RAJASTHAN STATE MINES & MINERALS LTD.

SUMMER TRAINING PROJECT

On

TECHNICAL FEASIBILITY IN

IMPLEMENTING IN ERP

Submitted to Suryadatta Institute of Business Management and Technology in partial fulfillment of the requirements for the degree of

Post Graduate Diploma in Management

2009-2011

Submitted By: Under Guidance`:

Ankit Samota Prof. Ashok Benegal

(Telecom + IT)

SURYADATTA INSTITUTE OF BUSINESS MANAGEMENT AND TECHNOLOGY

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TABLE OF CONTENTS

1) CHAPTER 1 – INTRODUCTION

i) EVOLUTION OF ERP

ii) MAJOR VENDORS OF ERP

iii) ERP MODULES

iv) FEASIBILITY OF ERP

2) CHAPTER 2 – COMPANY PROFILE

i) COMPANY HISTORY

ii) AMALGAMATION

iii) HIGHLIGHTS

iv) PRODUCTS

v) FINANCIAL PERFORMANCE

vi) BOARD OF DIRECTORS

3) CHAPTER 3 – RESEARCH OBJECTIVES AND SCOPE OF ERP

4) CHAPTER 4 – RESEARCH METHODOLOGY

i) ERP IMPLEMENTATION LIFE CYCLE

ii) BENEFITS O ERP

iii) COMPARISON OF ERP

iv) DATA COLLECTION

5) CHAPTER 5 – CONCLUSION & SUGGESTION

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ACKNOWLEDGEMENT

“Life is a journey of excellence. Every mile that one reaches during the

eternal journey is marked by the guidance of the near and dear ones and the

endeavor of mine no expectation.”

The immense pleasure and joy one derives on the completion of assigned

job is beyond description. It is the duty of the concerned person to pay this

respect & acknowledge the advice, guidance & assistance received from the entire

person to an accomplishment.

I owe a deep depth of gratitude to the college authorities for giving me the

opportunity to work on this project, their valuable help and keen interest,

constant encouragement, inspiration and critical supervision during the entire

course of this project, without their help and guidance, I wouldn’t have got the

opportunity to successfully complete the project report.

I extent my deep sense of thankfulness to Mr. Shanti Lal Nagda (Public

Information Officer) who allowed me to do my project in RSMML, Udaipur.

I am extremely thankful to Mr. Probal N. Majumdaar (SM, System) for

providing me the necessary information about the working of plant and various

aspects regarding my project report.

I shell ever remain indebted to Mr. J.Shantaram (Group General

Manager, Phos.) for his constant support, guidance & encouragement.

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DECLARATION

I declare that the project entitled “Security Analysis and portfolio

management" of Axis equity fund is a record of independent research work

carried out me during the academic year 2009-2010 under the guidance of my

faculty guide Prof. Ashok Benegal and my project guide Mr. Probal N.

Majumdaar.

I also declare that the project is the result of effort and has not been

submitted to any other University or Institute for the award of any degree, or

personal favor whatsoever. All the details and analysis provided in the report hold

true to the best of my knowledge.

Name…………………………………………

Place………………………………………….

Date……………………………………….….

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PREFACE

Practical knowledge has inestimable value for a student because theoretical

knowledge is incomplete if it is not correlated with the practical knowledge.

The work & experience gained during training period has increased my knowledge

many folds.

My report is the outcome of study for the internal project during 2009 – 10

session and has been submitted in partial fulfillment for the award of

Post Graduate Program in Business Management, Suryadatta Institute

of Business Management & Technology, Pune.

The topic of my project is a study of The New Management Mantra –

Enterprise Resource Planning (ERP). Enterprise resource planning: a software

system that coordinates every important aspect of an organization's production into

one seamless process so that maximum efficiency can be achieved.

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EXECUTIVE SUMMERY

Practical knowledge has inestimable value for a student because theoretical

knowledge is incomplete if it is not correlated with the practical knowledge.

The work & experience gained during training period has increased my knowledge

many folds. In this limited space a brief and comprehensive account has been

produced in the light of recent work done on calculation of enterprise resource

planning at RSMML through latest information available from various sources.

ERP is an industry term for the broad set of activities that helps to manage the

important parts of a business. The information made available through an ERP

system provides visibility for key performance indicators (KPIs) required for

meeting corporate objectives.

ERP software applications can be used to manage product planning, parts

purchasing, inventories, interacting with suppliers, providing customer service, and

tracking orders.

ERP can also include application modules for the finance and human resource

aspects of a business.

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CHAPTER 1

INTRODUCTION

An Enterprise Resource Planning System (ERP) is a collection of

modules/components integrated together while utilizing one database typically

used primarily by medium to large manufacturing organizations with multiple sites

located worldwide.

Connecting to one database allows users from all departments of the organizations

located anywhere in the world to attain the necessary information to carry out their

responsibilities.

The integrated approach offers improved operational processes and streamlined

information to the fingertips of anyone with the security rights to access it.

Enterprise Resource Planning (ERP) system solutions are currently in high demand

by both Manufacturing and service organizations, because they provide a tightly

integrated solution to an organization’s information system needs. ERP allows

professional people to manage their company in one system that integrates the

entire business process and creates a wide-enterprise view of significant corporate

information. Recently many organizations face a new challenge of increasing

competition, expanding markets and enhancement in customer expectations. This

issue needs to be considered in relation to the following potential and/or necessary

operational improvements.

Inventory reduction to a minimum

Reduction of total costs of products and/or services

Provision of more reliable delivery dates

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Making of assortment of production

Providing higher service levels to customer

Nowadays Information Technology (IT) and Business Process Re-engineering

(BPR) are used together as important means of giving the organization the leading

edge. The increasing need for

Implementing a total business solution has already taken place in most

organizations. ERP software has been developed to meet this need. In today’s

dynamic environment, there is a significant need for any organization to develop

their policies in order to become globally competitive. ERP is a strategic tool,

which helps the organization to obtain competitive edge by integrating all business

processes, optimizing the use of available resources, keeping up with technological

changes and ensuring timely responses. Chen (2001) conducted research in

planning for ERP systems.

He suggested that companies introduce ERP for the following reasons:

The use of multiple points of input with duplicated effort in the existing

system

The inability of the existing system to support organizational needs

The requirements of extensive resource for maintenance and support

The need of enterprise to reengineer their business process

The growth of enterprise and subsequent incompatibility of several

information systems.

The inability of employees to respond easily to questions or information

requested by key customers or suppliers.

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EVOLUTION OF ERP

Understanding the history and evolution of ERP is essential in order to understand

its current and future application. Material Requirement Planning (MRP) was the

earliest computerized information system. The focus of typical manufacturing

companies in the 1960s was on inventory, in that period most of the software

packages were designed to deal with that. MRP vendors expanded their systems to

include more business functions. In the early 1980s, MRP expanded from a

material planning and control system to a company-wide system capable of

planning and controlling all the organization’s resources. This expanded approach

was fundamentally different from the original concepts of (MRP) Manufacturing

Resource Planning

(MRPII) meant to integrate primary services (i.e. customer ordering, inventory

control and production control) and other services such as finance, accounting and

distribution into the planning process. The increasing need for integrating more

and more function led to the development of a total integrated solution. In the early

1990s, MRP II was further extended to cover areas such engineering, finance,

human resources, projects management, marketing etc. That led to the

development of ERP systems. ERP is running on client-server architecture, and

includes all the resource planning for the enterprise.

Examples of these are product design, information warehousing, and material

planning, capacity planning and communications system.

In summary, MRP software dealt with production requirements in the

manufacturing environment, MRP II was an extension of MRP to shop floor and

distribution management activities, and it is still being used by manufacturers. ERP

may be considered as the next generation of MRP II with other application areas

(quality, maintenance, marketing, accounting and human resources).

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EXPLANATORY DEFINITION OF ERP

The American Production and Inventory Control Society (1995) defines ERP as an

accounting oriented information system for identifying and planning the enterprise

resources needed to take, make, ship and account for customer orders.

It also states that ERP is the latest enhancement of MRP II with the added

functionality of finance, distribution and Human Resource Management (HRM)

integrated to handle the global business needs of an integrated and networked

enterprise.

Another definition of ERP given by Huang states that it is an industry term which

is used for a wide set of activities sustained by multi-module compliance software

that helps manufacture ring and service organizations to deal with the significant

sections of their business. ERP software provides organizations with a set of

integrated applications

That runs the following business functions: Human Resource (HR), accounting,

controlling, project management, production, materials management, and sales and

distribution. These applications are linked by a common database. Figure 1 shows

ERP system.

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Considering the above definition, ERP systems have some key characteristics such

as:

o Common access to a single set of data: the objectives of ERP system

are to have a single set of data across all business processes within a

company

o Standardized data definitions: the ERP business process shares the

same data definition across all ERP application modules.

o System flexibility: an ERP system should be flexible to the changing

needs of an enterprise. The client/server technology enables ERP to

run across various database.

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o Beyond the company scope: ERP system should not be confined to a

company’s boundaries.

