Erp And The Changing Scenario Of The Corporate: Case Of Osram India Limited
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ABSTRACT
The paper deals with the changing scenario of the corporate where the implementation of the ERP solution proved success and more implementations are carried out at different segments of the industry despite of the fact that the ERP projects failed heavily in India during the previous decade.
ERP has a significant impact right from the time it is conceived in the organization. It paves way for restructuring which would not have otherwise happened in organizations sticking to traditional and conventional values. ERP is an eye-opener for organizations because they get to realize the fine distinction involved in modifying the business processes. Organizations now disclose vital information in the public domain, which was otherwise, considered confidential and not meant for dissemination.
Paper deals with the case of Osram India Limited where the ERP project was undertaken by Siemens Information Systems Limited, Gurgaon which resulted in reduction in forecasting horizon, reduction in forecasting errors and changes in production plan, local material procurement cycle reduced by 50% resulting in inventory reduction of 30%;improved maintenance plan reduced the down time of critical machines by 30%; reduction in inter warehouse transfer by 70%; improved stocked visibility and access to head office data led to reduction of order processing cycle time, easy ordering and transactions, better stock control and vastly superior services for channel members. The customers got direct access to wide range of OSRAM products and services using new channel and ability to engineer complete systems quickly with firm delivery.
INTRODUCTION
Indian industry initially had legacy systems working on different platform, which were developed in-house, and tailor made to their method of working. Since the legacy system took care of data processing, only, the system generated some operational reports. Real MIS resided on Excel sheets along with different kind of analysis. Therefore, information was fragmented and authenticity was questionable.
Over a period of time, the systems underwent changes and represented a patchwork of several additions and modifications. They were loosely integrated across functional areas and there was duplication and information inconsistency. It was, therefore, important to migrate from this platform to something more stable and futuristic.
The management vision was to align IT with business. IT was to be used as a strategic business tool rather than for limited purpose of data processing. An information systems plan was drawn up, which besides other things, stated that the organization would go for common system across the organization which would also achieve integration between all systems, emphasis would be on improving business processes, to adopt best practices and to cover the entire supply chain.
The industries wanted to consider only state-of-art systems and one which had a clear roadmap for the future including conduct of business over the net. Tired of in-house developed systems, the company wanted a standard solution and in particular, an ERP. The idea was to partner with a technology vendor capable of taking them forward as the business expectations increasing rapidly.
The need for cutting edge ERP solutions is becoming crucial in this information age. This is accentuated by the fact that even the most fundamental market philosophies are changing rapidly and radically and market for almost all products / services has become truly global.
Another important factor that is driving the demand for ERP solutions is the changing characteristics of customers. Customers, who have become more knowledgeable of the various choices, have come to expect better quality, faster delivery, highly customized products, and enhanced support services. Delivering all these to customers is getting more difficult with the consistent entry of new players in the market space, stiffer competition and loss of regional domination because of globalization.
Last decade has seen the organizations around the world spending a large amount of money to adopt ERP systems due to six main reasons. Firstly, companies require a common database; secondly, they want to improve and standardize their process; thirdly, they require ongoing monitoring; fourthly, cutting down the operating cost; fifthly, improving relations with customers and suppliers and finally, improving their decision-making capability.
With the help of ERP solutions, enterprises are increasingly looking at sharing relevant business process related information with business partners. This not only allows all the partners involved to take decisions quickly and plan out actions according to the changing market compulsions, but also decreases the overall risk factor.
The enterprises with a global outlook are making a beeline for implementing cutting edge ERP solutions, which goes much beyond the focus of traditional ERP solutions. This is rendering the vast majority of the current ERP solutions obsolete from both architectural and business importance viewpoints. Therefore, there is increasing demand for both ERP II (from large enterprises) and advanced ERP solutions.
There is need for an economical transformation to an enhanced ERP solution and ERP vendors are rightly poised to undertake this transformation. ERP solutions, which are developed painstakingly with an experience of over a decade, are also designed to take care of an enterprises future technology and business process needs.
SCENARIO IN PREVIOUS DECADE
Nine companies out of ten had disastrous experiences with ERP in the previous decade, and pundits predicted the death of this application. But ERP has resurrected and is flying high on e-biz wings.
There is a superstition that to turn your business around all you need is to plug in an ERP solution and all will be well. But the reality is very different, if the experience of hundreds of Indian companies and thousands of global firms is indication. A recent study found that the average cost overrun in Indian ERP implementations was 178 percent, the average implementation time overrun was 230 percent of original expectations, and the average decline in productivity was an astonishing 59 percent. Most of the users think that ERP packages cost the earth, take ages to implement and at the end of the day deliver nothing. Looking at the inside story one discovers that the fault was not in the ERP packages but in poor understanding of what it takes to install ERP and poor planning and implementation.
List of successful ERP implementations include Bharat Petroleum Corporation Limited, Indian Oil Corporation Limited,