V K Agnihotri

 Organizations invest massive amount of time,

money and human resources during ERP
Implementation. Therefore, top management is
always eager to know “When the organization
will start getting the returns or benefits?”
 These benefits in case of ERP may be tangible
like ROI or intangible like improved customer
services. Broadly speaking they may be
classified under one of the following categories :
• Business Value addition
• Enhanced Business returns
 A point of caution here. Many a time the returns from ERP are either
below expectations or fail to come at all due to one basic attitudinal
approach prevailing in the organization viz. The ERP implementation
is seen as something similar to the introduction of a computer
system.
 In other words the ERP Project is seen as an exercise in IT rather than an
endeavor to improve business performance.
 Technology (IT) at best may be seen simply as a facilitator / enabler for
delivering the business value and business returns.
 If ERP project is seen as an exercise in IT, then the role of leaders of business
units is undermined causing problems in its implementation & returns.
 This is to bring home the point that the accountability for successful
implementation of ERP Project through which organization derives
benefit lies both with technology (IT) executives and leaders of
business units.
 Before proceeding further lets have a look at business scenario at
SAIL now and what needs to be done to leverage full benefit from
ERP implementation.
 At SAIL the Strategic (long term), the Tactical (mid term) &
the Operational (short term) business plans and targets are
rolled out at following planning levels at relevant horizons or
time frames.
 At the Apex level is Corporate plan for SAIL i.e. Targets &
MOU’s for SAIL as a whole, which is annual strategic plan
 The Next level is Organizational / Plant Level e.g.
 BSL,BSP,DSP,RSP,IISCO,ASP,VISL,SSP,MEL,RMD
 CMO,CCCO etc.
 These plans are tactical and are drilled down to monthly level.
 In case of plants the plans are further broken down to main
production units viz. Coke Making, Sinter Making , Iron Making,
Steel Making, etc. These plans are drilled down to scheduling or
daily level. The scheduling needs to be finally drilled down to
minute to minute level.
 This planning can not be dispensed with, as it forms the core
business planning.
 The views of plan are also developed to
analyze with respect to two main strategic
business divisions viz.
 Flat Products
 Long Products
 Typically when any large organization like SAIL go for
ERP implementation, by and large they retains the
basic structure of pre implementation planning.
Otherwise it will mean leaving the world of the proven
and familiar and looking at plans which are strange or
not well understood.
 Now, there is a well known business principal “If we
keep on doing what we are doing then we will keep on
getting what we are getting.” i.e. if we want to
CHANGE BUSINESS VALUE & BUSINESS
RETURNS we have to do some thing different. That
means we have to change the way we look at our
business i.e. our plans & implementations! But How?
 NEXT WE WILL SEE HOW ERP EMPOWERS US
WITH THAT MEANS TO CHANGE !
 The Implementation of ERP is not the change which we are
looking for to add the business value and to improve the
business returns, rather it (Implementation) provides us an
opportunity to carry out the said change through improved
Business Process Management.
 So obviously the next question is “What are business
processes and how bringing improvement in them will enhance
our business value and business returns.”
 Business processes are our business a typical example is “Sales
Order Processing”. We will discuss this in detail a little later .
 Managing these processes better means focusing on the
important activities, functions & resources of a company such as
Markets, Strategy, People , Financial Aspects , Material
Management etc.
 Every organization tries to manage its business process well.
The current ways of working, that is the way the business
processes are carried out at any point of time are the result of
• Historical precedent,
• Habits,
• Reactions to past challenges,
• The influence of technology, and
• Directions from senior management
• However, post ERP implementation one new dimension gets
added viz. the integration of various processes. The influence
of technology brings that change. This enables us to look at
our business in a new way which was not possible earlier and
opens new avenues for improvement though Business
Process Management.
 Let us try to understand difference between a business function
and a business process.
 Business processes are by nature inter-functional, that is, they span
multiple business functions.
