Assessment of Organizational Preparedness for ERP Implementation in NTPC

(DISSERTATION REPORT)

INFORMATION TECHNOLOGY

Knowledge Management System

ERP IMPLEMENTATION

Key Words : Communication, Change LAKSHYA, End Users, Process Owners

Management,

Project

Submitted by : Anup ji Agarwal, Sr. Manager(C&M), Unchahar, 9415501234, anupjiagarwal@ntpc.co.in

03/12/2007

Assessment of Organizational Preparedness for ERP Implementation in NTPC

A Dissertation Proposal for

XIX National Management Program

by

Anup Ji Agrawal

under the guidance of Shri T. Mukherjee DGM(C&M) NTPC, Unchahar Prof. Anjali Kaushik IT Deptt. MDI, Gurgaon

Management Development Institute

Gurgaon - 122 001

31th August, 2007

Assessment of Organizational Preparedness for ERP Implementation in NTPC

A dissertation submitted in partial fulfillment of the requirements for the award of

Post-Graduate Diploma in Business Management

by

Anup Ji Agrawal

XIX National Management Program

Management Development Institute

Gurgaon - 122 001
August, 2007

Assessment of Organizational Preparedness for ERP Implementation in NTPC

A dissertation submitted in partial fulfillment of the requirements for the award of

Post-Graduate Diploma in Business Management

by

Anup Ji Agrawal

under the guidance of Shri T. Mukherjee DGM(C&M) NTPC, Unchahar Prof. Anjali Kaushik IT Deptt. MDI, Gurgaon

XIX National Management Program

Management Development Institute

Gurgaon - 122 001
August, 2007

Certificate of Approval
The following dissertation titled "Assessment of Organizational Preparedness for ERP Implementation in NTPC" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post- Graduate Diploma in Business Management for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the dissertation only for the purpose it is submitted. Dissertation Examination Committee for evaluation of dissertation Name _______________________ _______________________ _______________________ Signature ___________________ ___________________ ___________________

Certificate from Dissertation Advisory Committee

This is to certify that Mr. Anup Ji Agrawal, a participant of the XIX National Management Program, has worked under our guidance and supervision. He is submitting this dissertation titled "Assessment of Organizational Preparedness for ERP Implementation in NTPC" in partial fulfillment of the requirements for the award of the Post-Graduate Diploma in Business Management. This dissertation has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other dissertation, monograph, report or book.

Faculty Advisor Prof. Anjali Kaushik IT Deptt Management Development Institute Gurgaon Date:

Organizational Advisor Shri T. Mukherjee DGM(C&M) NTPC Unchahar Date:

(A) List of Figures: Fig. 1: Taxonomy of ERP research Fig. 2: A Classification of Organizational Research in ERP Fig.3: Organizational Pre-requisites Research Model Design for Enterprise-Wide Systems Fig. 4: Classification of CSFs of ERP implementation into Markus and Tanis (2000) process-oriented ERP life cycle model Fig. 5: A suggested Framework for managing change associated with ERP Fig. 6: A Model of Successful ERP Adoption Fig. 7: Need of Project LAKSHYA - Current Reality vs. NTPC Vision Fig. 8: NTPC Vision DISHA to LAKSHYA Fig. 9: Broad Outline of Project LAKSHYA Fig. 10: ERP Coverage Fig. 11: IT Architecture at NTPC Fig. 12: SRM: e- tendering Process Flow Fig. 13: Project management Process Flow Fig. 14: Process Flow for Engineering & QA Fig. 15: Importance vs. Performance Gap End Users Fig. 16: Importance vs. Performance Gap Process Owners (B) List of Tables: Table 1: Issues of Concern in ERP Implementation Table 2: Mean ranking of CSFs by degree of importance in ERP implementation Table 3: Survey of critical success factors in ERP implementations Table 4: User Licenses for NTPC Table 5: Mean scores for Sub-factors (End Users) Table 6: Mean scores for Sub-factors (Process Owners) Table 7: Highest & Lowest Mean Scores for sub-factors (End Users) Table 8: Highest & Lowest Mean Scores for sub-factors (Process Owners) Table 9: Significant gap for Sub-factors (End Users) Table 10: Significant gap for Sub-factors (Process Owners)

(C) List of Appendices: Appendix 1: Questionnaires I. II. III. IV. Format for Personal details of Respondents Questionnaire for End Users Questionnaire for Process Owners Questionnaire for Project Sponsors

Appendix 2: SPSS DATA A) End User I. SPSS Data View & Variable View II. SPSS Output Correlation Coefficient between Sub-factors & Overall perception III. SPSS Output Correlation Coefficient between CSFs & Overall perception IV. SPSS Output Correlation Coefficient between Demographic Factors & Overall perception B) Process Owners I. SPSS Data View & Variable View II. SPSS Output Correlation Coefficient between Sub-factors & Overall perception III. SPSS Output Correlation Coefficient between CSFs & Overall perception (D) Abbreviations: BPR - Business Process Re-engineering C&M - Contracts & Materials CC - Corporate centre CO - Commercial Office COFD - Consumer operated Fuel Depot COLD - Consumer operated Lub. Depot CSF - Critical Success Factors DoP - Delegation of Power (of NTPC) EDC - Employee Development Centre ERP - Enterprise Resource Planning F&A - Finance & Accounts GR - Goods Receipt GW - Giga Watt (unit of energy) HQ - Head quarter HR - Human Resources IO - Inspection Office IT - Information Technology JIT - Just in time LOA - Letter of Award MB - Measurement Book MDCC - Matl. dispatch clearance Certificate MIS - Management Information System MNE - Multinational Entreprises MOM MPIC MTN MW NCR O&M OEM OES ORT PAC PC PF PM PMI PO PPA PR QA R&D R&M RA RCM RFQ - Minutes of Meeting - Material Planning & Inventory Cell - Material Transfer Note - Mega Watt (unit of energy) - National Capital Region - Operation & Maintenance - Original Equipment Manufacturer - Original Equipment Supplier - Operation Review of Targets - Proprietary Article Certificate - Personal Computer - Provident fund - Preventive Maintenance - Power Management Institute - Purchase Order - Power Purchase Agreement - Purchase Requisition - Quality Assurance - Research & Development - Renovation & Modernization - Running Account - reliability Centered Maintenance - Request for Quotation

RO SIV SRV

- Regional Office - Stores Issue Voucher - Stores Receipt Voucher

TC TDS TQM

- Tender Committee - Tax deduction at Source - Total Quality Management

ABSTRACT
This paper lays the foundation for a model of organizational pre-requisites for enterprisewide integration projects. The main objective of the paper is to provide an objective tool to the managers using which they can assess their organizations readiness for ERP projects. This study presents a literature-based model which lists the factors that are critical for assessing the organizational preparedness prior to undertaking these expensive projects. These are the must dos & donts for any organization, to reap desired benefits from ERP implementation. Six main factors identified from the ERP literature as critical to the organizations preparedness for ERP Project were: (1) Communication; (2) Change management; (3) BPR; (4) IT Infrastructure; (5) ERP team composition & (6) Top management support. The importance of each factor with respect to organizations preparedness is discussed on the basis of the extensive frame-work given by the Markus and Tanis' four-phase ERP life-cycle model and few other relevant studies. This study examines NTPCs (a 28 GW integrated power utility) preparedness towards ERP implementation. Selected software solution SAP-R/3 is being provided by M/s. SAP. It shall be implemented by M/s. SAP along with its implementation partner M/s. Siemens Information Systems Ltd. However modules on operational parameters shall be provided by RWE npower, UK. Unchahar unit of NTPC has been selected as sample for this study. It is to be covered under phase # 3 of the implementation schedule. Identified CSFs as mentioned above, have been further broken into sub-factors and their correlation with overall perception has been determined to find their criticality and pinpoint the areas where efforts seemed less compared to the importance of the variable. The paper examines the perceptions of the process owners & end users on each of these critical sub-factors. Additionally, efforts were made to verify these perceptions with the perceptions of the project sponsors. This also gave the opportunity to do a comparative study of the perceptions held by these three sets of respondents. Findings from the study indicate that additional thrust is required towards creating awareness about the ongoing activities both at the unit level and at organizational level. It is currently limited to the people directly concerned with implementation task. Limited awareness combined with less than adequate training efforts might end up with end users who are under-prepared and have apprehensions in adapting the new system. They would be unable to bear dual onslaught of technological changes as well as changes in long established procedures & work culture. Majority of the respondents feel outdated & unwarranted processes need to be weeded out, in order to achieve operational efficiency. ERP implementation gives one such opportunity to undertake a major BPR exercise, resulting into simplification and standardization of procedures. They also feel that NTPC might not be able to operate in a paperless environment with the present set of guidelines and regulated environment. NTPC DoP might also need to be amended suitably to simplify the decision making process. On the positive side, top management of NTPC is fully committed to implement the ERP project with minimum customization. It has strategic vision and wishes to leverage its operational efficiency through this initiative. Also, a sizeable portion of respondents feel that the existing legacy systems do not meet their present and future business needs. Thus, it might motivate them for better acceptance of the ERP implementation. Despite the fact that awareness level of end users needs further improvement, a large majority of

end users have negated most of the apprehensions related to ERP implementation. Also since, end users in NTPC are accustomed to work on legacy applications, they are likely to adapt to it with relative ease.

ACKNOWLEDGEMENTS
I wish to express my sincere gratitude to the following people, who have actively helped me in throughout this work: First & foremost to my faculty guide, Prof. Anjali Kaushik, IT Deptt., MDI, whose active direction and guidance was available throughout this work. Prof. C. P. Gupta, Chairman, NMP, MDI, who gave not only introduced us to the concepts of Research Methodology, but also followed it up with valuable insights on how to practice, during the course of this study. Shri. T. Mukherjee, DGM(C&M), NTPC, Unchahar - my organizational guide & mentor who extended all help from the organization side and facilitated smooth culmination of this work. NTPC management, which gave me opportunity at this stage of my career to update my knowledge. All my respondents, who participated actively in the perception survey and became a source of information through which meaningful conclusions on organizational preparedness could be drawn. Staff of MDI Library & Computer centre, who were more than willing to extend all help, anytime I needed. Finally, all those unnamed person who have extended any help directly or indirectly, in fructification of this work.

TABLE OF CONTENTS
TABLE OF CONTENTS .............................................................................................................. 13 1. INTRODUCTION ..................................................................................................................... 14 1.1 THE RESEARCH PROBLEM ............................................................................................ 16 1.2 LITERATURE REVIEW ..................................................................................................... 17 1.2.1 TAXONOMY OF ERP................................................................................................. 17 1.2.2 NEED FOR IDENTIFICATION OF CSFs IN INTELLIGENCE PHASE....................... 19 1.2.3 CRITICAL SUCCESS FACTORS IN PRE-IMPLEMENTATION PHASE OF ERP ..... 21 1.4 SUCCESSFUL BPR IMPLEMENTATION STRATEGY...................................................... 38 1.5 IMPORTANCE OF KNOWLEDGE INTEGRATION............................................................ 48 1.6 IMPACT OF CUSTOMIZATION ......................................................................................... 51 1.7 PROPOSED MODEL FOR ASSESSING ORGANIZATIONAL PREPAREDNESS ............ 52 2. ERP IMPLEMENTATION IN NTPC : AN OVERVIEW ............................................................. 58 2.01 INTRODUCTION ................................................................................................................... 58 2.02 CRITICAL SUCCESS FACTORS FOR ERP IMPLEMENTATION .................................................... 60 2.03 ROLES AND RESPONSIBILITIES ............................................................................................ 60 2.04 NTPCS VISION : FROM DISHA TO LAKSHYA ................................................................. 61 2.05 KEY ERP BENEFITS ........................................................................................................... 65 2.06 COVERAGE OF ERP PACKAGE ............................................................................................ 65 2.07 MODULES IN SAP .............................................................................................................. 66 2.08 FUNCTIONAL SCOPE ........................................................................................................... 66 2.09 LICENSES FOR NTPC......................................................................................................... 70 2.10 SOLUTION ARCHITECTURE FROM SAP................................................................................. 72 2.11 SAP BUSINESS INTELLIGENCE KEY CAPABILITIES ............................................................. 74 2.12 MODULES BYRWE NPOWER ............................................................................................... 75 2.13 IT ARCHITECTURE......................................................................................................... 76 2.14 GEOGRAPHICAL SCOPE ...................................................................................................... 76 2.15 PROJECT TIMELINES .......................................................................................................... 77 2.16 NEW SAP TERMS .............................................................................................................. 81 2.17 KEY PROCESS CHANGES .................................................................................................... 87 2.18 KEY ROLE CHANGES .......................................................................................................... 91 3. THE RESEARCH DESIGN .................................................................................................... 114 3.1 SAMPLE SET...................................................................................................................... 114 3.2 QUESTIONNAIRE DESIGN .................................................................................................... 114 3.3 DATA COLLECTION PROCEDURE ......................................................................................... 116 3.4 RESEARCH METHODOLOGY ................................................................................................ 116 4. SPSS ANALYSIS .................................................................................................................. 118 4.1 OBSERVATIONS ................................................................................................................. 118 4.2 INTERPRETATION OF OBSERVATIONS ................................................................................... 122 4.3 COMPARISON OF THE PERCEPTIONS OF THE THREE SETS OF RESPONDENTS ......................... 127 4.4 GAP ANALYSIS .............................................................................................................. 129 4.4.1 Interpretation of Performance Gaps...................................................................... 129 5. CONCLUSIONS .................................................................................................................... 133 5.1 RECOMMENDATIONS.................................................................................................... 134 5.2 LIMITATIONS OF THE STUDY........................................................................................ 135 6. REFERENCES ...................................................................................................................... 137 7. APPENDICES........................................................................................................................ 141

1. INTRODUCTION
All successful corporations today are run through dynamic interaction amongst its customers, suppliers & its own internal requirements. These corporations anticipate, respond, and react to the ever changing demands of the marketplace on a continual basis. In a fiercely competitive environment, business strategy is the key to business survival & it is leveraged through aggressive & efficient use of information technology. Advent of Enterprise resource planning (ERP) systems was one of the most innovative developments in information technology (IT) of the 1990s. ERP systems have replaced most of the legacy systems in large and multinational companies (Holland and Light 1999a, 1999b). An increasing number of multinational enterprises (MNE) have adopted ERP systems in the hope of increasing productivity and efficiency as a means of leveraging organizational competitiveness (Davenport 1998; Wagle 1998). An enterprise resource planning (ERP) system provides integrated solution for organizations information-processing needs in its core activities such as manufacturing and logistics, finance and accounting, sales and marketing and human resources. It enables a company to manage its resources (materials, human resources, finance, etc.) most efficiently and effectively. An ERP system helps different parts of the organization to share data and knowledge, reduce costs, and improve management of business processes. Some of the most significant advantages of ERP are: Automation, Integration & Standardization of business processes; Multiple point data entry & retrieval Real-time Data processing abilities Ability to manage core and support processes Assists decision making through tailor made reports Supports flexible client/server architecture Drives effective business process re-engineering (BPR) Inculcates TQM & Best Practices across the industry

Implementation of ERP is an extensive, time-consuming and costly process, running into millions of dollars, depending on the size of the organization, complexity of its operations and its current state of IT readiness. The investment relates to software itself and associated services such as consulting, implementing, training, and system integration (Parr et al. 1999). However, many ERP systems fail (Stratman and Roth, 1999). Many ERP systems face implementation difficulties because of end users resistance. Another impediment that is encountered relates to Knowledge Integration in an ERP implementation. As knowledge is embedded within various cross-functional business processes, its integration becomes critical. KI is an on-going process of constructing, articulating and redefining shared beliefs through collective interaction of organizational members. These difficulties and high failure rate in implementing ERP systems have led to research on critical success factors (CSFs) in ERP implementation. This research is an effort to identify the CSFs for organizational preparedness for ERP Implementation, based on various published research papers. These identified factors have been used to make generic model for testing organizational preparedness & identify the gaps for medium and large corporations.

