Date post: | 24-Jan-2015 |
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The whys of ‘ERP Product and Implementation Vendor’ Selection at M/S Penna Cements Limited
IntroductionConstruction Sector at its boom .In year 2006, Cement production grew 11% .Industrial and Infrastructure sectors, consumption of
cement rose upto 12%Andhra Pradesh with 18 Large and 16 mini cement
manufacturing facilities rank second in production of cement in the country .
Introduction of Penna Cement Industries LimitedLargest companies in the state.In August 1994, Penna Cement was incepted in
Anantapur District.Had access to finest quality Limestone.Capacity expanded to 1.7 million tonne per annum.1 million tonne plant at Ganeshpahad Village .
Penna Cement IT SystemDeveloped in house IT system since its establishment.It manages various business operations such as
purchase, sales and accounting operations.But due to tremendous growth of business IT system
was inefficient.
Legacy System at Penna Cement
Penna has developed an in house transaction processing system at their Head office in Hyderabad was developed by M/s Sindhu Corporate Services.
It includes following modules such as
I. Sales and Distribution
II. Accounting
III. Material Management
IV. PayrollAll Offices uses an Oracle Financials of their accounting
system processing
Challenges faced by the Legacy SystemThe Problem of Goods-in transit Identification.Paying sales tax on due date.Problem of limited scope.
Challenges in System Architecture.it consist of two layers- Client and Server.Each Client application requires its own session.It has restricted flexbility and choice of DBMS
Integrated Transaction Process SystemData for routine activity.The system which process transactions of all the
functional areas of business is called Integrated Transaction Process System.
Eg- Payroll, Accounting system
ERP Vendor Selection
ERP Vendor
Product Vendor Implementation Vendor
Steps in ERP process
Strategic plan
Readiness Assessment
Prepare for Vendor
selection
Vendor selection
Plan for implementatio
n
Implement the ERP Solution
Post Implementati
on Assessment
Focus on the case
Three things to focusComplete knowledge of business, its process and the
current system working on.ERP implemented companies in same industry, its
benefit and limitation andCollect the information of all the vendors available in
the market and what they offer.
Which to select?SAP- customize the module according to the
processes irrespective of the type of business.Oracle-keeps all the information and manages the
business in a single databaseBoth this software are costly, time consuming and
risky.
Best alternativeIndustry specefic ERP is preferred.The product of these vendors, target specefic areas of
the business to attract consumer.Provides better solution of having in depth
knowledge of industry needs and requirements.
IMPLEMENTATION VENDORThe management approached three vendors- SAP,
Oracle and Indice.All the functional departmental heads and technical
team of Penna were present.The company concentrated mainly on three factors:
- Price factor
- Licensing
- Implementation time
Cont..The price factor has made the global players SAP and
Oracle to get ruled out. Licensing is also an problem in case of installing
other leading ERP packages.
INDICEIt is the product of IC Infotech.It was choosen for implementation as the
management thought it would be better than SAP and Oracle.
IC Infotech is one of the fastest growing software services company.
It provides leading edge solutions for BFSI, Manufacturing, Retail and e-Governance verticals.
Indice has been successfully implemented at India Cements and Visaka Cement Industries.
Cont..Indice is an Integrated Information System specially
designed for the process industry, completely web based and following three- tier architecture.
It has its module in Sales and Distribution, Finance and Accounting, Material management, Plant/Factory Maintenance, Plant/Factory MIS, logistics Planning, Human resource management & Payroll etc.
Used for following industriesChemicalsMiscellaneous ManufacturingOil and GasOther transportationPharmaceuticalsPlastics and Rubber productsPulp and PaperTextiles and Apparel
Key featuresSecureSimpleComprehensiveReportsAdd- onWeb basedPlatform independent
ATTRIBUTES VENDORS
SAP ORACLE INDICE
PRICE Very expensive Expensive but compared to SAP, it is lower
Less expensive
AFFORDABILITY Not affordable Not affordable Affordable
ARCHITECTURE 3- tier architectureDatabase layer Application layer Presentation layer
3- tier architectureDatabase layerApplication layerPresentation layer
3- tier architectureData tier, Business tier and User interface tier
LICENSING Per- user Per- user Blanket licensing
INDUSTRY SPECIFIC Not specially designed for cement industry
Not specially designed for cement industry
Specially designed for cement industry
EXAMPLES OF SUCCESSFUL IMPLEMENTATION
Ultra Tech Cement Ltd., Ambuja Cements Ltd.
Not implemented India Cements and Visaka Cement Industries
COMPLEXITY High Medium Low
TECHNOLOGY Primarily ABAP PL/ SQL Java, Java scripts
USER FRIENDLINESS Low Low High
EASE OF CUSTOMIZATION
Not easy Not easy Easy
The Battalion for implementation
Project Coordinator
Experts from Penna
Experts from Indice
Project Manager and project Lead
Coordinates all Functional Heads
HR S&D FI CO PM MM
Selection of ModulesImportant task in implementation of ERP.Depends on the company’s requirement, affordability,
size and type of business.Penna decided to go for S&D, F&A, MM, P&P, PM
and HRM modules.
ConclusionThe case emphasizes the importance of an appropriate
vendor selection in ERP process.Vendor selection depends on number of factors.It is not always true that all large scale companies opt
for leading vendors. Sometimes local vendors also suit company’s business processes in a more appropriate manner.