FACT Project Report

7/27/2019 FACT Project Report

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ABSTRACT

A very important factor for implementing BPR is the enabling role of

Information Technology. Business Process Re-engineering involves changes instructure and in processes within the business environment. The entire

Information Technology plays a major role in the Business Process Re-

engineering as it provides office automation; it allows the business to be

conducted in different locations, provides flexibility in manufacturing, and

permits quicker delivery to customers and support rapid and paper less

transactions. In general it allows an efficient and effective change in the manner

in which work is performed. The topic entitled Study on Effect of

Implementation of ERP at FACT, Udyogamandal using the well knownsoftware SAP developed by SAP AG.

Towards the end of the year 2008-09, FACT,Ltd Has embarked on the

implementation of an enterprise resources planning system-SAP- at the cost of

Rs. 12 cores. The system was implemented to bring better integration of

department, improve the efficiency of working of departments and manpower

productivity in the overall improvement in the Management InformationSystem. In the same year, an integrated Enterprise Resources Planning System

SAP (System Application and Products) tailor made by M/S SAP Consulting

was implemented in FACT by configuring and thereby making it a customized

system which best fits FACTs business process.

The integrated system which is based on the Oracle platform helps to

optimization of business proceeds of the enterprise and provides informationsupport for speed decision making. This ERP software named SAP led stream

lining of many of the important business processes and activities which resulted

in eliminating some of the non value adding activities existed till then and many

of the system functionalities are in the process of developing. SAP in FACT

went live by November 2009.


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SAP in FACT is used for processing business related activities in the

areas of Sales and Distribution (SD), Materials Management (MM), Production

Planning (PP), and Quality Management (QM), Human Resource Management

(HR) including payroll, and also in the field of Financial Accounting (FI). With

the implementation of SAP in FACT, a centralized integrated database systemwas used, which helped in quick processing, accessing and updating of real time

data and thereby aids in timely decision making. This application had made

most of the operations across the functionalities online. Tools such as SAP

promote the horizontal organizational structure and are the vehicles for Re-

engineering the organizational structure in order to adopt the horizontal

operational subsystems of the tools. It can be said that IT does not only supportmanagement, IT changes the organizational structure.


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CHAPTER 1

INTRODUCTION


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INTRODUCTION

DESCRIPTION OF BUSINESS PROCESS RE-ENGINEERING

Business Process Reengineeringinvolves changes in structures and inprocesses within the business environment. The entire technological, human,and organizational dimensions may be changed in BPR. InformationTechnology plays a major role in Business Process Reengineering as it providesoffice automation; it allows the business to be conducted in different locations,

provides flexibility in manufacturing, permits quicker delivery to customers andsupports rapid and paperless transactions. In general it allows an efficient andeffective change in the manner in which work is performed.

Competition is continuously increasing with respect to price, quality andselection, service and promptness of delivery. Removal of barriers, internationalcooperation, technological innovations cause competition to intensify. All thesechanges impose the need for organizational transformation, where the entire

processes and organization climate and organization structure are changed.

Hammer and Champy provide the following definitions:

Reengineeringis the fundamental rethinking and radical redesign ofbusiness processes to achieve dramatic improvements in criticalcontemporary measures of performance such as cost, quality, service andspeed.

Processis a structured, measured set of activities designed to produce aspecified output for a particular customer or market. It implies a strongemphasis on how work is done within an organization. " (Davenport1993).

Creating the new enterprise involves considerable change in virtually

everything to do with people's working lives. Rather than fixing the old, we setout to create the new. There is a fundamental transformation occurring in

business - in terms of its structure, processes, people, and technology.


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The table following presents the changes in that occur in the business under

BPR.

SOURCE: Based on Hammer and Champy, 1993.

In resuming, the whole process of BPR in order to achieve the above mentionedexpected result is based on key step-principles which include redesigning,retooling and reorchestrating.

Objectives of BPR

When applying the BPR management technique to a business organization theImplementation team effort is focused on the following objectives:

Customer focus.Customer service oriented processes aiming toeliminate customer complaints. Speed.Dramatic compression of the time it takes to complete a task for

key business processes. For instance, if process before BPR had anaverage cycle time 5 hours, after BPR the average cycle time should becut down to half an hour.

Compression.Cutting major tasks of cost and capital, throughout thevalue chain. Organizing the processes a company develops transparencythroughout the operational level reducing cost. For instance the decision

to buy a large amount of raw material at 50% discount is connected toeleven cross checkings in the organizational structure from cash flow,

From Conventional To BPR

Functional departments Process TeamsSimple tasks (division of labour) Empowered employees

Controlled people (by management) Multidimensional work

Training of employees Education of employees

Compensation for skill and time spent Compensation for results

Pay raises based on promotions andSeniority

Low pay plus high performance-relatedBonuses

Advancement based on ability Advancement based on performance

Protective organizational culture Productive organizational structureManagers supervise and control Managers coach and advise

Hierarchical organizational structure Horizontal (flat) structure

Executives as scorekeepers Executives as leaders

Separation of duties and functions Cross-functional teams

Linear and sequential processes Parallel process

Mass production Mass customization


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inventory, to production planning and marketing. These checking becomeeasily implemented within the cross-functional teams, optimizing thedecision making and cutting operational cost.

Flexibility. Adaptive processes and structures to changing conditionsand competition. Being closer to the customer the company can developthe awareness mechanisms to rapidly spot the weak points and adapt tonew requirements of the market.

Quality.Obsession with the superior service and value to the customers.The level of quality is always the same controlled and monitored by the

processes, and does not depend mainly on the person, who servicing thecustomer.

Innovation.Leadership through imaginative change providing toorganization Competitive advantage.

Productivity. Improve drastically effectiveness and efficiency. In orderto achieve the above mentioned adjectives the following BPR projectmethodology is proposed.

1.4 Expected Results / Benefits

The expected results for a company that implements business processreengineering are the following:

Reallocation of jobs and processes so as to be combined into fewer, to beexecuted in natural order, simultaneously and by the least possiblenumber of employees.

Reorganization of the company's structure (downsizing) and employeeempowerment.

Jobs and processes become flexible so as to be executed according to theneeds of each case, company's and customer's need's (hybridcentralized/decentralized operations) The above changes will bringreductions of costs in the company, better quality (as far as price,

promptness of delivery and offerings of related services) in the productsand services provided to the customers. BPR shows that there is 'morethan one way to skin a cat' and enables a fresh view without ingrained

prejudice affecting judgement. It can produce huge initial savings where a


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business is struggling and often has the affect of turning around anunprofitable operation. Also, it leaves the business with a fullydocumented model of the operation, which is invaluable if embarking ona quality programme. The expected outcome from a successful BPR

process should the desired one for the favour of the business concerned.

The dramatic changes that are caused involve people's jobs and workingrelationships as it is very often that jobs are eliminated and the entire

process is not as beneficial for all.


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CHAPTER 2

LITERATURE REVIEW


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LITERATURE REVIEW

Business Process Re-engineering using SAP-R/3

"To change and to change for the better are two different things."A German Proverb

"So how has SAP managed to survive and prosper despite the nay-sayers?Several factors have contributed to the longevity of the ERP market leader. First,the ongoing costs and hassles of integration have pushed clients away from a bestof breed market. SAP is furthering its dominance in the core applications ERPmarket (FI, HR, basic manufacturing) through its strides in HR functionality, and itlooks quite likely that SAP will continue to have success in FI, HR, and some basicmanufacturing work across many industries. SAP has also managed to postpone itsday of reckoning by maintaining a global, multi-currency presence and makinggreat strides on industry-specific, targeted functionality."

