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.