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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

A SUMMER INTERSHIP PROJECT (SIP) REPORT ON “A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

DECLARATION I XYZ

here by affirm that the Project Report entitled “A study of

business process improvement after implementation of SAP ERP in GSEG” Prepared by me during the year 2011-12 in partial fulfillment of the requirements of Master of Business Administration degree, is my original work and have never been submitted elsewhere.

PLACE: XYZ

SIGNATURE

DATE:

XYZ

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

ACKNOWLEDGEMENT A summer project is golden opportunities for learning and self development .I consider myself very lucky and honored to have so many wonderful people lead me through in completion of this project. First of all I would like to thank Mr. XYZ (PLANT INCHARGE) and Mrs. XYZ (HR & ADMIN.) for allowing me to take up my project at their reputed organization. My special thanks to Mr. XYZ (HR & ADMIN.) who in spite of being extraordinarily busy with their duties, took time out to hear, guide and keep me on the correct path. My special thanks to Mr. XYZ (Electrical dept.) and every staff member of GSEG for their guidance at every stage of the project that enabled me to successfully complete this project which otherwise would not have been possible for me to complete the report with fullest Endeavour. Ms. XYZ (Assistant professor) whose patience I have probably tested to that limit. She was always so involved in the entire process, shared her knowledge and encouraged me to think. I am sincerely thankful to all the faculty member of MBA department of XYZ College of Management for their kind support. Last but not the least there were so many who shared valuable information that helped in the successful completion of this project.

XYZ MBA

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

EXECUTIVE SUMMARY A study is based on one of the group of GSPC that is GSEG which stand for Gujarat state energy generation. GSEG is a special purpose vehicle formed by GSPC to generate power in Gujarat by harnessing the ecofriendly & economical natural gas. GSEG is a part of the GSPC group’s overall strategy of establishing presence in both the upstream and downstream segment of energy value chain. The company is committed to using innovative advance & technology of producing gas based power. The title of the project is “A study of business process improvement after implementation of SAP ERP in GSEG”. The objective of the study is to check the validity of the current business process in GSEG and to measure the effectiveness of services through SAP ERP that is offered by GSEG in different departments. The Project focuses on aligning Employees, Strategies and Processes for Business Success. In the first part of the study, the overall power related activities that have been undertaken by GSEG over the past years have been discussed to give a basic understanding of the work that is performed by the company. In the second part, the need of SAP ERP in different areas of GSEG to effectively deal with business challenges has been discussed. In this project work, the basic aim is to establish are port which can state the importance of SAP ERP in today’s business development. In this Project, Descriptive research design has been used. Research is base on the survey, case study and secondary data .Sampling design is convenience sampling because of time and money constraints. The sample size is 30 respondents. Personal face to face interviews was conducted to collect the primary data. Have used tables, charts, cross tabulation and Chi-square test for interpretation of the survey.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG� By applying different statistical tools I have found some useful information that Employees do not adapt quickly to the changing business environment of SAP ERP. It takes some time to adjust to new environment. After the implementation of SAP ERP process in GSEG, the old employees who had taken training courses they were retired or have left the organization and the new employees have not taken any training courses. It has also reduced workload of employees. From the study some of the recommendations are identified which will definitely help the company to improve their service effectiveness through SAP ERP process. More training sessions should be given to employees regarding SAP ERP process as it has very vast applications. Everyone must become familiar with new roles, revised processes, and new control mechanisms. Process owners should be made aware of the new updates in SAP ERP process at regular basis either through mails or workshops, whichever is required. Top management should formulate some guidelines on how to reduce the paper-work.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

TABLE OF CONTENT

CHAPTER TOPIC NO.

1.0

INTRODUCTION

PAGE NO

1 1

1.1)

Industrial overview of power sector 3 1.1.1) The oil & gas sector 6

1.1)

Company overview 6 1.2.1) History 7 1.2.2) Mission 7 1.2.3) GSEG’s strength 8 1.2.4) Project development highlights 9 1.2.5) Partner & affiliation 9 1.2.6) Oppression millstones 10 1.2.7) Plans & projects 11 1.2.8) Client 11 1.2.9) Organization structure

2.0

LITRATURE REVIEW

3.0

RESEARCH METHODOLOGY

12 18 18

3.1) Research background 18 3.2) Objective of the study

6


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” 19 3.3) Benefit of study 19 3.5) Research design 19 3.6) Data collection method 20 3.7) Sample design 20 3.8) Statistical test used 20 3.9) Limitation of the study

4.0

DATA ANALYSIS AND INTERPRETATION

22 22

4.1) Secondary data analysis 22 4.1.1) ERP 23 4.1.2) ERP implementation 25 4.1.3) Advantages of ERP system 26 4.1.4) Disadvantages of ERP system 27 4.1.5) ERP vendors in the market 28 4.1.6) SAP 30 4.1.7) SAP solution 31 4.1.8) SAP business suite 33 4.1.9) My SAP ERP business suite 34 4.1.10) TCS & SAP solution 35 4.1.11) Business benefit 7


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” 38 4.1.12) Basic system 38 4.1.13) SAP cost /benefit analysis 46 4.1.14) Advantages & disadvantages 47 4.1.15) Navigation 51 4.2) Data analysis of primary data (surye) 82 4.3) Data analysis of primary data (case study)

90

5.0

FINDING

6.0

RECOMMENDATIONS

7.0

CONCLUSION

91 92

BIBLIOGRAPHY APPENDIX

LIST OF FIGURES

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

SR. NO.

TOPIC

Figure 1

Contractual Structure of the Hazira project

Figure 2

Organization structure

PAGENO. 8 11 23

Figure 3

ERP system 25

Figure 4

ERP implementation process 27

Figure 5

Most popular vendor 30

Figure 6 Figure 7 Figure 8

SAP evaluation SAP solution for large and small enterprise

31

SAP business suite function areas

32 34

Figure 9

SAP ERP frame work 48

Figure 10 Figure 11 Figure 12

Logging in SAP Screen element

49

SAP screen

50 87

Figure 13

Timetable SAP ERP system implementation of GSEG

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

LIST OF TABLES SR. NO.

TOPIC

PAGE NO. 52

Table 1

Missing any function 55

Table 2

One-Sample Test for standardized business process 57

Table 3

optimum choice

Table 4

Help in taking decision

Table 5

Transparency & control

62 56 65

Table 6

SAP ERP has reduce work load of employees 66

Table 7

One sample statistics 69

Table 8

Service are available

Table 9

SAP ERP system and processes are user

71

friendly 72

Table 10

Needed new training 74

Table 11

Involved * attend any training cross tabulation

Table 12

Involved * improved any are cross tabulation

77 78

Table 13

reduce time & faster service * chance of error Cross tabulation

Table 14

Chi-Square Tests for reduce time & faster service *

78

chance of error 79

Table 15

productivity increase * helpful & convenient Cross tabulation 80

Table 16

Chi-Square Tests for productivity increase * helpful & convenient 10


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

81

Table 17

help in taking decision * speed up transaction process Cross tabulation 81

Table 18

Chi-Square Tests for help in taking decision * speed up transaction process 82

Table 19

Increased an efficiency * helpful convenient cross tabulation 83

Table 20

Chi-square test Increased an efficiency * helpful convenient 84

Table 21

adapted change environment * user friendly Cross tabulation 84

Table 22

Chi-Square

Tests

for

adapted

change

environment * user friendly

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

LIST OF CHARTS SR.NO.

TOPIC

PAGE NO.

Chart 1

Involvement in SAP implementation

Chart 2

Improvement in current SAP system

51 52 54

Chart 3

SAP ERP has standardized business 56

Chart 4

SAP using hour in work 58

Chart 5

Would you continue using SAP 59

Chart 6

SAP ERP has reduced time & provides faster delivery of service 60

Chart 7

Productivity

has

increase

after

the

introduction of SAP ERP 61

Chart 8

Chances of error have been reduced with the introduction of SAP ERP 62

Chart 9

Chart 10 Chart 11

SAP ERP is more helpful and convenient then older system SAP ERP helps the organization to speed up

64

the transaction process SAP had increased an efficiency of the

68

organization 70

Chart 12

The employees of the organization have quickly adapted to changing environment 73

Chart 13

Attend

any

training

course

during

the

implementation 12


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG� 74

Chart 14

Involved and attend any training course 75

Chart 15

Current feeling for need new training 76

Chart 16

Type of training 77

Chart 17

Involved

*

improved

any

area

cross

tabulation

1. INTRODUCTION 1.1) INDUSTRY OVERVIEW OF POWER SECTOR: Natural gas is a colorless, odorless, naturally occurring gaseous mixture of hydrocarbon components. Natural gas is used in a variety of applications, such as feedstock in fertilizer in the petrochemical industry and as fuel in the power generation manufacturing of steel, textile, ceramic, glass and other industrial products. As a fuel, natural gas competes with a range of alternative products such as coal and lignite as well as petroleum products such as liquefied petroleum gas, naphtha, high speed diesel, light diesel oil and fuel oil. However, due to lower fuel, operating costs and better combustion characteristics, natural gas has distinct economic advantages over other sources of energy. In addition, natural gas has substantial environmental advantages over other energy sources, due to lower emissions. Worldwide, the percentage of global primary energy consumption of natural gas rose from 19% in 1980 to 24% in 2002. High growth in demand of natural gas is expected to occur in developing countries at a rate of 3.9% per year between 2001 and 2025. The Indian natural gas market is relatively underdeveloped compared to other regions of the world. By the years 2024 to 2025, the share of natural gas would increase to 20% of total primary energy consumption, according to Hydrocarbon Vision 2025. 13


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Gujarat is one of the largest oil and natural gas producing states in the country. Today, Gujarat has the most developed natural gas market in India. Gujarat not only has competing natural gas suppliers but also has competing pipeline network operators. The natural gas suppliers in Gujarat are GAIL (which is currently marketing the natural gas produced by ONGC and joint venture companies), Panna Mukta Tapti JV, GSPC/Niko, IOCL, BPCL, Cairn Energy, Petronet LNG Terminal, Hazira LNG Terminal. Gujarat has the largest natural gas pipeline network among all the Indian states. The pipeline network in Gujarat comprises of the North Gujarat and South Gujarat network of GAIL, a part of the HBJ pipeline network, the ex-Hazira network of GAIL, a part of the DVPL pipeline network, the pipeline network of GGCL and pipeline network of GSPL. Gujarat has the only two operational LNG terminals in India. Supplies to Gujarat are expected to increase manifold, with Petronet and Shell expanding their LNG re-gasification capacity. Industrialization, proximity to supply sources and developed natural gas transportation infrastructure have resulted in Gujarat emerging as the largest natural gas consuming state in the country, with more than 35% of India's total natural gas consumed in Gujarat. Currently the major public sector & privet sector players in the state’s electricity generation and distribution are as follows: Public sector: •

Gujarat state electricity corp.Ltd (GSECL)

Gujarat industries power co. Ltd (GIPCL)

Gujarat mineral development corp.( GMDC)

Gujarat state energy generation Ltd.(GSEG) 14


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Private sector: •

Torrent power generation Ltd (TPGL)

Gujarat paguthan energy corp.pvt.Ltd (GPEC)

Essar power

Gujarat has been proposed as potential hub for power generation and transmission by the government of Gujarat . The growing demand The estimated growth in the demand of power in Gujarat is 5.7% per annum in the period of 2006-2017. the growing demand can be easily capitalized using the resources, proximity and the non material input.