Instead, it should support the company’s online communication with

external entities.

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AN ERP DEVELOPMENT MODEL

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MAJOR VENDORS OF ERP SYSTEMS

At this point it is reviewed as imperative to develop the understanding of different

ERP software and their capabilities. “Currently, SAP, Oracle, PeopleSoft, Baan,

and J D. Edwards are the major competitors in the ERP”, which provide solution

based on Companies requirement.SAP, accounts for roughly 33 per cent of the

total market. Other major players include Oracle, PeopleSoft, Baan, and J D.

Edwards account collectively for roughly 36 percent of the total market.

(a) SAP

Established in Germany, SAP initiated operations in 1972. SAP with 33 per cent

market share, is the major ERP vendor and currently supports the business of more

than 12,000 customers. SAP is one of the largest software companies in the world,

as they spend 20-30 per cent of their annual revenues on research and development

(R&D) .SAP applications are in use in more than 107 countries and are available in

different languages and currencies. “SAP’s first two products operated on

mainframe hardware; R/1, but in 1981 was replaced by R/2, an online system. In

1992, SAP introduced R/3, a powerful client/server architecture product, which

quickly gained dominant market share”. This application is an integrated suite of

programs which has been created for specific type of business data processing such

as financial, manufacturing, distribution, logistics, quality control, logistic and

human resources. SAP is currently expanding its product line to supply chain

management, sales force automation and data warehousing.

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(b) Oracle

Oracle is the second-largest supplier of ERP software in the word its database is

offering the most popular repository of Enterprise Systems Data. Oracle was found

in 1977 in the USA. Oracle offers ERP applications designed to work with their

database software. Oracle is a leading database software provider that sells most of

its applications to manufacturers and consumer goods companies. Oracle 8i, its

latest version of the database for internet computing, it has developed an Internet

enabled suite of software modules for customer relationship management (CRM),

supply chain management, financials, projects, and human resource. Oracle’s

applications are used in over 76 countries and are available in 29 languages. It

consists over 45software modules falling into the following categories: financial,

human resources, projects, manufacturing, supply chain, and front office.

(c) PeopleSoft

PeopleSoft is the latest of current Enterprise Systems vendors. It initiated

operations in 1987 and went public in 1992 .Its product offerings are divided into

two categories: PeopleSoft Business Process Solution and PeopleSoft Industry

Solutions. PeopleSoft Business Process Solutions include materials management,

supply chain management, service revenue management, and complete suite of

enterprise for finance, supply chain planning, manufacturing and human resources.

While PeopleSoft Industry Solutions include industry-specific solutions designed

to serve customers communications, financial service, healthcare, manufacturing,

higher education, public sector, retail, Services, transportation, government, and

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utilities. Currently, it aims at the service sector with products designed to help the

relevant organizations handle their intangible costs. PeopleSoft is appropriate for

the service industry, in particular higher education, healthcare and public sector

organizations. In these sectors, PeopleSoft systems are able to deploy a unique

solution to inventory processes, which allows inventory counts, orders to be

automatically placed, purchase orders to be created, and invoices to be produced

and payments to be processed.

(d) Baan

Baan was found in the Netherlands in 1978, it has roughly 3000 clients in 5000

sites worldwide. Its software was primarily manufacturing oriented. Then the

company targeted the public sector. The Baan approach is to conduct concurrent

business processes re-engineering during the ERP implementation. Its aim is to

shorten the total implementation time frame, help to improve the Internet security

problems. Baan provides a scalable architecture making it possible for different

size of business to cost-effectively implement the software. It is also Web enabled,

giving enough flexibility to the organizations to gain a competitive advantage

through its implementation.

(e) J.D. Edwards

J.D. Edwards provides ERP applications for managing enterprise and supply chain.

The J.D.Edwards Enterprise Systems package gives customers control over their

front office, manufacturing, logistics and distribution, human resources and

finance. Recently the company‘s software runs on many different kinds of systems.

The different modules that are available from J.D.Edwards are: “foundation suite,

service suite, manufacturing suite, financial suite, energy and chemical suite,

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customer service management suite, government/education not-for-profit

solutions and utility and energy solutions”.

ERP systems have common characteristics, such as, they are based on central

relational database, they are built on client/server architecture, and they consist of

various functional modules. Moreover, there have invariably modules for financial,

sales order management, customer service management, purchasing, and inventory

management. As most ERP vendors have many similarities, they also have

substantial differences. Most ERP software vendors make assumptions regarding

the business philosophy and business practices .A company that need to implement

ERP must accept those vendor’s assumptions about the organization and change

existing processes and Procedures. In similar way J.D. Edwards requires some

customization to suit the business requirements. SAP designed to help organize

manufacturing and accounting processes and its system support all areas of

business on a global scale. Similarly, Oracle provides most of its application to

manufacturing and Consumer Goods Company. In contrast Baan offers

manufacturing software to companies that are wary of SAP products, and it

continues to develop enterprise systems in areas that SAP and Oracle are less

competitive, like project and distribution module. Since J.D.Edwards sells software

for managing the enterprise and supply chain, Baan is noted for its flexible

manufacturing and PeopleSoft has the lead in human resource software and several

software for service environment. SAP and Oracle were found suitable for

manufacturing environment. Their financial and supply chain systems are very

strong.

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ERP MODULES

The names and numbers of modules in an ERP system provided by different

software vendors may differ. Most vendors ERP software is flexible enough that an

organization can install some modules without buying the whole packages,

organizations brook down ERP packages in modules that handle several functional

departments including accounting, finance, human resource and material module

And they left the rest of the functions to be installed in future. However, these

modules interact as the business processes require information exchange among

different departments.

(a) Human Resource

This Module integrates human resources management for guiding personnel-

related tasks between managers and individual employees. There are many tasks,

including personnel planning and development, human resources administration,

automated personnel management, and business travel.

In addition, the following areas are covered: payroll-handling accounting and

preparation of checks related to employee salaries, wages, bonuses, employee

benefits and self-service Human Resource (HR) that allow employees to change

their personal information and beneficial allocation online.

(b) Finance

These modules refer to bookkeeping and making sure that the bills are paid on

time. Enterprise Resource Planning (ERP) can facilitate the following finance

functions:

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General ledger: ERP can keep centralized charts of accounts and corporate

financial balances, payments to suppliers and distribution.

Accounts receivable: tracks payments due to a company from its customers.

Fixed assets: manages depreciation and other costs associated with tangible

assets such as buildings, property and equipment.

Treasury management: monitors and analyses cash holding, financial deals

and investment risks.

(c) Manufacturing and Logistics

Manufacturers have employed ERP software to streamline their processes and to

respond dynamically to the competitive marketplace. Moreover, they use ERP for

improving the decision making process

by enabling high level of integration, improved information accuracy and

improved information flow throughout the company.

The use of ERP application in manufacturing has also been found to be critical in

improving customers satisfaction, reducing the total cost of manufacturing and

increasing the speed of order processing. ERP has also been found to be effective

in reducing inventory costs, and it has also been credited with reducing

manufacturing lead times.

(d) Sales

This area of application of ERP consists of order management, pricing, sales

management, and sales planning. Customer service management, which is another

significant aspect of sales and distribution related applications of ERP, administers

installed-base service agreements and checks contracts and guarantees when

customer call for help.

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(e) Controlling

ERP can facilitate overhead costs control through analyses corporate costs.

Moreover, this function can also manage products and manufacturing cost

controlling, activity-based costing, sales and

Profitability analysis and project control.

(f) Distribution

An important area under the distribution application is transportation management

which includes scheduling and monitoring and delivering products to the

customers by tracking of order status. Other areas of related ERP application also

include billing, electronic data interchange, address control, shipping, and

transportation management, which arrange, schedules and monitors delivery of

production.

(g) Quality Management

Quality management department may use an ERP system for: quality control,

inspection processing, quality certificates, and quality notifications. In addition,

this application can use ERP for

Manufacturing and purchasing quality tracking, test result entry in shop floor

control, repetitive real-time notification of out-of-tolerance conditions and

unlimited quality comments on each test.

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(h) Materials Management

ERP supports all materials management processes, including controlling of

purchase of raw materials needed for building products, order entry and

processing, and warehouse management that can keep track of goods and process

movements in corporate warehouses.

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FEASIBILITY OF ERP

A feasibility study is an evaluation of a proposal designed to determine the

difficulty in carrying out a designated task. Generally, a feasibility study precedes

technical development and project implementation. In other words, a feasibility

study is an evaluation or analysis of the potential impact of a proposed project.

Five common factors (TELOS)

(a) Technology and system feasibility

The assessment is based on an outline design of system requirements in terms of

Input, Processes, Output, Fields, Programs, and Procedures. This can be quantified

in terms of volumes of data, trends, frequency of updating, etc. in order to estimate

whether the new system will perform adequately or not. Technological feasibility

is carried out to determine whether the company has the capability, in terms of

software, hardware, personnel and expertise, to handle the completion of the

project

(b) Economic feasibility

Economic analysis is the most frequently used method for evaluating the

effectiveness of a new system. More commonly known as cost/benefit analysis,

the procedure is to determine the benefits and savings that are expected from a

candidate system and compare them with costs. If benefits outweigh costs, then

the decision is made to design and implement the system. An entrepreneur must

accurately weigh the cost versus benefits before taking an action.

