Business Applications – This Software Runs Your Business

"Those parts of the system that you can hit with a

hammer are called hardware; those program instructions that you can only curse

at are called applications"  –Anonymous

E-sourcing: Saving money



When Carrier started manufacturing in India in the late 80s, they followed

the traditional process for procurement of raw materials. Everything was done

manually, including finding suppliers (which would be limited to four or five in

number) and writing requests for quotations (RFQs)–documents that describe the

specs of the commodity in question. Negotiations would go on for days and in the

end, the supplier just may come back with agreeable prices. Today, e-sourcing

has changed all that radically. The geographical reach now available to the

company has become global. The supplier can now be anywhere–in Trichy or Latin

America or Taiwan. Also, competitiveness among suppliers has increased,

especially with the online bidding process. Most importantly, Carrier is saving

up to 18% on all purchases. And this when Carrier’s annual buying bills

amounted to Rs 170 crore.

The gift of time



Computerization happened to Avon Cycles as late as 1997-98, and today it is

amongst the first to successfully implement an enterprise resource planning (ERP)

solution in the bicycle manufacturing business in India. Avon cycles, with a

turnover of Rs 200 crores, crore, was on the lookout for a solution that could

integrate all internal and external business processes, build up quality and

hasten decision-making, as well as reduce costs. Though only one phase of the

implementation is over, Avon is already raving about benefits in time and costs.

The management earlier used to spend half a day going through bills and purchase

invoices. Now, the top brass just sign purchase orders and all accounts relating

to any purchase are controlled by the ERP. Their biggest benefit–the

management now has enough time to plan for the future.

These are but two examples of enterprises that have benefited from the

implementation of business applications. Be it an ERP package, SCM or CRM

implementation, these apps have made life a lot simpler for enterprises. But

before corporates start gaining from such initiatives, they are faced with

questions that decide the course that their decision will take. Enterprise-wide

software usually costs far more than your hardware and, therefore, it becomes

critical to have a well-thought-out IT strategy in place. There are a wide

variety of readymade and custom-made apps to choose from, but it is cardinal to

plan according to the needs of your organization.

The best apps to start with



The continued shifts in enterprise computing, corporate expansion and

acquisition have turned information systems into living, growing monsters that

become more difficult to tame each year. And CIOs are walking a tightrope to

find the solutions that will make their enterprises run smoothly. Like all

initiatives undertaken by companies, IT applications too flow from business

objectives. The first step, therefore, is to identify and agree on the

objectives that need to be achieved. This will set in place a definite framework

within which to evaluate business applications, while reducing the possibility

of drifting. Remember too, that different solutions view applications

differently. A detailed evaluation of possible solutions will reveal how they

are structured. A cost-to-benefits analysis is crucial, especially if the

planned investment is large.

Linking those business apps



Companies often have multiple business units across various locations, all

using different processes and computer systems that eventually lead to conflict

and inefficiency. Standardizing these processes and using a single, integrated

computer system can save time, increase productivity and reduce headcount. This

can be achieved by implementing an enterprise resource planning (ERP) system to

integrate financial data, standardize manufacturing processes and HR

information. Ideally, an ERP should take care of applications like financials,

payroll, logistics management, HR, production and planning. Vendors include JD

Edwards, Oracle Applications, PeolpeSoft, QAD, SAP, ESS and Baan, among others.

The ERP package can be extended further to integrate your supply chain

(dealers and vendors) into an automated supply chain management (SCM) system.

This would take care of inventory management, including retail software, and

dealer management system. Sony India, for instance, has managed to reduce its

inventories by 70% in just six months after it kicked off an SCM initiative.

However, be clear about the difference between ERP and SCM. ERP is still mis-labeled

as SCM in most places. While the former is focussed on specific–and sometimes

narrow–aspects of internal operations, with little or no effective capability

to integrate customers and suppliers, the latter extends beyond the organization

to create a collaborative demand and supply chain. Vendors include i2

Technologies, SAP, Oracle and QAD.

On the customer front, customer relationship management (CRM) tools can be

used to deliver personalized marketing and sales of products and services to the

customer. Being proactive in anticipating customer needs enables a company to

create a loyal client base. Retention, which proves more cost-effective than

acquisition, can be particularly useful for service-oriented sectors like

banking. Vendors here include Talisma, Seibal, PeopleSoft, Futurescape, Interact

Commerce and SAP. Besides, there are also applications targeting particular

industry segments, like financial institutes and banks. Finness by Nucleus

Software, for instance, is a financial application that caters to the needs of

global clients like AmEx and Citibank. There is also Finacle, which is Infosys’

financial application. Other financial application vendors include TCS, Navision

and iFlex.