1.1.1) THE OIL & GAS SECTOR: Gujarat governs a command over the on shore production of the crude in India by contribution almost 54% of the totle production. The government of Gujarat proposes Gujarat as energy hub, since it has unique feature of having state wise gas grid and multi gas supplier. Gujarat also contributes the on shore gas production with 39% of the total production. Refineries in Gujarat are accountable for 46% of refining capacity of the country. The major oil and gas reserves are located at the following location in Gujarat. Ankleshwar, Meshana, Trapti high, Hazira, Bharuch, Ghandhar, Dehej, Palej, Kalol and isolated around Ahmadabad The existing gas of 550 km has been proposed to be expanded to 2200 km which will add a very positive attribute to the oil and gas sector in Gujarat economy. The few of the factor which may woo the establish a new set up can be : 15


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” •

established infrastructure

location advantages

The privet and public sector enterprises like ADANI, GAIL, GSPC ,and BPCL are involved in gas distribution . Hazira and palej are the only two LNG terminals in India, mentioning the potential of Gujarat to be a state who can lead Indian the development and growth in oil and gas sector. The major factor is the location advantage, since Gujarat is having proximity to the middle east gas reserves along with the attractive northern market to capitalize on. The industrial power policy is supportive for the establishment of new units in the state since the electricity duty on the new establishment has been exempted for a period of 5 year. The units which generate electricity for the captive requirement also have been exempted from the duty for a period of year. Gujarat is one of the state which undergone the labor reforms leading to the flexible labor laws. The availability of skilled and unskilled human resource at lower cost is also a plus point for new ventures. It is one of the states with the best utilization of the human resources by being the state with the least man days lost due to industrial unrest in the country. The market of Gujarat is full of the oil and gas consumers. Fertilizer companies like IFFCO, KRIBHCO and GSFC consumer major chunk of the oil & gas product having the rising demand .the units involved in the power production like NTPC and GEB also can be the potential consumer with establishments of RIL and IPCL. This has been supported well by the progressive industrial policy adopted by Government of Gujarat with a focus on infrastructure , power reforms , tax regimes rationalization , port led development and establishment of SEZs.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

INSTALLED CAPACITY GEB IPPs Torrent Power AEC GIPCL Gas based, Baroda Essar Power Ltd.,Hazira GPEC, Bharuch GSEC- Gandhinagar GSEC-Wanakbori GSEG, Hazira GIPCL, Mangrol Total CENT SECTOR ( Gujarat Share ) TOTAL

4474MW 490 MW 305 MW 300 MW 655 MW 210 MW 210 MW 156 MW 250 MW 2576MW 1532 MW

8582 MW

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

1.2) Company overview: (GSEG LIMITED) 1.2.1) History: Diversification into power: GSPC Group decided to move into power generation as a part of its corporate diversification plan and embarked on a short gestation power project based on the use of natural gas from its gas fields. The Hazira area of Gujarat was chosen as the site for its first combined cycle power plant. To implement the project, GSPC promoted a separate company named Gujarat State Energy Generation Ltd (GSEG). GSEG, in turn, selected Alstom as contractor for the project through international competitive bidding. Alstom supplied the plant on a turnkey basis. Its scope included two GT8C2 gas turbines with generators, a steam turbine with generator and heat recovery steam generators as well as the overall power plant control system. The contract also included civil works, balance-of-plant and buildings. GSEG employed Desein Consulting Engineers of Delhi as advisors and to supervise

the

turnkey

contractor's

compliance

with

the

plant

specification. GSEG selected Steag Encotec as O&M contractor for the project. The power purchase agreement for the project was signed with GUVNL.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

1.2.2) MISSION: Recognizing the need for safe, affordable, secure source of energy in Gujarat, the primary mission of GSEG is to meet demand with a fuel source that is clean, reliable, efficient and safe. GSEG is also committed to become a strong strategic partner in the emerging integrative vision of the GSPC Group, resulting in more energy, economy and efficiency to individuals and enterprises, and a higher quality of life to everyone. True to the spirit of the Group's Safety, Health & Environment Policy and practices, GSEG is committed, responsible and environment conscious in its design, project planning, building, operating and enhancing the power generation facility business, by proactively meeting the applicable environmental laws, regulations and stipulations, and encouraging the development and use of efficient, clean and cost-effective energy technologies.

1.2.3) GSEG’S STRENGTH: •

One of the most efficient producers in Gujarat offering reliability and flexibility.

Application of Modern and Efficient Technologies - like CCPP and state-of-the-art controls for plant management.

Committed to environment friendly operations.

Excellent domain expertise guaranteeing efficient and economic operation.

Regular modernization to continuously increase energy yields and environmental performance.

GSEG continues to explore synergies with the other companies of GSPC Group - synergies between gas and electricity with intelligent application of fuel management strategies and information technology. 19


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

1.2.4) PROJECT DEVELOPMENT HIGHLIGHTS: Germination Gujarat State Petroleum Corporation Ltd. (GSPC), engaged in Oil & Gas E & P, decided to diversify into downstream activities for value addition in the energy business and thus, GSEG incorporated in December 1998.

FIGURE 1: Contractual Structure of the Hazira project

Abbreviations: •

GSPC = Gujarat State Petroleum Corporation Ltd.;

GSEG = Gujarat State Energy Generation Ltd;

GUVNL = Gujarat Urja Vikas Nigam Limited;

INAP = Alstom Power India;

CIF = Cost insurance, freight;

CHAP = Alstom Power Switzerland 20


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

1.2.5) PARTNER & AFFILIATION: •

Long term Gas Supply Agreement (GSA) with GSPC-Niko

Long term Power Purchase Agreement (PPA) with GUVNL (erstwhile GEB)

Alstom

as

Erection-Procurement-Construction

(EPC)

Turnkey

Contractor for CCPP •

Steag Encotec for Operations and Maintenance (O & M) of the CCPP Generation Plant

GIDC for land and water arrangements.

Equity Holders: GSPC, GUVNL (erstwhile GEB), GIPCL, GPCL, GIIC, KRIBHCO,GAIL Bond Holder's Trustee: Central Bank of India.

1.2.6) OPPRESSION MILLSTONES: Achievement In the present scenario, where almost all Power Projects are facing difficulties and hardly any new capacities are added to the system, GSEG has created a record of its own by synchronizing the First Gas Turbine in record time of 17 months and the Second Gas Turbine in 18 months from zero date of EPC contract. Adding true value to energy needs of Gujarat,

through

efficiency,

economy

and

environment

friendly

operations. Presently

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Cleaner-burning natural gas is the fuel of choice for today's newest electricity generating plants. Switching from coal to gas as the primary fuel for generating electricity can result in a 50% reduction in CO2 emissions per unit of electricity generated. This and the greater efficiency of gas combustion technology mean that energy from gas produces markedly less air pollutants than the equivalent of coal combustion. Power from large centralized facilities is being complemented by distributed power in the form of smaller scale facilities to meet local demand for electricity. Reinforcing GSEG and GSPC Group commitment to Natural Gas industry growth.

1.2.7) PLANS & PROJECTS: GSEG is repositioning GSPC Group's edge in creating better value in the core gas/ energy business chain through a strong, focused and successful electric utility business in Gujarat. GSPC Group's integrated business model combines the physical ownership and control of power generation and natural gas assets with energy and fuel management. Helping the Group in effectively managing the energy business risks, which

include

demand,

technologies,

fuel

prices,

logistics

and

competencies. And optimizing the value of our diverse portfolio of generating plants and gas assets. GSEG manages the electrical utility with •

Advanced power generation and management practices, and improve the efficiency of power supply to Gujarat Electricity Board

Operations at least-cost

Full compliance with the health, safety and environmental regulations of Gujarat

Excellent working conditions to optimise the skills and potential of the staff and managers involved.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” GSEG has demonstrated that it has the competencies and resources to occupy and excel in the power generation chain, including design, development, construction and operations. Soon the chain will be complete with the company's plans to expand capacity to larger projects and to enter distribution in Gujarat.

1.2.8) CLIENT: As of now, GSEG CCPP Operations are catering solely to Gujarat Urja Vikas Nigam Limited (erstwhile GEB).

1.2.9) ORGANIZATION STRUCTURE:

FIGURE 2: Organization structure

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

2) LITRATURE REVIEW The concept of reengineering traces its origins back to management theories developed as early as the nineteenth century. The purpose of reengineering is to "make all your processes the best-in-class." Frederick Taylor suggested in the 1880's that managers use process reengineering methods to discover the best processes for performing work, and that these processes be reengineered to optimize productivity. BPR or Business Reengineering echoes the classical belief that there is one best way to conduct tasks. In Taylor's time, technology did not allow large companies to design processes in a cross- functional or crossdepartmental manner. Specialization was the state-of-the-art method to improve efficiency given the technology of the time. This literature review covers a wide range of articles that has appeared on various

publications

and

internet

related

to

SAP

and

business

reengineering. The implementation project following this review is purely an academic work and there is no commercial objective driving this project. "To change and to change for the better are two different things." A German Proverb "So how has SAP managed to survive and prosper despite the naysayers? Several factors have contributed to the longevity of the ERP market leader. First, the ongoing costs and hassles of integration have pushed clients away from a best of breed market. SAP is furthering its dominance in the core applications ERP market (FI, HR, basic manufacturing) through its strides in HR functionality, and it looks quite 24


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG� likely that SAP will continue to have success in FI, HR, and some basic manufacturing work across many industries. SAP has also managed to postpone its day of reckoning by maintaining a global, multi-currency presence and making great strides on industry-specific, targeted functionality." "SAP '98 year in review, and outlook for the coming year," Jon Reed, SAP Newsletter, December 14th 1998. The

most

common

titled "Reengineering

definition the

used

Corporation,

comes a

from

Manifesto

for

the

book

Business

Revolution", by MIT professors Michael Hammer and James Champy. They defined BPR as "The Fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed." "The word reengineering today often implies changes from the most mundane to the most significant. Not all companies wish to make massive

changes

to

their

business

processes.