Cost Based Study: It is important to identify cost and benefit factors, which can be

categorized as follows:

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1. Development costs; and

2. Operating costs.

This is an analysis of the costs to be incurred in the system and the benefits

derivable out of the system.

Time Based Study: This is an analysis of the time required to achieve a return on

investments. The benefits derived from the system. The future value of a project is

also a factor.

(c) Legal feasibility

Determines whether the proposed system conflicts with legal requirements.

E.g. A data processing system must comply with the local data protection Acts.

(d) Operational feasibility

Is a measure of how well a proposed system solves the problems, and takes

advantage of the opportunities identified during scope definition and how it

satisfies the requirements identified in the requirements analysis phase of system

development.

(e) Schedule feasibility

A project will fail if it takes too long to be completed before it is useful. Typically

this means estimating how long the system will take to develop, and if it can be

completed in a given time period using some methods like payback period.

Schedule feasibility is a measure of how reasonable the project timetable is. Given

our technical expertise, are the project deadlines reasonable? Some projects are

initiated with specific deadlines. You need to determine whether the deadlines are

mandatory or desirable.

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CHAPTER 2

COMPANY PROFILE

Rajasthan State Mines and Minerals limited (RSMML) is one of the leading and

progressive undertakings of the Government of Rajasthan. It occupies a place of

pride in production and marketing of non metallic minerals of India. RSMML is

multi mineral and multi location enterprise engaged in mining of Rock Phosphate,

Lignite, SMS grade Limestone and Gypsum. RSMML is not  only the leader in

Mining & Selling of Rock Phosphate, Gypsum across the country, but also global

pioneer in technology in open cast mining and mineral beneficiation of Carbonate

Rock Phosphate.

Besides minerals, RSMML has also forayed into Energy Sector and has setup

74.80 MW installed capacity Wind Power Project at Jaisalmer, Rajasthan.

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COMPANY HISTORY

Rajasthan State Mines & Minerals Limited (RSMM) was originally

established in 1947 under the name of Bikaner Gypsum Ltd. (BGL) for mining of

Gypsum. Following the discovery of Jhamarkotra Rock Phosphate (RP) deposit in

Udaipur district of Rajasthan in 1968, BGL was appointed as contractor for mining

RP on behalf of the state in May, 1970. BGL was taken over by the Government of

Rajasthan in 1973 and renamed as RSMM.

Mining of Rock Phosphate and Gypsum has been the traditional activities of

RSMM. It is the largest producer of Natural Gypsum and the sole producer of

Selenite in the Country. It is the only producer of High Grade Phosphate Ore

(HGO), having 31% P2O5 content, in the country. RSMM accounts for 91% of the

total production and has mining rights to 83% of the total reserves of the country.

Rajasthan State Minerals Development Corporation Limited (RSMDC), a

State owned enterprise, was merged with RSMM with effect from April 1, 2001.

Rajasthan State Mines & Minerals Limited (in short RSMML) is one of the

leading and progressive undertakings of the government of Rajasthan. It occupies a

place of pride in production and marketing of non-metallic minerals of India.

RSMML is multi minerals and multi location enterprise engaged in mining of

Rock Phosphate, Lignite, SMS grade Limestone and Gypsum. RSMML is not only

leader in Mining & Selling of Rock Phosphate, Gypsum across the country, but

also global pioneer in technology in open cast mining & mineral beneficiation of

Carbonate Rock Phosphate.

Besides minerals, RSMML has also forayed into Energy Sector and has setup

15 MW installed capacity Wind Power Project at Jaisalmer, Rajasthan

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AMALGAMATION

The department of the company Affairs, Government of India (orders No, issued

year 2003, and witnessed completion of amalgamation of Rajasthan State Minerals

Development Corporation Limited (RSMDC), another Rajasthan State

Government PSU with Rajasthan State Mines & minerals Limited (RSMML).

S.O.207 (E) dated 19th February 2003) under section 396 of the companies act

1956 and the same has come into effect from 20th February, 2003, the date of its

publication in the Gazette of India (Extraordinary).

Strategic Business Units & Profit Centers

After amalgamation, the following four mineral based Strategic Business Units &

Profit Centers (SBU & PC) namely Rock Phosphate, Lignite, Gypsum and

Limestone have been set up as a part of corporate restructuring: -

Strategic Business Unit and Profit Centre – Rockphosphate at Jhamar Kotra

in Udaipur.

Strategic Business Unit and Profit Centre – Gypsum at Bikaner

Strategic Business Unit and Profit Centre – Limestone at Jodhpur

Strategic Business Unit and Profit Centre – Lignite at Jaipur

Rock Phosphate continued its prime position in the business profile of the

Company and catered to almost 94% of the indigenous demand. The capacity of

industrial beneficiation plant was increased from 1500 TPD to 3000 TPD and the

production got streamlined. The production of lignite was streamlined at Giral and

the company is gearing up fast for providing one million tones of  lignite for the

lignite based thermal power plant  at Giral under state owned Company, Rajasthan

Vidyut Utpadan Nigam Ltd. Being pioneer in the lignite field, RSMML has

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ensured its strong presence in the lignite based power sector in Rajasthan.

Dispatches of gypsum touched 3.39 million ton in 2008-09. Renewed emphasis on

environmental management was stressed upon for the management of gypsum

mines. Supply of SMS grade limestone to the steel plants of India touched the

record level of 2.30 million tones in 2008-09.

In the year 2008-09, company has achieved the profit before tax Rs. 177.89 crores

in comparison to profit before tax of Rs.186.75 crores in 2007-08. The Company

started a number of R&D activities to further strengthen its R&D activities.

Generous contributions were made for creation of life saving medical

infrastructure in 8 project districts. The dividend of Rs. 15,51,03,000/- was

declared for the year 2008-09.

RSMML today has broken away from its monopolistic moorings and welcomes

competition. From a small backwaters company, it is now rated as a

technologically advanced company and an innovator. It boasts of a highly trained

and competent workforce and strong financial base. It has established itself as the

most successful public sector company in Rajasthan

HIGHLIGHTS

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The revenue of the company has increased from Rs. 6364 millions to Rs.

9723 millions in the year 2008-09.

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Completion of the projects for doubling the capacity of the Industrial

Beneficiation Plant from 1500 TPD to 3000 TPD for beneficiation of low

grade rock phosphate ore to high-grade concentrate.

Successful commissioning of the Sixth phase of Wind power project at

Jaisalmer. The total capacity is now 74.8 MW and the power generated is of

grid quality.

Registration of Company’s Wind Power Project and energy saving project of

LGO Beneficiation plant with Executive Board of Clean Development

Mechanism under UNFCCC. This project shall get approx. 60000 to 700000

CERs Emission Reduction Certificate every year. Two other projects are in

pipeline for registration.

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Firming up market for the undersized limestone gitty, which was lying

unutilized.

The company has developed the organic fertilizer called Phosphate Rich

Organic Manure (PROM) by using high grade rock phosphate with farm

yard waste and organic matter.

The first Bio-Diesel plant of Rajasthan was commissioned with 1 TPD seed

processing capacity (260-270 liters bio diesel per day) at Jhamarkotra Rock

phosphate project, Udaipur.

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PRODUCTS

We are producing following product: -

Lignite

It is suitable for power production, cement and agriculture uses.

Gypsum

We are producing following products: -

Run of Mine (ROM) Gypsum

It is used for manufacture of cement and land reclamation.

Gypsum Powder

It is used for manufacture of cement and land reclamation.

ROM Selenite

It is used for manufacture of Plaster of Paris and Ceramics.

Limestone

We are producing following products: -

Low Silica Limestone

Low Silica Limestone is used in steel plants with BOF technology as

a flux.

Chemical grade Limestone

Chemical grade limestone is used mainly in chemical industries

producing quick lime and hydrated lime. It is also used in White

Cement and Grey Cement plants for the same purpose.

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Rock phosphate

We are producing following products:-

Crushed – ½" size High Grade Rock Phosphate

(SSP Manufacturing Units)

Crushed – ½" size High Grade Rock Phosphate

(DAP/ Nitro phosphate Manufacturing Units) 

Crushed – ½" size High Grade Rock Phosphate

(DAP/ Nitro phosphate Manufacturing Units)

Beneficiated Rock Phosphate Concentrate

(Fertilizer plants)

Ground Low Grade Rock Phosphate (RAJPHOS)

(Fertilizer for direct application to acidic soils)

Crushed – ½" size Medium Grade Rock Phosphate

(SSP Manufacturing Units)

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MAP OF RAJASTHAN

RESEARCH AND DEVELOPMENT

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The company has developed the organic fertilizer called Phosphate Rich Organic

Manure (PROM) by using high – grade rock phosphate with farmyard waste and

other organic matter. The field trials conducted through the different agriculture

universities in the country have shown that the agronomic efficiency of this new P

– fertilizer is higher than that of the complex phosphate fertilizers available in the

market today. ‘PROM’ is suitable to neutral and alkaline soils, which will prove to

be a boon to the Indian farmers. In the long run, this product will be a winner as it

has significant price advantage vis-à-vis the other chemical fertilizer.