1.1 THE RESEARCH PROBLEM

1.1.1 The Problem Statement: To assess the Organizational preparedness of NTPC on ERP Implementation 1.1.2 Genesis of the Research Problem: NTPC Ltd - the largest power utility in India generating close to 28 GW of power - is in the midst of an organization wide ERP implementation. Pilot projects at two locations have already gone live and further implementation is being taken up in different regions in a phased manner. Entire organization is scheduled to run on ERP by March, 2008. NTPC, Unchahar (a 1050 MW unit of NTPC) is to be covered in the third phase of the ERP implementation and is scheduled to go live by 28th Dec., 2007. Preparatory work like data cleansing work with regard to Material master, Vendor Master & Equipment master etc. is currently on. End users are being made aware of the ERP systems in general to sensitize them towards a new work culture. 1.1.3 Rationale for the study: Thus, the proposed study is most timely in respect of its scope & intent. With the pilot implementation at Ramagundam and Faridabad just being over and phase-wise implementation across all units just started, it would provide useful guidance to the Project implementation team, process owners and end users as well. 1.1.4 Objective of the Present Study: The objective of the present study is to assess the organizational preparedness of NTPC on ERP implementation (adoption & use), using the model derived on the basis of identified CSFs for organizational preparedness through literature study. Going further, this study aims to identify the gaps on various sub-factors related to ERP implementation and finally suggest remedial measures.

1.2 LITERATURE REVIEW

To establish the authenticity of the current research project and provide theoretical underpinnings, various published articles from electronic resources and printed material have been studied. These research papers produced by eminent researchers in this field provided valuable guideline and framework for carrying on the present research. As the developments in this field are happening at a rapid pace, recent studies have been referred to as far as possible. In order to conceptualize the Critical Success Factors relevant to the research problem & arrive at the framework for assessing the Organizational preparedness, efforts have also been made to include practitioners views on the matter. These are enumerated in the next chapter where consultants to NTPC ERP project have identified some CSFs. 1.2.1 TAXONOMY OF ERP The figure given below facilitates understanding of various issues involved with ERP. Author has based it on a comprehensive review of available material on ERP. Figure 1 highlights the major streams of ERP research (Majed Al-Mashari, 2003).

Figure 1: Taxonomy of ERP research

1.2.2 NEED FOR IDENTIFICATION OF CSFs IN INTELLIGENCE PHASE Despite well identified difficulties in ERP implementation, research on Critical Success Factors in intelligence phase is very limited. To further illustrate this point, a number of issues of concern have been identified around the current implementation of ERP, as illustrated in Table 1(Sammon, David).

Figure 2: A Classification of Organizational Research in ERP The issues of concern assume critical significance as many of these problems experienced in later phases of the ERP system life-cycle originated earlier but remain unnoticed or uncorrected. Hence, there is a need for research into the Intelligence phase of the decision making process for ERP software selection, highlighting the critical factors for both selection and implementation of an ERP package in a pre-planning phase environment, therefore, facilitating a vendor/consultant independent, methodology independent, and pre-implementation thought process(Sammon, David). In support of this argument, Stafyla and Stefanou (2000, p.293) state that given the cost and the permanent nature of ERP investments, an understanding of the way decisions are taken concerning the adoption, evaluation and selection of ERP software can be very useful for both academic research and practice. However, Esteves and Pastor (2001) go one step further by highlighting the important issue concerning the definition of those decisions organizations face prior to implementing an ERP system. Caldas and Wood (1998) and Wood and Caldas (2001, p.5) called for the utilization of a broader [alternative] perspective to its [ERP implementation] comprehension, one that would challenge the reductionism and information technology biases that have characterized the prevailing approach to the subject. Therefore, we propose that a key milestone in, and radical approach to, enterprise-wide systems integration research will

involve the identification and development of an organizational pre-requisites model for project implementation.

Table 1: Issues of Concern in ERP Implementation

1.2.3 CRITICAL SUCCESS FACTORS IN PRE-IMPLEMENTATION PHASE OF ERP The adoption of ERP system in an organization requires intense efforts, focusing on both technological and business themes of implementation. Critical to the success of these efforts is the adequate organizational preparedness for embarking on ERP. Various models and frameworks have been propounded by different researchers for assessing success of an ERP Project. However, keeping in view the scope of the current

study, relevant portions of each of these works by eminent researchers is being mentioned in the following sub-sections.

1.

Model

for

Organizational

Pre-Requisites:

Enterprise-Wide

Systems

Integration Projects The model (Figure 2) for enterprise-wide systems integration projects could potentially be used by organizations to internally assess the likelihood of ERP and Data Warehousing project success, and to identify the areas that require attention (Sammon, David).

Figure 3: Organizational Pre-requisites Research Model Design for Enterprise-Wide Systems This research model for ERP facilitates the examination of the degree of criticality of the factors across the three conceptual phases (Existing, Planned and Implemented). Due to the fact that the critical factors for ERP implementation are generated based on a synthesis of existing literature on ERP project implementation, one noticeable area of omission is that of the data factors, highlighting the lack of focus being placed on the importance of data for the implementation of an ERP project. This new era of enterprise wide systems integration projects introduces an increased level of complexity to an already complicated organizational initiative. Therefore, an implementing organization needs to be aware of the increasing complexities of the ERP systems and focus on their requirements in relation to enterprise-wide systems integration project requirements.

2.

CSFs as per Rao (2000):

A comprehensive frame-work has been developed by Rao (2000) with respect to the CSFs to be considered in the preparation stage of ERP implementation:

Infrastructure resources planning making sure that adequate infrastructure is planned for in a way that it becomes reliably available well in time (both for the pre-implementation and the post- implementation stages).

Local area network ensuring network support for any ERP or other applications.

Servers deploying adequate server/network, even during the training/modeling phase.

PCs introducing new PCs with latest configuration that would be quite adequate for most ERPs.

Training facilities establishing adequate training center to work as competency center.

Human resources planning focusing on building a teamwork environment where team size spans across the entire organization.

Education about ERP ERP education should be carried out across the organization about ERP success and failure practices.

Commitment to release the right people ERP is recognized as a difficult but necessary project, and the best people must work full-time on the project.

Top managements commitment top management must have a change mindset through learning at all levels.

Commitment to implement vanilla version ensuring minimal customization and quick implementation.

Ability and willingness to consider an ongoing site as a Greenfield site. Reasonably well working manual systems carrying out audit exercise to find the current status and corresponding corrective actions.

Strategic decision on centralized versus decentralized implementation.

However, out of the given twelve factors, some are decided at the conception stage of an ERP implementation. Hence, although these are important factors in the preimplementation phase, all of the above factors are not relevant to the scope of the present research.

3.

CSFs as per Fiona Fui-Hoon Nah et al (2001):

Through a comprehensive review of the literature, 11 factors were found to be critical to ERP implementation success ERP teamwork and composition; change management program and culture; top management support; business plan and vision; business process reengineering with minimum customization; project management; monitoring and evaluation of performance; effective communication; software development, testing and troubleshooting; project champion; appropriate business and IT legacy systems. Author classified these CSFs into the respective phases (chartering, project, shakedown, onward and upward) in Markus and Tanis ERP life cycle model. 1. 2. 3. 4. Chartering decisions defining the business case and solution constraints; Project getting system and end users up and running; Shakedown stabilizing, eliminating bugs, getting to normal operations; Onward and upward maintaining systems, supporting users, getting results, upgrading, system extensions.

The chartering phase comprises decisions leading to conception of the ERP project. Key players in the phase include vendors, consultants, company executives, and IT specialists. Key activities include initiation of idea to adopt ERP, developing business case, decision on whether to proceed with ERP or not, initiation of search for project leader/champion, selection of software and implementation partner, and project planning and scheduling. The project phase comprises system configuration and rollout. Key players include the project manager, project team members (mainly from business units and functional areas), internal IT specialists, vendors, and consultants (generally referred to as implementation partners). Key activities in this phase include software configuration, system integration, testing, data conversion, training, and rollout. The shakedown phase refers to the period of time from going live until normal operation or routine use has been achieved. Key activities in this phase include bug fixing and rework, system performance tuning, retraining, and staffing up to handle temporary inefficiencies. The onward and upward phase refers to ongoing maintenance and enhancement of the ERP system and relevant business processes to fit the evolving business needs of the organization. Key players include operational managers, end users, and IT support

personnel

(internal

and

external).

Key

activities

include

continuous

business

improvement, additional user skill building, upgrading to new software releases, and post-implementation benefit assessment. As different factors are important in different stages, it is important to classify the 11 CSFs identified into the phases of ERP implementation life cycle where the factors may come into play. Figure 3 shows the classification of these factors into an integrative framework. Table 3: Survey of critical success factors in ERP implementations

Figure 4: Classification of CSFs of ERP implementation into Markus and Tanis (2000) process-oriented ERP life cycle model

4.

CSFs as per Somers & Nelson (2001):

The work of Somers and Nelson was based upon a large scale meta-study of the case study literature in the area of ERP implementation from which they identified twenty-two critical success factors. Their study also solicited information from respondents to ascertain the stage at which their implementation had reached, identifying from the data the top five CSF by stage. Table 2 shows Somers and Nelson's results, providing the mean rankings of CSFs by degree of importance in ERP implementation, Table 2: Mean ranking of CSFs by degree of importance in ERP implementation (Somers & Nelson, 2001)
Critical Success Factor
Top Management Support Project Team Competence Interdepartmental Co-operation Clear Goals and Objectives Project Management Inter-departmental Communication Management of Expectations Project Champion Vendor Support Careful Package Selection Data Analysis and Conversion Dedicated Resources Steering Committee User Training Education on New Bus, Processes BPR Minimal Customization Architecture Choices Change Management Vendor Partnership Vendor Tools Use of Consultants

Mean
4,29 4,20 4,19 4,15 4,13 4,09 4.04 4,03 4,03 3.89 3,83 3,81 3.97 3,97 3,76 3,68 3,68 3.44 3,43 3,39 3,15 2.90

The aim of the research was to better understand project managers' perceptions of critical success factors (CSFs) as they affect the outcome of ERP implementations at

distinct stages of the implementation. These CSFs were subsequently reviewed by many researchers, since these emerged as sound pieces of research yielding typical results.

5.

CSFs as per Gupta (2000):

As per this study, the key to successful implementation of ERP are related to Securing top management commitment, Forming cross-functional task forces to link project management with business units, Carrying out an assessment exercise of hardware requirements, Making deployment in a step-by-step introduction rather than all at once, Starting early planning on user training and support, Streamlining decision making to move implementation quickly, and Being patient as ERP implementation takes time.

Gupta (2000) illustrates several common problems associated with ERP implementation. Among these is the resistance to change, when, for example, some employees become reluctant to learn new techniques or accept new responsibilities. Another problem is related to unplanned cost associated with new requirements emerging after the freezing stage. A third problem is poor training of end-users, who, when the system is up and running, do not know how to use it and maintain it continually.

1.3 IMPORTANCE OF CHANGE MANAGEMENT IN ERP IMPLEMENTATION While implementing an enterprise resource planning (ERP) system, top management should, proactively deal with the hostile attitude from potential users instead of reactively confronting it. Thus an integrated, process oriented approach is required for dealing with the complex social problem of workers' resistance to ERP. In spite of their many tangible & intangible benefits, some ERP systems fail (Stratman and Roth, 1999) while others face implementation difficulties because of workers' resistance. Al-Mashari and Zairi (2000) assert that effective implementation of ERP requires establishing five core competencies, among which is the use of change management strategies to promote the infusion of ERP in the workplace. Change management strategies for ERP implementation Improvement strategies, such as ERP implementation, commonly involve change. Hence, responsiveness to internal customers is critical for an organization to avoid the difficulties associated with this change (Al-Mashari and Zairi, 2000; Aladwani, 1999; Aladwani, 1998). To assist top management with the complex organizational problem of workers' resistance to ERP implementation, an integrated, process-oriented conceptual framework consisting of three phases (Figure 5): knowledge formulation, strategy implementation, and status evaluation has been suggested (Adel M. Aladwani, 2001). Knowledge formulation phase The first step in effectively managing change introduced by IT is to identify and evaluate the attitudes of individual users and influential groups (Aladwani, 1998). The answers to the following fundamental questions may offer a good starting point in determining the sources of employees' resistance to the ERP system. Who are the resisting individuals and/or groups? What are their needs? What beliefs and values do they have? What are their interests?

According to Hultman (1979), employee-raised facts, beliefs and values are good indicators of what may cause their resistance to change. Their apprehensions with regard to computer illiteracy, redundancy of an ERP system or job security or familiarity

with such a system may indicate the cause of resistance. Yet another group of users may be concerned about losing existing power and authority.

Strategy implementation phase Management can use the knowledge regarding potential users to overcome users' resistance and convince as many users as possible to adopt it (Aladwani, 1998). An action sheet for implementing the selected strategies based on three-level adoption process (think-feel-do) provides a good framework. Communication plays a decisive role in changing the cognitive component of users' attitudes of potential users of ERP. One effective communication strategy is to inform potential users of the benefits of ERP. In many cases, ERP implementation failed because of lack of communication (Al-Mashari and Zairi, 2000). While knowledge about what the system may help, unrealistic workers' expectations may deepen the resistance problem. Moreover, the success of future introduction initiatives depends on building a cumulative base of credibility by management. ERP users are expected to be reluctant to welcome the new system if they do not know how it works. Thus, training various user groups how the ERP system works is important in creating awareness (Stratman and Roth, 1999). It is therefore very important from the outset that potential users know how the ERP system is going to work along with role clarity for each of the user. In all cases, it is of paramount importance that the support staffs responsible for executing these communication strategies possess adequate political skills (Aladwani, 1999). The second step in the strategy implementation phase is to influence the affective component of users' attitudes. It could be addressed either through cost minimization or differentiation. The marketing intellectual, Porter (1985), proposed the low-cost strategy has a useful implication for ERP. Change agents must be able to convince ERP users that their net outcome of the adoption process will be positive, in order to create a positive adoption attitude (Amoako-Gyampah, 1999). The cost minimization strategy should be developed in such a way that it affects both individual workers and influential groups. These groups within the organization are also looking at the cost aspect of the implementation effort. Many a time new systems fail due to change in the balance of power in an organization, Markus (1983). Another strategy that could help affect the adoption attitude of potential users is differentiation. Users' perceived high quality of the ERP system has a positive impact on their attitudes toward that system, Aaker (1992). Normally, system users are not

equipped to scientifically measure quality attributes of the system, they constructs their perception about the system based on their hands-on experience. Training offers a good opportunity to help users adjust to the change and helps build positive attitudes toward the system. Thus, trained users can better appreciate the quality attributes of the system and its potential benefits. The last part in the strategy implementation phase is the cognitive stage. Getting the endorsement and support of key individuals, leaders of the influential groups and opinion leaders is the first strategy that can be used. To succeed, management has to capitalize on its efforts in the second stage when it tried to build users' intention to adopt the ERP system by minimizing the adoption costs of the groups. Also, convincing group leaders to effectively participate in the implementation process and make them feel that they are key players (because they are making key decisions) will ensure their valuable commitment. Because of their commitment, leaders of the groups will try to convince their colleagues that the ERP system is to their benefit. Another strategy is carefully timing the introduction of the new system. Attitude is one of the critical factors that must be taken into account when timing the introduction of a product. An ERP system should not be introduced until a positive attitude (i.e. an intention to adopt) is built and sustained among potential users. For example, do not introduce an ERP when a critical mass of your employees feels threatened by the system or feels forced (neither convinced nor encouraged) to accept the new system. Last but not least, top management commitment is critical for the success of the whole ERP implementation process (Gable and Stewart, 1999; Stratman and Roth, 1999). Change requires a strategic vision to ensure its long-term success (Aladwani, 1999). In a survey by Zairi and Sinclair (1995), leadership was ranked the number one facilitator of large transformation efforts. Management commitment and support is the ultimate strategy that will secure the necessary conditions for successfully introducing the change brought by ERP into the organization. Status evaluation phase The process of monitoring and evaluating change management strategies for ERP implementation is the last component of the suggested framework. Performance measurement system must monitor the progress of ERP change management efforts. The status evaluation phase provides feedback information to top management in a

dynamic manner. In order to be useful, the feedback should be timely, accurate, and systematic. Based on status evaluation phase outcome, top management takes appropriate action. An agile top management may want to re-identify users' needs and re-evaluate the execution of adopted change management strategies to find an acceptable fit between the two. Thus, to overcome users' resistance to change, top management has to: Study the structure and needs of the users and the causes of potential resistance among them; Deal with the situation by using the appropriate strategies and techniques; and Evaluate the status of change management efforts.