The

changes

companies require are on a continuum from streamlining to reinvention". Nancy H . Bancroft, Henning Seip, Andrea Sprengel, Implementing SAP R/3, II Ed, p116

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

THE SUCCESS STORIES: A) Central Michigan University: Central Michigan University is a public university in Mount Pleasant, Michigan in the US. More than 16,600 students attend classes at the main campus, and another 12,000 attend classes at satellite sites. CMU is known for providing a quality, student-focused education. CMU needed a new system that would ensure year 2000 compliance and that would move it from a transaction processing environment to an information management environment. The university also intends to take advantage of best practices and processes that improve efficiency, such as distributed transaction processing and increased electronic processing. CMU expects that the R/3 System will help it advance into areas like employee self service applications, better management reporting, and possibly workflow. Project Details: •

Duration: 9 months

Implementer : SAP America

Scope: Financials (FI, FM and CO), Materials Management (MM), Human Resources (PA, PD: Benefits, Time and Payroll) .

Team size: 6 core team members for FI and 6 core team members for HR, plus shared clerical and training support 26


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” •

Rollout sites: On-campus data entry and reports; Off-campus reporting at 14 sites.

End-users: Approx. 650 total (350 active users)

Budget: On time and within budget ($4 million incl. software, hardware, consulting, and related expenses)

B) Subaru-Isuzu Automotive Inc: Subaru-Isuzu Automotive Inc. is a joint venture of Fuji Heavy Industries Ltd. and Isuzu Motors Limited. Located in Lafayette, Indiana in the United States. Subaru-Isuzu was established in 1987 and currently employs approximately 3,000 associates. The $3 billion company produces the Subaru Legacy Sedan, Subaru Legacy Station Wagon, Subaru Outback, Isuzu Rodeo, and Isuzu Amigo. Subaru-Isuzu’s legacy financial systems were neither integrated nor all year 2000 compliant. Installing the R/3 System was the first opportunity for Subaru-Isuzu to actively capture and manage costs in a real-time, integrated system. Andersen Consulting was chosen due to its extensive experience implementing R/3 and its past successes with rapid implementation. Project Details: •

Duration: 4 months

Implementer:

Andersen

Consulting,

Andersen

Consulting

Enterprise Business Solution Center. •

Scope: Financials (FI and CO), Materials Management (MM), Funds Management (FM) .

Team size: 9 consultants, 8 client full time and 4 part-time members . 27


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” •

Roll-out sites: 1 site only-Lafayette, Indiana.

End-users: 120 occasional, 60 heavy users.

C) Crosfield: Crosfield B.V. in Eijsden near Maastricht in the Netherlands was founded in 1983 and is part of the international Crosfield Group headquartered in Warrington, UK. The subsidiary in Eijsden is the largest production site for silicate and zeolite products. The company generates approximately $80 million revenue each year and employs 185 people. The group has additional production sites in the UK, Italy, USA, Brazil, and Indonesia. Crosfield’s previous information system lacked integration and failed to effectively support the internal supply chain. The chemicals business is competitive and price-sensitive, so Crosfield needed an information system that provides integrated pricing information. R/3 was the solution Crosfield opted for to support its global business and improve the quality of management information. The subsidiary in Eijsden was chosen as the group’s R/3 pilot site. The R/3 roll-out is still in progress. Project Details: •

Duration: Less than 6 months.

Implementer: SAP Netherlands.

Scope: Financials (FI and CO), Materials Management (MM), Sales and Distribution (SD), Manufacturing (PP).

Team size: 6 full-time plus ad-hoc members. 28


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” •

Roll-out sites: 1 st phase: Netherlands, 2 nd phase: UK and USA.

End-users: 60 users.

Budget: Within budget; $0.6 million.

CONCLUSION: Following data conclude that: •

ERP tools are going to be the sphere head for the future of Business Reengineering.

BPR as seen and debated by a wide range of management experts identify the key "enabler" role of IT in reaching the goals of BPR.

SAP and its rapid implementation methodology is going to keep it in the Global leaders position for at least till the end of the next millennium, provided Microsoft comes up with a similar product.!!

If mismanaged, the entire implementation of SAP, whether it is done by the best of SAP consultant or by in-house teams, will dig the grave for the enterprise.

We take this opportunity once again to thank all the authors and publishers of materials on SAP and Business Reengineering. We once again acknowledge that we have drawn extensively from many authors and their publications and if anyone feels that they should be removed from this paper, we would me more than happy to comply.

29


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

3) RESEARCH METHEDOLOGY 3.1) RESEARCH BACKGROUND: ERP improves productivity, which is the main reason why especially large sized companies are keen to study about it and adopt the ERP system in their business processes. The key characteristic of the ERP system is integration, once an ERP system is implemented, each department in a company will use the same database; share the data that immediately improve the communication among the different department as good start. GSEG is one of the large organizations that launched a new ERP system in the beginning of the year 2005, and the system development was extended till year 2006. The new ERP system in GSEG is defined as a unified business system that provides all business function for the end – to – end business process. The function goals of applying ERP solution could be characterized as centralization, harmonization, and self – service. Research statement: “A

STUDY

OF

BUSINESS

PROCESS

IMPROVEMENT

AFTER

IMPLEMENTATION OF SAP ERP IN GSEG” 30


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

3.2) OBJECTIVE OF THE STUDY: The main objective is •

To check the validity of the current business process in GSEG.

To measure the effectiveness of services through SAP ERP that is offered by GSEG in different departments.

To know if SAP ERP has reduced workload of employees and thus is an efficient tool.

3.3) BENEFIT OF THE STUDY: The project findings will help in •

Validating the records of all the employees thus reducing the errors.

Maintaining a good and competitive environment among the employees and also help in measuring the effectiveness of services through SAP ERP in GSEG.

Improve the company at each level and give a competitive advantage over the other companies that are into the power sector and ultimately to achieve the organizational goal

3.5) RESEARCH DESIGN: Purpose of study: - Descriptive Here we want to know the business process improvement after implementation of SAP ERP in the organization & effectiveness on their employees. Degree of research question crystallization: - Exploratory study As per my objective of the research, the research questions would try to find out the current situation in the company. 31


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” 3.6) DATA COLLECTION METHOD: Based on my initial observation, I have prepared a questionnaire to collect the response from employees in the GSEG as primary data. Versatility of the questionnaire will help to cover almost all related factors impacting the effectiveness of using SAP in organization of the target sample. And face to face semi structured interview with the employees of the organization for the case study. The secondary data for the thesis is collected through the following tools like: •

Company websites

Internet

Employee handbook

PRE-TESTING OF QUESTIONNAIRE: It is necessary to check the questionnaire, before actual research is done. Therefore pilot testing is done. In this case , pilot testing has been done for 10 respondents and based on the feedback, the questioner was finetuned.

3.7) SAMPLE DESIGN:  Sample Unit:

employees using SAP ERP in GSEG

 Sample area:

Surat District

 Sample method:

convenient sampling

 Sample size:

30

 Duration of data collection: Time duration from 15 June to 15 July 2011.  Sampling frame: The database provide by GSEG ltd.

3.8) STATISTICAL TEST USED: 32


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Here we use the one sample T-test, chi-test, cross tabulation and frequency. One sample T-test is used to test the difference between sample mean and hypothesized population mean. Chi -test is used to compare the expectation mean and satisfaction mean.

3.9) LIMITATIONS OF THE STUDY: The report has been prepared on the basis of data which is collected through employee’s face to face interview, with the help of questionnaire and through secondary sources. Some of the constraints which evolved during the course of study are as follows: •

The

most

significant

limitation

has

been

that

the

actual

effectiveness of the services through SAP ERP cannot be just presented by doing the survey in some departments. •

Only human resource aspect of the organization was covered.

There could have been some errors while selecting employees in organization who are using the SAP.

There could be some errors in data collection, data interpretation, and even the environment plays an important role in the outcome of the results.

Some of the errors may have crept in due to the financial constraints.

There may have been some personal bias on part of employees due to unwillingness to reveal the fact or due to tiredness.

There may be some errors due to the responses of worker grade employees who are uneducated

33


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

4) DATA ANALYSIS AND INTERPRETATION 4.1)

SECONDARY

DATA

ANALYSIS

(THEORETICAL

CONCEPT) 4.1.1) ERP (enterprise resource planning): ERP stands for recourses planning. ERP is the term to describe the way to integrate data and processes from all areas of an organization into one system. In the past years, ERP systems were mostly used in large sized or deep industrial types companies. Theoretically, ERP system can be used in any sized or types of business, and in fact, today ERP system are widely used not only large companies but also small to medium sized business as well. Integration is the key to an ERP system. Before ERP system, companies usually use different software applications as separated system to perform the achieve the goal of integration, most of ERP system has to provide a minimum range of function and integrate them into one unified database. Today’s ERP system have a wide range of function such as supply chain management, customer relation management , manufacturing function, 34


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” warehouse management , human resources and financials functions. All these function should fit well with companies’ own database and network. In addition, software vendors are also adding value in the areas of data management, quality management, field service modules, and internet capabilities.

FIGURE 3 : ERP system

4.1.2) ERP IMPLEMENTATION: Implementation of ERP system can be complex depending on the business process of the company. For large companies, it takes even longer time to complete the implementing process. A good estimation of implementation time could be few week for small or medium size business companies and three months up to one year or more for larger 35


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” companies. Also, implementing an ERP system is very expensive, which needs huge investment on the ERP application and its related technical services. When a company decides to go for an ERP system, it is better to start with screening available ERP software solution and ERP vendors in market , choosing the best alternatives. After a more detailed evaluation of the choices the best solution is selected for the company. Good planning is the crucial step to begin the ERP project manager has a very important role during implementing ERP system. There are several critical aspects needed to be concerned in order to minimize the risk of the project. There will be significant changes for working staff and work environment during the implementing process, so it is very important for the company to make sure that every individual is on board and participation in the ERP project to a success. In practice, companies use ERP vendors or hire consultant

to

implement

the

ERP

system.