INTRODUCTION

The concept of reengineering traces its origins back to managementtheories developed as early as the nineteenth century. The purpose ofreengineering is to "make all your processes the best-in-class." Frederick Taylorsuggested in the 1880's that managers use process reengineering methods todiscover the best processes for performing work, and that these processes be

reengineered to optimize productivity. BPR or Business Reengineering echoesthe classical belief that there is one best way to conduct tasks. In Taylor's time,technology did not allow large companies to design processes in a cross-functional or cross-departmental manner. Specialization was the state-of-the-artmethod to improve efficiency given the technology of the time.

This paper is the first step towards an academic project leading to theimplementation of SAP R/3 we intend to do. This literature review is not acritique but reflects on business process reengineering and how that may

be achieved using SAP. We plan to discuss Business Reengineering and theuse of SAP R/3 as a tool for achieving the best results in BusinessReengineering in this paper. This literature review covers a wide range ofarticles that has appeared on various publications and internet related to SAPand business reengineering. The implementation project following thisreview is purely an academic work and there is no commercial objective

driving this project.

When we started working on this project, we were left with not manyoptions regarding the material available for starting an academically inclinedreport. Such a report would require extensive research into the reading materials


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available on the subject addressed and probable interviews with industryexperts. Both seemed rare and inaccessible if at all available in the beginning.So, we started visiting firms in and around Newcastle where BHP IT was and isimplementing SAP R/3 and interviewed some consultants. We even mailed afew questionnaires to a wide range of consultants and customers of SAP. But all

in vain.!!!

The apparent interest for this project team in SAP and ERP in generalwas kindred by the latest developments in IT and the installation of SAP R/3 atthe University. We do acknowledge the remarkable support given to us by Dr.Gregg Gibbon in understanding more of SAP and its "wonderfully complicated"world.

Coming back to the issues addressed here and the materials, we have

found a lot of material in the web and some publications in other media. Weacknowledge and thank all the authors of these publications and the papers thatwe have quoted extensively throughout the review.

The review starts with a peep into the world of Business ProcessReengineering, rephrased throughout this paper and in the forth-coming reportsfrom us as Business Reengineering. It then looks at the importance of IT inBusiness Reengineering and goes on in the next few chapters discussing thethoughts of experts in implementing SAP R/3 in an organization to achieveBusiness Reengineering goals set forth by the company. The paper also reviewsliterature written on the use of ASAP, a powerful tool used in theimplementation of SAP. We have tried our best to express and project ourthoughts about the issues addressed in these papers. It is acknowledged onceagain that we have extensively quoted experts and articles in this effort to makethis review a genuine and effective stepping stone for our further research andimplementation of SAP R/3.

So what is the conclusion that we have reached at the end of this nearlyexhaustive research?.. There are many ERP tools that are already in market and

successful and there are many that are in the workshop that we are amazed atthe rate at which new systems and opinions are revolutionalising ERP.

But then, as this literature review will be a valuable component to thisentire project and since we must work on a hypothesis to reach our goals, wesuggest the notion that as of date, SAP is the best Business Reengineering toolthat IT can offer to any firm, small or large, national or multinational, businessor service, no matter what type of customer the enterprise caters to.


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The hidden difficulties in implementation and management of this toolare discussed in the coming chapters. The next chapter discusses BusinessReengineering.

Business ReengineeringOld Wine in new Bottles?

"Your company is reengineering, or so it says. Is it the real thing or justanother flavour of the month? Guess right, and your career should sky rocket.Guess wrong, and you could end up among the living dead."

Andrea Ovans, "Should you take the reengineering risk?", Datamation,

"In the early 1900's, Henri Fayol originated the concept of reengineering:To conduct the undertaking toward its objectives by seeking to derive optimumadvantage from all available resources. Although the technological resources ofour era have changed, the concept still holds. About the same time, another

business engineer, Lyndall Urwick stated It is not enough to hold peopleaccountable for certain activities, it is also essential to delegate to them thenecessary authority to discharge that responsibility".

Lloyd, Tom, Giant with Feet of Clay/Tom Lloyd Offers a contrasting View of Business

Process Reengineering, Financial Times, December 5, 1994:

We have come to understand that BPR is often used by companies on thebrink of disaster to cut costs and return to profitability. The apparent danger isthat during this process the company may slash its capacity for future growth.To reap lasting benefits, companies must be willing to examine how strategyand reengineering complement each other - by learning to quantify strategy (interms of cost, milestones, timetables); by accepting ownership of the strategythroughout the organization; by assessing the organization's current capabilitiesand processes realistically; and by linking strategy to the budgeting process.Otherwise BPR is only a short-term efficiency exercise.

As the theory goes, with BPR, you start with a clean sheet of paper and redesign

entirely new ways to conduct some process that is important to your company'scustomers. Often BPR results in more responsible IT jobs. And the people who

participate in successful BPR efforts have a much better shot at those jobs,having helped to create them in the first place.

As a response to increased competitive pressure in the global market place,enterprises are looking to improve the way they are running their business. Atleast since Hammer'spublication in 1993, these activities are subsumed underthe term Business Process Reengineering. Business Process Reengineering, as

we have learnt from these papers essentially means to "take a step back"


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and, starting from the business goals, critically analyze and design the

processes needed and the information required to achieve those goals.

In our culture of quick fixes and silver-bullet solutions, many executivesmiscalculate what it takes to reengineer a business successfully. Early

reengineering projects must have been limited in scope with a minimum ofaffected "hard" processes and cross-organizational involvement. But today

people are reengineering multiple business units, departments and divisions thatare involved with "soft" processes like planning, product development andsupport servicing. In reality, this type of reengineering is more difficult becauseof the ambiguous scope and potential power conflicts associated with change.This requires more resources than most organizations and their executives arewilling to commit.

Such reengineering takes time. And the larger the project, the more timeis required. Street-smart business reengineers understand that businessreengineering requires infrastructure changes and cultural transformation inaddition to process, organization, and technology changes. Furthermore, oncethe radical changes are made, they must install continuous process improvement

practices in the business operation to prevent future deterioration and ensurepreventive maintenance.

So far we have only discussed certain issues that are associated withBPR. Now we will define BPR and discuss what BPR actually is. Depending onwho you talk to, there can be many different definitions of reengineering.However, before we can discover what reengineering really is, let us look atwhat it is not

A sure sign that a so-called reengineering project is one in name only is if thepeople in charge confuse business process reengineering with other activitiesthat have nothing to do with it or are basically mutually exclusive to it. Bewareif people in charge are confusing business reengineering with:

o Reengineering software, as the term is used in IT - unless that is donein support of a radical change in the way some business process isconducted.

o Reorganizing people in charge of departments, although that may resultfrom reengineering - that just rearranges the way authority is parceledout, not the way work is done.

o Reengineering the IT department.o Headcount reduction. More often, though, the opposite happens

because reengineering leads to growth.o

Incremental change to an existing process - that is TQM.


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Successful reengineering is not happening most of the time. Even MichaelHammer arguably the world's leading expert on BPR, concedes that it is noteven happening most of the time. Remember, real reengineering is aboutprocesses. Efforts aimed just at organizational charts, headcount

reductions, or making the boss's nephew a big shot are potential minefields.

The most common definition used comes from the book titled "Reengineeringthe Corporation, a Manifesto for Business Revolution", by MIT professorsMichael Hammer and James Champy. They defined BPRas "The Fundamental rethinking andradicalredesign of business processestobring aboutdramaticimprovements in critical, contemporary measures of

performance, such as cost, quality, service, and speed."