Figure 5: A suggested Framework for managing change associated with ERP

Figure 6: A Model of Successful ERP Adoption

1.4 SUCCESSFUL BPR IMPLEMENTATION STRATEGY 1.4.1 Introduction "Business Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed." -- Dr. Michael Hammer

Business Process Reengineering could bring about complete overhaul of organizational structures, technology. Successful BPR can result in revolutionary improvements for business operations through enormous reductions in cost or cycle time, substantial improvements in quality, customer service, or other business objectives. However, recent surveys estimate the percentage of BPR failures to be as high as 70%. Some organizations have put forth extensive BPR efforts but could achieve marginal or even negligible benefits. Others have succeeded only in destroying the morale and momentum built up over the lifetime of the organization. Thus, confusion seems to be prevailing on how successful BPR attempts could be made or what are the factors that should be considered for a successful BPR. But there is no generic prescription for all. It all depends on the unique needs of their industry, people, and culture. BPR is a management concept that has been formed by trial and error --or in other words practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent. "Reengineering is new, and it has to be done." 1.4.2 PERFORMING BPR: COMMON STEPS Phase 1: Begin Organizational Change Phase 2: Build the Reengineering Organization Phase 3: Identify BPR Opportunities Phase 4: Understand the Existing Process -- Peter F. Drucker management systems, employee responsibilities and performance measurements, incentive systems, skills development, and the use of information

Phase 5: Reengineer the Process Phase 6: Blueprint the New Business System Phase 7: Perform the Transformation Phase 1: Begin Organizational Change Activities: - Assess the current state of the organization - Explain the need for change - Illustrate the desired state - Create a communications campaign for change The first step is to examine the operating procedures and the bottom-line results that are generated by them. The purpose of performing the analysis described below is to determine whether dramatic change by doing BPR is really necessary. Aspects of the business that need to be evaluated are: how things are currently done, what changes may be occurring, and what new circumstances exist in our business environment. The deciding factor should be whether or not the organization, in its current state, is able to meet the needs of the markets it serves. The consequences of inaction should be identified and well understood. Finally, the proper future direction of the organization should be decided. The future "vision" of how the business must operate will serve as a clear and concise guide with measurable goals derived from business plans and strategies for employees to focus on. BPR requires significant changes throughout an organization, thus it must begin with a communications campaign to educate all those who will be impacted by this change. Communication to all levels of personnel must remain active from start to finish to keep everyone involved and working towards a common goal. It would do away with confusion and uncertainty that could result in build up of resistance. In order for change to be embraced, everyone must understand where the organization is today, why the organization needs to change, and where the organization needs to be in order to survive. Phase 2: Build the Reengineering Organization Activities:

- Establish a BPR organizational structure - Establish the roles for performing BPR - Choose the personnel who will reengineer An infrastructure must be established to support reengineering efforts. Who are the people that will be chartered to reengineer the business? What will their responsibilities be? Who will they report to? These are the questions that must be answered as the reengineering staff is gathered together to communicate, motivate, persuade, educate, destroy, create, rebuild, and implement. An effective leadership is most essential for BPR initiative. Without the commitment of substantial time and effort from executive-level management, most BPR projects cannot overcome the internal forces against them. The executive leader, should be a high-level executive, who has the authority to make people listen and motivational power to make them follow. There should be a process owner for each specific high-level process being reengineered. It brings in expertise and accountability to the whole exercise. A reengineering team is constituted of current insiders, who perform the current process and are aware of its strengths and weaknesses, along with outsiders who can provide objective input to spark creative ideas for redesign. Credibility of selected persons plays an important role in reducing the internal resistance to the new process. They diagnose the existing process and oversee the redesign and implementation. Lastly, a reengineering specialist can be an invaluable addition to the overall effort. A reengineering specialist can assist each of the reengineering teams by providing tools, techniques, and methods to help them with their reengineering tasks. Phase 3: Identify BPR Opportunities Activities: - Identify the core/high-level processes - Recognize potential change enablers - Gather performance metrics within industry - Gather performance metrics outside industry - Select processes that should be reengineered

- Prioritize selected processes - Evaluate pre-existing business strategies - Consult with customers for their desires - Determine customer's actual needs - Formulate new process performance objectives - Establish key process characteristics - Identify potential barriers to implementation In this phase, the entire organization is divided into high-level processes rather than the usual vertical business areas such as marketing, production, finance, etc. These processes -usually less than a dozen- are the major or core processes of the organization. This activity is slightly difficult because it requires us to identify the process boundaries (where the process begins and where it ends), that will help set the project scope for those processes that are to be reengineered. At this point, it is helpful to begin thinking about potential change levers which may lead to dramatic changes in the organizations processes. These are: the use of information, the use of information technology, and human factors. Once the major processes have been defined, we need to decide which of our high-level processes needs to be reengineered. Typically, organizations use the following three criteria: Dysfunction (which processes are the most ineffective), Importance (which processes have the greatest impact on our customers), and Feasibility (which processes are at the moment most susceptible to accomplish a successful redesign.These can show quick success and help build the much needed momentum and enthusiasm at all levels of the organization. Prioritizing the processes we have chosen to reengineer guides us in scheduling the order we will reengineer these processes. Going after the highest priority process first, we assess the preexisting business strategy which governed its component tasks. Process goals and objectives can be determined by combining customer needs with competitor benchmarks and "best of industry" practices (metrics on the best performers of a similar process in other industries). In addition to goals and objectives, we need to complete the conception of the new process

by identifying key performance measures, key process characteristics, critical success factors, and potential barriers to implementation. Phase 4: Understand the Existing Process Activities: - Understand why the current steps are performed - Model the current process - Understand how technology is currently used - Understand how information is currently used - Understand the current organizational structure - Compare current process with the new objectives At this stage, it is important to understand the underlying reasons why the existing process is carried out the way it is. By now new process objectives have been clearly defined (in Phase 3), existing processes can be measured in terms of the new objectives to see where we are and how far we have to go. Modeling the current process is an important part of this phase. It not only helps us to better understand the existing process, but also helps with planning the migration from the old to the new process and executing the physical transformation of personnel, organizational structures, information requirements, and how technology is used. Information that should be included in the models are process inputs (such as task times, data requirements, resources, demand, etc.) and process outputs (such as data outputs, cost, throughput, cycle time, bottlenecks, etc.).Understanding how and why the current processes use information is also important. We need to end up with an estimate of the current cost, robustness, and functional value of each technology and information systems currently being used. Phase 5: Reengineer the Process Activities: - Ensure the diversity of the reengineering team - Question current operating assumptions - Brainstorm using change levers

- Brainstorm using BPR principles - Evaluate the impact of new technologies - Consider the perspectives of stakeholders - Use customer value as the focal point During this phase, the actual "reengineering" begins. The "inside" perspective may reveal information about the existing process that was not uncovered in Phase 4. Equally important is the "outside" perspective of someone who will look at the process with a "fresh eye" and raise questions about operating assumptions that may not be obvious to the insider who might be too close to the process to see this. Including both outsiders and technologists on the team will help spark "out-of-box" thinking (thinking creatively above and beyond the current restrictions - the walls of the box).Lastly, a technologist will provide insight as to how technology can be applied in new and innovative ways. Having developed a good understanding of how the existing processes work in the previous phase, it is now necessary to question the operating assumptions underlying the processes. The Reengineering Team is now tasked with brainstorming to create new process ideas. According to Hammer, brainstorming sessions are most successful when BPR principles are considered. BPR Principles: Several jobs are combined into one; Workers make decisions; The steps in a process are performed in a natural order; Processes have multiple versions; Work is performed where it makes the most sense; Checks and controls are reduced; Reconciliation is minimized; A case manager provides a single point of contact; Hybrid centralized/decentralized operations are prevalent. Phase 6: Blueprint the New Business System

Activities: - Define the new flow of work - Model the new process steps - Model the new information requirements - Document the new organizational structure - Describe the new technology specifications - Record the new personnel management systems - Describe the new values and culture required This phase of the project takes the reengineered process developed in the previous phase, and provides the details necessary to actually implement it. In BPR, blueprints must be created to identify all the necessary details of the newly reengineered business system and the information required to support it. Blueprinting involves modeling the new process flow "to be" models derived from the "as is" process and information requirements in Phase 4. The blueprints should also contain models of the redesigned organizational structure. In addition, detailed technology specifications required to support the new process should be defined. Included in the blueprints should be the new management systems and values or belief systems of this redesigned area of the business. New management strategies, along with new performance measurements, compensation systems, and rewards programs should be outlined. The reengineered process may require a change in the values or belief systems of the company. The redesign may require an entirely different culture, or atmosphere, than what is prevalent in the organization today. It is critical to have these areas, and their responsibilities, defined as we go into the implementation phase. Phase 7: Perform the Transformation Activities: - Develop a migration strategy - Create a migration action plan - Develop metrics for measuring performance during implementation - Involve the impacted staff

- Implement in an iterative fashion - Establish the new organizational structures - Assess current skills and capabilities of workforce - Map new tasks and skill requirements to staff - Re-allocate workforce - Develop a training curriculum - Educate staff about the new process - Educate the staff about new technology used - Educate management on facilitation skills - Decide how new technologies will be introduced - Transition to the new technologies - Incorporate process improvement mechanisms After having communicated, strategized, analyzed, reengineered, and blueprinted the ideas for the new process, organization is ready to be transformed. This is where all of the previous efforts are combined into an actual business system. The first step in transforming the organization is to develop a plan for migrating to the new process. To achieve this, a path is required which can connect the current state of the organization, to the state where organization wants to be. Migration strategies include: a full cutover to the new process, a phased approach, a pilot project, or creating an entirely new business unit. An important point to consider is the integration of the new process(es) with other existing processes. The reengineered processes must be flexible enough to be easily modified later on, so as to integrate it with other reengineered processes. Successful transformation depends on consciously managing behavioral as well as structural change, with both sensitivity to employee attitudes and perceptions, and a tough minded concern for results. BPR Implementation requires the reorganization, retraining, and retooling of business systems to support the reengineered process. The new process will probably require a new organization, different in structure, skills, and culture. The new management structure should result in the control paradigm being

changed to the facilitation paradigm. The new process team structure should result in the managed paradigm being changed to the empowered paradigm. Once the new structures are established, tasks should be mapped in the process to functional skill levels, and ultimately to individuals. Transforming the workforce begins with an assessment of the current skills or capabilities of the workforce to include soft skills, operational skills, and technical skills. This inventory may require personal evaluations including areas of interest, peer evaluations and supervisor evaluations. Feedback should be provided to all personnel to ensure accuracy of current skills and interests for all staff. Knowing the new process skill requirements and a current skills inventory, the gaps can be assessed. An educational pyramid is an effective way to transfer knowledge of team building, self mastery, and subject matter knowledge. Systems training is essential to understanding the use of new information systems and how to take advantage of their capabilities. Process training may be needed to help employees think beyond a linear process to a more holistic interdependent process. Facilitation training for management is critical to develop their abilities to listen, allow mistakes, handle disputes among process experts, and transition to a coach/facilitator role. Education may be necessary for Total Quality Management (TQM), Statistical Process Control (SPC), or Continuous Process Improvement (CPI) if these mechanisms are designed into the new processes. Finally, a structured on-the-job training (OJT) program is instrumental in providing continuity of the new process during periods of personnel turnover or attrition. As with any dramatic change, people will have personal difficulties, to varying degrees. Almost all new process implementations are surrounded by confusion, frustration, and sometimes panic. The best transition strategy is one that minimizes, as much as possible, the interference caused to the overall environment. Transforming information systems to support the new process may involve retooling the hardware, software, and information needs for the new process. One approach to this transition could be a controlled introduction. The method would ensure that each part of the system is operational for a segment of the business before going on to the next module to implement. Although the risk may be low while the bugs in the new system are ironed out, it may be difficult to integrate the hybrid old/new systems in a step-wise manner. The flash cut approach is where the entire system is developed in parallel to the

existing system, and a complete transition occurs all at once. This may put the organization at a higher risk if the systems do not function properly at first, but it is the more common approach. Most reengineered processes function in an entirely different manner than existing processes; thus, even a stepwise introduction would, most likely, not be fully functional until all steps were introduced anyway. An important reason to justify the flash cut approach is that the reengineering benefits can be realized much sooner than with a controlled introduction. Data systems used to support the old process may have poor data integrity, incorrect data, or insufficient data to support the new business needs. Thus, information requirements of the re-engineered processes may be distinctly different from that of the earlier system. In these cases the data must be expanded to fill the gaps in the existing data and supply the new information requirements of the re-engineered process. (Balasubramanian, S., Excerpts from the article)

1.5 IMPORTANCE OF KNOWLEDGE INTEGRATION Most of the studies focus mainly on the potential benefits and critical success factors associated with ERP implementation. Very few have explored the important issues of impediments encountered, especially from a knowledge integration perspective. Following factors can be considered are primarily contributing to this process: (1) knowledge embedded in complex organizational processes; (2) knowledge embedded in legacy systems; (3) knowledge embedded in external processes; and (4) knowledge embedded in the ERP system. (Shan L. Pan et al 2001) 1.5.1 IMPEDIMENTS TO KNOWLEDGE INTEGRATION 1. Knowledge embedded in Complex Organizational Processes An ERP implementation is, in essence, an integrative mechanism connecting diverse departments so as to establish an integrated process (Hammer 1999). However, in the case of a decentralized organizational structure, where different BUs have autonomy, there are an abundance of highly adaptive and effective logistic and financial systems. This makes ERP implementation very difficult in a matrix-based organization structure due to conflict of interest among various BUs. It has to be overcome before their respective knowledge could be effectively integrated. To achieve this, standardization and transparency of knowledge throughout the organization is essential. 2. Knowledge embedded in Legacy Systems Knowledge is also embedded in legacy systems. Users are interested in comparing how consistent and similar the new ERP system was with the legacy systems. This concern stemmed partly from users awareness of failures encountered in earlier ERP implementations in other regions. This tendency of benchmarking against the legacy systems illustrates users reluctance to change and re-learning. This can be seen from two angles: a) as a technological constraint and b) as a social issue from a mindset change perspective. In order to overcome this problem, the ERP system can be made to look outwardly similar to the legacy system. This can be done by integrating knowledge through

mapping the information, processes, and routines of the legacy system into the ERP systems with the use of conversion templates.

3. Knowledge embedded in External Processes Another problem that is generally encountered is with regard to integrating the organizations internal knowledge with external knowledge - for example those of suppliers, consultants and contractors. Although, linking internal processes with externally based knowledge is difficult as the ERP system is designed to be internally focused, it is required to integrate with external systems. In order to overcome the difficulty of integrating the internal processes with externally based knowledge, some of the knowledge is embedded in the ERP system, especially after it is implemented. 4. Knowledge embedded in the ERP System: Post-implementation After the ERP is implemented, much of the knowledge that is embedded within the newly created ERP system is inaccessible from existing personal networks. Yet, in order to exploit the full potential of the ERP system, this embedded knowledge needs to be integrated with internal and external knowledge. To overcome this problem, knowledge-enabling structures like electronic knowledge sharing forums can be set up by the organization with the aim of encouraging formal knowledge sharing and movement toward systematic organizational memory accumulation. It also improves structural integration across the organization which is likely to support improved innovation in the future. Thus knowledge integration is a key problem in an ERP implementation. The need for knowledge integration continues even after implementation, if the system is to be fully appropriated. Knowledge integration does not happen automatically as the implementation of ERP is not merely a technological task influenced by users perceived usefulness, but a cross-functional knowledge integration process structurally enabled by the establishment and maintenance of knowledge-based social relationships intra- and inter-organizationally. This process is strongly influenced by, the socio-technical, structural, and relational constructs found in the organization.

1.6 IMPACT OF CUSTOMIZATION Customization has been a major source of pain for many organizations during implementation of Enterprise Resource Planning (ERP) systems. It affects the organization in an on-going fashion through increased maintenance costs, increased complexity and less flexibility of the system. For these reasons, most people strongly advocate a vanilla implementation, i.e. without customization. However, when business processes in an organization cannot be modeled in an ERP system without customization, the impact of a decision to not customize becomes relevant. The choice lies between two extremes - the requirement to customize to include business processes and the desire to successfully implement an ERP system without additional complexity; additional maintenance costs, and less flexibility. Thus all customizations are not created equal, and a certain type of customization is beneficial. Specifically, strategic customizations will enhance the IT infrastructure strategic alignment with the business strategy. Non-strategic customization, such as consistency customization, will impact the system agility of the corporation. The critical success factors concerning customization shall include information about the strategic nature of the customization. It should be judged on the basis of outcomes in terms of strategic alignment and systems agility. However, the perceived importance of these factors may differ across implementation partners such as top executives, users, project team members, internal IT specialists, vendors, and consultants. With a better understanding of the issues involved in ERP implementations, management will be able to make critical decisions and allocate resources that are required to make ERP implementation a success. (Ashley Davis, 2005)

1.7 PROPOSED MODEL FOR ASSESSING ORGANIZATIONAL PREPAREDNESS 1.7.1 Identification of Critical Success Factors & their sub-factors After going through the research work of many eminent scholars in this field, the LifeCycle framework (Markus and Tanis, 2000) and CSFs for organizational preparedness (Rao, 2000) were considered to be most appropriate and relevant to the current study. It was also noticed that many research works done in this field, have referred to the lifecycle approach. While selecting the sub-factors also, various research works enlisted against each of them have been referred.

