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V K Agnihotri

Organizations invest massive amount of time, money and human resources during ERP Implementation. Therefore, top management is always eager to know When the organization will start getting the returns or benefits? These benefits in case of ERP may be tangible like ROI or intangible like improved customer services. Broadly speaking they may be classified under one of the following categories:
Business Value addition which typically gets added in terms of benefits

like improved customer services, i.e. through


Improved competitiveness Reduced Costs ,Increased Flexibility of operation with respect to changes in customer demands Provision of superior quality of products and services etc. Spending less money, Making more money or Some combination of the two

Enhanced Business returns typically is in terms of


A point of caution here. Many a time the returns from ERP are either below expectations or fail to come at all due to one basic attitudinal imperfection prevailing in the organization viz. The ERP implementation is seen as something similar to the introduction of a computer system :

In other words the ERP Project is seen as an exercise in IT rather than an endeavor to improve business performance.

Technology (IT) at best may be seen simply as an enabler to delivering the business value and business returns. If ERP project is seen as an exercise in IT, then its business view point is either overlooked or diminished leading to delay in implementation & returns.

If we have consensus with the above point of view, then corollary is that the accountability for successful implementation of ERP Project lies with respective departmental heads also. Before proceeding further lets have a look at business scenario at SAIL now and what needs to be done to leverage full benefit from ERP implementation.

At SAIL the Strategic (long term), the Tactical (mid term) & the Operational (short term) business plans and targets are rolled out at following planning levels at relevant horizons or time frames.
At the Apex level is Corporate plan for SAIL i.e. Targets & MOUs

for SAIL as a whole, which is annual strategic plan The Next level is Organizational / Plant Level e.g.
BSL,BSP,DSP,RSP,IISCO,ASP,VISL,SSP,MEL,RMD CMO,CCCO etc. These plans are tactical and are drilled down to monthly level.

In case of plants the plans are further broken down to main

production units viz. Coke Making, Sinter Making , Iron Making, Steel Making, etc. These plans are drilled down to scheduling or daily level. The scheduling needs to be finally drilled down to minute to minute level.

This planning can not be dispensed with, as it forms the core business planning.

The views of plan are also developed to analyze with respect to two main strategic business divisions viz.
Flat Products Long Products

Typically when any large organization like SAIL go for ERP implementation, by and large they retains the basic structure of pre implementation planning. Otherwise it will mean leaving the world of the proven and familiar and looking at plans which are strange or not well understood. This is understandable, because when ever we go for major changes we would like to retain at least some common ground so that we can assess the capability of the new initiative under our scenario. This is irrespective of how much proven capability of the initiative is being claimed by the Vendor viz. SAP. Now, there is a well known business rule If we keep on doing what we are doing then we keep on getting what we are getting. i.e. if we want to CHANGE BUSINESS VALUE & BUSINESS RETURNS we have to do some thing different. That means we have to change the way we look at our business i.e. our plans & implementations! But How? NEXT WE WILL SEE HOW ERP EMPOWERS US WITH THAT MEANS TO CHANGE !

The Implementation of ERP is not the change which we are looking for to add the business value and to improve the business returns, rather it (Implementation) provides us an opportunity to carry out the said change through improved Business Process Management. So obviously the next question is What are business processes and how bringing improvement in them will enhance our business value and business returns.
Business processes are our business a typical example is Sales

Order Processing. We will discuss this in detail a little later . Managing these processes better means focusing on the important activities, functions & resources of a company such as Markets, Strategy, People , Financial Aspects , Material Management etc.

Every organization tries to manage its business process well. The current ways of working, that is the way the business processes are carried out at any point of time are the result of
Historical precedent, Habits, Reactions to past challenges, The influence of technology, and Directions from senior management

However, post ERP implementation one new dimension gets added viz. the integration of various processes. The influence of technology brings that change. This enables us to look at our business in a new way which was not possible earlier and opens new avenues for improvement though Business Process Management.

Let us try to understand difference between a business function and a business process.
Business processes are by nature inter-functional, that is, they span

multiple business functions. Business Functions are usually specific to departments which concentrate/ specialize certain skills and/or knowledge. Common examples of such functions are Manufacturing, Marketing, Sales, Human Resources, and Finance.

Even the simplest of processes involves the application of specialist skills found in different departments/functions.

Business Process is a collection of interrelated work tasks, initiated in response to an event that achieves a specific result for the customer of the process. Each word in this definition is important:

achieves a specific result The result might be Goods and/or Services. The result should be measurable, for example, Fulfillment of Orders, Resolution of Complaints, Raising of Purchase Orders etc. for the customer of the process Every process has a customer. The customer maybe internal (employee) or external (organization). While the Fulfillment of Order process has an external customer, there are many other processes such a Recruit Employee whose customer is internal. A key requirement is that the customer should be able to give feedback initiated in response to a specific event Every process is initiated by an event. The event is a request for the result produced by the process. interrelated work tasks The business process is a collection of clearly identifiable interrelated tasks executed by one or more actors (person, or department or organization ). A task could potentially be divided up into more and finer steps.

Lets consider a business process such as Sales Order Processing it involves following steps (Business Functions)
Taking the Order (Sales Function)
Planning the Production (Production Planning Function) Planning for materials (Material Requirement Planning Function) Procuring the Materials ( Procurement & Logistics Function)

Making the Product (Manufacturing Function)


Shipping the Finished Product (Shipping Function) Invoicing the Customer (Billing Function) Obtaining the payment from the customer (Collection Function) Process are not ends in themselves. They have a purpose, they create and deliver results that customers care about.

It is obvious from above analysis, that if want to improve Sales Order Processing we have to analyze all the above functions systematically and bring improvements where ever required only then the ERP implementation will add value to our business and bring returns. Here it may be mentioned that ERP provides a host of new techniques for Customer Relation Management.

As another example lets consider Purchasing of Goods as . It

involves following steps (Business Functions)


Raising Indent i.e. Material Quality, Quantity and requirement date (Production Planning Function) Raising Purchase Requisition (Purchasing Function) Request For Quotation (Purchasing Function) Quotation Evaluation & Vendor Selection (Purchasing Function) Issue of Purchase Order (Purchasing Function) Goods Receipt (Shipping & Stores Function) Invoice Verification (Stores & Purchase Function) Payment to Vendor ( Payment Function)

Similarly for improving the purchasing of goods we have to analyze all the above functions systematically and bring improvements where ever required only then the ERP implementation will add value to our business and bring returns. Here it may be mentioned that ERP provides a host of new techniques for Supplier Relation & inventory management.

Thus post ERP implementation the Sales Order Processing & Purchasing of Goods Business Processes will involve minimum all the above mentioned functions. However, the list will increase if in sales order processing the inconveniences such as redress of Customer Complaint comes in to play or in case of purchase of goods there are issues related with invoice verification due to quantity or quality. In the former case Quality, Sales & Application Engineering have to sort out the issues involved with the customer. In the latter case the Quality, Department raising indent , Stores , Purchase & Legal Department have to sort out issues involved with the vendor.

The new opportunity ERP implementation provides is to monitor and manage our business processes on a real time basis as post implementation we have at our disposal Complete, Accurate & Live information for all relevant aspects of our business and it will make available a platform

wherein we can analyze , control & manage our Business Processes rather than Business Functions only.

A word of caution here again. The concern regarding Completeness & the Accuracy of information brings into focus the quality and timely maintenance of data in the system.

Coming back to the original query that "When will SAIL start getting the returns or benefits from ERP implementation? SAIL will Start getting Benefits or Returns from ERP Implementation when we Adopt Business Process Management and make it the Pivotal Theme for Managing Our Business.