Enterprise Resource Planning

1. Enterprise Resource Planning implementation is a major challenge for organizations. ERP

implementation is a process of putting ERP processes in action. In simpler words, it is a
process that bring momentous changes in an organization’s work, system and practices.
According to studies, implementation of ERP typically requires changes in existing business
processes. Poor understanding of needed processes changes prior to starting
implementation is a major reason for project failure.
The organizations face different challenges while implementing ERP systems which are
timelines are longer than expected and poor planning that leads to the over-budget of the
ERP project.
Reasons for implementing ERP-
- Increases performance of the business- ERP helps to reduce manufacturing cycle time,
eliminate inventory storage problems and speed up order deliveries.
- Increases revenue- It increases an organization’s sales through CRM and sales force
automation process.
- Improves the efficiency of business processes- An ERP system automates business
processes and eliminates non-values added activities. ERP system also allows an
organization to match customers’ demands, which result in reduced inventory and
carrying costs.
- Leverages the available resources- ERP processes lead to the effective utilization of
organizational resources, such as capital and human resources. An ERP system helps an
organization to gain a clear insight of all resources so that they can be used more
effectively to improve business efficiency.
- Provides high security- An ERP system provides security to the critical information of an
organization such as financial and customers’ details. An ERP system does not allow
unauthenticated users to access critical information that can harm the organization.
- Standardizes business practices- An ERP streamlines business practices of an
organization, thereby preventing inaccuracies and inconsistencies.
- Combines operational, financial and strategic insight- An ERP system integrates and
analyses the data of all the departments of an organization and delivers crucial
operational, financial and strategic insight, which ultimately lead to effective decision
making.
There are no major surprises or uniqueness associated with the BPCL implementation
plan. Some noteworthy features are: • Top management involvement and guidance. •
Financial evaluation (cost-benefit analysis). • Stage 1 (process mapping) and Stage 2
(implementation). • Appropriate use of consultants and inner team members. • Training
on ERP, process redesign, and change management.
Inventory reduction and other benefits projected are one-time savings and they are not
exclusively related to ERP. Therefore, the best way of evaluating a need for ERP would be
based on cost of operation. This would mean the cost of an ERP solution proposed and the
inefficiencies and hence the burden on the company for not implementing an ERP may be
used to arrive at a solution. In short, what is proposed is to replace an investment analysis
oriented decision-making environment with an orientation to compare the cost of relevant
alternatives.
 ERP implementation in a large organization like BPCL poses many obvious technological and
project management challenges. Every organization, therefore, consciously prepares itself
for facing them. One challenge that is not so obvious in the beginning but becomes most
formidable at the end is that of change management. BPCL recognized it as the foremost
challenge and dealt with it right from the conception phase in the most intricate manner. It
had an advantage of successfully managing a change of similar magnitude in the recent past
during the CUSECS project. The same methodology was employed again. A note on the
change management methodology is provided in Annexure 6. Right from the beginning,
change management issues were measured to be of utmost importance. Apart from
training, various motivational workshops were conducted throughout the organization in
small groups. This was done to maximize employee participation and acceptance of the
change process. Six full-time coaches were appointed for taking up the change management
process.

2. Post- Implementation is a crucial phase in the lifecycle of an ERP system. It is a continuous

process that generally starts after the ERP has been successfully implemented in an
organization, and the employees have been trained to work on it. In this step, the company
will focus and involve many parties such as members of the developer to managers and
users to better understand the implementation process and the changes that will occur. 

The costs of an ERP system

The costs of an ERP system consist of many elements:
 The acquisition price. That is the money you pay when you buy licenses to use a
system. Sometimes you cannot buy a system, but you can hire it for a monthly fee.
 Maintenance. If you are renting the software (Software-as-a-Service or SaaS) then the
rental fee will include ongoing updates and support, but if you buy a perpetual license
outright, you will also need to pay for maintenance which is typically 20 percent of the
up front license cost.
 Business analysis resources. ERP suppliers know their products but they do not know
your business. Documenting your base requirements, redefining processes or
innovating with new systems capabilities all require analytical people that can bring
systems thinking to drive the project team towards the end goal. They will be needed
right at the outset to assist with your evaluation and selection project. 
 Data analysis. Similar to BAs, a data analyst is needed to supply the new system with
good clean data that conforms to the needs of the new system.     
 The costs of modifying the system. An ERP system can be used in different ways. The
supplier changes the settings of the system in such a way that it suits your company’s
operation. 