Commercialization of the PROM technology will help utilization of waste and also

help in conservation of the mineral rock phosphate as PROM shows good residual

effect.

The company has put a major thrust on the R&D activities in the recent past and

several new R&D projects have been taken up.

Research project taken up for development of fused CaMg phosphate to utilize the

vast reserves of low – grade ore of rock phosphate.

Converting tailing rejects of IBP to Direct Application Fertilizer for

Magnesium deficient soils.

Research project taken up for possible commercial production of Bio-

Diesel from Jetropha plant.

Beneficiation of low-grade gypsum for producing high grade 80 % +

material for industry.

R&D efforts on apatite mineral to be used in jewelry and decoration.

(Moving towards value added product)

Company has started a Training and consultancy Center at Jaipur,

Rajasthan.

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ENVIRONMENT AND SAFETY

As a responsible corporate citizen, RSMML accords equal importance to

ecological and social sectors. The company is concerned about not only the

economic bottom-line reflected by the impressive performance an all quarters and

higher profitability but also the benefits and impact of our operation, processes and

products on the environment and the health and safety of your employees and the

community.

RSMML has constructed a huge dam of 200 mcft. Fresh water storage capacity on

Jhamari River, which has helped in recharging the regional water table.

Extensive a forestation / plantation work is being done in and around all mines.

The industrial Beneficiation Plant is “Zero Discharge Plant”. The waste water is

treated at acid water treatment plant, resulting in a saving of about 1.5 million cuM

fresh water.

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Regular monitoring and control of different environmental parameters i.e. air,

water, dust, noise and heat etc.

Installation of dust extraction system at crushing and screening plant and at central

Gypsum Grinding Unit, Rawla, Bikaner.

The mined out area is being back filled simultaneously to reclaim the land.

Sajjan Niwas Garden established in 1883 has been adopted by RSMML and is

being restored to its pristine glory.

Company has a safety and health policy. Company follows statutory requirement

as per Mines Act 1952. Every year safety week celebrated at different units under

the aegis of Director General of Mines Safety (DGMS).

A well equipped vocational training center at Phosphate SBU caters to need of

various training regarding safety and occupational health for employees.

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SOCIAL RESPONSIBILITY

As a responsible corporate entity committed to discharge its social obligations,

RSMML has been contributing generously towards the development of the areas

located near its mining sites and other areas of operation.

These contribution have been in the area of –

Medical & Health Care

Drinking Water

Education

Environment

Development of Village Infrastructure

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The company has been providing medical and other facilities to the village situated

around its mines.

To improve medical infrastructure of Udaipur region, which is predominantly?

a tribal district, RSMML has contributed Rs. 3.05 crores for establishment of

Cardio-Thoracic Surgery Center and Neo – natal Special Care Unit at the M.B.

Government Hospital, Udaipur.

A contribution of Rs. 2.888 crores has been made to the Chief Minister Fund for

development of medical and Health infrastructure facilities in project districts.

The contribution has been made to Medical Colleges / District Hospitals at

Udaipur, Bikaner, Jodhpur, Barmer, Shri Ganganagar, Jaisalmer, Hanumangarh

and Nagaur.

Memorandum of Understanding has also been made entered with Government of

Rajasthan for utilization of these funds.

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Medical Camps are being regularly organized in the village around the mine

location and project areas of the company where free check-up and medicines are

provided.

RSMML has provided land for the project for setting up a 100-beded multi super

specially hospital at Udaipur under a JV arrangement with M/s American

International Health Management Limited, Udaipur. Total capital investment on

the hospital envisaged – Rs. 20 millions.

Other work for development of village infrastructure includes:

Contribution to Panchayats for school.

Improvement in village Goshalas.

According high priority to fulfill its social responsibilities, the company regularly

takes up works related to socio – economic development along with environment

restoration and management in the area where the company has major mining

operations and other business activities.

SUPPLY OF POTABLE WATER

Supplying 7 million liters per day of potable water from Jhamarkotra mines to city

of Udaipur since 1994-95.

Recently company has commenced supply of 6 million liters per day of portable

water from Kanpur mines in addition to the present supply of 7 million liters per

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day. With this, RSMML caters to the potable water needs of more than 2 lacks

people of the water-starved Udaipur City.

Adequate potable water supply is ensured through a permanent pipeline & 75,000

liters capacity GLR in each village.

MEDICAL & HEALTH

Full Fledged dispensaries at mine site and corporate office;

Managed by Qualified Doctor and Paramedical staff

Regular annual Monitoring of Occupational Health

Health facilities extended to employee’s dependents at mine site

Company also extends medical facility to village population in & around mine site

Recently, comprehensive health check-up, covering all the 2200 employees, has

been conducted with the help of National Institute of Miners, Nagpur, India

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OPERATIONS

(a) Mining...

(b) Phosphate

(c) Lignite

(d) Gypsum

(e) Limestone

(f) Beneficiation

(g) Wind Power

(h) Bio Diesel

PRODUCT

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(a) Phosphate

(b) Lignite

(c) Gypsum

(d) Limestone

(e) CERs

Financial Performance

    Rs. In millions           

Indicator 2004-05 2005-06 2006-07 2007-08 2008-09

Total Revenue 5108.9 5411.6 5700.18 6364.12 9723.47

Profit Before Tax 1185.5 1418.9 1561.11 1867.51 1778.94

Profit After Tax 776.2 950.4 1024.04 1223.81 1206.76

Net Worth 2825.2 3553.4 4536.34 5576.95 6596.69

Capital Employed 3549.5 4111.8 5157.72 6349.33 7306.69

Contribution to State Exchequer 1163.5 1186.6 1123.66 1380.52 4071.55

Share Capital 775.5 775.5 775.5 775.5 775.5

Earning per Share 10.31 12.26 13.2 15.78 15.56

Output per Employee 2.37 2.53 2.68 3.14 5.09  

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BOARD OF DIRECTORS

The present constitution of the Board is as under:

2. Shri T Srinivasan – Chairman.

3. Shri Rajeev Mehrishi, IAS Principal Secretary to the Government of

Rajasthan, Department of Finance, Jaipur

4. Shri Ashok Sampatram, IAS Principal Secretary to the Government of

Rajasthan, Department of Industries, Jaipur

5. Dr. Ashok Singhvi, IAS Secretary to the Government of Rajasthan,

Department of Mines, Jaipur

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6. Shri G.L. Vyas Director, Department of Mines & Geology, Udaipur

7. Shri A.C. Wadhawan, Ex-CMD, Hindustan Zinc Ltd, New Delhi

8. Shri R. K. Sharma Secretary General Federation of Indian Mineral

Industries (FIMI), New Delhi-19

9. Shri Sanjay Malhotra - Managing Director

CORPORATE OFFICE:

4, Meera Marg, Udaipur – 313004 India.

Phone : +91-294-2528681 to 85

Fax : +91-294-2523170

+91-294-2521727

E-mail : info@rsmm.com

REGISTERED OFFICE:

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C-89-90, janpath, Lal Kothi Scheme,

Jaipur – 302004, INDIA

Phone : +91-141-2743734

+91-141-2743934

Fax : +91-141-2743735

E-mail : rsmmljpr@sancharnet.in

CHAPTER 3

RESEARCH OBJECTIVES & SCOPE OF RESEARCH PROJECT

Why do ERP projects fail so often?

At its simplest level, ERP is a set of best practices for performing the various

duties in the departments of your company, including in finance, manufacturing

and the warehouse. To get the most from the software, you have to get people

inside your company to adopt the work methods outlined in the software. If the

people in the different departments that will use ERP don’t agree that the work

methods embedded in the software are better than the ones they currently use, they

will resist using the software or will want IT to change the software to match the

ways they currently do things. This is where ERP projects break down.

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Political fights erupt over how—or even whether—the software will be

installed. IT gets bogged down in long, expensive customization efforts to modify

the ERP software to fit with powerful business barons’ wishes. Customizations

make the software more unstable and harder to maintain when it finally does come

to life. The horror stories you hear in the press about ERP can usually be traced to

the changes the company made in the core ERP software to fit its own work

methods. Because ERP covers so much of what a business does, a failure in the

software can bring a company to a halt, literally.

But IT can fix the bugs pretty quickly in most cases, and besides, few big

companies can avoid customizing ERP in some fashion—every business is

different and is bound to have unique work methods that a vendor cannot account

for when developing its software. The mistake companies make is assuming that

changing people’s habits will be easier than customizing the software. It’s not.

Getting people inside your company to use the software to improve the ways they

do their jobs is by far the harder challenge. If your company is resistant to change,

then your ERP project is more likely to fail.