1. Communication: Targeted & Effective Communication (Falkowski et al, 1998; Wee, 2000) Communication among stakeholders (Holland et al, 1999; Shanks et al, 2000) Expectations communicated at all levels (Holland et al, 1999; Rosario, 2000; Shanks et al, 2000; Sumner, 1999) Project progress communication (Holland et al, 1999; Sumner, 1999)

2. Change Management: Recognizing the need for change (Falkowski et al, 1998) Enterprise wide culture & structure management (Falkowski et al, 1998; Rosario, 2000) Commitment to Change Perseverance & determination (Shanks et al,2000) User Education & training (Bingi et al,1999; Holland et al, 1999;Murray & Coffin,2001; Roberts & Barrar, 1992; Shanks et al,2000) Analysis of user feedback (Holland et al, 1999)

3. Business Process Re-engineering: (Bingi et al,1999; Holland et al, 1999;Murray & Coffin,2001; Roberts & Barrar, 1992; Shanks et al,2000; Wee, 2000) Level of complexity of operations Robustness of the existing system Level of documentation Flexibility in the system for BPR

Minimum Customization (Murray & Coffin, 2001; Rosario,2000; Shanks et al,2000; Sumner, 1999)

4. IT Infrastructure: Hardware -Server Capacity (Rao,2000) Network (LAN /WAN) connectivity (Rao,2000) Adequacy of bandwidth (Rao,2000) PCs & Peripherals - Adequacy wrt configuration & numbers (Rao,2000) IT workforce re-skilling (Sumner, 1999) User support organization & involvement (Wee, 2000)

5. ERP Team Composition: Best people on Team (Bingi et al,1999; Buckhout et al,1999; Falkowski et al, 1998; Rosario, 2000; Shanks et al,2000; Wee, 2000) Balanced & Cross-Functional Team (Holland et al, 1999; Shanks et al, 2000; Sumner, 1999) Partnership, Trust, Risk sharing & Incentives (Stefanou, 1999; Wee, 2000) Process & Technical knowledge of Team members & Consultants (Bingi et al,1999; Shanks et al, 2000; Sumner, 1999)

6. Top Management Commitment: Approval & support from top management (Bingi et al,1999; Buckhout et al,1999;Murray & Coffin, 2001; Shanks et al, 2000; Sumner, 1999) Top management publicly & explicitly identified the project as top priority (Shanks et al, 2000; Wee, 2000) Allocate resources (Holland et al, 1999; Roberts & Barrar, 1992; Shanks et al, 2000) 1.7.2 Critical Success Factors for Organizational Preparedness 1. Communication A shared vision of the organization and the role of the new system and structures should be communicated to employees. Management of communication, education and expectations are critical throughout the organization (Wee, 2000). User input should be managed in acquiring their requirements, comments, reactions and approval (Rosario, 2000). Communication includes the formal promotion of project teams and the advertisement of project progress to the rest of the organization (Holland et al., 1999). Middle managers

need to communicate its importance (Wee, 2000). Employees should be told in advance the scope, objectives, activities and updates, and admit change will occur (Sumner, 1999).

2. Change Management Change management is the most critical to any ERP implementation. It starts at the project phase and continues throughout the entire life cycle. Enterprise wide cultural and structural changes should be managed (Falkowski et al., 1998). An emphasis on quality, a strong computing ability, and a strong willingness to accept new technology would aid in implementation efforts. Users must be trained, and concerns must be addressed through regular communication, working with change agents, leveraging corporate culture and identifying job aids for different users (Rosario, 2000). 3. Business Process Re-engineering (BPR) Another important factor that begins at the project phase is BPR and minimum customization. Aligning the business process to the software implementation is critical (Holland et al., 1999; Sumner, 1999). Organizations should be willing to change the business to fit the software with minimal customization (Holland et al., 1999; Roberts and Barrar, 1992). Modifications should be avoided to reduce errors and to take advantage of newer versions and releases (Rosario, 2000). Business process reengineering should begin before choosing a system. While configuration, large amount of reengineering should take place iteratively to take advantage of improvements from the new system. Then when the system is in use reengineering should be carried out with new ideas (Wee, 2000). Quality of business process review and redesign is important (Rosario, 2000). In choosing the package, vendor support and the number of previous implementers should be taken into account (Roberts & Barrar, 1992).

4. IT Infrastructure Capacity of servers required would generally depend on the type of ERP system selected and the complexity & expanse of business operations. However, network structure (LAN/WAN) and connectivity (adequacy of bandwidth) for all locations/users is essential to reap full benefit out of the system. Thus, a suitable network backbone using optic fibre cable can be planned in advance. From the point of view of end users,

availability of PCs and peripherals need to be assessed and augmented if required. (Rao,2000) Training, re-skilling and professional development of the IT workforce is critical. On-site support should be available during implementation, in the form of trained hands, help desk or online user manual (Wee, 2000).

5. ERP Team Composition ERP team should be a cross-functional team consisting of the best people in the organization (Buckhout et al., 1999; Bingi et al., 1999; Rosario, 2000; Wee, 2000). It should have a mix of consultants and internal staff (Sumner, 1999), as business and technical knowledge both are essential for success (Bingi et al., 1999; Sumner, 1999). Team members need to be assigned full time to the implementation (Wee, 2000). The team should be given compensation and incentives for successfully implementing the system on time and within the assigned budget (Wee, 2000).

6. Top Management Commitment Top management needs to publicly and explicitly identify the project as a top priority (Wee, 2000). It should be visible through their own involvement and willingness to allocate valuable resources for the project (Holland et al., 1999). Apart from this, alignment with strategic business goals (Sumner, 1999) is a must. Managers should legitimize new goals and objectives. New organizational structures, roles and responsibilities should be established and approved. Policies should be set by top management to establish new systems in the company. In times of conflict, managers should mediate between parties (Roberts and Barrar, 1992).

2. ERP IMPLEMENTATION in NTPC : An Overview 2.01 Introduction Enterprise Resource Planning (ERP) is a cross - functional, multi-module integrated application package that help manage and automate a business, involving best practices thereby improving the performance. A single database provides access to all applications, programs and services within an enterprise. decision making is done. ERP incorporates all elements of a business - finance, materials, HR, maintenance, operations, projects and commercial activities etc. into a unified whole that operates more effectively and efficiently. It is a structured approach to optimizing companys internal & external value chain. Implementation of ERP imparts cutting edge advantages to an organization by Integrating their business processes Extending their competitive capabilities Ensuring a better return on investment at a lower total cost of ownership Transaction data are converted into useful information and analyses, based on which operational and strategic

Worldwide Trend External analysis revealed that leading Utilities are using commercial ERP solutions and there are no observed instances of a Custom Build approach to develop and integrate core applications. Most global fortune 500 firms use ERP solutions. Top Thermal Power Generators globally and in South Asia have ERP or are evaluating ERP to support core processes in Generation business. Some of the prominent names include Eskom, Reliant Resources, RWE Enpower, AEP, Enel, Xcel Energy, KenGen, Tokyo Electric Power Company, etc. Several leading Public sector enterprises like IOC, BPCL, HPCL, ONGC, VSNL, DMRC, CONCOR, NLC, BHEL and Private companies like Telco, ITC, ABB, TISCO, BSES, Tata Power, Godrej, MRF, M&M, Hero in India are adopting ERP backbone to integrate core processes. NTPC awarded the contract for Procurement of ERP and its Implementation to SAP India on 2nd May2006 with Siemens Information Systems Limited (SISL) as their Implementation Partner.

SAP & SISL: An Introduction M/s. SAP AG, based at Waldorf (Germany) is a world renowned concern for ERP solutions and implementation generates revenues in excess of $ 13.3 bn. It has done approximately 69,700 installations in 21,600 companies across the world. It has end-toend solutions available for 25 industries which embed Industry best practices. It has more than 12 million users in 120+ countries. It is backed by a strong R&D setup, with a total annual budget of over $ 1 bn. M/s. SAP established itself in India in 1996. It has two R&D Centre at Bangalore & Delhi Country wide Offices and a Customer Care Centre at Bangalore. With over 2000 customers and over 200 technology partners, which numbered less than half almost a year ago, SAP is poised for rapid growth. It has the third largest employee base in India after Germany & the US. M/s. Siemens Information Systems Limited (SISL) is system integrator and total solution provider to a global clientele. It has already implemented 120+ SAP implementations and undertaken 1000+ SAP related consultancy assignments from various reputed organizations in India & abroad. It is a SEI CMM level 5 & SEI P-CMM level 3 certified company. Offered Solution M/s. SAP AG, has offered SAP-R/3 solution to NTPC. SAP stands for Systems, Applications and Products in Data Processing. R/3 stands for Real Time 3-Tier architecture. The 3 Tier consists of Client i.e, PC or lap-top, Application Server (SAP) and Data base server. Timelines NTPC opted for a phased implementation of SAP. The strategy was to implement the configured solution first at 5 pilot sites i.e at Ramagundam, Faridabad, Koldam, Corporate centre and NCR HQrs by 1st June 2007, followed by rollout at other locations in a phased manner. The final roll out would be completed by 31st March 2008. Tangible And Intangible Benefits Some of the tangible benefits expected out of an ERP implementation are inventory reduction, reduction in procurement lead time, reduction in procurement cost etc.

Examples of Intangible benefits are improved and standardized business processes, better planning, control on accounts receivables and payables, transparent real time information, faster response to customers and employees, visibility of inventory across NTPC, tracking of status of various activities like project execution etc. It also acts as foundation for e-business and enables managing business changes consistently. Global Best Practices SAP Solution has been developed over the years based on the best practices used by Industry leaders across the globe. By adhering to Standard Solution, one automatically gets process with best practices. SAP Best Practices industry packages are designed to meet industry-specific needs, for example SAP Best Practices for integrated Power majors. 2.02 Critical Success Factors for ERP implementation Some of the critical success factors identified with regard to ERP implementation are listed below: Senior Management Commitment & Participation - Commitment and ownership to the implementation by all levels of people in the organization Readiness to Change - Change in mind set and behavior of end use to shift from legacy way of working to ERP environment Teamwork - Best People Full Time Communication Good Project Management Skills - Periodic Review & Quality Audit Business Process Re-engineering - just after mapping As Is processes End User Empowerment & Involvement - Clarity of roles and JIT training of end users Infrastructure Availability - Adequate hardware and connectivity at locations Using Standard Functionality - least customization Able Implementation Partner 2.03 Roles and Responsibilities 1. 2. Process Owners Take ownership of the improved processes and give approval Head of Projects Act as driver to ensure effective implementation of ERP at their location. Motivate all location people to adopt to the new way of working

To ensure availability of infrastructure facilities in time To ensure completion of codification exercise well in time at their location To expedite data migration activities at their location 3. Process Anchors Act as a link between the core team and users Help ERP Team in identifying As is processes & functionalities and in defining To be processes Fine tune existing processes and remove redundancies in the processes Share information as well as expectations from ERP Maintaining communication through document exchange, e-mails, workshops conferences etc. Act as Trainer, once trained 4. Change Agents Interact with ERP Team Act as opinion maker and generate awareness among colleagues Disseminate information about ERP, its advantages, features, limitations, success factors, precautions. Hold workshops / seminars on ERP at their locations 2.04 NTPCs Vision : From Disha to Lakshya NTPC management realized at the dawn of this millennium that operational efficiency and strategic effectiveness can be leveraged through an integrated, flexible and standardized information system architecture. Appropriately named project DISHA (direction) was conceptualized with the help of professional consultants. Subsequent to this initiative, project Lakshya (target) towards organization wide ERP implementation was taken up.

NTPCs Vision
An Integrated, Flexible and Standardised Information Systems architecture to position towards fundamental competitive advantage Bridging the Gap through Enterprisewide Resource Mgmt. System

Current Reality
Function based Organisation, Multiple stand alone packages, Time lag between market realities and decision making

Figure 7: Need of Project LAKSHYA - Current Reality vs. NTPC Vision NTPC has an ambitious target of reaching the generation targets of 51 GW by 2012 and 75 GW by 2017. In the recent years, NTPC has gone in for forward & backward integration to graduate into a fully integrated power utility. It is actively expanding its base by adding coal & gas equity to its portfolio besides going in for power distribution and trading, to reap the benefits of a liberalized power regime post Electricity Bill, 2003. It has responsibility towards all of its stakeholders. It has added many verticals to its portfolio like hydro-electric power generation, Nuclear power generation and Powerplant equipment manufacture apart from being in consultancy for power plant erection & commissioning and R&M activities for all other existing players in this field like SEBs etc.

NTPCs Vision

DISHA Business Imperatives

Growth in generating Growth in generating Capacity capacity Diversification Diversification

LAKSHYA

Support project management efforts to deliver projects on time and on cost Support diversification into new business areas Seamless interface Facilitate management control through flexible data/ analysis aided decision making

World class Integrated power Major powering Indias growth Operational Operational Excellence excellence

Support operating cost reduction efforts Efficiency in procurement and other operating systems Improve Capacity utilization

Strategic Efficiency Stakeholder Stakeholder Stakeholder Management management

Support topline (revenue) improvements Receivables and working capital management Facilitate stakeholder interaction e-enable Channels with suppliers & customers Create a transparent & learning organization knowledge management, HRM

Figure 8: NTPC Vision DISHA to LAKSHYA

It would be preposterous to think of a giant that NTPC is - as on date and keeping in view the future expansion plans - without an integrated resource planning system. Thus, it was only natural to go for an ERP based system architecture, wherein flexibility of resource deployment, system agility to respond to dynamic changes in the business environment and e-enabling of all internal & external interfaces all could be achieved in one go. It also brings in

Project LAKSHYA: Need of the Hour Changing Business Needs

Seamless Integration Dynamic response to changes in business environment Knowledge Management e-enabling external interfaces

Existing IT Scenario
Stand-alone Legacy Systems in use since 1994 Limited integration Varying technology Needs upgradation

Project Disha

BPR

Adoption of Best Practices

Users Expectations End User

User friendliness Easy navigability Web based integration Seamless data flow between applications No duplication of effort

Middle Management
Reliability Data integrity System audit

Top Management
Better MIS & Knowledge mgmt. Report consistency Real-time data Unified reporting for all plants Creation of knowledge workers

Figure 9: Broad Outline of Project LAKSHYA

2.05 Key ERP Benefits Single Data entry at source Integration across modules and Processes Standardization of Processes Online real time information Single version of Truth Visibility of Inventory across NTPC Improved Planning Process Online approvals Audit Trail Effective Business Process control through Authorization Employee self service Accountability at all levels Faster closing of Accounting Books No reconciliation 2.06 Coverage of ERP package
Engineering Projects and QA Contracts Site Procurement & Materials Operations Maintenance

Corporate Planning

Fuel Management

Commercial

Finance, Human Resources R & D, TQM , IT Rehabilitation and Resettlement Legal & Secretarial Safety, Security, Vigilance Consultancy Corporate Communications Employee Health Ash Utilisation Environment

Figure 10: ERP Coverage In addition SAP will also include the following Business Intelligence Business Information Warehouse Knowledge Management Workflow Document Management System

Xchange Infrastructure (XI) for integration with other packages / legacy applications Capability to support future business areas of NTPC including Coal Mining, Power Distribution, Power Trading etc. 2.07 Modules in SAP FI Finance CO Controlling MM Material Management PS Project System PM Plant Maintenance QM Quality Management SRM Supplier Relationship Management PP Production Planning SD Sales & Distribution LDM Lifecycle Data Management IS-U Industry Solution - Utilities HCM Human Capital Management BW Business Warehouse BPS Business Planning & Simulation KM Knowledge Management 2.08 Functional scope Core Processes Corporate Planning Functional Module Strategic Enterprise Management - Business planning & Simulation / Business information Warehouse SAP Functionality Supports implementation of planning in conjunction with balance sheet, profit & loss and investment planning. Financial and Strategic reports for Business Managers and Company Directors. The input data for BW will be extracted from R/3 system. Some of these BW reports will address predefined KPI reporting needs. Internal Projects and Turnkey Projects. Customer Project management (External Projects for Consultancy Business) Material planning / Issue of material to projects Progress reporting and Monitoring

Projects / Engineering and Quality Assurance / Contracts

Project Systems

Quality Management Collaborative Project Engineering Document Management System

QM in materials management in Procurement C-Projects C-Folders Product ideas are often collected in the form of drawings or descriptions.

