS Analysis for Quality Control & Improvement.6. Sales & Purchase Returns are better tracked.

Plant Maintenance:

1. Paper less Plant maintenance processing.2. Cost effectiveness & Cost tracking.3. Consumption analysis and MIS Reports for various resources. 4. Maximum Utilization of resources.5. Better analysis of repetitive problems of maintenance.6. Proper tracking of damages.7. Effective and meaning full Preventive Maintenance.

APPEARANCE OF SAP FOR BEGINNERS

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SAP Systems Application and Products. SAP is both the product name andThe name of the company.

SAP GUI(pronouncedgooey)

Graphic User Interface. The SAP GUI is the software on ourcomputer or local server that allows you to connect to one or more ofthe SAP R/3 environments.

This is an example of your SAP GUI icon. IT Staff will install the GUIBefore you go “live”. You should indicate on your SAP AuthorizationForm whether or not you have the software installed.

Client Business Unit that you will be using in SAP. For training you will use 250. For Production or the “REAL THING” 300.

User Business Unit that you will be using in SAP. For training you will use 250. For Production or the “REAL THING” 300.

MaximizeYour screen

Be sure to maximize your screen or you may not be able to viewMessages from SAP. (Information, Warning, Error)

InformationMessages

SAP will provide information messages on the Status Line at the bottom Of your screen.

WarningMessages

SAP will provide warning messages on the Status Line at the bottom ofYour screen. Warning message can be bypassed by pressing Enter.

ErrorMessages

SAP will provide error messages on the Status Line at the bottom ofYour screen. An error message cannot be bypassed. You must correctThe error or exit the task.

SAP sessions A session is an open SAP window. You may open multiple sessionsAnd work on a system task in each session. It is always a good idea toHave two sessions open.

Menu Paths One way to navigate in SAP is to use Menu Paths to get to a systemtask

SAP SCREEN SHOTS

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Logging on - Before you log on the R/3 System, you need to know

Client User Password

After you logon, you should ALWAYS do two things.1. Maximize your screen.2. Create a new session.Maximize your screen by double clicking on the top Menu Bar Line (Blue Bar) orYou may use the maximize button on the Menu Bar Line.

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MANU BAR MAXIMISE BUTTON

QAS-TRINING-USE CLIENT 250

PROD-PRODUCTION-THE REAL THING-USE CLIENT 300

Create a new session by using the Create a New Session button or by using theMenu Path (System > Create Session)Create a new session button.

Menu Path – System > Create Session

To get the Command Field Block to appear, left click on the right arrow. To close the CommandField Block, left click on the left arrow.

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CREATE A NEW SESSION

>SYSTEM

>CREATE SESSION

The Command Field Block is used for fast path commands that take you directly to a system taskWithout using the menus.

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ARROW

MANU BAR

TOOL BAR

TITLE BAR

FUNCTION

SAP STANDARD MENU TREE

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To open and close statusBar line, click on arrow.

Status Bar

SessionNumber Client

Arrow to openCommand Field

Back Cancel FirstPage

NewSession

PreviousPage

NextPage

LastPage

Shortcut

SAVEENTERExitSession

Help

PRINT

SEARCH

CustomizingOptions

SAP IMPLEMENTATION DECISION & APPROACH

SAP was the obvious choice for ERP Implementation as SAP is the world leader in ERP Software Market. The transactional security, robustness, data integrity and consistency, business controls as per best practices of international standards, scalability are the features due to which SAP is being the most sought after ERP software now.

SAP suggests a best methodology known as ASAP methodology that guides the customer and implementation partner to plan the implementation faster, economical and risk free. ASAP is an approach towards any ERP implementation in an organization. ASAP methodology is internationally acclaimed and accepted by most of the large IT firms that are into business application development and implementation.

Apart from the standard methodology, there should be customer specific approach based on nature of business, organization culture, geography, demography etc.

For SAP every implementation is new. No two implementations can be termed as similar. The approach adapted for Model Inc. in view of its size and product composition is explained here in detail.

The approach was systematic and procedural; where-in each activity was well estimated and well planned. Before detailing into the process of ERP Implementation at Model Inc., we present a brief insight into basics of ERP and its Implementation methodologies.

