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August 1998 MASTER FILE |
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Onto the ERP Bandwagon Continued... Traversing the Road As ERP usage increases, the vendors refocus their offerings. What are their strengths and weaknesses? where is the market headed?
When SHV Energy India Ltd. decided to implement an ERP application across the organisation, it chose MFG/ PRO from QAD Inc. SHV Energy, part of the Rs 75,000-crore Fortune 500 Dutch conglomerate SHV, focuses on LPG filling and distribution. The core business being distribution, the company wanted to implement an ERP package which would give them with the advantage of 'information anytime, anywhere.' After surveying the various ERP packages available, SHV opted for MFG/PRO from QAD Inc. One reason was MFG/PRO was easy and fast to implement. And it chose to implement only the distribution and financial modules. While each organisation is unique in its need for deciding to implement an ERP application, some considerations are common to all. SHV chose to build up its ERP system in a modular form. This way, at a later stage, it has the option of installing other functional modules from a different vendor. The other way is to install an integrated ERP application from a single vendor, at one go. Integrated packages, having a common interface for all modules, allow for easier cross-training of staff. And as most vendors price their packages on a per-seat basis, buying more modules from a single vendor can be cost-effective. Yet, implementing integrated packages requires more time and requires more enterprisewide consensus--not just across functions, but across personnel too. Which Vendor for You? How would you choose among them (or any others)? The Gartner Group has listed four major factors which can help. Time: You need to be able to deploy personnel for long period of time to identify key evaluation criteria. The selection process can take 20 employees up to 14 months. Cost: Acquiring the package can itself account for up to 30 percent of the total cost. This includes employee time, and personnel and travel expenses incurred while collecting and evaluating data. Finding Objective Data: Companies often report that they lack objective, validated data on vendor products and services and are forced to rely on vendor responses and materials. Rigorous Selection Methodology: Having this is important; otherwise, businesses may end up focusing on limited criteria, or relying on gut feelings. What's Critical?
In evaluating an ERP application (integrated or best-of-breed), some features help you reach a decision. These include functionality, technical architecture, cost, service and support , ability to execute and vendor vision. The last two relate to the vendor himself--how financially viable will the vendor be in the following years; what new features does he plan to offer over the years? Do they match market trends and your organisational goals? The priorities assigned to these factors by end-users have, however, changed over the years. According to an IDC (India) report, service and support the vendor can offer is now the prime concern that motivates customer purchase decisions. Other factors, in order of priority, are: synergy with existing processes, time constraints, training, migration planning ability and, finally, cost. As regards the time constraints user organisations face, many view ERP as a ready solution to tackle the Year 2000 problem. Hence, they would opt for a package that can be implemented within this time-span. The Market Flavour This focus on manufacturing and other discrete, process industries expanded after 1996, as ERP applications began integrating functionality specific to vertical segments, adds Sanyal. These segments include government and education, utilities, telecoms, banking and finance, and retail and transportation. Another expansion seen has been the integration of other functions: data warehousing, electronic commerce, Internet/intranet, product data management and CAD/CAM applications. The most recent trend of adding electronic commerce functionality offers businesses a direct route to the customer, sidelining the channel partners A case in point here is the Dutch airlines KLM, that plans to offer tickets over the Internet. Service with a Smile The services market touched Rs 580 crore in 1997-98, being nearly equally divided between domestic services and services export. The export services offered are primarily customisation. According to IDC (India), this demand for services is likely to double in 1998-99 and may jump by as much as fivefold by 2000. Following these market trends, vendors, implementation and consultancy service providers are realigning themselves to target different segments of the market. While vendors SAP AG, QAD Inc., SSA, Oracle Corp. and Baan Co. continue to target large enterprises (with revenues of Rs 1,000 crore and above), others (JD Edwards, Ramco and Mastek) have moved downwards; Baan, Oracle and SAP have also spread themselves to cover the SMEs (with revenues ranging from Rs 750 crore and below). SAP's small-segment implementations in place in India include Microland, Cadbury's and Widia India. Baan has announced two major initiatives. One, it will incorporate the older version in the new, to avoid version-derived problems. This will be called BaanSeries. On the other hand, it is developing at its Hyderabad development centre, software to help create a Baan backbone on to which functional packages from different vendors could be plugged in. Importantly, Baan has begun to include supply chains as extensions of an organisation, which integrate features hitherto outside the purview of ERP. Supply chain management is also being addressed by other vendors. MFG/PRO, for instance, has recently begun focusing on it. Rahul Chawla, managing director, Cambridge Technology Partners, implementation partners for PeopleSoft Inc., talks about the ground conditions in India as being good for the adoption of supply chain management technology. A supply chain management tool helps optimise, concurrently, the entire materials requirement of a business. According to S. Ganesh, practice head, ERP and Supply Chain Solutions, Wipro Infotech, the company has already saved its customers $5 billion in the two years or so that the company has been in the market. Of the implementation and consulting service providers, Anderson Consulting, Price Waterhouse, Ernst & Young LLP, Baan, Oracle and Mc Kinsey and Co. target the large and medium enterprises. Indian service providers such as Tata Technologies, Tata Infotech, Ramco, Mastek, NIIT Ltd. and Tata Consultancy Services target small and medium enterprises. Planning for Tomorrow According to Prof Sadagopan, the ERP package of tomorrow will become downsized and rightsized. The drive exists as only 20 per cent of people use as much as 80 per cent of the features available. Also, the solutions offered will become industry specific. They will become modular, capable of being 'mixed and matched', all distributed over the Web. The ERP user wants a package that is simple to comprehend and model, optimally priced, and solution-specific. The user tomorrow would want implementation period cut from the average 15 months to 2-3 months. Ideally, the package should be co-workable with other ERP solution interfaces. There could be expected a move away from vendor-implementer nexus towards the less partisan ground of the consultant. One paradigm easily imaginable in the very near future is the ERP application extended into the supply chain management arena on one hand and the consumer on the other on a backbone of electronic commerce on the Web. A logical corollary of this would be rapid customisation for a group of customers in a supply chain. In short, the ERP solution of the near future would be smaller, less complex, more adaptive, with better maintainable code. It would extend to small and medium businesses, look to extended supply chain, and adapt to new business processes over the current unwieldy ones. |
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Apart from offering packages, implementation and consultancy
services are in demand, either from the vendors themselves, or from third parties such as
DSQ Software, Chennai. DSQ provides customisation and implementation services for ERP
applications from Mapics Inc., and Marcam Solutions Inc., USA 