"The word reengineering today often implies changes from the most mundane

to the most significant. Not all companies wish to make massive changes totheir business processes. The changes companies require are on a continuumfrom streamlining to reinvention".Nancy H . Bancroft, Henning Seip, Andrea Sprengel,

Implementing SAP R/3, II Ed, p116

The authors define streamlining as making incremental changes to thecurrent processes to increase quality, decrease cycle time, or reduce cost and

reinventing as scrapping the current business process and creating a new one thattruly meets the needs of the company. It is pointed out by the authors that SAP R/3is well suited to efforts anywhere in this continuum, although a company shoulddevelop a high-level design prior to the implementation of any project at the farright of this continuum.

So, how do we achieve business process reengineering? Is there any concrete stepsthat has to be followed to achieve this? Or is this a theme that is usually developed

by the in-house team of each company, which they put into practice by a trial anderror or other methods? Does IT necessarily be there in this undertaking? What

does IT do if it is used as a tool in the process? These were some of the mostimportant questions that we were keen to find answers for in literatures wereviewed. The last two questions are answered in the following chapters.

To answer the first three questions, we took the help of what we term as thebible of business reengineering, Reengineering the Corporation, by MichaelHammer and James Champy.

This book evolves around the performances of American businesses through out

the 19

th

and 20

th

centuries, arguably one of the most successful businesspractices man kind has ever seen. The authors have developed their theories and


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suggestions based on a wide range of approaches to business processreengineering taken up by various companies. We gather that BPR is basicallynot just continuous improvement to the processes, initiated by certain concreterequirements of the company to improve its ongoing business processes.

The figure below illustrates the basic steps in continuous improvement. Here,you begin by documenting what you do today, establish some way to measurethe process based on what your customers want, do the process, measure theresults, and then identify improvement opportunities based on the data youcollected. Then implement process improvements, and measure the performanceof the new process. This loop repeats over and over again, and is calledcontinuous process improvement.

BPR relies on a different school of thought than continuous process

improvement. In the extreme, reengineering assumes the current process isirrelevant. BPR begins with defining the scope and objectives of yourreengineering project, then going through a learning process (with ourcustomers, our employees, our competitors and non-competitors, and with newtechnology). Given this knowledge base, one can create a vision for the futureand design new business processes. Given the definition of the "to be" state, a

plan of action based on the gap between our current processes, technologies andstructures is developed, and where to go. It is then a matter of implementing thesolution. The following picture describes BPR.

3. SAP R/3 a tool for Business Reengineering.

3.1. The Role of IT in Business Reengineering.

SAP R/3 has changed the nature of the reengineering process in twoways: First, it works as an enabler where it provides a system that is integratedand is based on best practices. Second, it supports and drives the reengineering

process, that is, it reaches a level where it becomes more than an enabler andbehaves a driver in this reengineering process. But this does not mean that SAP

R/3 will conduct the business reengineering for you, but it will only trigger itfor the company and the company from then onwards has to take it on boardand make the desired changes happen.

Despite studies that indicate over half of all reengineering efforts areinitiated "because of a perceived information technology opportunity...theactual technological solution is far less important than educating employees

to use IT as both a strategic initiative and as a tool in the reengineering

process."


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According to a roundtable of executives with extensive BPR experience,although information technology plays a central role in reengineering, "the ISorganization in many companies is unable to play." This ineffectualness may bedue to the historic inability of IS to do "anything big quickly", the "breedingout" of risk-taking, or the lack of advanced technology groups.

Senior management may be skeptical about the effectiveness of IT as a wholedue to the "lackluster" performance of many information systems in the pastdecades. In fact, it can be argued that the huge investment in IT has had littleimpact on productivity. "Although 85% of IT spending in the 1980's was inthe service sector, productivity in this sector increased only 1.9%, while

productivity in the manufacturing sector rose 44%."

Based on this record, it is not unreasonable to view IT as a disabler, which is

never used to "challenge why things are done in a company, but instead justifythe way they are done." Systems in the service sector have been used togenerate more unneeded reports, speed up superfluous work steps, generateunnecessary information, encourage shoddy thinking and misdirect attention tospurious details.

Based on the above findings, some insist that when developing a reengineeringstrategy, the best companies "ignore information technology." Only after thestrategy is complete should innovative IT applications be benchmarked, sinceinnovative applications often "stem from a combination of breakthrough ideasand from modifying several best practices."

The "democratization" of IT from the mainframe to the PC is "breaking

down the communications barriers between corporate functions, suppliers,

and even customers." This is sometimes called the "disruptive" power of IT.This ability for information to be at many places at the same time -- whichallows companies to reap the benefits of both centralization and decentralization-- is at the heart of BPR.

We realize the slowness and the huge cost implications of using IT as a majortool for achieving the goals of business reengineering. But today, forcompanies, where information is the heart of anything and everything that theyneed to get to the customer, both internal and external, we propose a theory thatIT is and will remain the most important tool that any organization can andshould use to achieve business reengineering goals.

3.2. Integrated solutions in Business Reengineering with ERP.

Enterprise Resource Planning is a term used to describe business software thatis:


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o Multifunctional in scope - it tracks financial results, procurement, sales,and manufacturing.

o Integrated in nature - when a piece of data is entered, regarding one ofthe functions, data regarding the other functions is changed.

o Modular in structure - it can be used in a way that is expansive ornarrow as you choose.

An ERP software solution is appropriate when an organization is seeking thebenefits of integration and contemporary best practices in its informationsystem, looking for a full range of functionality from the back office throughoperations and sales, and seeking to limit its implementation and ongoingsupport cost.

Integrated solutions are large: they cover multiple business applications. More

often than not, they require change in the underlying business processes in orderto be fully successful. Some people view them as a cost, often as a waste ofmoney; others view them as an investment as necessary in order to compete in arapidly changing business environment.

Because some software solutions are large, they are complex to implement.They are complex not merely because of the size - the number of users who willuse the system - but more of scope - the fact that those users cut acrossnumerous functions within the company.

Until off-the-shelf ERP solution software was developed, the only way toachieve the functionality we today find in SAP R/3 and many other ERPsolutions was to custom-design it. Because many in-house IT groups oftendesigned for system elegance rather than ease of use, the disconnect betweenthe business managers and the IT group continued.

It has really been only in the past couple of years, with the advent of R/3technology, that companies have truly been able to use the off-the-shelfinformation systems as enabling technology in a business reengineering effort.

Corporate interest in application-integration software is high, according to newmarket research, and vendors continue to enhance their products.

If you haven't asked yourself this question, you may be in for trouble: What doyou want from your ERP software package implementation? According to ouropinion, otherwise sophisticated executives are not asking this fundamentalquestion often enough. Instead many adopt ERP these days because they"know" it's good for them. An old, beat-up legacy system is proving harder tomaintain, so why not just replace it with a 21st Century system that, soon, noself-respecting company will be without? Just do it!


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According to recent surveys, almost two-thirds of all ERP implementations failto live up to expectations. If this was true for the large companies that firstadopted ERP, it could prove even worse for the many midsize companies thatare now beginning to install ERP. The new tools and pre-configured solutionsthat vendors are offering for quick implementation by midsize customers are

highly useful, but come without the customized optimization features that addmuch of the value promised by ERP. Unless you identify your company'sspecific operational needs and adopt a clear plan to extract them from the one-size-fits-all package, you risk adding just another layer of cost.

To achieve reality-based progress, you should ask some of the followingquestions:

o What are your key performance measures and how are you performing?o What's the transition plan for moving from legacy to ERP?o Once you've got the basic ERP system up and running, how can you

enhance it?