How do companies organize their ERP projects?

Based on our observations, there are three commonly used ways of installing ERP.

The Big Bang — In this, the most ambitious and difficult of approaches to

ERP implementation, companies cast off all their legacy systems at once and they

install a single ERP system across the entire company. Though this method

dominated early ERP implementations because of the need to revamp old systems

for Y2K, few companies dare to attempt it anymore because it calls for the entire

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company to mobilize and change at once. Most of the ERP implementation horror

stories from the late ‘90s warn us about companies that used this strategy. Getting

everyone to cooperate and accept a new software system at the same time is a

tremendous effort, largely because the new system will not have any advocates. No

one within the company has any experience using it, so no one is sure whether it

will work. Also, ERP inevitably involves compromises. Many departments have

computer systems that have been honed to match the ways they work. In most

cases, ERP offers neither the range of functionality nor the comfort of familiarity

that a custom legacy system can offer. In many cases, the speed of the new system

may suffer because it is serving the entire company rather than a single

department. ERP implementation requires a direct mandate from the CEO.

Franchising strategy—This approach suits large or diverse companies that

do not share many common processes across business units. Independent ERP

systems are installed in each unit, while linking common processes, such as

financial bookkeeping, across the enterprise. This has emerged as the most

common way of implementing ERP. In most cases, the business units each have

their own "instances" of ERP—that is, a separate system and database. The

systems link together only to share the information necessary for the corporation to

get a performance big picture across all the business units (business unit revenue,

for example), or for processes that don’t vary much from business unit to business

unit (perhaps HR benefits). Usually, these implementations begin with a

demonstration or pilot installation in a particularly open-minded and patient

business unit where the core business of the corporation will not be disrupted if

something goes wrong. Once the project team gets the system up and running and

works out all the bugs, the team begins selling other units on ERP, using the first

implementation as a kind of in-house customer reference. Interestingly, many

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companies that initially installed ERP using a franchising strategy are now trying

to consolidate as many of those different instances of ERP as possible down into a

handful or even one for the entire company.

Slam dunk—ERP dictates the process design in this method, where the focus is on

just a few key processes, such as those contained in an ERP system’s financial

module. The slam dunk is generally for smaller companies expecting to grow into

ERP. The goal here is to get ERP up and running quickly and to ditch the fancy

reengineering in favor of the ERP system’s "canned" processes. Few companies

that have approached ERP this way can claim much payback from the new system.

Most use it as an infrastructure to support more diligent installation efforts down

the road. Yet many discover that a slammed-in ERP system is little better than a

legacy system because it doesn’t force employees to change any of their old habits.

In fact, doing the hard work of process reengineering after the system is in can be

more challenging than if there had been no system at all because at that point few

people in the company will have felt much benefit from the new software.

How difficult is it to upgrade ERP software?

It’s extremely difficult, unless you are one of the rare companies that did not

tinker with the system while installing it. In the early days of ERP, vendors

pursued a vision that has since been disproved: Business processes built into the

software should be adopted by every customer. Change your business to fit the

system. CEOs like the sound of reengineering, but take that logic to the

departmental head that won’t be able to serve her customers as well with the

process in the software box and suddenly reengineering sounds less compelling.

CIO’s were forced (or acquiesced) to tinker with the innards of these packages to

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avoid losing valuable chunks of business processes and it made their lives hell.

Vendors ignored this reality for years. They thought changing the system to fit

your own processes meant you were a weak girly man who couldn’t stand up to

your business people. Those processes couldn’t be any good anyway if they hadn’t

made it into the vendors’ best practice pool when they developed the stuff.

Modifying the core code of ERP was like turning your Pinto into a low rider. You

just voided the warranty, dude. ERP vendors would not support customized

versions of their software.

When a new version of the highly integrated suite arrived with cool new

features, customers sometimes could not afford to install them because they had

made so many changes to the previous version. CIO’s had built so many different

links to the enterprise systems to get them working with other systems in the

company that an upgrade was akin to starting over. Many of the old links had to be

torn apart and rewritten to fit with the new version. And many of those rewrites

were completely pointless. The new suite might have one new piece and nine

others that had changed little since the last version. But it was all so integrated

together that every custom link had to be redone, even to the pieces that didn’t

change.

When vendors began breaking up and componentizing their suites to make

them easier to integrate with each other and with legacy systems inside the

company, they also broke up one of the value propositions that had been so

enticing in the first place: “free” upgrades. Freed of the suite model, enterprise

software vendors started charging fresh license fees for the new components they

developed. Many early ERP suites had their development “frozen.” Customers

could continue to get support, but newer features cost extra and worked much

better—or sometimes only—with the newer version of the vendor’s software. And

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CIO’s stuck with the old suites began wondering where all their maintenance fees

had gone. They couldn’t afford to upgrade to the newer, componentized version of

the vendors’ software models and if they could, they’d pay a new license fee for

their trouble.

In theory, early users of ERP paid for those new versions of the software

through yearly maintenance fees to the vendor that every ERP vendor charges. The

largest percentage of those fees went to R&D rather than to support and

maintenance of existing software. But the economics became untenable for

vendors. When the ERP boom crashed after 2000, sales of new software slowed to

a crawl and vendors said they were forced to charge for new components. It may

be true, but it ended the short era of “free” upgrades.

Will service-oriented architecture (SOA) replace ERP?

No. Every company needs a core transactional system that records the

information from its most important business processes. But companies are

realizing that ERP is shifting from being the sum total of their software

architecture strategy to being a component of a larger strategy based on expressing

technology as specific business services that business people can easily understand

—such as “customer record” or “get credit rating,” for example—rather than

arcane software applications like ERP.

The services strategy entails building an integration layer that is separate and

distinct from any of the software applications—including ERP—in a company’s

portfolio. The foundational piece—known as the messaging infrastructure—is like

a good executive assistant—translating, routing and monitoring information from

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different systems without these systems needing to connect directly. Adding,

changing or removing a system becomes a matter of modifying a single link, rather

than ripping apart connections to all the different systems it may need to

communicate with.

But while the messaging infrastructure makes connecting systems easier, it

doesn’t free business processes from their mainframe prisons, or eliminate

redundancies in applications, or provide any impetus to create a useful architecture.

Indeed, a good messaging infrastructure can perpetuate the chaos by making it

easier to deal with.

Messaging has long lacked a higher purpose, a strategy. Service objects (or

just plain “services”) are that strategy, and it is the second core piece of the

integration layer. This is an old concept, based on object-oriented programming

from the ‘80s. Services extract pieces of data and business logic from systems and

databases around the company and bundle them together into chunks that are

expressed in business terms.

At telecom company Verizon, for example, the service called “get CSR” (get

customer service record) is a complex jumble of software actions and data and

business logic extractions that uses Verizon’s messaging infrastructure to access

more than 25 systems in as many as four data centers across the country. Before

building the “get CSR” service, Verizon developers wanting to get at that critical

lump of data would have to build links to all 25 systems—adding their own links

on top of the web of links already hanging off the popular systems.

But with the “get CSR” service sitting in a central repository on Verizon’s

intranet, those developers can now build a single link to the carefully crafted

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interface that wraps around the service using the Web services standard simple

object access protocol (SOAP). Those 25 systems immediately line up and March,

sending customer information to the new application and saving developers

months, even years, of development time each time the service is used.

The most interesting new “feature” being developed by the ERP vendors

today is the extent to which they will make their software part of a service SOA

using their own homegrown integration software, known as middleware, and Web

services so that customers can more easily link ERP with other types of software in

the architecture. Each vendor has claimed fealty to the concept and each has its

own vision of how to create an integration layer independent of its own software

that is capable of linking to any other piece of software in the universe. But view

their pronouncements skeptically because if they do it well they will eliminate an

important piece of their competitive differentiation: dominance over the software

acquisition process of their customers.

When CIO’s call themselves a “SAP shop” or an “Oracle shop,” it’s because

software from those companies dominates their architecture and new software

from those providers works better with their existing code base than does code

from other vendors. Vendors who make integration with their software truly

universal eliminate the built-in advantage they have with existing customers. Some

ways that vendors use their new middleware strategies to keep customers: The

middleware is offered only to customers who upgrade to the latest version of ERP,

or customers are charged a fee for using the middleware to link with software from

another vendor.

How does ERP fit with e-commerce?

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ERP vendors were not prepared for the onslaught of e-commerce. ERP is

complex and not intended for public consumption. It assumes that the only people

handling order information will be your employees, who are highly trained and

comfortable with the tech jargon embedded in the software. But now customers

and suppliers are demanding access to the same information your employees get

through the ERP system—things such as order status, inventory levels and invoice

reconciliation—except they want to get all this information simply, without all the

ERP software jargon, through your website.

E-commerce means IT departments need to build two new channels of

access into ERP systems—one for customers (otherwise known as business-to-

consumer) and one for suppliers and partners (business-to-business). These two

audiences want two different types of information from your ERP system.

Consumers want order status and billing information, and suppliers and partners

want just about everything else.

