Implementing ERP Systems

Enterprise resource planning (ERP) systems, which are

often termed as early retirement planning, are today considered to

be the basic infrastructure to run any enterprise, be it large or small, private

or public. Currently, large business enterprises in India are in the process of

implementing ERP systems. ERP systems promise benefits that range from increased

efficiency to transformation of quality, productivity and profitability.

However, implementation poses some unexpected organizational challenges and

changes that can be structural as well as cultural in nature. ERP helps to

establish world-class best business practices and brings about transparency but

also calls for empowerment and flexibility in the decision making process.

The most promising argument is that to thrive in the e-commerce world,

companies need to transform their internal business processes with the

deployment of ERP systems. Hence, ERP is considered the backbone of e-business.

In mid-1998, a survey stated that 70% of Fortune 1000 companies have

either implemented or are in the process of implementing ERP systems. Gartner

says 90% of top companies have made purchases from at least one vendor.

A

Deloitte & Touche consulting group named ICS has defined a common set of

principles for enabling large-scale change in an enterprise. Change occurs at

several levels in an organization: strategy, process, people and technology.

In India, only the MNCs and private companies have so far

been able to implement ERP successfully. Most of these organizations have chosen

the technology enabled reengineering approach to implement ERP systems. Critical

success factors (CSF) and reasons for failure of ERP implementation have now

been widely researched. The CSF in ERP implementation is discussed below:

n Need

and growth of ERP solutions: In India, different companies went in for ERP

for different reasons. Many companies implemented ERP as a replacement of their

existing IT infrastructure. However, some companies recognized the capabilities

of ERP in terms of reengineering business processes and adopting the best global

business practices that are in built in ERP packages. Also, there are many

well-thought out, business-driven ERP projects such as M&M, HLL, Godrej,

TISCO and L&T that have resulted into enhanced productivity gains as well as

business benefits.



n Managing ERP implementation. Is

it about installing new software systems? If yes, then why is the installation

cost three to six times more than that of the product? Should it be taken as an

IT project or as a change management program? In early 1997, one of the largest

Indian PSUs spent over Rs 50 crore on its ERP project, only to realize later

that it was not about IT.

An ERP project should be top management driven as a business

and change management initiative and should not to be viewed as an IT project

for merely automation. It should be people driven, process oriented,

technology-enabled, and a business-innovation and transformation program.

Prof

M P Jaiswal



The author is associate professor (IT) at MDI, Gurgaon.