The key to deriving value from ERP investments is understanding the role ofERP packaged software, and using this new tool to drive business change,rigorously measuring performance, and following up with aggressive action.

Within the realm of single-vendor ERP solutions, SAP software has a numberof distinguishing features. It has the broadest and deepest available

functionality. Most organizations use only 20% of R/3's available functionality.R/3 offers full integration of manufacturing, customer-facing, and back officefunctions in real time and in a seamless way. It also is a truly global product.

3.3. What is SAP R/3?..The Pandora's Box?

All the information about SAP given here are taken from their web pageand we thankfully acknowledge that SAP, the worlds largest enterprisesoftware company. They provide companies of all sizes with business solutions

that deliver a better return on information. SAP products and services integratean organization from financials and human resources to manufacturing and salesand distribution. This integration enables companies to optimize supply chains,strengthen customer relationships, and make more accurate managementdecisions. Founded in 1972, SAP today leverages a global network of people,

processes and products to assure customer success.

In 1972, in Mannheim, Germany, five engineers had an idea. They wanted toproduce and market standard software for integrated business solutions. So, they

started a little company (with a big name) called "Systemanalyse andProgrammentwicklung." Since then, that company has become SAP (Systems,


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Applications, and Products in Data Processing). And, it has been dedicated toproviding SAP users with A Better Return On Information. From its beginning,SAP approached business application software from a business viewpoint. Bycollaborating with business and IT executives, and partners worldwide, SAPdeveloped a unique understanding of the challenges faced in implementing

technology solutions for business users.

They developed software that could help companies of all sizes link theirbusiness processes, tying together disparate business functions, and helping thewhole enterprise run more smoothly. From the beginning, the software wasdeveloped to work on a multilingual/multinational level, gaining it quickacceptance in countries all over the world. And, because created through theSAP Business Framework, it evolved from mainframe to business applicationsoftware solutions.

The innovative thinking of SAP soon made it the top software vendor inGermany. Today, SAP is the largest supplier of business application software inthe world the worlds fourth-largest independent software supplier, overall. In

preliminary results for 1997, SAP sales had increased 62% to DM 6.0 billion.SAP employs over 17,000 people in more than 50 countries who are dedicatedto providing high-level customer support and services.

SAP's industry-focused strategy with close customer alliances has been veryproductive for both SAP and Aerospace & Defense customers. It has enabledAerospace and Defense customers to work with SAP in defining industrycritical requirements and influencing forthcoming industry-specificfunctionality.

The Aerospace & Defence industry-specific functionality integrated with SAPcore components provide a strategic business infrastructure, supportingAerospace & Defense business processes and best business practices. Together,they enable SAP Aerospace & Defense customers to reap high benefits andreturn on investment.

Even though we are not going to use this Industry specific application fromSAP, we think it is important for the reader to know the wide range of productsSAP offer.

3.4. The Eye of the Storm - when to go for SAP.

There are a few reasons to go for SAP. It is important to look at these reasonsand ask oneself if they are really the reasons for undergoing the time, effort, and

expense that will take to properly undertake the installation of SAP.


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The Good reasons:

o You are engaging in a business reengineering effort and have heardof that one can "kill two birds with one stone", by installing SAPright now.

o It is part of a well worked out IT strategy. Your company has anaging IT structure, runaway selling, general and administrativecosts.

The Bad Reasons:

o You think this will be a quicker, easier, and less costly fix to your"Year 2000" problem than upgrading current systems.

o You think you can get a jump on your competitors.o

Your competitors have SAP, so you too should have it.o You can not get fired for it.

3.5. The Success Stories.

Central Michigan University

Central Michigan University is a public university in Mount Pleasant, Michigan

in the US. More than 16,600 students attend classes at the main campus, andanother 12,000 attend classes at satellite sites. CMU is known for providing aquality, student-focused education.

CMU needed a new system that would ensure year 2000 compliance and thatwould move it from a transaction processing environment to an informationmanagement environment. The university also intends to take advantage of best

practices and processes that improve efficiency, such as distributed transactionprocessing and increased electronic processing. CMU expects that the R/3System will help it advance into areas like employee self service applications,

better management reporting, and possibly workflow.

Project Details:

Duration: 9 months Implementer : SAP America Scope: Financials (FI, FM and CO), Materials Management (MM),

Human Resources (PA, PD: Benefits, Time and Payroll) . Team size: 6 core team members for FI and 6 core team members for HR,

plus shared clerical and training support


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Rollout sites: On-campus data entry and reports; Off-campus reporting at14 sites.

End-users: Approx. 650 total (350 active users) Budget: On time and within budget ($4 million incl. software, hardware,

consulting, and related expenses)

Subaru-Isuzu Automotive Inc.

Subaru-Isuzu Automotive Inc. is a joint venture of Fuji Heavy Industries Ltd.and Isuzu Motors Limited. Located in Lafayette, Indiana in the United States.Subaru-Isuzu was established in 1987 and currently employs approximately3,000 associates. The $3 billion company produces the Subaru Legacy Sedan,Subaru Legacy Station Wagon, Subaru Outback, Isuzu Rodeo, and IsuzuAmigo.

Subaru-Isuzus legacy financial systems were neither integrated nor all year2000 compliant. Installing the R/3 System was the first opportunity for Subaru-Isuzu to actively capture and manage costs in a real-time, integrated system.Andersen Consulting was chosen due to its extensive experience implementingR/3 and its past successes with rapid implementation.

Project Details:

Duration: 4 months Implementor: Andersen Consulting, Andersen Consulting Enterprise

Business Solution Center. Scope: Financials (FI and CO), Materials Management (MM), Funds

Management (FM) . Team size: 9 consultants, 8 client full time and 4 part-time members . Roll-out sites: 1 site only-Lafayette, Indiana. End-users: 120 occasional, 60 heavy users.

Crosfield.

Crosfield B.V. in Eijsden near Maastricht in the Netherlands was founded in1983 and is part of the international Crosfield Group headquartered inWarrington, UK. The subsidiary in Eijsden is the largest production site forsilicate and zeolite products. The company generates approximately $80 millionrevenue each year and employs 185 people. The group has additional

production sites in the UK, Italy, USA, Brazil, and Indonesia.

Crosfields previous information system lacked integration and failed toeffectively support the internal supply chain. The chemicals business is

competitive and price-sensitive, so Crosfield needed an information system that


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provides integrated pricing information. R/3 was the solution Crosfield optedfor to support its global business and improve the quality of managementinformation. The subsidiary in Eijsden was chosen as the groups R/3 pilot site.The R/3 roll-out is still in progress.

Project Details:

Duration: Less than 6 months. Implementer: SAP Netherlands. Scope: Financials (FI and CO), Materials Management (MM), Sales and

Distribution (SD), Manufacturing (PP). Team size: 6 full-time plus ad-hoc members. Roll-out sites: 1st phase: Netherlands, 2nd phase: UK and USA. End-users: 60 users. Budget: Within budget; $0.6 million.

3.6. Issues and Tools for Implementation of SAP

Before going into the real aspects of what tools are available for SAPimplementation, we would like to take a look at the Logistics Module that weare concerned with.

This group of modules provides support for inbound and outbound logistics aswell as a variety of different manufacturing environments. There are a numberof bolt-on software packages that add functionality, such as CAD and mobiledata entry. Logistics includes operations from requisition of materials until thegoods are delivered and the bill is sent. The following are the key areas in thismodule:

MM - materials management - probably the largest module in the entireSAP system.

PP - production planning. PM - plant maintenance. QM - quality management. SD - sales and distribution. SM - service management.