Traditional ERP vendors are having a hard time building the links between

the Web and their software, though they certainly all realize that they must do it

and have been working hard for years to develop it. The bottom line, however, is

that company with e-commerce ambitions face a lot of hard integration works to

make their ERP systems available over the Web. For those companies that were

smart—or lucky—enough to have bought their ERP systems from a vendor

experienced in developing e-commerce wares, adding easily integrated

applications from that same vendor can be a money-saving option. For those

companies whose ERP systems came from vendors that are less experienced with

e-commerce development, the best—and possibly only—option might be to have a

combination of internal staff and consultants hack through a custom integration.

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But no matter what the details are, solving the difficult problem of

integrating ERP and e-commerce requires careful planning, which is key to getting

integration off on the right track.

Can I use ERP to manage a network of foreign suppliers?

ERP was designed at a time when process management was an internal

affair. The systems have lagged behind the explosive growth of globalization and

offshore outsourcing of manufacturing. When most U.S. manufacturing was still

mostly local, companies could link their ERP systems through expensive electronic

data interchange (EDI) connections. But EDI links (and ERP systems themselves)

never penetrated much beyond a manufacturer’s top tier (read biggest, richest) of

suppliers, due to the cost of installing and managing the links at the supplier. In

third-world manufacturing destinations, even an Internet connection is often a

luxury. The market for managing the core ERP information (orders, inventory,

etc.) of the “extended supply chain,” is only now beginning to emerge.

What are the hidden costs of ERP?

Although different companies will find different land mines in the budgeting

process, those who have implemented ERP packages agree that certain costs are

more commonly overlooked or underestimated than others. Armed with insights

from across the business, ERP pros vote the following areas as most likely to result

in budget overrun.

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1. Training—Training is the near-unanimous choice of experienced ERP

implementers as the most underestimated budget item. Training expenses are

high because workers almost invariably have to learn a new set of processes,

not just a new software interface. Worse, outside training companies may

not be able to help you. They are focused on telling people how to use

software, not on educating people about the particular ways you do business.

Prepare to develop a curriculum yourself that identifies and explains the

different business processes that will be affected by the ERP system. One

enterprising CIO hired staff from a local business school to help him

develop and teach the ERP business-training course to employees.

Remember that with ERP, finance people will be using the same software as

warehouse people and they will both be entering information that affects the

other. To do this accurately, they have to have a much broader

understanding of how others in the company do their jobs than they did

before ERP came along. Ultimately, it will be up to your IT and

businesspeople to provide that training. So take whatever you have budgeted

for ERP training and double or triple it up front. It will be the best ERP

investment you ever make.

2. Integration and testing—Testing the links between ERP packages and

other corporate software links that have to be built on a case-by-case basis is

another often-underestimated cost. A typical manufacturing company may

have add-on applications from the major—e-commerce and supply chain—

to the minor—sales tax computation and bar coding. All require integration

links to ERP. You’re better off if you can buy add-ons from the ERP

vendors that are pre-integrated. If you need to build the links yourself,

expect things to get ugly. As with training, testing ERP integration has to be

done from a process-oriented perspective. Veterans recommend that instead

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of plugging in dummy data and moving it from one application to the next,

you should run a real purchase order through the system, from order entry

through shipping and receipt of payment—the whole order-to-cash banana—

preferably with the participation of the employees who will eventually do

those jobs.

3. Customization—Add-ons are only the beginning of the integration costs of

ERP. Much more costly, and something to be avoided if at all possible, is

actual customization of the core ERP software itself. This happens when the

ERP software can’t handle one of your business processes and you decide to

mess with the software to make it do what you want. You’re playing with

fire. The customizations can affect every module of the ERP system because

they are all so tightly linked together. Upgrading the ERP package—no walk

in the park under the best of circumstances—becomes a nightmare because

you’ll have to do the customization all over again in the new version. Maybe

it will work, maybe it won’t. No matter what, the vendor will not be there to

support you. You will have to hire extra staffers to do the customization

work, and keep them on for good to maintain it.

4. Data conversion—It costs money to move corporate information, such as

customer and supplier records, product design data and the like, from old

systems to new ERP homes. Although few CIO’s will admit it, most data in

most legacy systems is of little use. Companies often deny their data is dirty

until they actually have to move it to the new client/server setups that

popular ERP packages require. Consequently, those companies are more

likely to underestimate the cost of the move. But even clean data may

demand some overhaul to match process modifications necessitated—or

inspired—by the ERP implementation.

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5. Data analysis—Often, the data from the ERP system must be combined

with data from external systems for analysis purposes. Users with heavy

analysis needs should include the cost of a data warehouse in the ERP

budget—and they should expect to do quite a bit of work to make it run

smoothly. Users are in a pickle here: Refreshing all the ERP data every day

in a big corporate data warehouse is difficult, and ERP systems do a poor job

of indicating which information has changed from day to day, making

selective warehouse updates tough. One expensive solution is custom

programming. The upshot is that the wise will check all their data analysis

needs before signing off on the budget.

6. Consultants ad infinitum—When users fail to plan for disengagement,

consulting fees run wild. To avoid this, companies should identify objectives

for which its consulting partners must aim when training internal staff.

Include metrics in the consultants’ contract; for example, a specific number

of the user company’s staff should be able to pass a project-management

leadership test—similar to what the consultants have to pass to lead an ERP

engagement.

7. Replacing your best and brightest—It is accepted wisdom that ERP

success depends on staffing the project with the best and brightest from the

business and IS divisions. The software is too complex and the business

changes too dramatic to trust the project to just anyone. The bad news is a

company must be prepared to replace many of those people when the project

is over. Though the ERP market is not as hot as it once was, consultancies

and other companies that have lost their best people will be hounding yours

with higher salaries and bonus offers than you can afford—or that your HR

policies permit. Huddle with HR early on to develop a retention bonus

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program and create new salary strata for ERP veterans. If you let them go,

you’ll wind up hiring them—or someone like them—back as consultants for

twice what you paid them in salaries.

8. Implementation teams can never stop—Most companies intend to treat

their ERP implementation as they would any other software project. Once

the software is installed, they figure the team will be scuttled, and everyone

will go back to his or her day job. But after ERP, you can’t go home again.

The implementers are too valuable. Because the implementers have worked

so closely with ERP, they know more about the sales process than the

salespeople and more about the manufacturing process than the

manufacturing people. Companies can’t afford to send their project people

back into the business because there’s so much to do after the ERP software

is installed. Just writing reports to pull information out of the new ERP

system will keep the project team busy for a year at least. And it is in

analysis—and, one hopes, insight—that companies make their money back

on an ERP implementation. Unfortunately, few IS departments plan for the

frenzy of post-ERP installation activity, and fewer still build it into their

budgets when they start their ERP projects. Many are forced to beg for more

money and staff immediately after the go-live date, long before the ERP

project has demonstrated any benefit.

9. Waiting for ROI—One of the most misleading legacies of traditional

software project management is that the company expects to gain value from

the application as soon as it is installed, while the project team expects a

break and maybe a pat on the back. Neither expectation applies to ERP.

Most of the systems don’t reveal their value until after companies have had

them running for some time and can concentrate on making improvements in

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the business processes that are affected by the system. And the project team

is not going to be rewarded until their efforts pay off.

10.Post-ERP depression—ERP systems often wreak cause havoc in the

companies that install them. In a recent Deloitte Consulting survey of 64

Fortune 500 companies, one in four admitted that they suffered a drop in

performance when their ERP system went live. The true percentage is

undoubtedly much higher. The most common reason for the performance

problems is that everything looks and works differently from the way it did

before. When people can’t do their jobs in the familiar way and haven’t yet

mastered the new way, they panic, and the business goes into spasms.

How can ERP improve a company's business performance?

ERP’s best hope for demonstrating value is as a sort of battering ram for

improving the way your company takes a customer order and processes that into an

invoice and revenue—otherwise known as the order fulfillment process. That is

why ERP is often referred to as back-office software. It doesn’t handle the up-front

selling process (although most ERP vendors have recently developed CRM

software to do this); rather, ERP takes a customer order and provides a software

road map for automating the different steps along the path to fulfilling the order.

When a customer service representative enters a customer order into an ERP

system, he has all the information necessary to complete the order (the customer’s

credit rating and order history from the finance module, the company’s inventory

levels from the warehouse module and the shipping dock’s trucking schedule from

the logistics module, for example).

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People in these different departments all see the same information and can

update it. When one department finishes with the order it is automatically routed

via the ERP system to the next department. To find out where the order is at any

point, you need only log in to the ERP system to track it down. With luck, the

order process moves like a bolt of lightning through the organization, and

customers get their orders faster and with fewer errors than before. ERP can apply

that same magic to the other major business processes, such as employee benefits

or financial reporting.

That, at least, is the dream of ERP. The reality is not so rosy.