Core Processes Contracts / Site Procureme nt & Materials / Fuel Manageme nt

Functional Module Materials Management

SAP Functionality Procurement of Materials Direct, Consumables, Indirect, Stores and Spares, Miscellaneous. Maintenance of relevant masters viz. Material / vendors / services Procurement of services Source administration External Procurement of Materials Direct, Consumables, Indirect, Stores and Spares, Miscellaneous Internal Procurement Material Classification and Codification External Procurement of services Service Classification and Codification, Creation of Service Masters Internal Procurement of Services

Inventory Management & Decentralized Warehouse Management mySAP Supplier Relationship Management Quality Management India Localization

Goods Movements for all divisions Warehouse management for inbound shipments and outbound shipments

It covers the full supply cycle, from strategic sourcing to operational procurement and supplier enablementleveraging consolidated content and master data QM in materials management in Procurement Excise Duties, Sales Tax and With-holding Tax functions only

Core Processes Maintenance

Functional Module Plant Maintenance

SAP Functionality Damage Related maintenance, Planned maintenance, Refurbishment-based maintenance Additional Requirements Project-based maintenance processing

Work Clearance Management Environment, Health, Safety

Work Permits issuance The area of environment, health and safety is subject to many regulations, laws, and, last but not least, company requirements. mySAP PLM Environment, Health and Safety / Emissions Management supports you in meeting all these requirements, with as little effort as possible to achieve the most effective results. This means: Automated processes Automatic safety Integration into the overall business solution of SAP

Core Processes Commercial Finance and Accounts (Including Payroll)

Functional Module IS-Utilities Financial Accounting and Reporting

SAP Functionality Energy Data Management Global settings and General Ledger processing Accounts payable processing Accounts receivables processing Funds Management Cash Management Bank Accounting

Investment Management

Investment program handling

Asset Management

Handling of Fixed assets Direct capitalization

Core Processes Human Resource

Functional Module Human Resources Module

SAP Functionality Organizational Management Employee database, Payroll , Time Management, Personnel Area and Personnel Administration Cost planning Actual Costing / Revenue allocation Period-end closing Business Consolidation

Managerial Accounting

Cost and Revenue accounting Overhead cost controlling

Core Processes Operation

Functional Module RWE nPower Functionality Cost of Availability Losses (+ Optigen) Cost of Losses EOH ILM E-lerts Emissions Reports EDL OIS Reportwriter Epilog Gas & Load Predictor Merit Order Package

2.09 Licenses for NTPC Table: 4 Sl 1 2 3 Item/Activity Transactional Users Medium Users Low/Occasional Users Qty 5,000 4,000 16,000

4 5

Payroll Employee records RWE nPower (11 modules)

25,000 Corporate 125,000 Tags or as required for the entire NTPC capacity as mentioned in the RFP, whichever is higher, and implementation at all OPC Compliant units & units becoming OPC Compliant till roll-out

OSI (PI Historian)

2.10 Solution Architecture from SAP (A) mySAP Business Suite SAP R/3 enterprise mySAP Product Lifecycle Management (mySAP PLM) Engineering and design and management of ongoing engineering changes mySAP Supplier Relationship Manager (mySAP SRM)# e-Procurement

mySAP Supply Chain Management (mySAP SCM)# To manage entire supply network from supply chain design to material sourcing and from forecasting demand to scheduling mySAP Customer Relationship Manager (mySAP CRM)# Includes state-of-the-art features and functions to help find, attract, and retain customers. Tightly integrated with the utility-specific functions of Billing, Invoicing and A/R, Transactions Exchange and Energy Data Management. Strategic Enterprise Management (SEM) Enables to execute strategies quickly and successfully while managing business performance throughout the entire organization; performance supports monitoring, integrated business strategic planning, and consolidation

effective stakeholder communication, thus enabling valuebased management. Industry Solution for Utilities covering Energy Data Management, Billing & Contract Management (mySAP Utilities)# A customer information and billing system for utilities companies, is tailored especially to the demands of the utilities industry.

# The implementation of these modules is to the extent of meeting the specified functionalities in the RFP.

(B) Platform and Integration Components - SAP NetWeaver (C) Application platform for all SAP solutions - SAP Web Application Server (SAP WAS) (D) Information Integration - mySAP Business Intelligence (mySAP BI)

(E) Access Integration - mySAP Enterprise Portals (mySAP EP) Portal Infrastructure Knowledge Management Collaboration (F) Process Integration - mySAP Xchange Infrastructure (mySAP XI) (G) Third Party Products Powermaster from Siemens Optibiz software technologies RWE npower 2.11 SAP Business Intelligence Key Capabilities Data Warehousing (SAP BW Administrator Workbench) Extraction, transformation, and loading Data warehouse management Business modeling BI Platform Online analytical processing (OLAP) Data Mining Alerting Meta Data Repository Planning Framework BI Suite of Tools (SAP BW Business Explorer) Query Design Managed Reporting and Analysis Visualization Web Application Design Collaboration Pre-configured Business Content

2.12 Modules byRWE nPower SAP has proposed RWE nPower to address certain specific requirements within the Operations part of Functional Requirements. This solution would get integrated to the SAP solution through a standard middleware The offered modules are as follows: Cost of Availability Losses (+ OptiGEN) To highlight areas of poor plant performance that affect the maximum output of the unit. Cost of Losses (Coal) To analyze the components of the plant process, calculating actual heat losses and comparing them with condition-based target values. Integrated Load Management (ILM) To monitor and display the conformance of generation performance against energy dispatch instructions and load dispatch centre requirements Load & Gas Predictor To simplify the process of nominating the quantity of natural gas required for the expected Gas Turbine load. EOH Monitoring To validate the GT manufacturers Equivalent Operating Hours (EOH) or Operational Data Counter (ODC) systems Emissions Report To meet the reporting requirements of a local monitoring and inspection agency OIS E-lerts provides event based e-mailed alerts for OSI software PI systems Electronic Dispatch & Logging (EDL) Manages the dispatch process for generation plant and co-ordinates and manages the communication and instruction commercial processing between the market operator and the plant operator Electronic Operations Log (EpilOG) To replicate and enhance the paper-based logs that are traditionally used in power station control rooms OIS Report Writer To write reports based on PI data.

2.13 IT ARCHITECTURE

Central Database Server

Application Server ERP DATA CENTRE

DISASTER MGMT. SITE

Regional HQs Plants Corporate Offices

Figure 11: IT Architecture at NTPC 2.14 Geographical Scope Phase I

Different Seismic Zones

2 MBPS Leased Line VSAT Link 4 MBPS Leased Line

The Corporate Centre offices located at Delhi and NOIDA Regional headquarter- NCR HQ at NOIDA Gas Station - Faridabad

Coal Station - Ramagundam Hydro power project at Koldam including Hydro Region Phase II In Phase II of the implementation, all modules as in the pilot phase will be implemented across the remaining locations of NTPC. Group1 1 Coal (Badarpur), 2 Gas (Anta, Auraiya), 1 Hybrid (Dadri), 2 CO's (Chandigarh & Jaipur) 3 Coal (Korba, Sipat, Vindyachal), 2 Gas (Kawas, Gandhar), 4 CO's (Raipur, Baroda, Bhopal, Jabalpur), 2 IO's (Mumbai, Bhopal), 1 RO (Mumbai), 1 T&CC (Mumbai) 4 Coal (Singrauli, Rihand, Unchahar, Tanda), 1 RO (Lucknow) & 1 IO (Hardwar) 1 Coal (Simhadri), 1 Gas (Kayamkulam), 5 IO's (Hyderabad, Bangalore, Chennai, Ranipet, Trichy), 3 CO's (Bangalore, Tiruvananthapuram, Chennai), 1 RO (Hyderabad ), 1 T&CC (Chennai ) 4 Coal (Farakka, Kahalgoan, Talcher (2)), 1 RO (Patna), 2 CO's (Bhubaneswar & Ranchi), 1 IO (Kolkata), 1 T&CC (Kolkata)

Group 2

Group 3

Group 4

Group 5

2.15 Project Timelines Phase Milestone Start Finish

Pilot Phase Implementation of all the core processes at pilot sites Plants (Ramagundam, Faridabad & Koldam), NOIDA RO and NOIDA Corporate HQ Project Preparation and Team Training Business Blueprint Realization Baseline & Final Final Preparation Go-Live Support & Rollout Preparation Week 1 Week 10 Week 25 Week 43 Week 53 Week 9 Week 24 Week 42 Week 52 Week 60

Phase 1.1 - Rollout at Northern Region- A - 1 Coal (Badarpur), 2 Gas (Anta, Auraiya), 1 Hybrid (Dadri), 2 CO's (Chandigarh & Jaipur) Final Preparation Post Go-Live Support Week 61 Week 70 Week 69 Week 73

Phase 2.1 Rollout at Western Region - 3 Coal (Korba, Sipat, Vindhyachal), 2 Gas (Kawas, Gandhar), 4 CO's (Raipur, Baroda, Bhopal, Jabalpur), 2 IO's (Mumbai, Bhopal), 1 RO (Mumbai), 1 T&CC (Mumbai) Final Preparation Post Go-Live Support Week 61 Week 70 Week 69 Week 73

Phase Milestone Start Finish Phase 1.2 - 4 Coal (Singrauli, Rihand, Unchahar, Tanda), 1 RO (Lucknow) & 1 IO (Hardwar) Final Preparation Week 73 Week 80 Post Go-Live Support Week 81 Week 84 Phase 2.2 - 1 Coal (Simhadri), 1 Gas (Kayamkulam), 5 IO's (Hyderabad, Bangalore, Chennai, Ranipet, Trichy), 3 CO's (Bangalore, Tiruvananthapuram , Chennai), 1 RO (Hyderabad), 1 T&CC (Chennai) Final Preparation Week 73 Week 80 Post Go-Live Support Week 81 Week 84 Phase 1.3 - 4 Coal (Farakka, Kahalgoan, Talcher (2)), 1 RO (Patna), 2 CO's (BBN & Ranchi), 1 IO (Kolkata), 1 T&CC (Kolkata) Final Preparation Week 85 Week 91 Post Go-Live & Support Customer Competence Centre (CCC) ASAP Methodology Overview Week 91 Week 53 Week 95 Week 156 Customer Competence Centre (Central Team NOIDA), Offsite Support

Project organization and standards Prepare project charter Initial project planning Level 1/2 training for project team Technical requirements planning Prepare executive kickoff meeting

Customer requirements gathering , Gap Analysis, Create the Business Blueprint System installation Management review of Business Blueprint

Level 3 training Baseline Configuration Final Configuration/ Integration Test Design, develop and test interfaces, reports, and conversions

Go-live plan End-user training Integration, volume and stress testing Establish internal help desk Data migration Cut-over to productive environment

Application support Verify accuracy of productive system Measuremen t of business benefits

2.16 New SAP Terms Legacy Terminology SAP Terminology

Materials Management
Material Code Material Code directory Vendor code directory Indent Contracts LOA Enquiry Rate Contract MTN SIV MIS/SRV GR Register Stock items Amendment Vendor code Bid updation PR/PO Approval Bill certification Verification Material Number Material Master Vendor Master Purchase Requisition Service Service P.O RFQ Contract Stock Transfer Order Issue Slip Mat. Document (G R) Inbound Delivery MRP items Version Vendor Id. Maintain Quotation PR/PO Release LIV (Logistic Invoice verification) Bid Invitation (RFQ in R/3) Purchase Requisition ( PR) Conditions (pricing) Vendor Purchase Order Package/Contract

Supplier Relationship Management

Tender Indent Pricing Schedule Contractor/Supplier Billing Breakup Contract/NOA/LOA

Plant Maintenance
PM (Preventive Maintenance) Work order Permit Work specification Corrective Maintenance Predictive maintenance Isolations Work order closed Assembly/Sub assembly PM ( Plant Maintenance) Notification Maintenance order Task List Break down Maintenance Condition based maintenance Work clearance Management Notification completed (NOCO) Functional Location

Destination department

Work centre

Legacy Terminology

SAP Terminology

Project Systems
Projects Budget Control Budget Preparation Purchase Indent MRC SIV RA Bill Bill Certification CWIP Asset Capitalization Project definition, Project Structure (WBS element) Availability Control Cash Flow Planning Purchase requisition GR(Goods Receipt) GI (Goods Issue) Service Entry Sheet (SES) Release strategy for SES Service Acceptance Asset under Construction (AUC) Project Settlement Business Area Inter Business Area transaction Logistic Invoice Verification

Financial Accounting
Project Code Inter Unit Advice Bills Processing

Commercial
REA Data - KWH REA Data Others e.g. Entitlement, Settlement logic Disconnection Notice Collection Centre Billing Region New Beneficiary Activation Deactivation of Beneficiary PPA Beneficiary Sectoral Players Plant Plant-Stage Tariff Billing Components e.g. FC, VC, FPA etc Register Facts ( Installation / Rate Cat/ Rate) Clearing Rules Dunning Cash Desk Portion Move-in Move-out Contract Contract Partner General Business Partner Business Area Rate Category Rate/Line Items Position (distinct post held by each employee) DWS (daily work schedule - 9 am, lunch 1-1.30 pm, 5.30 pm) PWS (Period work schedule - pattern, shift roster)

HR
Nil Shift Rota

Legacy Terminology Engineering & QA

Project Phase of a Project Document Bill of Quantity (BOQ) Approval /Commenting Modification/ documents Revision Number Approved vendor List Manufacturing/Reference/ Quality Plan Inspection Call Regional Inspection Office Assignment of Inspection call to inspector Non Conformity Report Standard/Field Version Number Q Info record updation in approved Plant

SAP Terminology

View of a Plant ( Under iPPE Module ) Document Info Record ( DIR ) Bill of Material ( BOM ) Status change Engineering Change Management (ECM )

Document Info Record and Inspection Plan Inspection Lot Inspection Type Assign user status in the inspection lot Quality Notification

2.17 Key Process Changes Materials Management Legacy Process Decentralized material vendor Code Allotment. No codes for services at most locations. Stores department raises indents for stock control items. Approval of competent authority is required for all indents. SAP Process New code will be allotted by central codification cell based on request sent by the users across NTPC. System automatically generates indents for MRP items based on MRP parameters maintained in the system. Indents created by system through MRP run and based on ABB stands approved and no separate approval will be required. (under approval) Key Process Changes Centralized codification process.

Process simplification and lead time reduction.

Process simplification and lead time reduction.

Manual approval of indents.

On line approval of indents.

Moving towards paperless environment.

Legacy Process Approval required for inviting tenders.

SAP Process No approval will be required for calling tenders in case of single tender on OEM/ OES/ PAC/ standardized vendors, Open tender and in cases of Limited tender where vendors are enlisted/ standardized and enquiries are being given to all the enlisted/ standardized vendors. (under approval) System automatically values the material based on terms and conditions maintained in the PO. Where ever SRV is to be prepared, regularizing PO to be created in the system. Material pending for inspection is part of NTPC inventory.

Key Process Changes Process simplification and lead time reduction.

Valuation of materials is done by Finance. Regularizing POs for cash purchases are normally not maintained in the system. Material supplied becomes the part of NTPC inventory only after inspection and acceptance and taken in to stock by custodian. Accounting documents are created by Finance based on documents (SIV, SRV etc.) created by Materials Department. Material is valued on the basis of monthly weighted average price. Material issued from main stores is charged to consumption.

All the pricing conditions to be maintained in the PO. Regularizing POs are to be created if SRV is to be prepared. Material in NTPC premises is part of NTPC inventory.

Accounting documents are created automatically by the system when a Material document is saved. Material is valued at moving average price which changes on each transaction. Material lying in sub stores will be part of inventory. Spares can either be issued against Maintenance Work Orders or moved on stock transfer from main stores.

Auto creation of accounting document based on Material document. Real time valuation of Material. Material lying un utilized will be part of inventory irrespective of location of storage.

In case of vendor owned inventory, (COLD,COFD) no SRV is raised at the time of receipt.