An Enterprise Resource Planning (ERP) system is an integrated software package composed by a set of standard functional modules (Production, Supply Chain Management, Sales, Quality Management, Maintenance, Finance, etc.,) developed or integrated by the vendor that can be adapted to the specific needs of each customer. The current generation of ERP systems also provides reference models or process templates that package the current best business practices by supporting organizational business processes.

Despite the benefits that can be achieved from a successful ERP system implementation, there is already evidence of failure in projects related with ERP implementations. Industry statistics show that >60% of ERP implementation starts historically fail.  This is mostly due to lack of Proper Planning resulting to high cost and low through-put.

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There are twelve major reasons for why companies fail in implementing SAP.

Lack of Top Management Commitment Inadequate Requirements Definition Poor ERP Package Selection Inadequate Resources Resistance to Change/Lack of Buy-in Miscalculation of Time and Effort Misfit of Application Software with Business Processes Unrealistic Expectation of Benefits and ROI Inadequate Training and Education Poor Project Design and Management Poor Communication Lack of Team Spirit

Above all high Cost of Implementation due to longer project duration is one of the major reasons due to which Small & Medium Businesses hesitate to go for ERP implementation. But Market Reality is, every organization irrespective of size and turnover, has to react to the need of customer industries. ERP implementation is a perfect synergy between IT systems and business processes and is considered as the ideal technology investment and it can be justified only if the user company experiences significant benefits to its overall business. To extract the maximum benefits out of this investment is the main objective of implementing ERP at Model Inc., with the determination to overcome all the above stated problems.

IN THE BEGINNING

Model Inc. started ERP Project with a definite purpose. Right from the beginning, the Top Management of the Company knew that there was a need for an Integrated System covering all the processes in the organization to achieve its objectives. After evaluating several packages, the company decided to implement SAP which is a proven ERP Package in the Market enjoying almost 70% of Market Share.

The big task ahead was to reach a sophisticated level of technology with very little experience. Apart from selecting key users, the ERP implementation process was considered an opportunity to re-engineer business processes. The first step of the pre-implementation process was to learn from others failures.

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Sufficient information has been collected about experiences of other companies both at the time of implementation and in the post implementation scenario.

STRATEGIES

Learning from experiences of other companies and thorough market analysis, it has been concluded that ERP Implementation is quite an expensive Project for Small & Medium Enterprises, and in order to proceed with the Project, Cost of the Project is to be cut down greatly and bring it to the purview of company’s affordability. Every ERP Implementation involves three costs,

1. Software Package Cost2. Hardware & Infrastructure Cost3. Implementation Cost

Through analysis it was clear that it is almost impossible to cut down Software & Hardware Costs. Only left was “Implementation Cost” that can be reduced. On analysis it was concluded that, the following are the ways through which implementation Cost can be reduced.

Reduce the Implementation Period. Choose an Implementation Partner with experience and expertise in

implementing SAP, good reputation in the market, has quality man-power who can complete the work in the shortest period.

Negotiate best competitive Implementation Price. Build a strong internal Implementation Team representing all the

functional areas of the Company and comprising of experienced employees who have thorough Business Process Knowledge.

Motivate the Implementation Team to do parallel activities in a planned manner.

“The final outcome of the analysis was to complete the SAP Project in 6 Months to reduce the cost of implementation and fit it into company’s budget.”

The major concerns that attracted the maximum focus were as below in the order of priority.

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Change Management. Design of Production Planning & Plant Maintenance Modules for

which there were no legacy systems. All the processes were completely manual. The challenge was transformation from manual to fully automated processes.

Proper Integration of all modules. Codification of Masters (Especially Material Master). Master Data Collection & Preparation. Final Data Collection (Open Sale Orders, Purchase Orders, Account

Balances, Work-In-Process Inventory).

The overview of “Best Practice” implementation methodology with strategies adapted to complete the “Project” successfully “In 6 Months” is described below.