Let’s go back to those inboxes for a minute. That process may not have been

efficient, but it was simple. Finance did its job, the warehouse did its job, and if

anything went wrong outside of the department’s walls, it was somebody else’s

problem. Not anymore. With ERP, the customer service representatives are no

longer just typists entering someone’s name into a computer and hitting the return

key. The ERP screen makes them businesspeople. It flickers with the customer’s

credit rating from the finance department and the product inventory levels from the

warehouse. Did the customer pay for the last order yet? Will we be able to ship the

new order on time? These are decisions that customer service representatives have

never had to make before, and the answers affect the customer and every other

department in the company. But it’s not just the customer service representatives

who have to wake up. People in the warehouse who used to keep inventory in their

heads or on scraps of paper now need to put that information online. If they don’t,

customer service reps’ screens will show low inventory levels and reps will tell

customers that the requested item is not in stock. Accountability, responsibility and

communication have never been tested like this before.

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People don’t like to change, and ERP asks them to change how they do their

jobs. That is why the value of ERP is so hard to pin down. The software is less

important than the changes companies make in the ways they do business. If you

use ERP to improve the ways your people take orders and manufacture, ship and

bill for goods, you will see value from the software. If you simply install the

software without trying to improve the ways people do their jobs, you may not see

any value at all—indeed, the new software could slow you down by simply

replacing the old software that everyone knew with new software that no one does.

CHAPTER 4

RESEARCH METHODOLOGY

Definition of Research:

“Research is an organization and systematic way of finding answers to questions.”

SYSTEMATIC because there is a definite set of procedures and steps

which you will follow. There are certain things in the research process that are

always done in order to get the most accurate results.

ORGANIZED in that there is a structure or method in going about doing

research. It is a planned procedure, not a spontaneous one. It is focused and limited

to a specific scope.

FINDING ANSWERS is the end of all research. Whether it is the answer to

a hypothesis or even a simple question, research is successful when we find

answer. Sometimes the answer is no, but it is still as answer.

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QUESTIONS are central to research. If there is no question, then the

answer is of no use. Research is focused on relevant, useful, and important

questions. Without a question, research has no focus, drive, or purpose.

ERP Implementation Life Cycle

The process of ERP implementation is referred as d as "ERP Implementation

Life Cycle". The following are the steps involved in completing the lifecycle

Shortlist on the basis of observation

Selecting an ERP package for the company can nevertheless be compared

with the process of "Selecting the right Person for the Right Job". This exercise

will involve choosing few applications suitable for the company from the whole

many.

Assessing the chosen packages

A team of Experts with specialized knowledge in their respective field will

be asked to make the study on the basis of various parameters. Each expert will not

only test and certify if the package is apt for the range of application in their field

but also confirm the level of coordination that the software will help to achieve in

working with other departments. In simple terms they will verify if the synergy of

the various departments due to the advent of ERP will lead to an increased output.

A choice is to be made from ERP implementation models.

Preparing for the venture

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This stage is aimed at defining the implementation of ERP in all measures. It

will lay down the stipulations and criteria have to be met. A team of officers will

take care of this, who will report to the person of the highest hierarchy in the

organization.

Gap Analysis

This stage helps the company to identify the gaps that has to be bridged, so

that the company’s practice becomes akin to ERP environment. This has been

reported as an expensive procedure but it is inevitable. The conglomerate will

decide to restructure the business or make any other alterations as suggested by

GAP analysis in order to make ERP user friendly. Click here for a detailed study

on GAP analysis. A choice is to be made from ERP implementation models.

Business process reengineering

Changes in employee rolls, business process and technical details find place

in this phase of restructuring most popularly refered as business process

engineering. For more details on BPR click here.

Designing the System

This step requires lot of meticulous planning and deliberate action. This step

helps to decide and conclude the areas where restricting have to be carried on. A

choice is to be made from ERP implementation models.

In-house Guidance

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This is regarded as a very important step in ERP implementation. The

employees in the company are trained to face crisis and make minor corrections as

well because the company can neither be at liberty nor afford the bounty to avail

the services of an ERP vendor at all times.

Checking

This stage observes and tests the authenticity of the use. The system is

subjected to the wildest tests possible so that it ensures proper usage and justifies

the costs incurred. This is seen as a test for ERP implementation.

The real test

At this stage the replacement takes place viz the new mechanism of

operation and administration takes over the older one.

Preparing the employees to use ERP

The employees in the organization will be taught to make use of the system

in the day to day and regular basis so as to make sure that it becomes a part of the

system in the organization.

Post Implementation

The process of implementation will find meaning only when there is regular

follow up and proper instruction flow thereafter and through the lifetime of ERP.

This will include all efforts and steps taken to update and attain better benefits

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once the system is implemented. Hence an organization has to perform ERP

implementation safely and correctly.

BENEFITS OF ERP

Improve access to information.

Improve workflow and efficiency.

Improve controls and program alerts

Process re-engineering: update old process.

Foundation for new processes, such as e-procurement, with significant ROI.

Following\ contracts terms

The performance of ERP software can be gauged on the basis of its working

in relation to the terms of contract. ERP software that accords to contractual terms

in relation to working definitely indicates better performance than vice versa.

Compare ERP software on the 8 following criteria modules:

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1. Finance

2. Human Resources

3. Manufacturing Management

4. Inventory Management

5. Purchasing Management

6. Quality Management

7. Sales Management

8. Technology

Compare ERP on Financial Criteria

The finance section encompasses modules for bookkeeping and making sure the

accounts are paid or received on time.

How to compare ERP software on finance? Simple. Compare ERP software on the

following financial criteria:

1. General Ledger

2. Accounts Payable (A/P)

3. Accounts Receivable (A/R)

4. Fixed Assets

5. Cost Accounting

6. Cash Management

7. Budgeting

8. Financial Reporting

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9. Project Accounting

Compare ERP on Human Resources Management (HRM)

The section dedicated to human resources management (HRM) encompasses all

the applications necessary for handling personnel-related tasks for corporate

managers and individual employees. 

Modules will include personnel management, benefit management, payroll

management, employee self service, data warehousing, and health and safety.

How to compare ERP software on human resources management? Simple.

Compare ERP software on the following HRMS criteria:

1. Personnel Management

2. Benefits

3. Payroll

4. Employee Self-Service

5. Data Warehousing

6. Health and Safety

Compare ERP on Manufacturing Management (Discrete and Process)

Manufacturing management (for both discrete and process manufacturing)

encompasses a group of applications for planning production, taking orders, and

delivering products to the customer.

How to compare ERP software on manufacturing management? Simple. Compare

ERP software on the following manufacturing management criteria.

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Because we want to compare ERP software systems on an apple-to-apple basis, we

need to make a difference between discrete manufacturing and process

manufacturing.

Discrete ERP

1. Product Costing 2. Shop Floor Control

3. Production Planning

4. Field Service and Repairs

5. Project Management

6. Product Data Management (PDM)

7. Product/Item Configurator

Process ERP

1. Product Costing 2. Shop Floor Control

3. Production Planning

4. Formulas/Recipes

5. Process Model (Formulas + Routings)

6. Process Batch Control and Reporting

7. Conformance Reporting

8. Process Manufacturing Costing

9. Material Management

Compare ERP on Inventory Management

Inventory management (IM) encompasses a group of applications for

maintaining records of warehoused goods and processes movement of products to,

through and from warehouses.

How to compare ERP software on inventory management? Simple. Compare ERP

software on the following inventory management criteria:

1. Inventory Management On-line Requirements

2. Processing Requirements

3. Data Requirements

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4. Reporting and Interfacing Requirements (Inventory Management)

5. Locations and Lot Control

6. Forecasting

7. Reservations and Allocations

8. Inventory Adjustments

Compare ERP on Purchasing Management

Purchasing management encompasses a group of applications that controls

purchasing of raw materials needed to build products and that manages inventory

stocks.

It also involves creating purchase orders/contracts, supplier tracking, goods receipt

and payment, and regulatory compliance analysis and reporting.

How to compare ERP software on purchasing management? Simple. Compare

ERP software on the following purchasing management criteria:

1. Vendor and Supplier Profile

2. Supplier Rating and Profile

3. Requisitions and Quotations

4. Purchase Orders

5. Prices and Discounts

6. Vendor Contracts and Agreements

7. Purchase Order Management

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8. Procurement Reporting, On-line Reporting Capability

9. Repetitive Vendor Procurement

10. Procurement Receipts

11. Repetitive Vendor Procurement

12. Reporting

Compare ERP on Quality Management

Quality management encompasses applications for operational techniques and

activities used to fulfill requirements for quality control, inspection plan creation,

and management, defective item control and processing and inspection procedure

collection planning.

How to compare ERP software on quality management? Simple. Compare ERP

software on the following quality management criteria:

1. Defective or excess material return processing must update on-hand

2. Customer return file: awaiting disposition

3. Damaged material—corrective action and failure analysis available to

vendor on-line

4. Inspection required indicator by supplier and by item

5. Pre-inspection receipts registered as "inventory on hold"

6. On-line inquiry of inspection and material review board (MRB) queue

7. Validation against automated inspection criteria

8. Inspection disposition with audit trail

9. Disposition delinquency report

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10. Quantity rejected

11. Reject reason codes

Compare ERP on Sales Management

Sales management encompasses a group of applications that automates the data

entry process of customer orders and keeps track of the status of orders. 