GR is to be made as and when a consignment is received. However, vendor stock will be shown separately and will not be part of NTPCs valuated stock.

Vendors stock at NTPC premises is visible.

2.18 Key Role Changes Materials Management Legacy Role Custodian SRV. finally posts Role post SAP GR is posted at Receipts & Inspection stage. Central codification cell will allot Material codes. System automatically Accounting document. posts Key Role Changes Custodian has no role in SRV clearance. Site MPIC will have no role in allotting new Material codes. PSL group has no role.

MPIC allots Material code at plants. PSL group valuates documents like SRV,SIV etc POs are always created by Materials department.

Cash purchase regularizing PO will be made by indenter. (under approval)

New role of Indenter as Purchaser.

SRM - SAP Process Flow: (Figure 12)

SRM eTendering Process Flow
Material Management (R/3) C&M / CC&M
External Requirement in SRM

SRM C&M / CC&M

Prepare documents manually Yes
Bid Document Available ?

Supplier

No

Having Vendor Code / user id ?

No

Get SRM Vendor Code / user id ?

Yes Upload documents in cFolder (digtl. sign) Prepare Draft Bid Invitation Document Complete Bid Invitation Document Open Tender Yes

Login to SRM No Paid the Bid Fees Pay (online / Offline) & Proceed

Logout View/Download Bid Document Aprroval No

Bid Published on the eTender Site (digtl sign.)

Quote for the Bid ? Yes Agree to Terms & Conditions ? Yes

No

Released P/ R (SRM Procurement)

Complete Bid Document & submit (digtl sign.)

Upload documents in cFolder (digtl sign.)

SRM - SAP Process Flow

SRM eTendering Process Flow

R/3 Tender Committee C&M / CC&M
Bid Opening date reached Yes Open Bid Document Technical Evalutaion (Documents downloaded from cFolder) Offline
N o

SRM (Composite Bidding) Engineering

Supplier

Can not open Bid Document

Bid Evaluation CS in BW

Convert Bid to Live Auction (Draft) Yes

No

Reverse Auction Opted ? Complete Auction Document & Publish

Accept the Bid Conduct Live Auction Return EMD amt to other bidders (FI Process)
Approval

Approved Bid

Create Purchase Order

Create Purchasing Contract with best bidder

SAP Process Decision

Predefined Process

On-page Reference Terminator

Manual Operation

Key Process Changes - SRM Legacy Process Codification of Equip./ System/ Sub system Presently these are not codified. Last contract price against each of these equipments/ System/ Sub system are entered separately and maintained in isolated system. PR creation Note sheet is moved for each package by contract coordinator after cost estimate approval. Approval of Bid document & TC Nomination Bid document approval and TC nomination as per present DOP on paper. On-line approval of Bid document Presently all approvals are done on paper. Indenter (Engineering/ Coal Mining & Washeries/ Energy Technology, etc.) would create the PR. Bid document approval would be by HOD electronically. TC nomination will be restricted to maximum three + 1 level approval. (under approval) Use of standard bidding documents as far as possible. Further it is proposed to have approval of bid document through release strategy/ workflow (under approval) Total tendering process would be through e-procurement, to be introduced in phases. Bid document will be available in soft form. Participating vendors submit their Bids on-line. would PR would be prepared by indenter instead of written communication. Number of reduced. approvers SAP Process Equipment/ System/ Sub system will be coded and will flow into BPS. Vendors would quote against each of these codes separately. Information on last contract price will be available from the system without any manual entry. Key Process Changes Equipment codification.

Electronic approval instead of paper approval. Standard bidding documents used. Number of approvers reduced. Electronic approval instead of paper approval. e-procurement Submission of Bids online. On line reverse auction. Comparative statement created in the system. Introduction signatures. of digital

Tendering & Preparation of Comparative Statement Presently, tendering process is manual.

In case to case basis, reverse auction would be conducted. Clarification on bids will be done on-line through C-Folder.

Payment of tender fee through payment gateway.

Comparative statement would be created in the system.

Legacy Process Approval of TC Award recommendation TC recommendation is signed on paper by the TC members which is approved by the competent authority as per DOP. Package In charge (Contract Coordinator) handles all activities related to a package. Approver approves document on paper. the

SAP Process

Key Process Changes Number of reduced. approvers

It is suggested to directly put up TC recommendation for nonboard case to the approving authority electronically (under approval). Same role now to be performed through the system.

Electronic approval.

Working on the system.

Approver approves on line.

Electronic approvals.

Key Role Changes - SRM

Legacy Role Reverse auction administrator role is being performed by WIPRO personnel.

Role post SAP Package In charge would act as reverse auction administrator.

Key Role Changes Reverse auction would be handled through SAP system only by the Package In charge and no separate system is used. Direct assignment of PR to concerned Package In charge. Electronically, Purchasing Group is changed in PR for assignment.

Manual assignment respective packages various Package charge.

of to In

PR once received by the HOD would be assigned directly to concerned Package In charge in consultation with Group Head.

Key Process Changes - Operations Legacy Process Daily performance data posting. SAP Process Daily performance data posting. Key Process Changes No dual posting. Single source posting (to the extent possible auto captured) to take care of all MIS across company. Instead of operation posting and EEMG verifying, single posting (editing facility available) will happen. MIS MIS No need for separate posting, fax, e mail etc. All MIS requirements across company will be generated automatically from the data posted locally at station. MIS reports would be available for authorized users. Trip report Trip report Instead of hard copy, soft copy will be maintained. Approval also happens through system. Available across company with customized search facility. Action taken reporting (of all reviews such as ORT, ROPR, Technical audit etc). Shift Logging Action taken reporting (of all reviews). Instead of making need based reports, system will generate reports based on information in the system with filtering options.

Shift Logging

Instead of filling log book manually, pre defined log template will be updated by the system (manual entry also possible). Instead of hardcopies, all documents like Tech audit, Energy Audit, re commissioning details, operation instructions etc will be available in soft copies linked to functional location or equipment.

Document Management

Document Management

Key Role Changes - Operations Legacy Role MIS-Reports presented to Senior Management manually. Document (Hard copies) Management by departments. Document approval in hard copies based on MOM, Communication etc. Role post SAP MIS-Reports to be viewed from the system. Documents available in soft form in the system. Key Role Changes More automation and ease of access at the point of usage. Online real time information from the system. Need to check inboxes regularly and take actions. Notifications will have to be raised by the concerned people on time.

Document approval through system based on notifications.

Key Process Changes - Plant Maintenance Legacy Process Breakdown Maint. Comprehensive codification is not there to capture break-down maint. History. This forces users to fill in details of maintenance as description, thus capturing of history turns out to be cumbersome. Closing of work order card done by MTP. Shutdown/ Opportunity Maintenance Same as B/D maint. Condition Based Maint. Done on SOS basis SAP Process The provision of catalog profile helps to define comprehensive codes for damage, cause of damage, object, task and effects. Codes can be easily searched and entered in Notification by the users. The codes provide adequate flexibility to create desired reports for breakdown analysis, RCM etc. Closing of order (TECO) to be done by maintenance department. Key Process Changes

Reliable maintenance history expected. These histories will be great help to RCM.

Same as B/D maintenance. Will be scheduled. Data can be directly entered in the system. Can automatically generate notifications through email. Faster action possible.

Preventive Maintenance Time based PM. Legacy Process Calibration Process Presently done offline. Record is maintained in a stand alone PC. Refurbishment Process There is no effective provision of capturing the cost of refurbishment of a material. The current value of refurbished material is not getting updated due to this reason, hence the material is not returned to the main stores. General Maintenance There is no provision of separate accounting of jobs of general nature. Currently, these are also booked under b/down category. This increases the no. of B/down Orders. Maintenance Procurement PR is raised by the concerned Maintenance department.

Time, Performance and Strategic PM will be possible. SAP Process Notification will be generated by the system and all the calibration history will be available online.

Improved Reliability.

Key Process Changes Calibration history of equipments available online.

Refurbish able materials are identified in the system. Through the detailed refurbishment process, the refurbishment cost is realistically updated on the current value of the material. Material can be now returned to main stores with this value.

A separate Notification & Maintenance Order are created for jobs of general nature. Thus the routine jobs can be effectively segregated from the actual breakdown jobs. Requirement for 3 years will be generated by the Maintenance department. PR will be generated on the basis of MRP run. Separate PR will be generated by Maintenance department for items for which requirement has not been projected. (subject to approval) The same is captured through the system. Maintenance department will create a notification on the basis of which workshop will create order in which different activities will be captured. Lead time and Inventory level will reduce.

Workshop Management Presently creation of job order card by Maintenance department and workshop processes are done manually.

R&M jobs It takes a long time and requires extensive followup to get the R&M proposals cleared from OS-R&M/ R&M-Engg and other agencies.

The complete R&M process is mapped in Project mode from concept to completion. The approval process will be handled through work-flow. The material & man-power availability can be monitored effectively through PSWBS elements.

Legacy Process Major Overhauling Job Presently done offline. Record is maintained in a stand alone PC. O&M Documentation & Print Room Mgmt. Documents kept in local plant file servers. RCM Based on no. of permits on an equipment / system and approximated cost of maintenance, generation losses etc, RCM is done. Spares Development Approval process is lengthy. Data of one project is not available to the other project. Work Clearance Mgmt. Status of the job not known till PTW is returned. Common Process Changes Material is drawn separately by filling an SIV & it is required to be re-entered in the Job Card

SAP Process Data will be available in the system which can be used for proper planning and budgeting.

Key Process Changes

To be handled through DMS (Document Management System).

Equipment / System maintenance history and CBM data will be available online which shall help in RCM process. Less approval time. Data can be shared at Client Level.

Proper selection of maintenance activities and frequency will help to optimize maintenance cost.

Easy to get the list of relevant vendors.

Status will be known in the system.

Helps in expediting.

Material is required to be entered only once in the Maintenance Order (MO) and can be drawn from stores using reservation slip created on MO release.

to relate it to specific maintenance job.

Material once issued is treated as consumed by Finance. Approval process is very lengthy.

The unused material can be returned to main Stores & actual material shown consumed in MO is only booked as consumed. Can be reduced using Work Flow. Reduction time. in process

Legacy Process Jobs done by the contractors are not being captured item-wise in the Job card. A separate measurement record is required to be maintained for verification & filling up of MB. Material Procurement process is lengthy.

SAP Process Standard Service Masters will be available for choosing external service (contract) in the order. The required service can be copied from the contract, linking item wise job to the MO. Service entry sheet can be created directly from this. Lead time will reduce due to less approval time and better data capturing (Specs & Vendors) in the system.

Key Process Changes Saving of Area Engineers' time in filling MB.

More time will be available for other creative jobs.

Project System - To Be Process Flow

Project Concept & FR Preparation

FR Approval

Pre award Engineering

Pre Order Schedule

Tendering & Award of Package

Project Schedule

Post Award Engineering

Tracking of Materials

Budgeting & Cash flow Planning

Progress Monitoring

Site Bills Management

Site Execution

Progress updation of Project

Asset Capitalisation

Contract Closing

Project Management Process flow value chain in SAP

NB: Process flow shown here may not all be sequential, some scenario might be running in parallel.

Figure 13: Project management Process Flow

Key Process Changes - Project System Legacy Process SAP Process Key Process Changes

Project planning & monitorin g based on standalon e networks & limited to critical areas.

A uniform basis for planning of future and ongoing projects. Concept of Project overall Progress in addition to Progress at package level. Real-time updation & actual expenses in an integrated manner at different levels of WBS, which will ensure Quick & accurate settlement to AUC and then to Assets. Online reporting with provision of multiple plan comparison at different stages of Project. Milestone trend analysis will help to access the direction of progress tracking. Generation of repository for Material & cost related information vis a vis type of project. Major improvement in terms of process integration cutting across functions & department through out the life cycle of the project.

Online Project Structure from reference template or from Operating Project in the System. Concept of Work Break Down Structure WBS to be used through out the life cycle. Cost planning with availability of Project related repository. All activities from concept till investment approval will be included and monitored, resulting in improvement on time schedule. Improvement in timelines for FR preparation. Project FR approval visibility online, thru workflow, will facilitate faster approval path/time. On line availability of schedules of all packages integrated in one operative version of the schedule for the entire project. Provision of version comparison. Real time Collaboration between various internal department & vendors would help approvals & resolution of issues faster. Tracking of Vendors materials, starting from Pre dispatch inspection, dispatch & receipt at site. Approval of QA docs, inspection and FQA activities. Real time cost controlling for the project. Adopting planned cost for providing project budget. Provision of utilization. warning for checking budget

Reports for Planned Vs actual, Variance analysis, Milestone monitoring, scheduling and crashing. Availability of Cost related report with drill down features. Reports related materials availability & utilization. Efficient management of owner supplied inventory. Tracking of contractor supplied inventory. System support in handling deviation. Fast and accurate Reconciliation of Materials & expenditure facilitates faster contract closing.

Key Role Changes - Project System Legacy Role Only MNW and standalone L-2 networks are prepared. L-2 networks are not updated. Depending on the criticality, Milestone based revised schedules are made as per the commitment dates to Top Management. Material tracking is done based on the critical area requirements. Role post SAP There will be an integrated project structure consisting of WBS element and network activities. Approval of L-2 networks, Data sheets, Quality plans, & Engg drawings will be done through collaboration folder. Status of material at different stages will be available from the system. Key Role Changes Project structure creation and expansion will be done by CMG authorized person and validated by Corporate Finance. Updating of activities on L-2 networks will be carried out by authorized persons of concerned depts. MDCC status to be updated by RIO. Goods receipt at site to be done by Site erection. Service entry & 1st level service acceptance will be carried out by concerned site engineer in the system. Final Service acceptance by FQA will be done in the system after confirming to FQP requirements. Invoice verification will be done by Engr-in-charge.

Site measurement sheets and MB are done manually or using some help from standalone software.

Service entry, service acceptance and invoice verification are to be carried out in the system.

Key Process Changes - Commercial Legacy Process Tariff Data maintained by RBC. REA Data RBC. entry by Tariff Data Commercial. REA Data Commercial. SAP Process maintained uploading by by Corp Key Process Changes

Regional

Petition data obtained manually. Monthly details of fuel for billing obtained manually. Collection details sent manually.

Petition data to be available thru system. Monthly details of fuel will be available through the system. Collection details to be available thru system.

MIS report consolidation for all regions was done manually.

MIS report / analysis consolidation for all regions to be available thru system.

Legacy Process Base Tariff data for billing entered by RBC. Monthly data for FPA entered by RBC. REA data entered by RBC.

SAP Process Base Tariff data for billing to be entered by Corp Commercial. Monthly data for FPA to be uploaded by Regional Commercial. REA data to be uploaded by Regional Commercial.

Key Process Changes

Key Process Changes - Financial Accounting Legacy Process All Postings in General Ledger (GL) by F&A employees. Each Project/ Office maintains its own series of vouchers. SAP Process GL entries are also generated by transactions carried out by nonF&A employees. Number ranges for each document type will be common for NTPC. Key Process Changes Data entry and capture at source. Data at NTPC level will be available. Review will be linked to Business Area and authorized person for a transaction. Information will be available across the company for a party/Business Area in case of Assets. No need for inter-unit reconciliation.

Each Project has its own party codes and asset register.

Various masters such as Vendor master, Customer Master, Asset Master, Employee Master etc. would be at NTPC level i.e. common to all Projects. Inter project transactions are handled thru authorizations to post inter business area (BA) transactions whereby accounting entries are posted in all the relevant BAs.

For inter-unit transactions advices are sent along with documents across projects requiring reconciliations.

Rectification/ reversal of vouchers is relatively easy.

Any reversal of a voucher would have to be done by the original creator. The reasons for reversal would have to be recorded. Since one transaction creates multiple documents in SAP, all the documents would need to be reversed.

Important to ensure the correct data the first time every time.

Quarterly Closing.

Monthly Closing for almost all transactions including depreciation. SAP Process

Updated information availability. Key Process Changes Capture information source. of at

Legacy Process Receipt of a cheque/ draft in a department other than F&A is not captured leading to information gaps. TDS is deducted from the bills of the contractors/ third party. Quarterly return is then manually prepared and efiling is made. Coal receipts and issues are entered in the system in batch mode. Monitoring servicing is activity. of Debt a manual

The departments concerned would enter the details of receipt of cheque/ draft and generate receipt thru the system. The entire process is automated. TDS Certificates are directly printed from the system and quarterly return for e-filing will be generated from the system.