We are still studying the functionality that are embedded within these sectionsand will be discussed and assignments will be done on this module at a laterstage.


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Now to discuss the tool that we will be using at the Williamtown Airforce baseto implement SAP R/3.

There are certain myths about SAP implementation.

The company can hire all the SAP implementation resources necessary. The entire implementation can be outsourced and not take the staff's time. SAP R/3 is just another systems project, so the IT people can do it

themselves. SAP R/3 can be installed in 100 days, even in a $20 billion company.

Accelerated SAP (ASAP) is SAP AG's rapid implementation methodologyspecifically designed for enterprises that establish tight time constraints for theirR/3 implementation - resulting from the inherent pressures of an evolving

business or from the need to become Year 2000-compliant.

First it is designed for simple implementations by companies that are lesscomplex and smaller in size, global companies that have turned to SAP in the

past. It works best for a business or a business unit that generates betweenUSD200 million and USD2 billion revenue as a single country or regionalentity.

The value proposition of Accelerated SAP - faster results, more certainoutcomes - has proved to be compelling. Recognizing the potential of the

methodology-based approach, other major ERP suppliers have responded withsimilar initiatives intended to streamline and standardize their implementation

process.

But SAP was the first ERP supplier to systematically attack the long-and-uncertain implementation timeframe problem. There are six major phases inASAP methodology.

o Project preparation.o

The business blueprint - outline of the business.o Simulation - designing and configuring SAP.o Validation.o Final Preparation and Going Live.o Support.

Perhaps the greatest single accomplishment of SAP has been the successfuldevelopment of the ASAP implementation methodology, and the resultingsuccess in the mid-market


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CONCLUSION

The title of this report suggests that we should be looking at the managementmantra business process reengineering and should link it to the use of SAP toachieve the BPR goals. We have tried to discuss and give you an insight into the

thoughts of certain industry experts in this regard.

We have also tried to project what we feel about the issues of BPR and how thismay be achieved by SAP. But, certainly, this is not a critique of any body'swork and hence we have tried only to know what actually BPR means and notcritique BPR. As a practice, it is seen with the installations of SAP that most ofthem used this tool to achieve one or the other BPR goals. Some on a short term

basis, and mostly on a long term basis, as this ERP tool is one of the most costlyapplications available in the market.

This literature review is developed with a view to help us in the project that weare undertaking and we believe that we have gathered certain very importantfacts about SAP and BPR during the research for this review. They are given atthe end of this chapter.

We came across an article which reflected on one of the SAPHIRE conferencesthat was held during this year. It seems like instead of the coffee mugs, tokensand other stuff that are given to CEOs to impress and make them take on boardthe costly ERP tool like SAP, they were offered Porsche Boxsters, VW Beetlesand Harley-Davidson motorcycles!! The excess of it all inspired a few thoughtsin our minds.

We do not know how long all this will go on. The conventional wisdom is thatERP sales will decline substantially after 2000, when organizations are nolonger trying to solve their Y2K problems with a fast (right!) ERP installation.

No, ERPs are not purely a result of millennial craziness. For vendor and usercompanies, they are not a flash in the '90s pan, but rather a long-term

phenomenon. However, no matter how depressing it may seem, "going live"with an installation is just the beginning (but presumably still better than "goingdead").


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We therefore reach the following conclusions.

o ERP tools are going to be the sphere head for the future ofBusiness Reengineering.

o BPR as seen and debated by a wide range of management expertsidentify the key "enabler" role of IT in reaching the goals of BPR.

o SAP and its rapid implementation methodology is going to keep itin the Global leaders position for at least till the end of the nextmillennium, provided Microsoft comes up with a similar product.!!

o If mismanaged, the entire implementation of SAP, whether it isdone by the best of SAP consultant or by in-house teams, will digthe grave for the enterprise.

We take this opportunity once again to thank all the authors and publishers of

materials on SAP and Business Reengineering. We once again acknowledgethat we have drawn extensively from many authors and their publications and ifanyone feels that they should be removed from this paper, we would me morethan happy to comply.


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CHAPTER

INDUSTRIAL PROFILE


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INDUSTRIAL PROFILE

India Fertilizer Industry

India fertilizer industry is one industry with immense scopes in the future.

India is primarily agriculture oriented country and its economy is highly

dependent on the agrarian produce.

The majority of the populace of India lives in rural areas and the

foremost occupation in the villages is agriculture. Developments pertaining to

different industries are being made on a massive scale to change the country's

economy from an agrarian one to a industrial one. It is extremely important for

the fertilizer industry India to have development in terms of technologically

advanced manufacturing process and innovative new-age products. The firstfertilizer manufacturing unit in India was set up in the year 1906 at Ranipat in

Chennai.

In the present scenario, there are more than 57 large and 64 medium and small

fertilizer production units under the India fertilizer industry. The main products

manufactured by the fertilizer industry in India are phosphate based fertilizers,

nitrogenous fertilizers, and complex fertilizers. The fertilizer industry in India

with its rapid growth is all set to make a long lasting global impression.

2.1.1. Some of the public sector companies in India fertilizer industry:

National Fertilizers Limited Fertilizers & Chemicals Travancore Limited Rashtriya Chemicals & Fertilizers Limited Madras Fertilizers Limited Steel Authority Of India Limited Neyveli Lignite Corporation Limited Paradeep Phosphates Limited Pyrites, Phosphates & Chemicals Limited Hindustan Fertilizer Corporation Limited


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2.1.2. Some of the private sector companies in India fertilizer industry:

Chambal Fertilizers & Chemicals Limited Ajay Farm-Chem Private Limited

Balaji Fertilizers Private Limited Deepak Fertilizer and Petrochemicals Corporation Limited Bharat Fertilizer Industries Limited Coromandal Fertilizers Limited Gujarat Narmada Valley Fertilizer Co. Limited Meerut Agro Chemicals Private Limited Duncans Industries Limited Karnataka Agro Chemicals Godavari Fertilizers & Chemical Limited Shri Amba Fertilizers (I) Private Limited Tuticorin Alkali Chemi & Fertilizer Limited Gujarat State Fertilizers & Chemicals Limited Indo-Gulf Fertilizers & Chemicals Corporation Limited Southern PetroChemical Industries Corporation Limited Maharashtra Agro Industrial Development Corporation Zuari Industries Limited- Fertilizer Limited Mangalore Chemicals & Fertilizers Limited

2.2. WORLD SENERIO

Fertilizer (orfertiliser) is any organic or inorganic material of natural or

synthetic origin (other than liming materials) that is added to a soil to supply

one or more plant nutrients essential to the growth of plants. A recent

assessment found that about 40 to 60% of crop yields are attributable to

commercial fertilizer use. They are essential for high-yield harvest: European

fertilizer market is expected to grow to 15.3 billion by 2018.

Mined inorganic fertilizers have been used for many centuries, whereas

chemically synthesized inorganic fertilizers were only widely developed during

the industrial revolution. Increased understanding and use of fertilizers were

important parts of the pre-industrial British Agricultural Revolution and the

industrialGreen Revolutionof the 20th century.
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Inorganic fertilizer use has also significantly supported global population

growth it has been estimated that almost half the people on the Earth arecurrently fed as a result of synthetic nitrogen fertilizer use.

Fertilizers typically provide, in varyingproportions:

six macronutrients:nitrogen(N),phosphorus(P),potassium(K),calcium(Ca),magnesium(Mg), andsulphur(S);

seven micronutrients: boron (B), chlorine (Cl), copper (Cu), iron (Fe),manganese(Mn),molybdenum(Mo), andzinc(Zn).