Consulting

services,

customization services and support services and support services are the most common types of professional services. Consulting services (at the initial phase) is responsible from the beginning of ERP implementation till the company go live with the new system. With the help of consulting services (at the extension phase) provide the help to create the customized interface and transaction code. Most of the ERP solution is made as a core application, so there are some changes have to be done according to company’s needs. Support services (at the maintenance phase )is responsible for the ERP system,

solving

the

problems

related

with

ERP

issues

and

its

maintenance work. Figure 2 shows the movement of each stage during the ERP implementation process according the time consuming and investment costing for the company. Moving from one stage to the next

36


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” will cost more investment on the application software and more time consuming for the project completing.

FIGURE 4 : ERP implementation process

4.1.3) ADVANTAGES OF ERP SYSTEM: ERP improves productivity, which is the main reason why companies apply

it

into

their

business

process.

Once

an

ERP

system

is

implemented, each department in a company will use the same database and share the data which eventually improved cooperative working environment of each department of each department and increased productivities are the desirable results. Except to improve productivity, there are many other advantages that promote for implementing an ERP system: •

Integrating all department system into one ; as soon as all different systems are integrated into one , the working environment is

37


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” unified into one as well. On the other hand, it will also increase the ability to streamline different processes and workflows. •

Easily share the data across various departments, in ideal ERP system there is only one database needed for the whole company , which will decrease the amount and types of software that used before that means it will be easier for the staff to share and collect the data among various department .

ERP improves efficiency. Different from traditional business systems, where data are processed by higher or management level users, so that could take long time for the data to arrive for the end users. ERP system provides an easy access for individual end users to the data so the work can be done more efficiently than before.

Less investment. Business solution software is not cheap, and ERP system is also quite expensive to implement. but compare the total investment on ERP system to the sum of all other business solution needed for the whole business process, the investment on ERP costs much less.

Better tracking, ERP system allows the company to have better tracking of their product or services. Such data includes the data , place and condition etc of the products and services . it is very important to improve the quality of products for to a higher level, which improve s the development of their production line and the customer service.

4.1.4) DISADVANTAGES OF ERP SYSTEM: On the other hand, some disadvantages or obstacles are revealed during the practice of ERP system implementation. Mainly these negative issues are related with high investment to install and run , difficulties and high costs in switching to other ERP system, re –engineer the business processes, limitations of the customization, less quantities and qualities of “ good data” , risk of losing the sensitive data, no suitability for a short period business, need of training courses for end users. 38


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Usually, many of these problems can be solved if sufficient investment are very important for making the program smoothly running, and helping the working staff to adapt the new system quickly and efficiently.

4.1.5) ERP VENDORS IN THE MARKET: Comparing with the amount of commercial ERP software, there are much less open source ERP software packages available in the market, with a maximum amount about 20 selections ,which are from ERP vendors Adempiere , Apache, OFBiz, Blue, Erp, Dolibarr, EdgeERP , and WebERP and so on . Figure 3 present the most popular ERP vendors in the world 2011. SAP , Oracle application , infor Global solution , The sage group, Microsoft Dynamic were the top five ERP vendor when the comparison was based on their ERP market share . SAP was on the top position of the list. Most of these key ERP players offer large collection OF ERP software packages that suits all suits all sizes companies and different industry types of business. So when any companies search ERP solution , in most cases , they start with these ERP vendors.

39


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

FIGURE 5: MOST POPULAR VENDOR

4.1.6) SAP (Systems, Applications, Products in Data Processing) The company SAP was founded in Waldorf, Germany, in 1972 by five exIBM engineers. SAP stands for System, Anwendungen, Produkte in der Datenverarbeitung (Systems, Applications, Products in Data Processing). The original founders have been so successful in growing SAP into a global player such that SAP AG is now the third-largest independent software supplier in the world, with over 19,300 customers,10 million users and 60,100 installations, including more than half of the world’s top 500 companies. SAP had revenues of €7.4 billion and net income of €509 million in the year 2002 [SAP Annual Report 2002] . What made this company so successful? The first big scale product SAP launched in 1979 was SAP R/2.Running on mainframe computers, R/2 was the first integrated, enterprise wide packaged software and it was an 40


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” immediate success in Germany. For years SAP stayed within the German borders until it had penetrated practically every large German company. Looking for more growth, SAP expanded into the remainder of Europe during the 80's. Towards the end of the 80's, client-server architecture became popular and SAP responded with the release of SAP R/3 (in1992). This turned out to be another success for SAP, especially in the North American region into which SAP had expanded in 1988. The growth of SAP R/3 in North America has been nothing short of stunning. Within a 5 year period, the North American market went from virtually zero to 44% of total SAP worldwide sales. SAP America alone employs more than 3,000 people and has added the names of many of the Fortune 500 to its customer list (8 of the top 10 semiconductor companies, 7 of the top 10 pharmaceutical companies etc). SAP today is available in 46 country-specific versions, incorporating 28 languages. These solutions are tailored to meet the specific requirements of 23 different industry categories, from aerospace and defense to utilities, giving SAP a competitive advantage that no other company can match. SAP R/3 is delivered to a customer with selected standard processes turned on, and many other optional processes and features turned off. At the heart of SAP R/3 are about 10,000 tables which control the way the processes are executed. Configuration is the process of adjusting the settings of these tables to get SAP to run the way you want it to. Functionality included ranges from financial accounting (e.g. general ledger, accounts receivable, accounts payable etc) and controlling (e.g. cost centers, profitability analysis etc) to sales and distribution, production planning and manufacturing, procurement and inventory management, and human resources. The start of the internet age at the end of the 90’s was a big challenge for the big players of the enterprise software industry. While trying to grow at a high speed, the companies, SAP included, were racing not to miss 41


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” the internet train. Businesses had to be internet-enabled, e-business quickly became the buzzword of the decade, and the software companies introduced new concepts, new products. Today, SAP offers solutions that improve virtually every aspect of business, government, and education. For example, my SAP Business Suite allows employees, customers, and business partners to work together from anywhere, at any time. SAP’s customer relationship management,

supply

chain

management,

and

product

life-cycle

management solutions help streamline critical business processes. Leading-edge technologies in such areas as technology platforms, enterprise portals, and mobility provide customers with the tools they need to work more efficiently and profitably. [SAP Annual Report 2002]

FIGURE 6 : SAP evaluation

4.1.7) SAP SOLUTION:

42


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” SAP has divided its solution products in to three main categories based on the sizes and business objective of the client companies; SAP for larger enterprise, SAP business objects and SAP for small to midsize company. Basically, the solutions for larger enterprises are far more expensive to invest, and need a longer time to implement. The design of the program is very complex and required certain capacities for installing. For smaill and midsized companies, the solutions are affordable and quick to go live. The series of SAP business objective solutions are designed for more deep industrial business or more specific in certain business areas. figure describes the three main categories of SAP product and their sub – categories of each product. GSEG brought SAP ERP software packages which were from SAP business suite category which was designed for large enterprises.

43


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” FIGURE 7 : SAP solution for large and small enterprise

4.1.8) SAP BUISSNESS SUITE: SAP business suite is one of the ERP solution from SAP company which is designed for large scaled enterprises to execute the business processes and IT strategy at same time. Figure 6 shows the functional areas of the product, which are customer relationship management, enterprise resource

planning, product

life cycle

management, supply chain

management and supplier relationship management. Including all these essential business processes inside one intergraded software system, SAP business suite also adds more value to the business processes.

Because of ability of supporting end- to –end business processes , SAP business suite enables the client company to gain many competitive advantages on many areas such as more efficient financial management , more effective sales management and human resources management and better logistics.

44


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

FIGURE 8 : SAP business suite function areas

4.1.9) MY SAP ERP BUSINESS SUITE: Once the MySAP ERP business suite solution is installed, to be available and useful, the new system must contain all data of the operation company. The data is so called master data such as material data, supplier data, customer data, chart of account , and other business related data. 45


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” After complete the SAP solution implementation, the new system goes live and works the similar way as other business software. The most significant difference is that the data is input only once. FIGURE explains the SAP ERP framework and data processing process. For instance, after receiving one sales order, detailed data of sales order transfer into SAP system by sales department. At same time, the data is received to material management model to check out the item availability of there has enough items for this order. If there is not enough, purchase order will be made according to the sales order. When there are enough product items, the sales order will forward to logistic execution model to outbound deliver the product to customer. After confirmed the unload delivery, company will sent the bill to the customer in order to complete the sales order. The data doesn’t need to be input many times in different departments, in different standards format or even in diffident measurement. It is very crucial for company to use good data to run business. Usually during the business process, data transfers in to the MySAP ERP system are financial data, material management data and sales distribution data, but as an addition, production planning data ,which includes forecast data.

46


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

FIGHURE 9: SAP ERP frame work

4.1.10) TCS & SAP SOLUTION: Tata Consultancy Services (TCS) is working closely with SAP AG in ‘dedicated partnerships’ on the design and development of multiple End-To-End Processes which are part of the SAP Business Suite .

Specifically, TCS experts & SAP solution teams worked collaboratively on the following End-to-end processes of SAP Business Suite: •

Efficient Manufacturing Operations

Integrated Product Development

Embedded Product Compliance

High Performing Assets – Asset Visibility & Performance

Responsive Supply Network – Manufacturing Network Planning & Execution

47


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” TCS provides feedback to SAP with regards to customer and market requirements, for quality assurance and further improvement for each of the above solutions. At the same time, TCS builds skills at an early stage before launch of these solutions, and enhances the skills within TCS for these solutions using a ‘train-the-trainer’ approach. This makes TCS an ideal implementation partner for these SAP solutions.

4.1.11) BUSINESS BENEFIT: SAP ERP delivers a comprehensive set of integrated, cross-functional bus iness processes. With SAP ERP, you can gain the following benefits: • Improve alignment of strategies and operations  Run your enterprise in accordance with strategy and plans, accessing the right information in real time to identify concerns early.  Pursue opportunities proactively.  Achieve

corporate

objectives

by

aligning workforce

and

organizational objectives.  Find the best people and leverage their talent in the right job at the right time. • Improve productivity and insight  Leverage self-services and analytics across your organization.  Improve operational efficiency and productivity within and beyond your enterprise. • Reduce costs through increased flexibility  Use

enterprise

services

architecture

to

improve

process

standardization, efficiency, and adaptability.  Extend transactions, information and collaboration functions to a broad business community. 48


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” • Support changing industry requirements  Take advantage of the SAP Net Weaver platform's latest open, Web- based technology to integrate your end-to-end processes seamlessly • Reduce risk  Solve complex business challenges today with SAP, your trusted partner for long-term growth, with 30 years of experience working with organizations of all sizes in more countries than any other vendor.  Solve complex business challenges today with SAP, your trusted partner for long – term growth, with 30 years of experience working with organizations of all sizes in more countries than any other vendor.  Join SAP's world-class partner network, uniquely qualified to support the best business practices in more than 25 industries. • Improve financial management and corporate governance  Gain deep visibility into your organization with financial and management accounting  Functionality combined with business analytics.  Increase profitability, improve financial control, and manage risk. • Optimize IT spending  Integrate and optimize business processes.  Eliminate high integration costs and the need to purchase thirdparty software.  Deploy other SAP business suite application incrementally to improve cash flow and reduce costly borrowing.