Strategy – 1 : ASAP Implementation Methodology recommended by SAP adapted

The Implementation methodology adapted is “ASAP” Methodology recommended by SAP itself. In view of Small and Medium Businesses, as a strategy for market expansion SAP has devised this methodology that drastically cuts down the time and cost of implementation. SAP has designed this methodology with the years of implementation experience in Global Projects. “Change Management” was taken as an umbrella activity throughout the Project covering all the phases of implementation process. Please Refer Annexure – I.

Strategy – 2 : Partner Selection

Implementation Partner Selection is a key activity in SAP Implementation. With the help of vital inputs given by SAP, many recommended implementation partners were evaluated on various factors such as,

1. Price quoted for Implementation2. Post Implementation Support offered

3. Reputation & Sustainability of the Partner in the Competitive SAP Market

4. Availability of Quality Man-power with the Partner5. Proximity to the site of Implementation6. Approach of the Partner towards maintaining relationship with the Clients

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After evaluation, we selected “Softest Technologies” as our Implementation Partner. We appreciate Softest for allowing Interview of Consultants before they were assigned to the Project. The strategy of evaluating Consultants helped greatly to identify experienced consultants to get maximum quality output from them. It helped to stick on to Project Schedule in various phases of the Project.

Strategy – 3 : Change Management

The first step to implementation was to familiarize employees with the changes that were likely to take place post-implementation in order to create a wave of change within the organization. The implementation also involved coordination with all concerned user departments to iron out any gaps in the implementation.

ASAP methodology typically follows a two-tier approach to any big-bang implementation. The first is the “AS IS” approach, which studies existing processes in the organization and suggests various changes that would speed them up. The second is the “TO-BE” approach that outlines details of the changes that are likely to happen in the workflow process. Both the approaches are basically meant to suggest the best alternative based on reference models picked up from all over the world.

Model Inc.’s strategy towards Change Management was to involve all the employees in both “AS-IS” and “TO-BE” stages. All the employees were informed about the progress of the Project through periodic communication meetings. To create more involvement and positive view on ERP implementation all the employees from Office Area were involved in the activities mentioned.

1. Employees were interviewed at the stage of “AS-IS” and the answers were taken as inputs for the preparation of “AS-IS” documents. All the employees were informed that their current work responsibilities will be taken as basis for the preparation of “AS-IS” documents. The response from employees was very good and Total Employee Involvement could be seen in the project.

2. Next stage of involvement was at the stage of Data Collection. The process of Master & Open Items Data Collection was planned to involve every employee of Model Inc. and contributed to the process. The importance of data collected and formatted and its usage in SAP has been explained in detail. Thus every employee could visualize and correlate the data with the process flow of SAP.

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3. The next stage was Training & Go-Live. Normally every ERP Implementation has a phase called “Training”. There was no difficulty in training end users as they were already involved in the Project. The approach towards training was to establish and highlight the link between the “AS-IS” Process, “To-Be” Process and the “Master Data Collection” already familiar to end user. Hence end-user training was comparatively easy as there was no need of elaborating every piece of data entered and the end result of the process.

Strategy – 4 : No Outsourcing

In order to reduce the implementation cost, it was decided not to go for Outsourcing of any activity related to ERP Implementation. There is a normal practice in the market that, the companies that go for ERP Implementation Out-source the activities like,

1. Facilities & Network Management2. Codification of Master Data3. Management Consultancy

All mentioned above if out-sourced; increase the cost of implementation drastically. In order to avoid such costs, we decided to share these work among ourselves and do all the activities internally. Our SAP Team was motivated and trained to do parallel activities of

1. Co-coordinating with Implementation Partner Team2. Codification of Master Data of respective modules3. Studying & Implementing Critical Integration Points of the Modules4. Training end-users & Preparation of user-manuals5. Documenting all the activities in their respective modules

The idea was a great success and this as “Key Success Factor” of SAP Implementation.

Strategy – 5 : Requirements Description from ISO Documentation

Model Inc. is an ISO 9001:2000 & ISO 14001:2004 Certified Company. As per ISO standards documentation is available for all the Processes of the Company

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along with the Standardized list of Tools used for the Processes. ISO Documentation of Process Modules was used as base for “AS-IS” study.