The macronutrients are consumed in larger quantities and are present in

plant issue in quantities from 0.15% to 6.0% on a dry matter (0% moisture)

basis (DM). Micronutrients are consumed in smaller quantities and are presentin plant tissue on the order of parts per million (ppm), ranging from 0.15 to 400

ppm DM, or less than 0.04% DM.

Only three other macronutrients are required by all plants: carbon,

hydrogen, and oxygen. These nutrients are supplied by water and carbon

dioxide.

The nitrogen-rich fertilizerammonium nitrateis also used as anoxidizing

agent in improvised explosive devices, sometimes called fertilizer bombs,

leading to sale regulations

Fertilizers are broadly divided into organic fertilizers (composed of

organic plant or animal matter), orinorganicor commercial fertilizers. Plants

can only absorb their required nutrients if they are present in easily dissolved

chemical compounds. Both organic and inorganic fertilizers provide the same

needed chemical compounds. Organic fertilizers provided other macro and

micro plant nutrients and are released as the organic matter decays--this may

take months or years. Organic fertilizers nearly always have much lower

concentrations of plant nutrients and have the usual problems of economical

collection, treatment, transportation and distribution.

Inorganic fertilizers nearly always are readily dissolved and unless added

have few other macro and micro plant nutrients. Nearly all nitrogen that plants

use are in the form of NH3 or NO3 compounds. The usable phosphorus

compounds are usually in the form of phosphoric acid (H3PO4) and the
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potassium (K) is typically in the form of potassium chloride (KCl). In organic

fertilizers nitrogen, phosphorus and potassium compounds are released from the

complex organic compounds as the animal or plant decays. In commercial

fertilizers the same required compounds are available in easily dissolved

compounds that require no decay--they can be used almost immediately afterwater is applied. Inorganic fertilizers are usually much more concentrated with

up to 64% (18-46-0) of their weight being a given plant nutrient, compared to

organic fertilizers that typically often have only 0.4% or less of a their weight a

givenplant nutrient.

Nitrogen fertilizers are often made using the Haber-Bosch process

(invented about 1915) which uses natural gas (CH4+) for the hydrogen and

nitrogen gas (N2) from the air at an elevated temperature and pressure in the

presence of a catalyst to form ammonia (NH3) as the end product. This

ammonia is used as afeedstockfor other nitrogen fertilizers, such asanhydrous

ammonium nitrate (NH4NO3) and urea (CO(NH2)2). These concentrated

products may be diluted with water to form a concentrated liquid fertilizer (e.g.

UAN). Deposits of sodium nitrate (NaNO3) (saltpeter) are also found the

Atacama desert in Chile and was one of the original (1830) nitrogen rich

inorganic fertilizers used. It is still mined for fertilizer.

In the Nitrophosphate process or Odda Process (invented in 1927),

phosphate rockwith up to a 20% phosphorus (P) content is dissolved withnitric

acid (HNO3) to produce a mixture ofphosphoric acid (H3PO4) and calcium

nitrate(Ca(NO3)2). This can be combined with a potassium fertilizer to produce

a compound fertilizer with all three N:P:K: plant nutrients in easily dissolved

form.

Phosphate rockcan also be processed into water-soluble phosphate (P2O5)

with the addition of sulfuric acid (H2SO4) to make the phosphoric acid inphosphate fertilizers. Phosphate can also be reduced in an electric furnace to

make high purity phosphorus; however, this is more expensive than the acid

process.

Potash can be used to make potassium (K) fertilizers. All commercial

potash deposits come originally from marine deposits and are often buried deep

in the earth. Potash ores are typically rich in potassium chloride (KCl) and

sodium chloride (NaCl) and are obtained by conventional shaft mining with the
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extracted ore ground into a powder. For deep potash deposits hot water is

injected into the potash which is dissolved and then pumped to the surface

where it is concentrated by solar induced evaporation. Aminereagents are then

added to either the mined or evaporated solutions. The amine coats the KCl but

not NaCl. Air bubbles cling to the amine + KCl and float it to the surface whilethe NaCl and clay sink to the bottom. The surface is skimmed for the amine +

KCl which is then dried and packaged for use as a K rich fertilizer--KCl

dissolves readily in water and is available quickly forplant nutrition.

Compound fertilizers often combine N, P and K fertilizers into easily

dissolved pellets. The N:P:K ratios quoted on fertilizers give the weight percent

of the fertilizer in nitrogen (N), phosphate (P2O5) and potash (K2O equivalent)

The use of commercial inorganic fertilizers has increased steadily in the

last 50 years, rising almost 20-fold to the current rate of 100 million tonnes of

nitrogen per year. Without commercial fertilizers it is estimated that about one-

third of the food produced now could not be produced. The use of phosphate

fertilizers has also increased from 9 million tonnes per year in 1960 to 40

million tonnes per year in 2000. A maize crop yielding 69 tonnes of grain perhectare requires 3150 kg ofphosphatefertilizer to be applied, soybean requires2025 kg per hectare. Yara International is the world's largest producer ofnitrogen based fertilizers

TECHNOLOGY ADOPTION IN FACT

FACT computerized its activities since 1965 to meet the growing need formanagement information, engineering and commercial applications. The majormission and function of the Computer Service Centre is to operate as a centralagency for providing computer services to various divisions of FACT to aid in

management of information. The centre is equipped with servers in all itsdivisions connected by FACT NET and Intranet network. FACT had introducedthe ERP system in 2009.

The main objective of this Computer Service Centre is the following:

Setup and maintain corporate network of computers called FACT NET.

Process data and prepare relevant information for various levels of

management for appropriate and speedy managerial decisions
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Identify and develop prospective areas for computerization

To augment production by reducing breakdowns of plants and

equipments through integrated computerized maintenance and materialmanagement system.

Cost reduction through standard costing and budgetary controlmonitoring through computerized system

Financial disciplines by applying various modern techniques throughcomputerized system

Prompt and efficient service for meeting employees informationrequirements, payment of wages, settlement of claims etc.

Optimum solutions to engineering designs and use of techniques such asCAD, CAE etc. thereby enhancing professional competency and aiding

competitive quotes.

To have a marketing management system for invoicing, credit control,marketing analysis etc

To link the computer systems in FACT with the National Network forcapturing environmental data and information required by the company.


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CHAPTER 4

COMPANY PROFILE


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COMPANY PROFILE

Industry Structure and Development

The Fertilizers and Chemicals Travancore Limited (FACT) was incorporated in

1943. In 1947 FACT started production of Ammonium Sulphate with aninstalled capacity of 10,000 MT/annum at Udyogamandal, near Cochin. In the

year 1960, FACT became a Kerela state PSU and towards the end of 1962,

Government of India became the major shareholder. From a modest beginning,

FACT has grown and diversified into a multi-division/ multi-functional

Organization with basic interest in manufacture and Marketing of Fertilizers and

Petrochemicals, Engineering Consultancy and design, Fabrication and Erection

of Industrial Equipments. FACTs mission is to be a significant player in

Fertilizers, Petrochemicals and other business such as Engineering andTechnology Services.

As mentioned earlier FACT became a Kerela State Public sector Enterprise on

15th August 1960 and 21st November1962, the Government of India became a

major share holder. The 2nd stage of expansion of FACT was completed in

1962. The 3rd stage of expansion was completed in 1965 with setting up of a

new Ammonium Sulphate Plant. FACT Engineering and Design Organization

was set up on 24th July 1965 to meet the emerging need for indigenous

capabilities in vital areas of Engineering, Design and Consultancy for

establishing large and medium Fertilizer Plants. FEDO has since then

diversified into chemicals, Petro-Chemicals, Hydrometallurgy, Pharmaceutical

and other areas. FEDO offers services from project identification and evaluation

stage to plant design, procurement, project management, site supervision and

commissioning of new plants as well as revamping and modernization of old

plant.