49


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” • Gain higher ROI faster  Install SAP ERP using rapid-implementation techniques that cost less than half what traditional approaches cost.  Leverages preset defaults and prepackaged versions available for specific industries. • Retain top performers  Link employees’ performance to compensation programs such as variable pay plans and long-term incentives.  Retain your top performers through clearly defined career and development plan. • Provide immediate access to enterprise information  Give employees new ways to access the enterprise information required for their daily activities.

50


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

4.1.12) BASIC SYSTEM: •Accounting System  Financial accounting (FI)  Controlling (CO)  Asset Management (AM) •Production and logistics  Sales and Distribution (SD)  Materials Management (MM)  Production Planning (PP)  Quality Management (QM)  Plant Management (PM) •Others  Project System (PS)  Human Resources (HR)  Workflow (WF)  Industry Solutions (IS)

4.1.13) SAP COST/BENEFIT ANALYSIS: FI/CO Modules Reduce Receivables (0-75%, 20%): Calculation:  Identify current working capital investment in receivables  Determine average days outstanding  Estimate reduction in days outstanding  Determine associated reduction in working capital

51


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”  Benefit (annual) is the cost of capital for the reduction in working capital SAP Enablers:  On-line and integrated system provides faster invoicing cycle time  Better analysis tools for receivables analysis Reduce Lost Discounts (0-90%, 40%): Calculation:  Identify dollar volume of purchases with discounts  Identify % discounts taken  Estimate % increase in discounts taken  Estimate average discount (usually 1 to 2 %)and associated payable age reduction  Multiply % increase in discounts taken times dollar volume of purchases with discounts  Multiply increased purchase volume subject to discount just calculated by the average discount  Subtract off cost of capital for required increase in working capital (estimating increase in working capital in this case is somewhat complex. Find someone who knows how to estimate the increase in working capital) SAP Enablers:  Integration with purchasing provides on-line verification and reduced entry  Improved availability of information to pay invoice resulting in quicker payment

52


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Reduce Credit Losses (0-50%, 5%) Calculation:  Identify annual credit write-off  Estimate percent reduction SAP Enablers:  Credit

Management

integrated

with

sales

and

distribution

functionality Improve Cost Control - Reduce Costs (0-4%, 2%) Calculation:  Identify budget accounts and amountsfor the organization  Review budget accounts and determine which accounts are controllable  Calculate total dollars in controllable accounts  Estimate percent reduction in controllable costs SAP Enablers:  On-line, Real-time cost management information  On-line analysis tools  Earlier visibility of costs and commitments SD Module Improve Pricing (0-10%, 1%) Calculation:  Identify total sales by product line in dollars  Estimate % improvement in pricing  Since improved pricing does not materially impact fixed or variable costs, benefit is sales multiplied by improvement percentage 53


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” SAP Enablers:  On-line

real-time

capabilities

increase

responsiveness

and

customer service  Pricing procedures capability helps reduce “bad” deals  On-line visibility of product cost and profitability analysis enables better decisions Increase Sales (0-10%, 2%) Calculation:  Identify sales volume by product line  Estimate total sales capacity/production capacity (this should include allowances for preventative and unplanned downtime for maintenance reasons)  Estimate sales value of lost available production  Estimate margin of lost production  Estimate portion of capacity that can be converted to sales SAP Enablers:  On-line

real-time

capabilities

increase

responsiveness

and

customer service  Improved customer forecasting MM Module Reduce Inventory (0-50%, 10%) Calculation:  Identify inventory value by category (if LIFO valuation, value is actually higher than reported)  Estimate inventory reduction goals by category

54


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”  One approach would be to treat reduction as a one-time benefit, but  Another approach would be to recognize the annual benefit of reduction in carrying costs (I believe this better reflects reality)  Multiply inventory reductions by incremental carrying costs (Carrying cost includes cost of capital, taxes, insurance, and damage allowances - should not include cost of assets, labor, or building unless major reductions in inventory are anticipated) SAP Enablers:  Improved visibility of inventory  Improved forecasting  Improved data accuracy  Reduced process cycle times Reduce Obsolescence and Damage (0-10%, 2%) Calculation:  Identify current inventory obsolescence and damage costs  Estimate improvement SAP Enablers:  SAP provides on-line visibility of stock usage PP Module Increase Production/Sales (0-5%, 1%) Calculation:  Determine total sales  Determine margin on sale  Determine capacity utilization 55


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”  Estimate increase in capacity utilization  Benefit is the margin on additional production SAP Enablers:  Integration with MM provides earlier visibility of material/asset availability issues  Production planning helps identify unused capacity  Better forecasting and planning tools helps identify correct product mix to produce  Better planning tools help manage product conversion (tear down, setup, off-spec) costs Reduce WIP Inventory (0-50%, 10%) Calculation:  Identify value of WIP inventory  Estimate percent reduction in WIP  Multiply inventory reductions by incremental carrying costs (Carrying cost should include cost ofcapital, taxes, insurance, and damage allowances - should not include costs for assets, labor, orbuilding unless major reductions in inventory are anticipated) SAP Enablers:  Better forecasting and planning tools minimize need to maintain WIP as a buffer against unknown demand  Improved visibility of inventory with on-line system  Improved accuracy of inventory information Improve Margins (0-5%, 2%) Calculation:  Identify sales by product line 56


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”  Determine margin by product line  Estimate improvement percentage  Apply improvement to total sales volume SAP Enablers:  Profitability analysis helps target product mixes for greater profitability  Product costing helps target changes in production and pricing strategy PM Module Increase Asset Utilization - Reduce Production Asset Downtime (010%, 5%) Calculation:  Identify daily sales volume  Determine margin on daily sales  Determine fixed cost per day  Determine production downtime for planned and unplanned maintenance  Estimate portion of downtime to be eliminated  Benefit is margin and fixed costs previously lost during downtime SAP Enablers:  Integration with other modules reduces cycle time for maintenance orders  On-line system with analysis tools helps drive down unplanned maintenance  Better problem tracking and preventative maintenance forecasting

57


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Reduce Maintenance Requirements (0-10%, 4%) Calculation:  Estimate total cost of plant maintenance - usually captured in a cost center  Estimate reduction in maintenance due to improved preventative maintenance SAP Enablers:  Preventative maintenance capability 

Maintenance history reporting and analysis

Other Benefit Areas  Existing Systems Infrastructure  Eliminate Mainframe and Other Equipment (100%)  Identify hardware to be eliminated  Estimate salvage value (or lease cost) of hardware  Eliminate Maintenance Contracts For Current Hardware and Software to be Eliminated  (100%)  Identify hardware and software to be eliminated  Identify maintenance contracts on hardware/software to be eliminated  Reduce IT staff required to support current hardware and software (0-100%, 75%)  Identify total FTE’s supporting existing hardware and software  Allocate FTE’s to current hardware maintenance, software systems and overhead processes  By now, this is probably no longer a viable savings area.However, the IT department has probably estimated the cost of year 2000 problem. 58


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Project Avoidance (100%)  Identify planned projects to develop point solutions (i.e. Plant Maintenance package)that will no longer be required when SAP is installed  Determine planned budget for all planned projects Manpower Reductions (0-20%, 10%)  Identify processes performed in all departments impacted by SAP implementation  Identify characteristics of each process identified above (i.e. frequent rework, excessive downtime, missing information)  Identify key ways that SAP will change each of the processes identified  Estimate the percent change in manpower effort required for each process  Determine net change in manpower by department and by position  Determine where opportunities exist to reduce manpower  Multiply reductions by manpower cost loaded with benefits only

4.1.14) ADVANTAGES AND DISADVANTAGES: Advantages •

ERP allows easier global integration (Barriers of currency exchange rates, language, and culture can be bridged automatically)

Updates only need to be done once to be implemented company wide

Provides

real-time

information,

reducing

the

possibility

of redundancy errors •

Creates a more efficient work environment making it easier for employees’ to-do their job which leads to effectiveness.

59


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” •

Vendors have past knowledge and expertise on how to best build and implement a system.

Disadvantages •

Locked into relationship by contract and manageability with vender a contract

can hold a company to the vendor too high. until it

expires and it can be unprofitable to switch vendors if switching costs are •

Inflexibility- vendor packages may not fit a company's business model exactly and customization can be very expensive.

Return on Investment may take too long to be profitable.

SAP ERP implementations have a risk of project failure.

60


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

4.1.15) NAVIGATION:

FIGURE 10: logging in SAP

61


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

FIGURE 11: screen element

62


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

FIGURE 12 : SAP screen

63


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

4.2) DATA ANALYSIS OF PRIMARY DATA (SURYE): Q-1 Were you involved in implementation process of SAP in GSEG?

INTERPRETATION: The chart 1 showed that 36.67% of the respondent were in their position before the SAP implementation in GSEG, 63.33% of the respondent were hired after the implementation SAP project. The result showed that at least more than half respondent is the new employees in GSEG after the SAP project completes. To be more specific, there were no new employees were hired or work change during the SAP project.

64


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

Q-2 Do you see any improved area currently in SAP, either in software itself or functions related to it?

INTERPRETATION: The question was trying to find out from the sample that if respondents noticed any improved areas in current SAP system, either in software itself or function related with, and trying to identify the improved area.73.33% employees reply that there are no improve in current area in SAP but 26.67% employees say that there are improvement area in SAP like MM module, client server change, reporting opportunities expanded, a slight improvement in user interface, accessibility of the system is improved, and mistakes was corrected.

65


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Q-3 What are the missing functions in your current SAP system?