ERP Implementation challenges

-Stages to be followed- The ERP implementation process should follow all the
implementation phases. It leads to a chaotic situation if the sequence of phases is followed
randomly by an organization, which further leads to confusion in the organization.

-Project planning: Organizations often underestimate the time and budget necessary for a
successful implementation.One of the most common causes of budget overruns is scope
creep—when a business adds capabilities or features to the system that weren’t part of the
original plan—and another is underestimating staffing needs, according to Statista.
 Developing a clear and realistic plan from the start can help to avoid those issues. A realistic
project plan that acknowledges possible speed bumps and minor cost overruns and
addresses them in advance will simplify that decision-making process and keep the project
on track.

-Data integration: One of the key advantages of ERP is that it provides a single, accurate
source of data for the whole organization. A key step in ERP implementation is data
migration, which typically involves moving data from multiple older systems into the ERP
database. But first, you have to find all of your data. This may be much more challenging
than you expect. The information may be spread far and wide across the organization,
buried in accounting systems, department-specific applications, spreadsheets and perhaps
on paper.

Well-planned data migration can help to keep the entire ERP implementation project on
time and on budget. It’s also an opportunity to winnow out obsolete and redundant data
lurking in the organization’s older systems. In contrast, underprioritizing data migration can
cause issues such as inaccurate or duplicate data and challenges to your go-live date.

-Data quality: Once the organization has located all data sources, it can start thinking about
migrating it to the ERP system. But that may involve a serious data hygiene exercise.
Because multiple departments interact with the same customers, products and orders,
organizations often have duplicate versions of the same information in their systems. The
information may be stored in different formats; there may be inconsistencies, like in
addresses or name spellings; some information may be inaccurate; and it may include
obsolete information such as customers or suppliers that have since gone out of business.

Ensuring data quality can become a sizable project on its own, involving validating the data,
cleaning out duplicates and adding missing values before migrating data to the ERP system.
The new data should also be thoroughly tested before going live with the ERP system.

-Change management. An ERP implementation involves more than just switching to a new
software system. It typically means overhauling business procedures to take advantage of
the efficiency and productivity improvements possible with the new solution. This requires a
shift in mindset and a change in everyday work processes for many employees, which
presents typical change management challenges.

3.a. Materials Management (MM) -SAP MM (Material Management) Module is a SAP ERP
component that helps organizations with material management, inventory management, and
warehouse management in the supply chain process. It is a portion of SAP ECC’s logistics functions
which consists of several components and sub-components. The most prominent and widely used
components are Master Data, Purchasing, and Inventory.

The features of a SAP MM system are as follows −

 SAP MM is one of the modules of SAP that deals with material management and
inventory management.
 Material Management as a process ensures no shortage of materials or any gaps in
the supply chain process of the organization. SAP MM hurries up the procurement
and material management activities, making the business run smoothly with
complete time and cost efficiency.
 It deals with managing the materials (products and/or services) and resources of an
organization with the aim of accelerating productivity and reducing costs. At the
same time, SAP MM is quite versatile to accommodate variations that are frequent in
any business environment.
 It deals with the Procurement Process, Master Data (Material & Vendor Master),
Account Determination & Valuation of Material, Inventory Management, Invoice
Verification, Material Requirement Planning, etc.

3. b . Sales and Distribution (SD) -The SAP SD module is one of the primary ERP module developed by
SAP. SAP service and distribution deals in better management of sales and customer distribution
data and processes in organizations. It works closely with other these modules towards effective
process work. Other modules that SAP SD integrates are financial accounting (FI), controlling (CO),
materials management (MM), and production planning (PP) and so on. All these collaborate
together and enhance the work process in enterprises.

SAP SD configuration needs adequate knowledge on handling SAP developed software products. It is
widely advised by experts to undertake SAP SD training in order to build a strong base on SAP SD
user. SAP SD module has multiple components that mix different processes within the job area.
 Components of SAP SD Module

 SAP-SD-MD: Master Data

 SAP-SD-BF: Basic Functions

 SAP-SD-SLS: Sales

 SAP-SD-SHP: Shipping

 SAP-SD-TBA: Transportation

 SAP-SD-FTT: Foreign Trade