Reduction in efforts in routine activity.

GR/GI would be on as received/ as issued basis. System will give alerts as well as create accounting entry for debt servicing based on last exchange rate available. HR Payroll and Finance module are integrated and automatic postings of accounting documents are made on processing of payroll. No manual intervention of Finance department is required. Most of the employee related transactions would be thru SelfService with in-built check of

Real time information about stock position. System support for routine activities.

FI & HR module are not currently integrated. At the end of the month, Payroll data is posted manually in Finance. Virtually no Self Service options to employees.

Reduction in efforts.

Faster processing of employee claims.

entitlements etc.

Manual flow of data between NTPC and PF Trust. Most of the reports are created outside any system leading to variations.

Automatic posting in PF accounts and in NTPC GL.

Trust

No need reconciliations.

for

Reports would be generated thru the system leading to consistency. An authorized user would be able to view the information required thereby obviating the need to send reports. HR Payroll and Finance module are integrated and automatic postings of accounting documents are made on processing of payroll. No manual intervention of Finance department is required.

Information available on the click of a button.

FI & HR module are not currently integrated. At the end of the month, Payroll data is posted manually in Finance.

Reduction in efforts.

Key Role Changes - Financial Accounting Legacy Role Entire data entry in F&A books are by F&A employees. Employee related data being maintained in F&A exclusively by F&A. Details of an invoice are not captured by anyone. No role of F&A person for capitalization of an asset prior to actual capitalization. All employee claims are processed by F&A. Role post SAP Most of the data entry would be by the initiator of a transaction who in most cases would be a non-F&A person. The F&A books would be updated based on employee master maintained by HR. Invoice details would be entered in the system by MM/ E-I-C. F&A person to assign the relevant account/ vet WBS structure etc., leading to faster capitalization. The system to process certain claims such as multipurpose/ computer advance etc. Key Role Changes Data entry by non-F&A employees.

No need of data entry by F&A.

F&A would verify the details, if required. New role of F&A.

Reduction of F&A role.

All receipts accounted by F&A.

Receipts would be also accounted by a receiver in other departments.

Shift in role.

Key Process Changes - HR Legacy Process Hiring an employee. SAP Process HR enters the Name, Grade, Dept, Basic and gives user-ID to Employee. Employee to enter qualifications, dependents, nominations, prior work experience etc and submit proof. HR after due verification saves the data. Training Nomination . PMI Training calendar / EDC Training calendar will be available in the system. Employee will enter the request for training. Approval through workflow (previous training details visible during approval process). Legacy Process Computer Advance. SAP Process Employee applies in system. Eligibility checks automatic. Amount gets disbursed. Key Process Changes No Performa invoice. No recommendation Controlling officer. No restriction to 80% amount (max 40,000/-). of of All employees will have access to training calendar. Key Process Changes Employee enters the details, chances of errors in the data is minimized. One Employee master. (HR/Fin)

No proof of utilization required. Key Role Changes - HR Legacy Role Role post SAP Key Role Changes

Controlling Officer Recommends all advances Conveyance reimbursement Internet reimbursement Incentive for higher education Incentive for family norms Withdrawals Fund pursuing from small

Nil

Provident

Transfer Pay Advance

Engineering and QA&I Modules Modules iPPE (Integrated Product & Process Engineering) DMS (Document Management System) C Folders (Collaboration Folders) QM (Quality Management) Interfacing with the following: PS (Project Systems) SRM (Supplier Relationship Management) MM (Materials Management) HCM (Human Capital Management) Engineering & QA - Process Flow in SAP

Concept Engineering (FR)

i P P E

Basic Engineering (DIM) Pre-award engineering (Internal detailed engineering (FSC)

Q M
Post-award engineering (Detailed engineering ) As Built

As Maintained

Figure 14: Process Flow for Engineering & QA

Key Process Changes - Engineering and QA&I Legacy Process Engineering Data/ information of various phases of a project is: in various forms (hard/ soft) decentralized/ available with Dealing Engineer/ respective Group Organized Package. in Project/ SAP Process All Data will be readily available in soft form in DMS and will be properly arranged in Hierarchal manner in the iPPE module for a Project. Reference Models of Power plant of same capacity and fuel type will be developed in iPPE using modular approach (systems/ subsystems) and thus module wise requirements (technical, Drawing / Document List) will be standardized. Quicker development of package scope from Reference Model of the Project (Drag and Drop) and facility to check the coverage of Projects entire scope in Packages. Real time Collaboration within & outside Engineering (including vendors/ contractors) through C Folders (browser based). Real time Interaction with Contractors/ Vendors. Key Process Changes Creation/ Populating of iPPE Structure in hierarchal manner as systems, sub-systems of a power plant. More focus on standardization and design consistency. Enterprise-wide availability information/ data. of

While information sharing within Engineering is through eDesk/ DREAMS, the same with outside Engineering is through paper documents/ emails. Monitoring / Reporting process is largely manual, consuming Engineering effort and time in collection/ collation of inputs. Same information is to be reported in different formats. Changes carried out in approved documents /drawings are largely localized and tracking them with history is difficult.

Monitoring data is getting captured in the system in due course of execution of various engineering processes. Standard Reporting formats as available in the system will be used.

Standardization of reporting. Saving in effort/time spent on the same.

Robust ECM Change mechanism to change.

(Engineering Management) control the

The system will maintain the change record of each standard document/ approved drawing along with history (who, when,

what & why).

Legacy Process Final Documentation (approved drawings / documents / O&M Manuals) is handed over by the contractor at the end of the contract.

SAP Process Progressive design handover by the contractor as & when design of a particular system is getting finalized. O&M Manuals now will be finalized by OS Deparrtment who will be issuing CCP-04 for the same. Quality Plan document will be approved using C Folder & DMS. Inspection Plan for CHP stages will be created in the system with linkage of reference documents to facilitate inspection.

Key Process Changes Step of Validation of documentation package eliminated. Role change of handling CCP-04 to OS department required for Contract Closing. Creation of Master Inspection Characteristics, Catalogues, Inspection Plan, for CHP points and linking of DIRs of Reference documents. Saving of inspection time & effort besides traveling cost. Since all the documents are pre-linked, entry of documents referred in CHP is eliminated.

Quality Plan approval.

Status of approval of the reference documents / BBUs being verified at the time of inspection only, and not at the time of raising of inspection call.

Inspection call cant be raised if any of the reference documents is still un-approved.

Deviations observed are being processed manually and in paper form, and their disposition takes considerable time.

Auto-generation of Quality Notification in case of deviation and its disposition getting recorded in the system.

Quicker disposition of the deviations. Central repository of deviations which can be referred for improvement in specifications.

Business Planning Process Business Planning Process

The Budget process has been included in the Business Plan to have one plan across NTPC. Integrated Planning process taking Inputs from Different units/ departments directly in system. Only Relevant Data is visible to relevant Responsible Persons. Approval of proposed Budgets by Authorized person via Approval process in system. Monitoring of Actual vs. Planned through the System. All External reporting would be derived from internal Business Plan. (Excerpted from SAP/NTPC Documents for ERP Implementation at NTPC) 3. THE RESEARCH DESIGN 3.1 Sample Set In order to meet the research objectives, employees of NTPC, Unchahar have been selected as sample set. A perception survey was conducted among the Process owners and End users using a structured questionnaire based on the CSF for organizational preparedness, identified through the literature review. Additionally, few of the project sponsors were also contacted to assess the readiness of the organization from their view point. End users form the largest chunk of the entire population as they are the situated at the bottom of the pyramid. These are the most affected in terms of process functionalities and thus are most sensitive towards its operational effectiveness. Process owners are the functional heads of different sections like HR, C&M, Finance & O&M etc. They are also custodian of systems, procedures and processes within their own functional domain. They constantly watch out for any system deficiency and strive towards ironing out the same through suitable remedial intervention. They are situated at the middle of the pyramid. Project sponsors are the ones who have the conceptualized the whole project in order to leverage strategic effectiveness and operational efficiency of the organization through this initiative. They are the key decision makers and provide resources & direction towards smooth culmination of the whole exercise. They are placed at the top of the pyramid. 3.2 Questionnaire Design

Questionnaire has been designed in such a way so as to address all the relevant issues, which concern these three distinct classes of respondents. That is why, three different set of questionnaires have been designed with special emphasis on the issues of immediate concern to each of these classes of respondents. All the questions have been formulated around the six identified factors. However, care has been taken while framing of the questions, to customize it to suit each of these levels. Respondents were asked to mark their perceptions on a five point Likert scale, ranging from 1 (Not at all agree) to 5 (Completely agree). In case of Project sponsors, their perception has been converted into a rating which gives organizational readiness towards ERM on 1-100 scale. (Keith Lanchbury, Carol A. Ptak, 2000) [Appendix- 1]

3.3 Data Collection Procedure These questionnaires were administered in person by the researcher to all the respondents, except in case of project sponsors, who were mailed/ posted with these questionnaires. They were also briefed about the objectives of the research and directions towards filling the same through a covering letter. Respondents from each of these three subsets, namely end users, process owners and project sponsors, were selected on random basis. However, care has been taken to cover only those respondents who had already been through ERP awareness program. 3.4 Research Methodology First of all, Critical Success Factors (CSFs) for assessing organizational preparedness were identified through literature study combined with practitioners view point. Subsequently, various sub-factors likely to have significant impact on overall ERP preparedness were identified again through literature study. Finally, structured questions were designed around each of these sub-factors. Questionnaires were pre-tested on a group of respondents to check its validity & reliability. Entire data was collected, serialized and codified for entry into SPSS software to elicit useful and implement able interpretation. Mean scores for each of the critical factors like 1) Communication, 2) Change Management, 3) Existing IT infrastructure & 4) Business Process Re-engineering was calculated for end users and entered into SPSS data view. Correlation coefficient for each of these factors among themselves and with respect to the overall perception of the respondent was found to check the extent to which these factors are correlated and have some kind of impact on each other. For Process owners, two additional factors, ie, 5) ERP Team composition & 6) Top Management Commitment were also considered. Also, demographic factors like 1) Department in which respondent worked, 2) his/her Total work experience and 3) Average daily exposure on the existing legacy system were also factored in to find if any of these factors had any impact on the overall perception of the respondent. Since questions posed to the end users and the process owners were different, separate SPSS charts were used to conclude the data interpretation for End users & Process owners. Data was analyzed using the following steps:

1. 2.

Mean scores for each of the sub-factors was found for each of these two sets. Correlation coefficient for individual sub-factors with respect to overall perception

level was found using mean scores, for each of these two sets. 3. Correlation coefficient for the identified CSFs with respect to overall perception

level was found using mean scores for each of the sub-factors within each CSF. 4. Finally, Gap analysis was done using individual sub-factor Correlation coefficient

and their mean score. 5. 6. Interpretation of the obtained data with reference to the objective of the research Suggestions and Recommendations

4. SPSS ANALYSIS

4.1 Observations
(A) End Users: This set of respondents was posed with thirty structured questions on the following four factors out of the total six given in the Organizational preparedness matrix. These are: 1) Communication 2) Change Management 3) Existing IT infrastructure & 4) Business Process Re-engineering As per the SPSS analysis, the following facts are evident: Overall perception on successful ERP implementation is positively correlated to the perceptions on Change Management efforts ( = 0.536) and to the level of awareness ( = 0.436) in a very significant way. Perceptions on level of BPR efforts ( = 0.224) and Level of existing IT infrastructure ( = 0.193) are also positively correlated to the overall perception level in very less significant way. Out of the four factors, level of awareness (communication) is positively correlated to the change management ( = 0.466) and the existing level of IT infrastructure ( = 0.557) in a very significant way. However, it is negatively correlated to BPR efforts ( = - 0.407) in a very significant way. It means better the awareness of the respondent, lower is the perception of the ongoing BPR efforts. Also, perception on Change management is positively correlated to the perceptions on existing level of IT infrastructure ( = 0.286) and level of BPR efforts ( = 0.133) in a less significant way. Overall perception on ERP implementation is not significantly correlated to any of the three demographic variables like Department in which respondent worked, his/ her total work experience or their average daily engagement on the existing legacy systems. [Appendix- 1(II)]

However, Department in which a respondent worked has positive correlation with the level of communication ( = 0.306) and the level of existing IT infrastructure ( = 0.320), indicating uneven spread of these two factors.

Average daily exposure of a respondent on the existing legacy systems is positively correlated to the awareness level ( = 0.245) but strangely enough negatively correlated to the perception on BPR efforts ( = - 0.193) and the change management ( = - 0.124) although very less significantly. [Appendix- 2(A)]

Other notable observations from the mean score table for various sub-factors. [Table: 5] Table: 7
Main Factor Commn . Chg. Mgmt. IT Infra. Sub- factors scoring Lowest Software soln. being used-SAP-R/3 Ongoing activities at the unit level Training imparted to users was very interactive and relevant Presently available bandwidth would be sufficient to cater to ERP connectivity Package may not be able to provide software support for non-routine decision making situations Mean Score 3 2.5 2.6 Sub- factors scoring Highest ERP as business tool ERP implementation may kill creativity at work IT personnel need to be trained and equipped in terms of resources to address users problems NTPC business processes need to be reworked before ERP can produce results Mean Score 3.9 4* (Disagree) 3.9

BPR

2.8

3.6

Note: Higher the score, more is the level of agreement. * scores on this question has been coded in the reverse order (negatively correlated) (B) Process Owners: This set of respondents was posed with a different set of thirty questions on all the six factors given in the preparedness matrix with a balanced focus on all of them. The two additional factors, which are in addition to the four factors listed for the end users are: 5) ERP Team Composition 6) Top Management Commitment As per the SPSS analysis, the following facts are evident: Out of the six factors of the preparedness matrix, two, ie, Top management commitment ( = 0.720) and ERP Team composition ( = 0.610) are found to be positively correlated to the overall perception about successful ERP implementation in a significant way. [Appendix- 1(III)]

Next in order are level of Business Process Re-engineering ( = 0.585) and Communication ( = 0.581). These two are also positively correlated to the overall perception about successful ERP implementation in a less significant way.

Incidentally, Level of existing IT infrastructure ( = 0.439) and Change Management ( = 0.366) are also positively correlated, but very less significantly.

All the six factors except Level of existing IT infrastructure are positively correlated to each other, to varying degrees.

Level of awareness is positively correlated to perception on BPR efforts ( = 0.870), Change Management ( = 0.741) and ERP Team Composition ( = 0.717) in a significant way. It is also positively correlated with other two factors Top management commitment ( = 0.615) and existing level of IT infrastructure ( = 0.419), although in a less significant way.

Change management is positively correlated to perception on BPR efforts ( = 0.641) and ERP Team Composition ( = 0.575) and Top management commitment ( = 0.483) apart from level of awareness in a significant way.

Existing level of IT infrastructure is positively correlated to the perception on Top management commitment ( = 0.471) apart from awareness in a significant way

BPR is positively correlated to perceptions on ERP Team Composition ( = 0.756) and Top management commitment ( = 0.644) apart from awareness in a significant way.

Top management commitment is positively correlated to perceptions on ERP Team Composition ( = 0.700) and BPR efforts in a significant way and change management and existing level of IT infrastructure in a less significant way.

ERP Team Composition is positively correlated to perceptions on BPR efforts, Top management commitment, level of communication and Change management in a significant way.

No analysis was possible in this case with respect to their demographic profile. Each respondent was unique with respect to his work profile, had total work experience of more than 15 years and their average daily exposure on the existing legacy system was uniformly low. [Appendix- 2(B)]

Some notable observations from the mean score table for various sub-factors. [Table: 6]

Table: 8
Main Factor Commn. Sub- factors scoring Lowest Mean Score 2.6 3.9 2.3 3.7 2.8 3.9 Sub- factors scoring Highest Project would save processing time Result in seamless flow of information ERP is the need of the hour as business tool Support staff from IT are adequately trained and equipped to handle support functions effectively ERP would result in standardization of processes across the organization Team consists of persons from all functional disciplines adequately NTPC mgmt. giving top priority to ERP NTPC mgmt. monitoring the project reg. NTPC mgmt. committed to bring on time Mean Score 4.5 4.8 2.8 4.5

Team members regularly communicate the progress of ERP ERP is a must for doing business Chg. Mgmt. with other ERP enabled org. Existing servers sufficient for IT Infra. storage and processing needs of ERP Data cleansing work is on, so as BPR to prepare it for migration to the ERP Members of ERP team shall get ERP Team incentives on successful Comp. completion Resources have never been a Top Mgmt. constraint in the execution of this Commit. project

3.9 4.1

Note: Higher the score, more is the level of agreement.