Table 1: missing any function Frequency

Percent

Valid Percent

Cumulative Percent

yes

6

20.0

20.0

20.0

no

24

80.0

80.0

100.0

Total

30

100.0

100.0

INTERPRETATION: The question was aiming to find out if there were missing functions in current SAP system, and in which areas existed these missing functions from respondent’s point of view. As the result shows, only 20 % respondent said that there were still some missing functions in the new SAP system. Which include automatic memos; cost tracking; HR module and several aspects such as occasional occurred errors in analytical reporting;

Q-4 Do you agree that SAP ERP has standardized business process? 66


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 3: SAP ERP has standardized business INTERPRETATION: From the above graph we can conclude that out of 30 respondents surveyed about 60% of the employees strongly agreed to it that SAP ERP is a standardized process, while 30% of them agreed and 10% of them neither agree nor disagree to it that in GSEG SAP ERP software has standardized business process. One Sample t-Test: Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (1). In other words, we can say that the respondents are strongly agreed that SAP ERP has standardized process. 67


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” i.e. Ho: x = µ = 1 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, In other words, we can not say that the respondents are strongly agreed that SAP ERP has standardized process. i.e. H1: x ≠ µ, i.e. H1: x ≠ 1 Significance level: 0.05 Table 2: One-Sample Test for standardized business process Test Value = 1 95% Interval T standardized

df

4.014 29

Confidence of

Sig.(2-

Mean

tailed)

Difference Lower

Upper

.000

.500

.75

the

Difference .25

business INTERPRETATION: Here the test is performed at 95% confidence level i.e. the chance of occurring type 1 error is 5% and the p-value comes out as 0.00 which is lesser than 0.05, at the hypothesized mean value 1, it means that the null hypothesis H0 is rejected and alternative hypothesis is accepted and it can be said that there is significant difference between calculated mean and hypothesized mean. So, we can say that respondents are agreed that SAP ERP had standardized business process. This level is not so strong but it is nearer to positive response.

Q-5 On average, how often do you use SAP related with your work:

68


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

INTERPRETATION: The aim of the question was trying to find out the frequency of SAP usage from diffident users groups of new SAP system in GSEG. the ranges of the frequency sets were divided into five values base on time that responses use SAP system in the work. Chart 4 showed that the SAP usage frequencies in general. More respondents used SAP in their works 2-5 hours a day , 2-5 hour a week or even all the time. And no one are using SAP once a week and once a month in the organization.

Q-6 Do you think SAP is optimal choice for the GSEG?

69


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Table 3 : optimum choice Frequency Percent

Valid Percent Cumulative Percent

Yes

26

86.7

86.7

86.7

No

4

13.3

13.3

100.0

100.0

100.0

Total 30

INTERPRETATION: There are many selection ERP solution software or software packages in the world, SAP is one ERP solution product produced by SAP company. Many ERP suppliers have offered their ERP solution, SAP ERP business suite was the final choice for GSEG. Based on that, it would be interesting to know SAP users in GSEG opinions on this question. Table result shows that 86.7% employees think that SAP is optimum choice for the GSEG and 13.3% employees think that SAP is not optimum choice for the GSEG.

Q-7 If you could make the decision today , would you continue using SAP?

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

CHART 5: WOULD YOU CONTINUE USING SAP INTERPRETATION: There were almost 99 % of responses showing that the respondents from all user levels were willing to continuing using SAP system. Only 1 % responses was from opposite side. The reasons were he gave that the SAP is not suitable for their needs. Such as, technical issues, lack of understanding of the software’s capabilities, customizing. In author’s opinion, most of reasons can be solved by additional training to the SAP users.

Q-8 Do you think that SAP ERP has reduced time & provides faster delivery of service?

71


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

Chart 6: SAP ERP has reduced time & provides faster delivery of service INTERPRETATION: Here 50 % respondents completely (100%) believed that SAP ERP has reduced the time of processing the data with other department and provide the faster service so they can do their work easily and fast compared to older system while 33.33% respondents believed that SAP ERP reduced 75% time of processing the data with other department and provide the 75% faster service then the older system and 16.67% respondents believed that SAP ERP reduced 50% time of processing the data with other department and provide the 50% faster service then the older system.

Q-9 Do you think that Productivity has increase after the introduction of SAP ERP? 72


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 7: Productivity has increase after the introduction of SAP ERP INTERPRETATION: The above result show that after the implementation of the SAP ERP the productivity of the employees’ work has increase as 86.7 % of the respondents have agreed to it while 13.3% of them denied to it. Out of 86.7% of the employees 36.7% respondents believe that productivity has increase above 60 % . While 30% respondents believe that productivity has increase in the range of 30%- 60 % and 20% respondents believe that productivity has increase below 30 % . So from that we can say that this system is better than older one.

Q-10 Do you agree that Chances of error have been reduced with the introduction of SAP ERP? 73


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 8: Chances of error have been reduced with the introduction of SAP ERP INTERPRETATION: The above graph shows that 93.3% respondents believe that Chances of error have been reduced with the introduction of SAP ERP and only 6.7% respondents do not believe that chances of error have been reduced with the introduction of SAP ERP. So we can say that maximum people agreed to it

that chances of error have reduced to a great extent with the

introduction of SAP ERP system in GSEG.

Q-11 Do you agree that SAP ERP is more helpful and convenient then older system?

74


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 9: SAP ERP is more helpful and convenient then older system INTERPRETATION: From the above graph we can conclude that50% of the respondents agreed that new system is more helpful & convenient than older one while 40 % of the respondents strongly agreed to it and only 10% of them neither agree nor disagree to it. So we can say that maximum employees have agreed to it that the new system is more helpful and convenient to use than the older one.

Q-12 Do you think that SAP ERP has helped in taking quick decisions?

75


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

help in taking decision Frequency

Percent

Valid Percent

Cumulative Percent

yes

27

90.0

90.0

90.0

No

3

10.0

10.0

100.0

30

100.0

100.0

Total

Table 4: SAP ERP has helped in taking quick decisions INTERPRETATION: Table result shows that 90% employees think that SAP ERP has helped in taking quick decision because of faster delivery and less chance of error in business process of the organization of the GSEG and only 10% of the employees think that SAP has not helped in taking quick decisions.

Q-13 Do you agree that SAP ERP helps the organization to speed up the transaction process?

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 10: SAP ERP helps the organization to speed up the transaction process INTERPRETATION: Here 43.3 % respondents completely (100%) believed that SAP ERP has helped the organization to speed up the transaction process and provide the faster service while 33.33% respondents believed that SAP ERP has helped the organization to speed up the transaction process up to 50% and 23.3% respondents believed that SAP ERP has

helped the

organization to speed up the transaction process up to 75% so we can say that they can do their work easily and fast compared to older system.

Q-14 Does SAP ERP maintain transparency and control of the organization? 77


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Table 5: transparency & control Frequency

Percent

Valid Percent

Cumulative Percent

Yes

26

86.7

86.7

86.7

No

4

13.3

13.3

100.0

100.0

100.0

Total 30 INTERPRETATION:

Here the result shows that 86.7% of the employees think that SAP ERP maintain transparency and control of the organization of the GSEG and 13.3% employees think that SAP is not maintain that transparency and control. Because of the lack of knowledge of employees they are having only limited knowledge of their field.

Q-15 Do you agree that SAP ERP has reduced work load of employees?

reduce work load Frequency Percent strongly agree

Valid Percent

Cumulative Percent

10

33.3

33.3

33.3

Agree

6

20.0

20.0

53.3

nighter agree nor disagree

8

26.7

26.7

80.0

Disagree

6

20.0

20.0

100.0

30

100.0

100.0

Total

Table 6: SAP ERP has reduced work load of employees

INTERPRETATION: From the above graph we can conclude that 33.3% of the respondents strongly agreed to it that new system has helped in reducing work load of 78


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” employees than older one while 20 % of the respondents agreed to it and 26.7% of them neither agree nor disagree to it. Only 20% of the respondents disagreed to it. So we can say that maximum employees have agreed to it that the new system is more helpful and convenient to use than the older one and this has helped in reducing work load of employees. One Sample t-Test: Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (1). In other words, we can say that the respondents are strongly agreed that SAP ERP has standardized process. i.e. Ho: x = µ = 1 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, In other words, we can not say that the respondents are strongly agreed that SAP ERP has standardized process. i.e. H1: x ≠ µ, i.e. H1: x ≠ 1 Significance level: 0.05 Table 7: One-Sample Statistics reduce work load

N

Mean

Std. Deviation

Std. Error Mean

30

2.33

1.155

.211

79


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG� One-Sample Test Test Value = 1 95% Interval Sig. reduce

(2- Mean

Confidence of

the

Difference

T

df

tailed)

Difference Lower

Upper

work 6.325

29

.000

1.333

1.76

.90

load INTERPRETATION: Here the test is performed at 95% confidence level i.e. the chance of occurring type 1 error is 5% and the p-value comes out as 0.00 which is lesser than 0.05, at the hypothesized mean value 1, it means that the null hypothesis H0 is rejected and alternative hypothesis is accepted and it can be said that there is significant difference between calculated mean and hypothesized mean. So, we can say that respondents are strongly agreed that SAP ERP has reduced work load of employees. This level is not so strong but it is nearer to positive response.

Q-16 Do you think that implementation of SAP had increased an efficiency of the organization ? 80


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 11: SAP had increased an efficiency of the organization INTERPRETATION: The above result show that after the implementation of the SAP ERP 26.7% of the employees believe that believe that the overall efficiency of the organization had increase above 60%. While 60% of them said that the efficiency level increased between 30%-60% and the rest 13.3% of them said that the overall efficiency level has increased below 30%. So from that we can say that most of the respondents agreed to that the overall efficiency level increased between 30%-60%

Q-17 Do you agree that SAP ERP services are available as & when required? 81


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Table 8: services are available Frequency

Percent

Valid Percent Cumulative Percent

Yes

14

46.7

46.7

46.7

No

16

53.3

53.3

100.0

100.0

100.0

Total 30

INTERPRETATION: Here 46.7% respondent says that SAP ERP services are available as and when required but 53.3% respondent says that SAP ERP services are no available as and when required because of server problem.

Q-18 Do you agree that the employees of the organization have quickly adapted to changing environment?