The availability of ISO Documents helped greatly in completing the preparation of “AS-IS” documents in a very short time. Along with ISO Documents the end users were interviewed and they were requested to explain the process modules, in order to document the processes in detail.

Implementation of ISO Standards and Systems is another “Key Success Factor” that driven has driven towards successful implementation of SAP at Model Inc. The samples of AS-IS and TO-BE Process Documentations are enclosed as Annexure - II.

Strategy – 6 : Involvement of Top Management

Top Management’s Commitment towards the project is major success factor for an ERP Implementation Project. It is the responsibility of Top Management to motivate and drive the organization towards “Change” in “Vision”, “Mission”, “Goals”, “Objectives” and ultimately “Process” to reach our goals.

Model Inc. Top Management is fully committed in the Project and motivated the SAP Team to work hard, through appreciations and due recognition. Management has made all the required facilities to SAP Team and supported during every phase of the Project. Management has given top priority to SAP Meetings & Reviews. Whenever Re-engineering required for a Process the issue was taken on priority and quick decision-making ensured in order to keep the pace of the Project.

Strategy – 7 : Project Management

Project Management is another key factor for the success of ERP Implementation. The main challenge for a Project Leader is to manage people. It requires good leadership qualities in order to drive the Project Team towards same goal in the same pace.

Both from WENTD. as well as from Implementation Partner, the Project Leaders nominated were good and with the help of support of Top Management they were successful in planning, scheduling and executing all the activities within the Project Timeline. It can be proudly said that, the Project despite of many challenges and hardships is completed as per schedule in exactly 180 days. Refer Timeline Chart of Project for reference in Annexure - III.

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Strategy – 8 : Logical ROI Plan

In order to avoid surprises in Post Implementation Scenario, Return-On-Investment was calculated quite logically, in line with reality of ERP ImplementationWENTD. Has set some objectives while starting the ERP Project. Those objectives have been considered as parameters of evaluation of Success of the Project ROI in the Post Implementation Period.

Strategy – 9 : Selection of Core Team

Right Mix and the selection of the internal implementation team is one of the KEY SUCCESS FACTOR for Smooth effective presentation. The uniqueness of the core team selected was, that the team comprised of mostly key Best Actual users from Supervisor cadre from Respective departments. This core team had members who were hands on, on job and were well supported remotely by the respective HOD’s. While as a convention, the industry follows and selects managerial levels for the implementation which the SBU felt would add one more layer of approval of decisions and implementation and result into associated practical problem resulting into delay in every point implementation.

Strategy – 10 : Team Work

There is no need to mention that “Team Work” is the secret of success for any Project. WENDT. Has “Team Spirit” in its culture. Every employee of Model

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Inc. is motivated by the Team Spirit and Leadership qualities exhibited by their Superiors. It is in the culture and Nature of Model Inc. to be in Team together in achievements as well as Hardship and reach goals set easily and successfully. Hence we did not require putting extra effort to teach our SAP Team what is Team Work and how to interact with other team members.

It can be proudly said that the basic culture of WENDT (INDIA) LIMITED. “Being In Team” spelled success of Implementation Project.

FINDINGS

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Greater scope of cost reduction.

SAP helps the ability to view the status of order.

Customer can view the product by item wise also price wise.

Planning function is improved in its effectiveness and efficiency.

Elimination manual follow up each and every module.

Better customer satisfaction

This system has been developed in a structured manner which helps further

development can be done very easily.

CONCLUSION

WENDT(INDIA) LIMITED being a fore-runner for many “Best Practices” has adapted and introduced another

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“Best Practice” to small & medium organizations that are in need of implementing ERP but hesitating to do so fearing high costs and possible failures. With the implementation methodology and success in maintaining the software in post implementation period, Model Inc. stands worth of an example for successful ERP implementations.

BIBLIOGRAPHY

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The following books and websites have been referred during the preparation of this project

SAP Learners guide

- Publisher: SIEMENS

SAP Table Reference

- http://www.sap-img.com/

SAP ONLINE REFERENCE

- www.sap.com

-www.saphelp.com

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