Case Study: ERP Implementation @ a steel manufacturing company

Name of Client One of the largest steel manufacturers

Sales Turnover Rs 7000 Cr

Number of Licensed Users 800

Modules Implemented Phase I: SD, FI, CO (PA), MM, QM

Phase II: FI, CO, MM, PP, PM

Number of Locations Phase I: 70

Phase II: 1 (Jamshedpur Works)

Project Duration Phase I: 8 Months

Phase II: 9 months

Go-Live Date Phase I: Nov 1, 1999

Phase II: Nov 1, 2001

Core Team size Phase I: IP = 35, Client = 35

Phase II: IP = 45, Client = 75

Why ERP was implemented

The Company wanted to improve its overall efficiency in the marketplace. Along with certain other
initiatives, the Company chose to implement ERP with the following as the primary objectives:
Nationwide inventory visibility and control thereby facilitating decisions for inventory
reduction; on-line credit check thereby facilitating better receivable management.
Visibility of cost at Product-Quality-Section level thereby facilitation cost reduction measures
Better product mix decisions through profitability analysis at margin level, faster monthly
account closure by 5th of every month

Critical Success Factors of Project:

Top management commitment

Training – Core Team & End user
Communication and change management
Risk assessment and mitigation
Scope control

Challenges faced in project & how they were tackled:

Training

Training was one of the key issues in the implementation simply because of the size of
implementation and number of end users getting affected by it.
 The strategy adapted to handle this was to prepare the training strategies well in advance.
There was a separate team that handled training. The model followed was “train the trainers”
by which the consultants trained the core team which in turn trained the end users. Similarly,
the help desk strategy adapted was a “hub and spoke” model by which the first level of
problems were identified and solved by the key users at each individual location. Then the
problems were escalated to regional hubs and finally it came to the consultants who were
stationed at the Central Help Desk.

Technical Challenges

Technically, this is one of the most complex projects. In the first phase, while order
processing and despatch and sale was in ERP the production planning, capacity planning,
scheduling and production recording was in the legacy. Railway despatch related
documentation was again in legacy. Besides there were some interfaces with the lotus notes
system where market development activities were designed. For these a large number of
interfaces needed to be built. Some were two-way interfaces, while others were one-way.
Some of the interfaces were on-line while others were in the batch mode. A large number of
technologies like MQ series, ODBC interface were used.

In second phase, there are around 45 interfaces with several islands that are currently not in
scope. Some of the interfaces are with other ERP packages like BaaN. Most advanced
technologies like EAI are being looked into to give the best possible interface.

Other areas of challenge was the wide area network for the large number of sites and the
hardware which is easily one of the largest in India with one database server and 17
application server and a fallback server. The size will further increase in Phase 2.

Customization

One of the key challenges in the project is to contain the number of customizations, the
demerits of it are well known.

This was handled in a number of ways. First, there was a clear directive from the project
sponsor that ERP will be customized only if there is an ROI on that.

In cases where there is a demand on customization, IP is helping the Company to find out
ways how other industries in India and abroad on ERP are handling similar situations. In
some cases IP has suggested various bolt-on packages like IVL Import documentation. This
has been possible because of access to large global database that IP has.

IP’s role in Change Management

The Company is an old organization with around 45,000 employees. Managing change in such a
large organization was one of the key challenges of the project. The way this issue was
addressed was that ERP implementation has been positioned as a large scale change initiative
with a focus on performance improvement along dimensions of value enhancement, cash
liberation and cost reduction. It has never been positioned as an IT initiative. In fact the key
members like the project sponsor and the project manager is from the functional side and not
from IT side, though IT played a major support role.

Some of the steps taken to ensure change is managed properly are as follows:

A clear directive from the CEO that it is his project

 Several workshops and analysis on project visioning, stakeholder analysis, change history
assessment to facilitate change agent and change targets
Peer recognition programs
Communication through newsletter, validation workshops, user acceptance testing, etc.
Separate change management track facilitated by Change management consultants from IP

Benefits to Client:

Cash Liberation

Phase I - Nationwide inventory visibility and control thereby facilitating decisions for inventory
reduction; on-line credit check thereby facilitating better receivable management.
Phase II – Consumption based planning for MRO items thereby leading to reduction in
inventory for MRO items

Cost Reduction

Phase II – Visibility of cost at Product-Quality-Section level thereby facilitation cost reduction

measures

Value Enhancement

Phase I – Better delivery compliance through on-line availability check thereby leading to
greater customer satisfaction; better product mix decisions through profitability analysis at net
realization level
Phase II – Better product mix decisions through profitability analysis at margin level, faster
monthly account closure by 5th of every month