 Business Functions are usually specific to departments which
concentrate/ specialize certain skills and/or knowledge. Common
examples of such functions are Manufacturing, Marketing, Sales,
Human Resources, and Finance.
 Even the simplest of processes involves the application of
specialist skills found in different departments/functions.
 Business Process is a collection of interrelated work tasks, initiated
in response to an event that achieves a specific result for the
customer of the process. Each word in this definition is important:
• “achieves a specific result”
 The result might be Goods and/or Services.
 The result should be measurable, for example, Fulfillment of Orders, Resolution
of Complaints, Raising of Purchase Orders etc.
• “for the customer of the process”
 Every process has a customer. The customer maybe internal (employee) or
external (organization). While the “Fulfillment of Order” process has an external
customer, there are many other processes such a “Recruit Employee” whose
customer is internal. A key requirement is that the customer should be able to
give feedback
• “initiated in response to a specific event”
 Every process is initiated by an event. The event is a request for the result
produced by the process.
• “interrelated work tasks”
 The business process is a collection of clearly identifiable interrelated tasks
executed by one or more actors (person, or department or organization ).
 A task could potentially be divided up into more and finer steps.
 Lets consider a business process such as “Sales Order
Processing” it involves following steps (Business Functions)
 Taking the Order (Sales Function)
 Planning the Production (Production Planning Function)
 Planning for materials (Material Requirement Planning Function)
 Procuring the Materials ( Procurement & Logistics Function)
 Making the Product (Manufacturing Function)
 Shipping the Finished Product (Shipping Function)
 Invoicing the Customer (Billing Function)
 Obtaining the payment from the customer (Collection Function)
 Process are not ends in themselves. They have a purpose, they create and
deliver  results that customers care about.
 It is obvious from above analysis, that if want to improve “Sales
Order Processing” we have to analyze all the above functions
systematically and bring improvements where ever required only
then the ERP implementation will add value to our business and
bring returns. Here it may be mentioned that ERP provides a host
of new techniques for Customer Relation Management.
 As another example lets consider “Purchasing of Goods” as . It
involves following steps (Business Functions)
• Raising Indent i.e. Material Quality, Quantity and requirement
date (Production Planning Function)
• Raising Purchase Requisition (Purchasing Function)
• Request For Quotation (Purchasing Function)
• Quotation Evaluation & Vendor Selection (Purchasing Function)
• Issue of Purchase Order (Purchasing Function)
• Goods Receipt (Shipping & Stores Function)
• Invoice Verification (Stores & Purchase Function)
• Payment to Vendor ( Payment Function)
• Similarly for improving the “purchasing of goods” we have to
analyze all the above functions systematically and bring
improvements where ever required only then the ERP
implementation will add value to our business and bring returns.
Here it may be mentioned that ERP provides a host of new
techniques for Supplier Relation & inventory management.
 Thus  post ERP implementation the “Sales Order Processing” &
“Purchasing of Goods” Business Processes will involve minimum
all the above mentioned functions.
 However, the list will increase if in “sales order processing” the
inconveniences such as redress of Customer Complaint comes in
to play or in case of “purchase of goods” there are issues related
with invoice verification due to quantity or quality.
 In the former case Quality, Sales & Application Engineering have
to sort out the issues involved with the customer. In the latter case
the Quality, Department raising indent , Stores , Purchase & Legal
Department have to sort out issues involved with the vendor.
 The new opportunity ERP implementation provides is to
monitor and manage our business processes on a real time
basis as post implementation we have at our disposal
Complete, Accurate & Live information for all relevant aspects
of our business and it will make available a platform
wherein we can analyze , control & manage our
Business Processes rather than Business Functions only.
 A word of caution here again. The concern regarding
Completeness & the Accuracy of information brings into focus
the quality and timely maintenance of data in the system.
 Coming back to the original query that
"When will SAIL start getting the returns
or benefits from ERP implementation?”
 SAIL will Start getting Benefits or
Returns from ERP Implementation when
we Adopt Business Process
Management and make it the Pivotal
Theme for Managing Our Business.