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

Chart 12: The employees of the organization have quickly adapted to changing environment INTERPRETATION: Here

26.67%

of

the

respondents

agreed

that

the

due

to

the

implementation of SAP ERP has adapted completely (100%) and also the same respondents believe that at 75% level the employees of the organization have quickly adapted to the changing environment. While 30% respondents believed that at 50% level and the other 13.33% and 3.33% respondents believed that at 25% and at 0% level the employees of the organization have quickly adapted to the changing environment. So we can say that because of technical knowledge and lack of training only 26.67% of the employees have completely adopted the changing environment. 83


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Q-19 Do you think that SAP ERP system and processes are user friendly? user friendly Frequency

Percent

Valid Percent

Cumulative Percent

yes

18

60.0

60.0

60.0

no

12

40.0

40.0

100.0

Total

30

100.0

100.0

Table 9 : SAP ERP system and processes are user friendly INTERPRETATION: Here 60 % respondent says that SAP ERP system and processes are

user friendly but 40 % respondent says that SAP ERP system and processes are user friendly. So we can say that the employees do not have the proper knowledge of using the software.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Q-20 Do you think that there is a need of any expert needed to train new employees?

Table 10: needed new training Frequency Percent

Valid Percent

Cumulative Percent

Yes

28

93.3

93.3

93.3

No

2

6.7

6.7

100.0

100.0

100.0

Total 30

INTERPRETATION: Here 6.7% of respondent says that there is no need of expert to train new employees and 93.3% of respondent says there is a need of expert to train new employees because as there is lack of time and knowledge of senior respondent and another thing the system is tough to teach the new employees.

Q-21 Did you attend any training course during the implementation? 85


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Chart 13: attend any training course during the implementation INTERPRETATION: Here only 5 of respondents says that they attend any training course during the implementation and 25 of respondents says that they did not attend any training course during the implementation So we can conclude that maximum no of employees were denied of the training activates to be provided by the organization.

Q-21

&

Q-1

involved

*

attend

any

training

Crosstabulation 86


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Table 11: involved * attend any training Cross tabulation Count attend any training involved

yes

No

before implementation

4

7

11

after implementation

1 5

18 25

19 30

Total

Total

CHART 14: INVOLVED AND ATTEND ANY TRAINING COURSE. INTERPRETATION: Here before implementation of SAP 7 respondent says that they have not taken any training and 4 respondents says they have taken training and after implementation of the SAP

Q-22 What is your current feeling –do you think you need new or refreshing training courses in the use of SAP? 87


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG�

CHART 15: CURRENT FEELING FOR NEED NEW TRAINING INTERPRETATION: Here there is 93.3% of respondent says that they want new and refreshing training courses in the use of SAP and only 6.7% respondent says that there is no need for new or refreshing training courses in the use of SAP thus according to the result we should provide new and refreshing training courses in the use of SAP to motivate our respondent. There were many comment were received on this subject to explain the reasons why the new or refreshing courses needed. In general , these topics were from many different aspect: some of the respondents claimed that they needed new SAP training course, because there were not repeating courses frequently provided so that there was lack of opportunity to participating in these courses or specification SAP courses related with work in practice; and some respondent would like to have advanced SAP training course in order to have a better using of SAP system.

Q-23 which are the most suitable and acceptable training platforms for you at moment? 88


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

CHART 16: TYPE OF TRAINING INTERPRETATION: Here the result shows that 56.7 % respondent wants to seek physical attention to lecture .it considered as very traditional way of study ,as scientifically approved that it was the most efficient and effective way to study. and 26.7% respondent says that they want all type of training as (physical attention to lecture, virtual, self study and E-learning) and the least percentage that is 3.3% respondent says that they like self study type of training.

Q-1 & Q-2 involved * improved any area Cross tabulation

89


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Table 12: involved * improved any area Cross tabulation Count improved any area Involved

Yes

no

before implementation

4

7

11

after implementation

4 8

15 22

19 30

Total

Total

Char 17: involved * improved any area Cross tabulation INTERPRETATION: From the cross tabulation result shows that employees who previously use to work without SAP system does not find any change even after implementation of SAP. There are in all 7 employees who think this.

Q-8 & Q-10 reduce time & faster service * chance of error Cross tabulation Null Hypothesis (Ho): There is no significant association between reduce 90


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” time & faster service and chance of error i.e.: x = μ Alternative Hypothesis (H1): There is significant difference between reduce time & faster service and chance of error Table 13: reduce time & faster service * chance of error Cross tabulation Count chance of error reduce time & faster service

Yes

no

Total

100%

9

1

10

75%

14

1

15

50%

5 28

0 2

5 30

Total Table 14: Chi-Square Tests

Asymp. Sig. Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value

Df

(2-sided)

.536a .846 .487 30

2 2 1

.765 .655 .485

INTERPRETATION: The Chi-square test is carried out at 95% confidence level (0.05 significance level). The Pearson Chi-square value comes out as 0.765, which is greater than the significance level of 0.05, Null hypothesis accepted and alternative hypothesis rejected it means there is a no significant association between reduce time & chance of error.

Q-9 &Q-11 productivity increase * helpful & convenient Cross tabulation 91


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Null Hypothesis (Ho): There is no significant association between productivity increase and helpful & convenient i.e.: x = μ Alternative Hypothesis (H1): There is significant difference between productivity increase and helpful & convenient Table 15: productivity increase * helpful & convenient Cross tabulation Count helpful & convenient neither agree nor strongly agree Agree Productivity increase

disagree

Total

No

0

4

0

4

below 30%

1

5

0

6

30%-60%

5

3

1

9

above 60%

6 12

3 15

2 3

11 30

Total

Table 16 :Chi-Square Tests Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value

Df

Asymp. Sig. (2-sided)

10.260a 12.442 1.142 30

6 6 1

.114 .053 .285

INTERPRETATION: The Chi-square test is carried out at 95% confidence level (0.05 significance level). The Pearson Chi-square value comes out as 0.114, which is greater than the significance level of 0.05, Null hypothesis accepted and alternative hypothesis rejected it means there is a no 92


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” significant association between productivity increase & helpful and convene.

Q-12 &

Q-13

help

in taking decision

* speed

up

transaction process Cross tabulation Null Hypothesis (Ho): There is no significant association between help in taking decision and speed up transaction process i.e.: x = μ Alternative Hypothesis (H1): There is significant difference between between help in taking decision and speed up transaction process

93


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Table 17: help in taking decision * speed up transaction process Cross tabulation Count speed up transaction process 100%

75%

50%

Total

help in taking

yes

11

7

9

27

decision Total

No

2

0

1

3

13

7

10

30

Table 18: Chi-Square Tests Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value

Df

Asymp. Sig. (2-sided)

1.197a 1.841 .232 30

2 2 1

.550 .398 .630

INTERPRETATION: The Chi-square test is carried out at 95% confidence level (0.05 significance level). The Pearson Chi-square value comes out as 0.550, which is greater than the significance level of 0.05, Null hypothesis accepted and alternative hypothesis rejected it means there is a no significant association between taking decision and speed up transaction.

Q-16

&

Q-11

increased

an

efficiency

*

helpful

&

convenient Cross tabulation Null Hypothesis (Ho): There is no significant association between increased an efficiency and helpful & convenient i.e.: x = μ 94


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Alternative Hypothesis (H1): There is significant difference between increased an efficiency and helpful & convenient Table 19: increased an efficiency * helpful & convenient Crosstabulation Count helpful & convenient strongly increased efficiency

nighter agree

agree

Agree

nor disagree Total

0

4

0

4

30%-60%

9

8

1

18

above 60%

3 12

3 15

2 3

8 30

an below 30%

Total

Table 20: Chi-Square Tests Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value

Df

Asymp. Sig. (2-sided)

6.979a 8.053 .008 30

4 4 1

.137 .090 .928

INTERPRETATION: The Chi-square test is carried out at 95% confidence level (0.05 significance level). The Pearson Chi-square value comes out as 0.137, which is greater than the significance level of 0.05, Null hypothesis accepted and alternative hypothesis rejected it means there is a no significant association between increase an efficiency and helpful and convenient.

95


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Q-18 & Q-19 adapted change environment * user friendly Cross tabulation Null Hypothesis (Ho): There is no significant association between adapted change environment and user friendly i.e.: x = μ Alternative Hypothesis (H1): There is significant difference between adapted change environment and user friendly

96


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

Table 21: adapted change environment * user friendly Cross tabulation Count user friendly adapted

change

environment

Yes

No

100%

6

2

8

75%

4

4

8

50%

4

5

9

25%

3

1

4

1 18

0 12

1 30

0% Total

Total

Table 22: Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

a

3.032 3.429 .004 30

df

Asymp. Sig. (2-sided)

4 4 1

.552 .489 .948

INTERPRETATION: The Chi-square test is carried out at 95% confidence level (0.05 significance level). The Pearson Chi-square value comes out as 0.137, which is greater than the significance level of 0.05, Null hypothesis accepted and alternative hypothesis rejected it means there is a no significant association between increase an efficiency and helpful and convenient.

97


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

4.3) DATA ANALYSIS OF PRIMARY DATA (CASE STUDY) GSPC which stands for Gujarat state petroleum cooperation is one of the leading oil & gas exploration, development & Production Company in India. It is a group of a companies working simultaneously to provide energy to the society of India. Case study is based on one of the group of GSPC that is GSEG which stand for Gujarat state energy generation.GSEG is a special purpose vehicle formed by GSPC to generate power in Gujarat by harnessing the eco-friendly & economical natural gas. GSEG is a part of the GSPC group’s overall strategy of establishing presence in both the upstream and downstream segment of energy value chain. The company is committed to using innovative advance & technology of producing gas based power. GESE is a huge company which a huge data base to handle. Managing the data & resources are of upmost important for all the company to survive intense competition.GSEG previously used to manage the data by according it in Microsoft excel. Excel used to help the company manage the data only to a limited extends. Centrally management of the same data was not possible through excel. As we know GSEG has its finance departments located in the Gandhinagar district of Gujarat & the rest are located in Hazira at Surat, Gujarat. It is more important that the data of Gandhinagar and Hazira are linked or can say connected to each for the progress and to make effective decision making. GSEG also need to be connected to GSPC and GSPL as there are major groups that requires help of & are helpful to GSEG. So data of GSEG also needs to be transferred to these groups. Through Excel this linkage or connective was not possible or say was not effective and so management becomes a hard task for GSEG group. 98


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG� Routine transactions were not available immediately or on the regular basis due to excel due to some software limitation.