4.2 Interpretation of Observations

Deduced findings from the observations as listed in the previous sub-sections are as under: (A) End Users On the Negative side: This set of respondents has low perception on all the four factors, ie, Level of Communication, Change Management, Level of IT Infrastructure available & the Business Process Re-engineering. However, they are particularly concerned about long and arduous processes prevailing in their respective work areas. Majority of them feel that outdated & unwarranted processes need to be weeded out to achieve operational efficiency and higher level of maturity is required in data codification of material, equipments and vendors. This set of population is barely aware of the ongoing activities both at the unit level and at organizational level. They are very less aware about what needs to be done to accomplish this target. End user involvement has also been very low in the documentation of AS IS processes. These two facts taken together are

alarming from the point of view of change management also. It is unthinkable that without their active participation an organization wide ERP implementation can be accomplished successfully. Their level of awareness is limited about the software solution, SAP-R/3 & its attendant features strictly from the point of view of functionality. It is further supported by their low scores on training aspect. Although, all the selected respondents (end users) have already attended awareness sessions; it has not been able to do much to their advantage. Hence, formal and more in-depth training combined with some on-hand experience of the respective functional module may boost their confidence and their acceptance of the new system. The level of IT infrastructure available in the form of PCs and peripherals seems to be less than adequate and the available Band-width is far too insufficient to cope up with the density of online system use. On the Positive side: However, a sizeable portion of respondents feel that the existing Legacy systems are not good enough to take care of their present and future business needs, which might motivate them for better acceptance of the ERP implementation. Also, a very large majority has negated most of the apprehensions about ERP. These are very commonly expressed concerns, when a massive system overhaul of this magnitude takes place in a large public sector undertaking like NTPC. (B) Process Owners On the Negative side: This set of respondents has significantly low perception of two out of the total six factors, viz., Level IT Infrastructure available & the ERP Team composition. They are particularly doubtful about the abilities of persons on the team in delivering the expected outcome. A large majority of the people feel that implementation team shall not be given any additional incentive on successful completion. Their opinion could be biased due to their knowledge of NTPC reward and recognition guidelines.

Respondents have commented poorly on the lack of two way communication between the functional experts and the team members. This could have a bearing on the BPR efforts and also on the change management.

IT infrastructure available in the form of existing server capacity, network and support staff capability and resources seems to be less than adequate and needs augmentation.

Many of these respondents are very skeptical about ushering into a new era of paperless environment, wherein most of the decision making processes could be completed through an online transactions and authorizations.

This set of respondents has the perception that we are not adequately prepared at this point in time for the ERP implementation and lag behind with respect to the LAKSHYA targets.

On the Positive side: Despite the hurdles mentioned above, this set of respondents acknowledges the need of going in for the ERP is a step in right direction. They are favorably inclined towards a new work culture where systems are integrated and data is easily accessible. They also acknowledge the fact that NTPC management is giving full support to this initiative, to bring this project on time and with minimum customization. However, there is a catch. Their ratings are much less for the question no 30, where performance was an additional factor, leaving enough doubt on this aspect of implementation. On the benefit aspect from this initiative, the respondents are cautiously optimistic. It is probably so because of their long experience of working in a different work culture and the resulting inertia. However, since scores are not alarmingly low; it probably needs intervention in the form of formal training and mass awareness campaigns. (C) Project Sponsors Project sponsors were also provided with a structured set of twenty questions which revolved around strategic aspects of ERP implementation. As it is, population of this

set of respondents is small in number, being at the top of the pyramid. Apart from that, their availability is a key issue. Although close to twelve such respondents were randomly selected. Questionnaire was mailed / posted to them with a covering letter detailing the objective of the study and detailed instructions on how to fill the questionnaire, only three of them responded. Despite such a poor response, the available data is being analyzed to cull out some meaningful analysis. [Appendix - 1(IV)]

(1) There is fair amount of agreement on: I. People in NTPC are aware of the business challenges being faced by the organization. This is a healthy sign for any organization. II. Performance measurement in NTPC has undergone a drastic change from being internally oriented to customer focused in the recent past. This has brought about a sea change in their outlook towards focus of their job. III. NTPC needs to reduce levels in the organizational hierarchy to smoothen its working. This when implemented would certainly bring about increased manpower efficiency, greater accountability and faster decision making. IV. NTPC has graduated from traditional costing methods to value added costing. This cost centre concept has brought about cost consciousness in the units and greater accountability on the part of their managers. V. Greater collaboration would take place among functional areas with the implementation of ERP System at NTPC. VI. NTPC DoP needs to be suitably modified to simplify the decision making process with the introduction of ERP. VII. Organization would become more receptive to change with the introduction of ERP. VIII. Lot of emphasis is placed on continual learning in NTPC. IX. NTPC has benchmarked its performance against the "Best-in-class" practices by the Global leaders in the industry. X. ERP would ultimately lead to reduced cost of operations. (2) However, there is ambiguity on certain issues like: I. NTPC has a flexible workforce and process capability. II. In NTPC, major business processes have been re-engineered and all redundant processes been eliminated. III. In NTPC, business processes across the organization have been standardized. IV. Existing Management Information Systems (MIS) is effective in terms of providing timely & quality information.

V. NTPC Performance Appraisal system assesses and recognizes both individual & team performance in terms of achievement of strategic & operational goals. VI. NTPC personnel are ready for operating in an integrated resource management system. (3) And there are strong reservations on the few issues like: I. It is not easy to access the information/ knowledge available in a different station within the organization. II. NTPC can not operate in paperless environment with the present set of guidelines and regulated environment. III. NTPC does not have a formal process of identifying and resolving process constraints. On the whole they feel that NTPC would be able to meet ERP targets in terms of Schedule, Performance & Customization. As per the ERM checklist their mean score comes out to be 77 on a 100 point scale. This can be interpreted as Organization is close to ready for ERM (Keith Lanchbury, Carol A. Ptak, 2000). 4.3 Comparison of the Perceptions of the Three Sets of Respondents Of the four aspects of preparedness matrix, which are common to both the set of respondents, Process owners have better scores in comparison to the end users on Awareness, Change Management and Business Process Re-engineering. This is probably due to their greater exposure on the initiative. However, Process owners are doubtful about adequacy of the existing IT infrastructure. Although Process owners seem to be more aware about the ERP implementation initiatives, they are less sure of its success in comparison to the end users. Most of it emanates from their poor perception of the existing IT infrastructure and progress till date with respect to ERP targets. Though they seem to be convinced about its implementation to fairly reasonable levels, they have reservations about the expected performance of the ERP system. It can also be viewed in the context of usual apathy towards any new initiative in a public sector environment. As we go down the ladder among the three distinct sets of respondents, ie, from the Project sponsor to the Process owner to the End user, it is found that the

perception on adequacy of communication level reduces. It assumes lot of significance due to its impact on the perception on many other factors in the matrix.

4.4 GAP ANALYSIS To find gap between perceptions of the respondents on the importance of the various sub-factors critical to ERP preparedness of the organization vis--vis their performance an Importance vs. Performance matrix has been plotted. All the sub-factors (ranging from 1 to 29) have been plotted on X-axis and their Correlation coefficient values (between individual sub-factor & the overall perception level, using SPSS) on Left y-axis. These correlation coefficients (ranging from -1 to +1) define the extent to which these sub-factors affect the overall perception on ERP implementation of the respondents; thus their importance. Certain sub-factors were also found to be negatively correlated with the overall perception. Mean scores of the performance (perception of the respondents about these sub-factors) has been plotted on the Right Y-axis. Their values range from minimum 1 to maximum 5. Here again, any value less than 3 (Agree) would be construed as disagreement. Now the two points for each variable (sub-factor) can easily be compared by looking at these two series in the plot. Wherever the Mean Performance plot is below the Correlation Coefficient plot, there is a gap between the Importance and Performance. Those subfactors where gap between performance and importance was more than 10% (0.5) were considered to be significant. They need further efforts and attention, to bridge the gap in importance and performance. 4.4.1 Interpretation of Performance Gaps (A) End Users: Table: 9
Quest. No. 5 10 12 13 14 17 19 Sub-factor Description Awareness level about Software soln. (SAP-R/3) Awareness about ongoing activities at unit level Awareness about intangible benefits from ERP End User involvement in As Is Documentation Sufficiency of available Bandwidth for ERP NTPC business processes need to be reworked Usefulness of training provided Correlation Coeff. () 0.31 0.32 0.55 0.49 0.15 0.10 0.09 Mean Perf. 3.0 3.0 3.3 2.9 2.6 3.6 2.5 Perf. Gap 0.60 0.60 0.75 1.05 0.60 0.80 0.70

[Fig. 15, 16]

Significant gap between Importance and Performance were found in the following subfactors:

Efforts seem to be lacking in end user awareness and training. This set of respondents has not gained significantly from the awareness program being

organized. Thus, lot of effort may be required to strengthen these in order to smoothen the ERP implementation. Another very important factor which is found lacking is the involvement of all stakeholders. A two-way information sharing mechanism may be put in place to avoid alienation of the vast majority of this set of respondents. It could prove to be crucial from the change management view point. The available Band-width is far too insufficient to cope up with the density of online system use. The respondents are also concerned about long and arduous processes prevailing in their respective work areas. Majority of them feel that outdated & unwarranted processes need to be weeded out to achieve operational efficiency. (B) Process Owners: Gap between Importance and Performance were found in the following sub-factors: Table: 10
Quest No. 5 11 12 13 14 15 16 28 29 Sub-factor Description Manpower allocated for ERP best in their field Incentives to Impl. team on successful completion ERP team members seek feedback from experts Commn. about progress of the project by Impl team Sufficiency of existing server capacity for ERP Sufficiency of existing LAN/WAN support Need of support staff (IT) training Progress of Data Cleansing work Current level of preparedness wrt Lakshya targets Correlation Coeff. () 0.62 0.29 0.46 0.67 0.19 0.23 0.65 0.64 0.69 Mean Perf. 3.10 2.80 3.00 2.60 2.30 2.50 2.80 3.70 3.40 Perf. Gap 1.10 0.75 0.90 1.75 1.10 0.90 1.55 0.60 1.00

Significant gap between Importance and Performance were found in the following subfactors: The respondents at this level are very critical about the manpower allocated for this project. Also, they are doubtful whether any incentive shall be paid to the member of the implementation team on successful completion. All of this could be result of their knowledge of NTPC reward and recognition policy.

Process Owners perception about lack of communication among various stakeholders is similar to that of end users. It is yet another very crucial factor, which has bearings on Change management.

Apart from this, preparations with respect to Project Lakshya targets seem to be lagging and that seem to tilt the overall perception of the process owners negatively.

As far as augmentation of IT infrastructure is concerned, it needs careful evaluation by expert group for ERP execution. But, IT personnel need to be retrained to make sure that robust and efficient user support system is in place.

These findings validate the conclusions drawn on the basis of mean scores.

5. CONCLUSIONS
Based on the factors covered in this study it can be concluded that top management of NTPC is fully committed to bring the ERP project as per schedule. However, strategic vision of the top management would be realized only if the operational targets are achieved by all the involved functions. ERP is one such project where each and every function of the organization is involved to some extent. There are certain factors which need further strengthening to brace the whole organization structure into a tight knit team for this mammoth task. First and foremost, awareness about the ongoing activities both at the unit level and at organizational level is limited to the people directly concerned with implementation task. Until & unless, percolation of knowledge and awareness reaches the bottom most layer of the pyramid; two fold advantage of user empowerment and increased acceptance of the new system can not be achieved. There is near unanimity among the respondents that NTPC does not have a formal process of identifying and resolving process constraints and there is urgent need to weed out outdated & unwarranted processes, in order to achieve operational efficiency. They are of the opinion that NTPC can not operate in paperless environment with the present set of guidelines and regulated environment. NTPC DoP might also need to be amended suitably to simplify the decision making process. This calls for major overhaul of the organizational systems & procedures and culture as well. Finally, aspects like ERP team composition, existing IT infrastructure and IT support staff retraining & resource needs to be looked into to further strengthen it. Same may be augmented after objective need assessment. However, there are some silver linings among the dark clouds too. A sizeable portion of respondents feel that the existing legacy systems are not good enough to take care of their present and future business needs, which might motivate them for better acceptance of the ERP implementation. It also reduces their dependency on subordinate staff & provides reliable data. Also despite the fact that awareness level of end users needs further improvement, a large majority of end users have negated most of the apprehensions related to ERP implementation. When a massive system overhaul of this magnitude takes place in a large public sector undertaking like NTPC, inherent inertia due to long established procedures and sudden

change in work culture are traditionally resisted by the end users due to their perceived fears about their ability to adapt to such changes. But since, end users in NTPC are accustomed to work on legacy applications, they are likely to adapt to it with relative ease. Still, managing smooth transition from the existing legacy systems to the new system would be a major challenge. Teething troubles during pilot implementation have already provided us the insights into what is not to be done. Although this is a huge task and requires surgical precision in execution, many multi-national organizations have done it successfully in the past. It could be a jerk free ride! Option is with us!! 5.1 RECOMMENDATIONS Following are the recommendations for effective implementation of ERP at NTPC, based on the factors considered in the present study: 1. Training & Communication: Professionally managed, in-depth training sessions coupled with on-hand experience in using the ERP functionalities, is urgently needed for all the end users. It could also include some sort of evaluation process to assess their proficiency at the end of it. It would add objectivity to the whole exercise and prepare them for smooth implementation. Communication needs to be improved at all costs as early as possible. It could be arranged with the help of professionals to manage it in the form of mass media campaign, within the organization. Active use of all the available media options (printnewsletters & magazines, electronic intranet & TV) is the need of the hour. Another option is to organize games and events on ERP to promote awareness in an informal way. Training would remove their ill founded apprehensions and common concerns; ultimately leading to informed and confident users, who would be ready to adapt the new system with minimal jerk. 2. Simplify Business Processes: BPR related issues need to be hammered out well in advance to see that these are properly mapped into To Be processes. These changes need to be identified in consultation with process owners and end users as appropriately as possible. Bold

leadership initiatives may be needed to effect major policy changes and manage changes in the organizational culture due to absorption of these changes. All out efforts should be made to bring in a paperless work environment, wherein most of the decision making processes could be completed through an online transactions and authorizations. Implementation of ERP should be seen as a major opportunity to weed out outdated and unwarranted processes. If this opportunity is missed, we would be missing out on one of the major advantages that could bring about significant gains on operational efficiency, flexibility in deployment of resources and strategic agility while responding to dynamic situations. 3. Enhance User Involvement: User involvement can only be increased through increased participation by all. It could be in the form of allocation of ERP related task like Data cleansing work, documentation work etc. Also, users feedback on various functionalities can be assessed and incorporated if deemed fit. Two way communication channels would go a long way in dealing with this problem. 4. Strengthen ERP Implementation setup: As per the perception of the respondents across the spectrum, ERP team composition calls for urgent attention in terms of skill set and proficiency of the manpower staffing, to strengthen it further. 5. Improve IT Infrastructure: Also, existing IT infrastructure in terms of Server capacity, network capacity & connectivity and IT support structure needs to be augmented. Shortage of PCs and peripherals at workplaces and network connectivity could seem to be a minor constraint but might convert into a major irritant in ERP implementation efforts. 5.2 LIMITATIONS OF THE STUDY 1. Although, researcher has strived to make this study as comprehensive as possible with respect to the issues concerning organizational preparedness on ERP implementation, completeness of the same can not be claimed.

2. Also, conscious efforts have been made to maintain utmost neutrality & objectivity while dealing with the study, some amount of subjectivity can not be ruled out, as researcher is also a stakeholder in the organization under study.

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7. APPENDICES Appendix 1: Questionnaires V. VI. VII. VIII. Format for Personal details of Respondents Questionnaire for End Users Questionnaire for Process Owners Questionnaire for Project Sponsors

Appendix 2: SPSS DATA A) End User V. SPSS Data View & Variable View VI. SPSS Output Correlation Coefficient between Sub-factors & Overall perception VII. SPSS Output Correlation Coefficient between CSFs & Overall perception VIII. SPSS Output Correlation Coefficient between Demographic Factors & Overall perception B) Process Owners IV. SPSS Data View & Variable View V. SPSS Output Correlation Coefficient between Sub-factors & Overall perception VI. SPSS Output Correlation Coefficient between CSFs & Overall perception