It involves order entry, order tracing and status reporting, pricing, invoicing, etc. It

also provides a basic functionality for lead tracking, customer information, quote

processing, pricing & rebates, etc.

How to compare ERP software on sales management? Simple. Compare ERP

software on the following sales management criteria:

1. On-line Sales Management Requirements

2. Reporting and Interfacing requirements

3. Available-to-Promise (ATP)

4. Pricing and Discounting

5. Customer Service and Returned Goods Handling

Compare ERP on Technology

The technology category defines the technical architecture of the ERP system, and

the technological environment in which the product can successfully run. Criteria

include product and application architecture, software usability and administration,

platform and database support, application standards support, communications and

protocol support and integration capabilities. Relative to the other evaluation

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criteria, best practice selections place a lower relative importance, on the product

technology category. 

However, this apparently lower importance is deceptive, because the product

technology category usually houses the majority of the selecting organization's

mandatory criteria, which usually include server, client, protocol, and database

support, application scalability and other architectural capabilities. The definition

of mandatory criteria within this set often allows the client to quickly narrow the

long list of potential vendors to a short list of applicable solutions that pass muster

relative to the most basic mandatory selection criteria. 

During the process of ERP software selection, a great deal of attention is given to

the functional capabilities of the software being evaluated. While this aspect is

obviously important, ignoring the technical mechanisms by which the ERP

software actually operates can be fatal to the ERP software solution selection

project.

How to compare ERP software on technology? Simple. Compare ERP software on

the following technology criteria:

1. Architecture

2. User Interface

3. Client and Server Platforms

4. Application Tools

5. Workflow and Document Management

6. Reporting

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Errors in ERP implementation

ERP implementation failure is a major concern for companies. ERP

implementation needs to be done without allowing any scope for limitations and

mistakes. If it is not done perfectly then the success of ERP system will remain a

question mark.

The first and foremost factor that discourages ERP in an organization is the

exorbitant costs and investment. The second one is the drafting of an ERP

implementation plan to ensure ERP implementation success.

Enhancement of ERPs function

Erp's scope gets wider as it is implemented in an organization. There is a call

for including many tasks under the purview. This dilutes the ERP Existing system

after modifying it a couple of times. Repeated change in configurations and

systems will only add to the confusions. When the functions are operated by a

machine it becomes increasingly difficult to make the necessary changes. These

troubles arise when they are not foreseen and addressed in the implementation

stage. They have to be given a place in ERP implementation plan.

Organizational reaction to change

Changes do happen quickly and immediately in the organization after ERP

is implemented. But if there is no proper understanding of the process or

mishandling of information, it will result in questioning the ERP process. If

updating is not done in the machine it will only affect the business process and

create unnecessary confusions. The changes don't happen all on a sudden in an

organization and expecting it immediately will only cause needless

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disappointments. In spite of all this expecting every member in the organization to

respond proactively will not happen. If that happens the chances of ERP

implementation success are great.

Inflating resources for ERP implementation

The implementation time and money always exceeds the promises and

stipulated deadline and amount. This makes companies to lose faith on ERP and

ERP vendors. They think that ERP vendors overplay on the costs and time required

but it is not so. Infect they are aware of it in the very beginning stage itself but

have a different reason for concealing. They don't disclose it in the beginning

because it would look like exaggerating. Infect no one would like to lose a

prospective business and vendors are equally aware of the fact that "Truths are

always bitter"! However many people mistake this to be the cause for ERP

implementation failure.

Organizations non adherence to the stated principles

Organizations largely experience a wide gap between practices and

preaching .Infect this has a negative effect on the entire business scenario itself.

The voracity and impact of loss could be greater and more devastating when this

turns out to be true even in the case of ERP. Since ERP successful functioning is

purely based on following the laid down procedures the lag could throw a serious

challenge on ERP'S potential right from the stage of its implementation.

Problem of Transformation due to ERP

Employees find it hard to digest the transformations that place in an

organization all on a sudden due to ERP implementation. Infect employees exhibit

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positive signs as everything goes right in the first place. But as one progresses he

finds difficult to work as it gets more complex. The initial interest and expectation

turns into apprehensiveness in due course of time. There is another category of

people who did not encourage ERP right from the conceptualization stage. Their

state of mind during these circumstances deserves

The acronym "ERP"—for enterprise resource planning—was defined in

1990 by Gartner, Inc. (Stamford, CT). That was then. This is now. Gartner's

Research Director in the Business Process and Applications Group, Brian Zrimsek,

sees three major changes affecting ERP now:

1. Process extensions. "Today, ERP is still for the enterprise, but the

enterprise is changing. It's becoming more virtual." Consider how the OEMs are

outsourcing aspects of car design and the rise in contract manufacturing. Both of

these business processes span physical enterprise boundaries. "ERP starts to

struggle as you outsource more activities," says Zrimsek. The build/made items in

ERP become bought/purchased items. The visibility that comes from routings,

work-order statuses, and work-in-process data acquisition gets lost. Hence the

drive for collaborative information systems among outsources partners. But

remember, points out Zrimsek, "ERP wasn't built with the Internet in mind."

2. Virtualization of functionality. ERP was initially built for manufacturing

and distribution. Now, fully integrated, feature-rich, ERP systems have extensions

for supply chain management (SCM), customer relationship management (CRM),

warehouse management, and several other business processes. Zrimsek has seen

ERP deployed in just about all industry sectors; food, petrochemical, aerospace and

defense, the armed services, and even the public sector. Consequently, ERP

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vendors are deepening the functionality of their systems to meet the needs of the

target industries.

3. Architecture. Before client-server computing in the early 1990s, which

was kind of the birth of ERP, resource planning systems were very monolithic.

ERP deployments were basically mainframe deployments. Upgrading meant taking

out the whole thing and putting in a new system. Today, users are loathe to pay

20% to 60% of what they paid in system implementation for upgrades/migrations.

This is putting pressure on ERP vendors to provide software that is open,

component-oriented, and migrate in pieces—thereby leaving existing, desired, ERP

components (as well as SCM, CRM, etc.) in place and functional.

Add that all together and you see why Gartner is coining the term "ERP II"

to label the "next act

in the evolution of

ERP, which expands

beyond enterprise-

centric optimization

and transaction

processing to a new

focus on improving

enterprise

competitiveness." So,

dismiss anything written that ERP is dead. "It's not accurate to say there's nothing

happening in ERP. ERP is still growing and evolving," exclaims James Shepherd,

Senior Vice President at AMR Research (Boston, MA). ERP is still doing what it's

supposed to: provide a common database for an entire enterprise. "ERP is truly the

enterprise backbone. That can't go away," says David Schaap, Product Marketing

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Erp's Evolution Into ERP II

Manager for BRAIN North America, Inc. (Ann Arbor, MI). If anything, ERP is

manufacturing's equivalent to Microsoft's Office Suite: lots of core functionality

and changes that are far more incremental than they once were.

DATA COLLECTION

For research we need two types of data:

Primary data – the data, which are collected from the field under the control and

supervision of an investigator, is known as primary data. This type of data is

generally collected for the first time. In my research there is no requirement of

primary data.

Secondary data – if data’s are collected from the journals, magazines, annual

report of companies etc. then such are called as secondary data. In order to

achieve my objectives secondary data are utilized for the purpose of doings

various calculation. In each of these sources of data, the process of data

collection has already been done by the respective organization

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CHAPTER 5

CONCLUSION & SUGGESTIONS

ERP vendor has to address all these issues in order to ensure that there is ERP

implementation success. If everything goes as per ERP implementation plan then

there are no chances of ERP implementation failure.

Open ERP has become established as the main free market-changing alternative for

enterprise management systems in amongst software from giants such as SAP,

Oracle and Microsoft, and from the small software developers in their own niches.

Until now only two main alternatives existed for systems that manage a company’s

information: install a proprietary ERP system, complete but usually overweight,

inflexible, and expensive; or develop a solution internally, adapted to current needs

but often expensive to develop, not integrated, and incomplete.

With its free business model, Open ERP combines the advantages of a complete

ERP system with the flexibility of an in-house solution. The open source code, the

project’s general flexibility, and its hundreds of modules let you construct a

solution from a selection of the modules already available and you can then freely

update it as your needs evolve.

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The results will be at the top end of what you might expect from any ERP system,

let alone an Open Source system. The considerable gains in productivity,

efficiency and visibility become apparent only a few months after implementation.

And you can gain from increased operational quality even if you reduce your

human resourcing intensity. Because there are fewer repetitive tasks for your staff

to do, they can concentrate on higher added-value work. We frequently receive the

gratitude of senior management who get better results from their business because

they’ve adopted Open ERP.

BIBLIOGRAPHY

www.google.com

www.wikipedia.org

www.rsmm.co.in

www.whitepapers.com

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