FIGURE 13: Timetable SAP ERP system implementation of GSEG In 2005 the company had a hard discussion to solve this problem facing the company so that they can move fast in the race with the competitor. After a long decision and taking the suggestion of all members the company decided to adept an ERP program. ERP is an enterprise resource planning which help in storing all information in a central device software through which any department can get any kind of information from anywhere & at any time. For ERP to run or manage effectively the company was in search of a software which can help in storing & updating of data which can be accessed through anywhere at any time. ERP software were many but out of them the one which headed 1st in the line was SAP. SAP which stands for systems, applications, products in data processing. SAP business suit allows employs, customer & business partner to work together from anywhere at any time. Looking at the advantages of SAP GSEG adapted SAP as the one which could help it to solve the problem of managing the inventory that it was facing. 99


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” GSEG brought SAP ERP software package which were from SAP business suit category which was designed for large enterprise. After adopting SAP it provided training which it named as E-URJA to employee so that they can make the best use of the new technology. It took one year time to reengineer the organization as it had to transfer all the data from Excel to SAP. The reengineering period was a time at which the company has to face a hard challenge. TCS was the company which provided GSEG with the SAP software. Employee were teaching to adept SAP, but to add to fire TCS change it client server which lead to a more problem for the company. Employee again had to learn the software because the changes in the client server lead to a major technological change in the software. It was in the year 2008. GSEG employees were learning to adopt the new SAP technology but with the passage of time recently almost 50% of employee who were member of E-URJA training have left or are retired from the company and the new employee coming in the organization does not have adequate knowledge about SAP software. Training to the new employees of the company is not being provided for the same & so the new employee has to rely or their senior’s to provide them the same knowledge. Seniors are co-prating and provided and helping their junior but still the basic knowledge of the same is not being had by the new employees. They just have limited knowledge about SAP which helps them to do their daily work but adding if they face any other problem besides the daily one they become blank on the same. New employees and seniors employees both are demanding training for the same so that they can help the company to progress on a larger and quick scale. GSEG wants to progress using SAP it is very important for them to provide a detail training to all its employees which will wider their knowledge in a way helpful to the company. 100


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

SUMMERY OF CASE STUDY: •

GESE is a huge company which a huge data base to handle. Managing the data & resources are of upmost important for all the company to survive intense competition.

It is more important that the data of Gandhinagar and Hazira are linked or can say connected to each for the progress and to make effective decision making.

In 2005 the company had a hard discussion to solve this problem facing the company so that they can move fast in the race with the competitor.

Looking at the advantages of SAP GSEG adapted SAP as the one which could help it to solve the problem of managing the inventory that it was facing.

After adopting SAP it provided training which it named as E-URJA to employee so that they can make the best use of the new technology.

Employee again had to learn the software because the changes in the client server lead to a major technological change in the software. It was in the year 2008

Training to the new employees of the company is not being provided for the same & so the new employee has to rely or their senior’s to provide them the same knowledge.

They just have limited knowledge about SAP which helps them to do their daily work but adding if they face any other problem besides the daily one they become blank on the same.

New employees and seniors employees both are demanding training for the same so that they can help the company to progress on a larger and quick scale.

5) FINDINGS 101


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” This project report attempted to answer the following question: “A BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP IN GSEG” Through an analysis, it was determined that: •

After the implementation of SAP ERP process in GSEG, employees feel that more training sessions are required as ERP software has very vast applications.

After the implementation of SAP ERP process in GSEG, the old employees who had taken a training courses they were retired or leave the organization and the new employees have not taken any training courses.

After the implementation of SAP ERP process in GSEG, paper work is not eliminated but has been reduced up to some extent.

After the introduction of SAP ERP productivity has increased.

SAP ERP has reduced workload of employees.

SAP ERP system is better than the older system as it is more user friendly

and

has

integrated

all

departments

thus

making

work easier. •

Understanding of SAP ERP process helps in decision making.

Employees do not adapt quickly to the changing business environment of SAPERP. It takes some time to adjust to new environment.

An ERP implementation is not simply a large IT implementation projectit is a sizable organizational project. Organizational benefits will not be achieved if the enterprise focuses on the technical aspects only. Information technologies cannot by itself influence the productivity of a company. The main efficiency factor lies in the way people use these technologies. Many information strategies fail for ignoring this issue.

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

6) RECOMMENDATIONS Following suggestions were made to improve the effectiveness of SAP ERP process: •

Required level of training should be given to employees. Training must stress the need for more disciplined work habits and make it clear that even simple mistakes can create consequences in other areas. Regular training should be a strong feature.

More training sessions should be given to employees regarding SAP ERP process as it has very vast applications. Everyone must become familiar with new roles, revised processes, and new control mechanisms.

Reports

and

returns

as

well as

query

system

need

to

be strengthened. •

Training regarding Application Tracker should be given since it works as a window to get the correct status of processing of forms applied in the SAP ERP process such as reimbursement, advances & allowances.

Feedback of the users of SAP ERP process should be addressed properly through training sessions.

Overall training sessions & workshops should be provided on quarterly basis to the SAP ERP process owners of each department.

Process owners should be made aware of the new updating in SAP ERP process at regular basis either through mails or workshops, whichever is required.

Top management should formulate some guidelines on how to reduce the paper-work.

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7) CONCLUSION EPR system integrate supply chain management, customer relations management, manufacturing function, warehouse management, human resources, and financials functions in to one system. By using ERP system, company gain more ability of improving productivity and profitability. Numerous of companies have tried to adopt the ERP system to operate their business processes. GSEG is one large organization that applied the ERP system for improving the core competency. The implementation of ERP system was not easy task to complete. Especially for GSEG. The implementation process of the system was very complex and time consuming. Because of the good preparation and efficiency of the investment of the ERP project. The organization successfully replaced the older operation system with the new SAP ERP system. Managing and developing the new ERP system are the challenges to the organization today. In order to reach the ultimate goal of the optimizing the business benefits from its ERP system, there are still some change needed. GSEG really need more SAP training courses to offer all SAP users. The result of the survey showed that most of the SAP users did not receive enough training courses needed during and implantation of the new SAP system, further on they are willing to take more training courses.

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BIBLIOGRAPHY:  http://www/sap.com  http://www/GSEG.com  http://www/GSPC.com  http://www.pathfinder.com/@@gOwoNn… Magazine/1995/951002/managing.html  http://www.aberdeen.com/research/comp/whtpaper/1998/sap1/ sap1.htm  http://www.cio.com/archive/enterprise/011598_erp_content.html  http://www.sap.com/solutions/business-suite/index.epx  http://www.sap-basis-abap.com/sapgeneral/sap-cost-benefitanalysis.htm JOURNALS AND MAGAZINES  GSEG manuals  Employee Handbook BOOKS Sankar Chetan S., Rau Karl-Heinz “Implementation strategies for SAP R/3 in a multinational organization”, E-Book Anderson George W. “Sams Teach Yourself SAP in 24 Hours”, E-Book

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QUSTIONNAIRE FOR SAP USERS IN GSEG

I am Dipika Panchal, Pursuing MBA from Bhagavan Mahavir College of Management at Surat city. As a part of our curriculum, I am working on as research project “A study of business process improvement after implementation of SAP in GSEG” I seek your kind cooperation in this regard & request you to fill up the questioner. This study is for academic purpose only. No information shall be disclosed anywhere else. The questionnaire is absolutely anonymous and contains only 24 questions. Our testing suggests that survey will take approximately 5-10 minutes to complete. We do appreciate your time and support. Name:

Working since (month & year):

Age:

Post:

JULY 2011 (P.T.O) 106


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” A) Implementation

1) Were you involved in implementation process of SAP in GSEG? o I was in my position before implementation began o I was hired during the implementation o I was hired after SAP implementation

2) Do you see any improved area currently in SAP, either in software itself or functions related to it? o If YES , please list main topic ∆ 1 _____________ ∆ 2_____________ ∆ 3_____________ o NO

3) What are the missing functions in your current SAP system? o If YES , please list main topics ∆ 1______________ ∆ 2______________ ∆ 3______________ o NO

107


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” 4) Do you agree that SAP ERP has standardized business process? Strongly Agree O O O O O Strongly Disagree

(P.T.O)

B) SAP in GSEG today and tomorrow

5) On average , how often do you use SAP related with your work: o Once a month o Once a week o 2-5 hours a week o 2-5 hours a day o All the time o Other ____________

6) Do you think SAP is optimal choice for the GSEG? o YES 108


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” o NO

7)

If you could make the decision today , would you continue using SAP? o

YES

o If NO, what are the main reason ,select all that apply: ∆ Not suitable for our needs ∆ Technical issues ∆ Data issues ∆ Quality of the software ∆ Lack of understanding of the software’s capabilities ∆ Conflict with other system ∆ Inadequate training ∆ Customizing ∆ Other_____________

(P.T.O) C) Service through SAP ERP effectiveness

8) Do you think that SAP ERP has reduced time & provides faster delivery of service?

Completely O O O O O Not at all 109


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

9) Do you think that Productivity has increase after the introduction of SAP ERP? o If YES ∆ Below 30% ∆ 30%-60% ∆ Above 60% o NO

10)

Do you agree that Chances of error have been reduced with

the introduction of SAP ERP? o YES o NO

11)

Do you agree that SAP ERP is more helpful and convenient

then older system?

12)

Strongly Agree O O O O O strongly Disagree

Do you think that SAP ERP has helped in taking quick

decisions? o YES o NO 110


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG”

(P.T.O) 13)

Do you agree that SAP ERP helps the organization to speed

up the transaction process?

14)

Completely O O O O O Not at all

Does SAP ERP maintain transparency and control of the

organization? o Yes o NO

15)

Do you agree that SAP ERP has reduced work load of

employees?

16)

Strongly Agree O O O O O Strongly Disagree

Do you think that implementation of SAP had increased an

efficiency of the organization ? o If YES, ∆ Below 30% 111


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” ∆ 30-60% ∆ Above 60% o NO 17)

Do you agree that SAP ERP services are available as & when

required? o YES o N0 (P.T.O) 18)

Do you agree that the employees of the organization have

quickly adapted to changing environment? • 19)

Completely O O O O O Not at all

Do you think that SAP ERP system and processes are user

friendly? o YES o NO 20)

Do you think that there is a need of any expert needed to

train new employees? o YES o NO

D) Training

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“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” 21)

Did

you

attend

any

training

course

during

the

implementation? o If YES, please specify what king of training?___________ o NO

22)

What is your current feeling –do you think you need new or

refreshing training courses in the use of SAP? o If YES , please specify what kind of training ____________ o NO

(P.O.T) 23)

Which are the most suitable and acceptable training

platforms for you at moment ? o Physical attention to lectures o Virtual training ( video conference) o E- learning o Self – study ( material provided by SAP administration) o Other___________

113


“A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG” Give your idea to make organization’s process more effective.

Specify your suggestions for improvement, if any:

Thank you for your participation in our survey.

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A STUDY OF BUSINESS PROCESS IMPROVEMENT AFTER IMPLEMENTATION OF SAP ERP IN GSEG