Getting started: Strategy questions



Start with a well-thought-out strategy that answers questions such as single

solution or best-of-breed, Big Bang or phased implementation along with

communication and connectivity strategy. Though it would be ideal to do away

with the outdated system, many companies usually elect to retain some aspects of

the legacy system. Legacy systems may not be scaled up or integrated in their

entirety, but they can always be used for non-critical or non-core functions

like finance, HR and administration. In most cases, vendors provide

"integration-to-roadmap" for these legacy systems with their

applications, but you need to make sure that they interface well with the new

applications and that the control and security processes are in place.

Select a vendor keeping in mind business and growth requirements and assess

what impact his applications will have on your existing network. It is extremely

essential to make sure that the software you are buying fits well with your

business and will reap you significant returns in terms of productivity

enhancement and overall efficiency. A single suite of applications makes life

easy, but a single solution may not fit all business needs. Some companies,

therefore, elect to adopt a ‘best-of-breed’ approach.

At the same time, it is also viable to put together a team drawn from all

departments in the organization, those that will work on the new application.

Though IT staffers generally spearhead these efforts, team-building skills along

with your technology expertise is essential to put a successful application in

place.

The big step: Budgets



Most companies do not have regular planned budgets for investment in

business software. Funds get allocated on an ad hoc basis, as and when the need

arises. It, therefore, becomes important for CIOs to keep track of emerging

technologies that can bring in quantifiable benefits to business processes,

evaluate them and invest in them judiciously. Though assessing the cost of these

enterprise-wide applications is difficult to pin down unless on a case-to-case

basis, the number of users and the amount of customization is what drives final

expenditure. ERP software, for example, can range from Rs 5 lakh upward (Ebizframe)

to solutions like SAP and Baan, which could run into a few crores.

To determine the investments involved, get a quote for an up-and-running

solution from the vendor. Then project the cost of support personnel and fees

for upgrades and support. As a benchmark when budgeting for applications,

licenses are about 50% of the initial cost–with training and implementation

making up the remainder. But for highly-customized solutions, the ratios vary

significantly.

The need to standardize



Using multiple solutions does not imply multiple vendors. Too many vendors

can causes chaos among users and create problems in integration. Also, while

dealing with bugs and upgrades, you will have to seek support from various

sources, which can be a cumbersome process. For standardization of software

across the organization, admit that you have a large number of users for a

single vendor–he will then be more eager to provide support.

Do I need consultants?



Let’s face it, nobody knows your business better than you do. So, as far

as it is about assessing enterprise needs, setting on revenue targets and

business plans, you are the best judge. But when it comes to software planning

and development, a technology consultant–who has experience with similar

implementations and industry knowledge as well as functional and process

expertise–could be a huge help especially if you are going for a large-scale

deployment.

But don’t expect them to provide a solution to all your problems.

Consultants are not Gods! Ideally, you should work hand-in-hand with a

consultant, who will assist you in the process of migration and re-engineering

through: analysis of existing applications, identification and development of

suitable technology, replacement of obsolete apps and integration to a new

environment.

Track and measure benefits



Before you go about measuring RoI or doing a cost-benefit analysis, you need

to go back to the time where you identify your key performance indicators before

implementation, which have the defined parameters or benchmarks for measuring

performance. Post-implementation, you measure your achieved results against

these indicators that allow you to conclude whether you have achieved the

incremental benefits or not. This also allows you to set improvement targets for

implementation of new processes and systems.

It is also important to identify clear responsibilities for each of the

performance targets and to put in place a monitoring and review mechanism. Happy

apps shopping!

Team DQ

Forecast

ERP: Thanks

to ERP software, businesses have improved their manufacturing operations,

better organized their HR departments, and enhanced their accounting and

financial practices. But what’s next? To achieve real-time collaboration

and demand forecasting, future ERP systems must seamlessly pass

information among business partners’ disparate systems. The next step in

ERP will allow users to go online to browse product catalogs, check

availability, and order supplies. Users will hook ERP systems into

extranets, turning their computers into virtual trading floors. The result–procurement

times slashed by half and raw materials bought at lower prices.

SCM: According

to Gartner, due to product immaturity, incremental rollout methodologies

and the economy in general, largescale strategic SCM projects will not be

seriously considered by 90% of global 2000 executive management until

2003. In 2001, the business environment impelled most enterprises to take

tactical approaches to SCM IT expenditures, focusing on enterprise-wide

cost reductions. This will continue to drive changes in 2002 across the

SCM market.

CRM: Privacy,

personalization, tactical investing, and training will loom large in the

CRM market in 2002. Enterprises will find that customers want to see why

all this data is being gathered, and they will expect the CRM experience

to reflect intelligent use of personal data. Enterprises should look

seriously at personalization technology, if it’s not already part of the

enterprise’s CRM plan. Customers’ expectations will force enterprises

to "take the plunge" and learn to redesign themselves from a

customer point of view.