The FACT Ltd has expanded and diversified over the year and has became oneof the major producers of Fertilizers and allied Chemicals in India.


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VISION

Growth and Diversification are most essential to long term survival and FACT

today is keenly pursuing new opportunities in the areas of:

a) Software Development for process industry.b) Consultancy for infrastructure projects.

FACTs vision is to emerge as a leader in business of agricultural inputs,industrial intermediary and engineering consultancy and construction of

industrial and infrastructure facilities.

MISSION

FACTs mission is to be a globally competitive producer and supplier ofagricultural inputs and extend world class engineering and technology service

with maximum share holders value.

The above mission statement means:

a) FACT aims to provide best products and services.b) Globally competitive supplier means the product and services offered by

FACT will match with the quality and price offered by competinginternational firms.

c) World class services means expertise gained and required to developtechnological capabilities required for design, installation, operation and

maintenance in the chemical process industry and infrastructure sector.

d) Maximum share holder value would mean that the company would operateprofitably and generate enough resources for growth. To sustain such

growth, the company would identify profitable opportunities and diversify.

FACTs objectives are:

a) To produce and market Fertilizers & Caprolactam and other productsefficiently and economically, besides achieving a reasonable and

consistent growth.

b) To effectively manage the assets and resources of company to ensure areasonable return on investment.

c) To focus on reduction and technology up gradation in order to becomecompetitive in its line of business.


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d) To constantly innovative and develop new products and services tosatisfy customer requirements.

e) To invest in new business lines, where profit can be made on asustainable basis over the long term.

f) To provide services to the framing community by organizing technicaltraining, soil testing and other productivity improvement services inagriculture.

FACT DIVISIONS

The head office and registered office of FACT Ltd is situated at Ealoor,

Udyogamandal. It has 4 divisions and 3 subdivisions.

DIVISIONSA)Manufacturing DivisionB)Marketing DivisionC)FACT Engineering and Design Organization(FEDO)D)FACT Engineering Works(FEW)SUBDIVISIONA)Research and DivisionB)Computer CentreC)Management Development Centre

Computer Services Centre at FACT

FACT is a pioneer in the industry for adopting information technology and hasthe unique distinction of having implemented IT enabled enterprise businesssystems way back in 1965 to meet the growing need for managementinformation, engineering and commercial applications. IT systems have sincethen been kept constantly upgraded so as to keep pace with the rapid

technological advancements.

The latest in the chain of enhancements is the FACT>>FORWARD enterpriseresource planning system (ERP) implemented in November, 2009 in-house coregroup along with implementation partners M/s SAP, the world leader in ERPsegment.

FACT Computer Services Centre (CSC), the in-house IT department performeda key role in implementation of FACT>>FORWARD system including

feasibility analysis, securing management approval, selecting/managing coregroup members from different functional groups, coordinating project


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management during project preparation, blueprinting, realization, finalpreparation and go-live.

CSC is equipped with around 25 numbers of centrally located virtualizedservers for hosting SAP system and the corporate IT network, FACTNET,

which encompasses around 600 connected PCs, a Citrix based virtual privatenetwork (VPN) that connects via Internet around 150 sales points spread acrossthe 4 southern states, 2 Mbps leased line from CSC to FACT Cochin Division, 4Mbps Internet leased line for hosting Citrix VPN, 64 Kbps leased lines fromCSC to FACT Engineering Works & FACT offices in Willington Island andaround 15 Km of optical fibre network that links FACT offices inUdyogamandal complex & nearby locations.

Functional modules of ERP system including Finance, Costing, MaterialsManagement, Sales & Distribution, Production Planning, Quality Management,

Plant Maintenance, Project Systems, Human Capital Management, andSupplierRelationship Management are maintained by the in-house Centre ofExcellence consisting of members from functional groups. Technical modulesincluding Enterprise Portal, Business Intelligence and ABAP based customsoftware are maintained by the in-house IT team.

Besides functioning as a central hub for IT support in the organisation, CSC hasan important role to play in ensuring compliance to enterprise wide standard,

business rules and best practices, keep management abreast of fast pacedtechnological changes and recommending timely enhancements of IT resources

in the enterprise.CSC is geared up to augment its infrastructure with state-of-the-art data centre,disaster recovery site, optic fibre network for FACT Cochin Division, accesscontrol system for sensitive areas, e-kiosks for extending enterprise portal toemployee work-spots and to explore IT enabled sectors such as mobilecomputing, e-commerce/e-payment/payment gateway, B2B systems and so on.

ORGANIZATION CHART OFF COMPUTER SERVICE DEPARTMENT

General Manager

Deputy General Manager

Manager

System Administrator

Staffs


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CHAPTER 5

RESEARCH METHODOLOGY


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RESEARCH METHODOLOGY

PRIMARY DATA

The data was collected through questionnaire method. Certain respondents from

each section where interviewed randomly for their exclusive opinions on the

concerned area of my study.

SECONDARY DATA

E-Books, websites, FACTs Annual Reports have been a source for collectingsecondary data pertaining to the topics right through the research.

RESEARCH PERIOD

Period for conducting research was for 2months, from the month June to July

1013.

SAMPLING METHOD

An explorative research design has been followed for conducting the research,

where the thoughts ideas and perceptions where taken into consideration to

know more about the real side prevailing within the organization for the topics

concerned. The sampling method used was Stratified Random sampling, wherethe samples have been selected randomly from 5 different strata like PP, MM,

FI, SD, and HR.

SAMPLE SIZE

The sample size was 50 employees, 15 each from Materials Management

Department and Production Planning Department and 10 from FI and 5each

from SD/Marketing and HR.

TOOLS USED

SPSS 16.0 was used as the tool for the purpose of data analysis, which is a

statistical package developed by IBM for analysing data obtained from survey.


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CHAPTER 6

DATA ANALYSIS AND INTERPRETATION


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1) Is ERP-FACT Forward easy to use?Responses No: respondents Percentage

Disagree 00

Somewhat disagree 2 10

Neutral 6 30

Somewhat agree 7 35

Strongly Agree 5 25

Total 20 100

Interpretation:About 25% of employees Strongly Agreed, 35% SomewhatAgreed, 30% said Neutral and 10% Somewhat Disagreed that ERP-FACTForward system is easy to use.

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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2) Getting started with SAP is Easy?Response Frequencies Percentage

Disagree 0 0

Somewhat disagree 1 5

Neutral 5 25

Somewhat agree 8 40

Strongly Agree 6 30

Total 20 100

Interpretation:About 30% of employees Strongly Agreed, 40% SomewhatAgreed, 25% said Neutral and 5% Somewhat Disagreed that SAP is easyto use.

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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3) An ERP System has increased the productivity and efficiency of theemployees using it.

Responses No: respondents PercentageDisagree 0 0

Some what disegree 1 6.25

Neutral 4 25

Some what agree 9 56.25

Strongly Agree 2 12.5

Total 16 100

Interpretation:About 12.5% of employees Strongly Agreed, 56.25%Somewhat Agreed, 25% said Neutral and 6.25% Somewhat Disagreedthat ERP System has increased the productivity and efficiency of the employeesusing it.

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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4) The ERP help you in faster completion of your daily routine tasksResponse No: of Response Percentage

Disagree 0 0Some what disegree 0 0

Neutral 7 35

Some what agree 9 45

Strongly Agree 4 20

Total 20 100

Interpretation:About 20% of employees Strongly Agreed, 45%Somewhat Agreed, 35% said Neutral that ERP help you in fastercompletion of your daily routine tasks

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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5) The report generation is much simpler using the ERPResponse No: of Response Percentage

Disagree 0 0

Some what disegree 0 0

Neutral 3 15


Strongly Agree 11 55

Total 20 100

Interpretation:About 55% of employees Strongly Agreed,30% SomewhatAgreed, 15% said Neutral that The report generation is much simpler usingthe ERP

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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6) The information in the ERP is detailed, structured and accurate.Response No: of Response Percentage


Neutral 4 20


Strongly Agree 11 55

Total 20 100

Interpretation:About 55% of employees Strongly Agreed, 25% SomewhatAgreed, 20% said Neutral that The information in the ERP is detailed,structured and accurate.

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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7) Is the modules of SAP useful for your DepartmentResponse No: Of Response Percentage


Neutral 5 25


Strongly Agree 6 30

Total 20 100

Interpretation: About 30% of employees Strongly Agreed,45% SomewhatAgreed, 25% said Neutral that The Modules of SAP are useful for theredepartment.

Disagree

Some what disegree

Neutral

Some what agree

Strongly Agree


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8) Do you feel that ERP system have helped in automating the tasksActivities and made the inventory management more efficient and effective?

Response No: Of Response PercentageStrongly Agree 3 15

Agree 14 70

Disagree 3 15

Strongly Disagree 0 0

Total 20 100

Interpretation:About 15% of employees Strongly Agreed,70% Agreed,15% said Disagree that ERP system have helped in automating the tasksActivities and made the inventory management more efficient and effective

Strongly Agree

Agree

Disagree

Strongly Disagree


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9) Can ERP help in better decision making as a user?Response No: Of Response Percentage

Yes 20 100

No 0 0

Total 20 100

Interpretation: About 100% employees agrees that ERP helps in betterdecision making.

Yes

No


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10) DOES THE ERP HELP YOU IN FASTER COMPLETION OF YOURDAILY ROUTINE

Response No: Of Response Percentage

Yes 20 100

No 0 0

Total 20 100

Interpretation: About 100% employees say that ERP helps you in faster

completion of your daily routines.

Yes

No


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11) Do you feel that implementation of SAP the interrelation between variousdepartment and person have favourable affected?

Response No: Of Response PercentageStrongly Agree 5 25

Agree 12 60

Disagree 3 15


Total 20 100

Interpretation: About 25% of employees Strongly Agreed,60% Agreed,15% said Disagree that they feel implementation of SAP the interrelation

between various department and person have favourable affected.

Strongly Agree

Agree

Disagree

Strongly Disagree


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12) Do you feel that implementation of SAP affected in a better way?Response No: Of Response Percentage

Yes 17 85No 3 15

Total 20 100

Interpretation: About 85% of employees feel that the implementation of SAPaffected in a better way.

Yes

No


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13) While implementing ERP, how significantly did you customize your ERPpackage?


No Customization 0 0

Minor Customization 5 25

Some Customization 4 20

Significant Customization 11 55

Extreme Customization 0 0

Total 20 100

Interpretation: About 25% of employees says Minor customization,20%says Some Customization, 55% said Significant Customization was madeusing ERP.

No Customization

Minor Customization

Some Customization

Significant

Customization


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14) Is your institution outsourcing or considering outsourcing any componentof ERP support for any module?


Already outsourcing 11 55

Currently in Process of outsourcing 5 25

Will outsource 3 15

May Outsource 1 5

Total 20 100

Interpretation: About 55% of employees says Data outsourcing is AlreadyBeing done ,25% Currently in Process of outsourcing, 15% said WillOutsource,and 5%says that they May Outsource.

Already outsourcing

Currently in Process

of outsourcing

Will outsource

May Outsource


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15) Do you feel that SAP serves a platform for member customers,employees, and management working collaboratively to define enterpriseservice?


Strongly Agree 4 20

Agree 15 75

Disagree 1 5


Total 20 100

Interpretation: About 20% of employees Strongly Agreed,75% Agreed,5% said Disagree that that SAP serves a platform for member customers,employees, and management working collaboratively to define enterpriseservice.

Strongly Agree

Agree

Disagree

Strongly Disagree


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16) How do your (ongoing) support costs compare pre-ERP to post- ERP?


Increased above 50% 9 45

Increased above 20% 0 0

Minor % increased 3 15

Stayed about the same 0 0

Decreased above 10% 5 25

Decreased above 20% 0 0

Not Measured 3 15Total 20 100

Interpretation: About the cost comparison of post-ERP and pre-ERPimplementation, 50% of employees says increased about 50%,25% saysDecreased about 10%, 15% says Not Measured

Increased above 50%

Increased above 20%

Minor % increased

Stayed about the same

Decreased above 10%

Decreased above 20%

Not Measured


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17) Did your institution perform BPR(Business Process Redesign) as a part ofimplementation of ERP?


No Redesigning 0 0

Minor Redesigning 3 15

Some Redesigning 6 30

Significant Redesigning 11 55

Extreme Redesigning 0 0

Total 20 100

Interpretation: About 20% of employees Strongly Agreed,75% Agreed,

5% said Disagree that that SAP serves a platform for member customers,employees, and management working collaboratively to define enterpriseservice.

No Redesigning

Minor Redesigning

Some Redesigning

Significant

Redesigning

Extreme Redesigning


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18) Which is the most significant obstacles you had to overcome tosuccessfully implement this product?

Response frequency Percentage

Resources constraints 3 13

Training issues 5 21

Data issues 3 13

Technical / Software issues 7 29

Lack of internal expertise 4 17

Other issues 2 8Total 24 100

Resources

constraints

Training issues

Data issues

Technical / Software

issues

Lack of internal

expertise

Other issues


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CHAPTER 7

FINDINGS


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FINDINGS

1. From among the 80-100 employees who are expected to work with SAP,only a few were aware of the functionalities of SAP, that too each personknown only the activities related to their area of operations. In each of the

5 sections using SAP 70% responded that they are fully comfortable with

SAP while with rest 30% were finding SAP it only partially Comfortable

which shows the level of comfort of each person among 30% is on a low

side which is shown in Table No. 2, which shows that Re-engineering

effort is not fully effective.

2. The main advantage offered by SAP in FACT is Integration of allLevels of Information, Easy Data up-dating and access to real time dataalso it increased the productivity of certain department up to 50%.

3. SAP in FACT, covers Business Process like MM,HR,PP,SD and FI. 85%of the total responses which shows that implementation of SAP have

favourably affected their work and their department.

4. It could be seen from all the above results that organizationsperformance level got changed significantly with SAP.

5. Majority of the responded believes SAP has played an Enablers Role inFACTs BPR program, which shows the significance of IT in FACT forre-engineering purpose.

6.

Majority of responded got an opinion that Finance related processing gotchanged significantly with the implementation of SAP.

7. About 55% if responded strongly agree that the data generated by ERP isdetailed, structured and accurate.


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CHAPTER 8

SUGGESTIONS


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SUGGESTIONS

1)Educate employees about the features and future benefits that SAP

provide to FACT and thereby to its employees by fully working with the SAP

system. Give proper training by showing them demonstration and visual aidedtalks on the opportunities which remain hidden by fully utilizing SAP for doing

all the processes.

2)Try focusing more on already implemented modules and make it fullyfunctional by taking an initial step by a group of employees who feel SAP as a

Documents

FACT Project Report