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  Date:02nd July 2010

 Compiled by: M Sathya Kumar  


SAP / ERP - Implementation

 

Background :

The top management of a chemical organisation, with its Head Office at Mumbai and factories at Vapi, whose turnover is Rs.350 crores, plans to improve its processes and introduce ERP. The internal audit department which is handled by an outsourced Chartered Accountant firm has helped the organisation to review its manual processes as part of internal auditing and also helped during ISO 9001 implementation. As the Chief Internal Auditor is conversant with the existing systems and processes, their weaknesses and is also aware of the key personnel and their strengths and weaknesses, the Managing Director has assigned the task of negotiating and implementing the ERP system up to ‘Go-Live’ stage to the Chief Internal Auditor. The Managing Director is extremely happy with this arrangement, because the function is a combination of both — inhouse and outsourced work and the function will get stability and benefits of continuous attention from the five-member team and also the expertise from its outsourced partner-in-charge.

Methodology :

Based on the above background, the partner-in-charge of the firm had a meeting with his audit managers to chalk out a plan to achieve the above objectives. He decided to include one audit manager as part of the full-time ERP implementation team.

Following other steps are also taken by him with permission from the Managing Director to make the ERP implementation successful :

  • Appointing an experienced IT Head.
  • Asking the IT Head to appoint two other IT Managers — one at the Head Office and the other at Factory location. Knowledge of hardware including managing networks was important pre-requisite for appointment at the Head Office and knowledge about basic hardware and software troubleshooting was an important pre-requisite at the factory.
  • Asking the IT Head to make a project report with basic projections about hardware including manpower, software, linking Head Office and factory — Mumbai to Vapi, etc. This project report to be firmed up after negotiating ERP software and also after discussions and firming up the hardware vendors for computers, LAN networking at factory, RF links at various units at Vapi, etc.
  • Cleaning the existing manuals for making it the ‘As is’ documentation which would serve as the first step in the ERP implementation.
  • Asking the IT Head to invite ERP software and hardware vendors for understanding their deliverables and also negotiating the same for the company.
  • Asking the IT Head to invite Implementation Partners for selecting one of them for the implementation of the required software.
  • Appointing a team of 6 MBAs — three from finance and three engineers to take care of making the masters and also handholding during requirement analysis, testing stage and go-live stage. There was a clear understanding with the Managing Director that these young MBAs would be absorbed in the company after the ‘go-live’ stage, as they would have deep understanding of processes and the software systems and would be helpful to the existing functions and would also be part of a ‘Continuous Improvement Team’ which would be created once the ERP went live for further developments and enhancements for second phase of development.

The methodology adopted was as the following :

  • Pre-Project Preparation Phase

·         Understand the project background and prepare for the project.

·         Computer literacy training at HO by an outside agency/internal team — HO.

·         Computer literacy training at Vapi by an outside agency/internal team — Vapi.

  Data Preparation

·         Legacy data clean-up at HO

·         Legacy data clean-up at Vapi.

  System Landscape Roadmap

·         IDES server configuration with knowledge transfer to IT on Prod. server (Continuous)

·         Dev. server, Solution Manager & BI Server configuration with knowledge transfer to IT

·         Internet connectivity

·         Desktop installation

·         Networking

·         Production server

·         Schedule ‘Go-Live Check’ by SAP.

  Project Preparation

·         Conduct project overview workshop — HO

·         Review and sign-off high-level business requirements — HO

·         Define project organisation and create teams — HO

·         Get location-wise user list — HO

·         Review and revise the project plan — HO

·         Review and revise the training plain — HO

·         Assemble and sign-off project charter — HO

·         Assemble and sign-off project plan — HO

·         Conduct Level 1 training — HO

·         Sign-off project preparation phase — HO.

  Deliverables by Implementation Partner

·         High level business requirements — HO

·         Project Charter — HO

·         Project Plan — HO.

  Business Blueprint

·         Level 2 and template training and business understanding by Implementation Partner to company

·         Representing organisation structure in SAP and knowledge transfer to Core Team

·         Prepare functional activities documents by Implementation Partner with departments

·         Prepare and sign-off requirements lists by Implementation Partner with departments

·         Modify, fill and sign-off Q&A DB questionnaire by Implementation Partner with core team & Business Process Owners

·         Forms and reports training by Implementation Partner and view by Core Team and Trainees

·         Prepare business blueprint documents, coding, doc. numbering and knowledge transfer to Core Team by Implementation Partner

·         Review business blueprint by Implementation Partner with Core Team & Business Process Owner

·         Revise business blueprint documents by Implementation Partner

·         Sign-off business blueprint by Business Process Owner

·         Collect test cases, document test plans, and sign-off by Core Team & Business Process Owners

·         Document development specs for forms & reports by Core Team with Implementation Partner and Business Process Owners

·         Develop MS-Excel sheets for master uploading (Methodology and Templates) by Core Team & B.P. Owners

·         Develop MS-Excel sheets for balance uploading (Methodology and Templates) by Core Team & B.P. Owners

·         Business blueprint phase sign-off.

·         Deliverables by Implementation Partner.

  Realisation by Core Team with Implementation Partner

·         Establish systems administration functions and knowledge transfer to Basis Team

·         Baseline configuration and knowledge transfer to core team

·         Additional configuration and knowledge transfer to core team by Implementation Partner

·         Smartforms & ABAP development and knowledge transfer to ABAP team

·         Master data collection by trainees, Core Team & U. champions

·         Master data loading knowledge transfer to IT

·         Master data loading

·         Master testing

·         Training preparation and user manuals by Core Team

·         User roles, user codes, authorisation and knowledge transfer to Core Team

·         Realisation phase sign-off — HO

·         Deliverables by Implementation Partner.

  Final Preparation

·         User training by Core Team, Implementation Partner to User Champions & users

·         Certifying master data by B.P. Owners

·         Move development to production environment — HO

·         Upload master data in production environment — HO

·         Configuration changes and knowledge transfer to Core Team to Implementation Partner

·         Master data entry directly in mySAP (for SAP specific) Masters by Core Team & trainees

·         Production environment test by Core Team & IT

·         Inform new invoice series to Excise and Sales Tax Department — HO

·         Help-desk by Core Team & IT

·         Final preparation phase sign-off — HO.

  Go-Live and Support

·         Opening balances by Core Team, User Champions & Trainees

·         Data entry in live between cut-off and cut-over dates by Core Team & User Champions

·         Post go-live support by Core Team & Implementation Partner

·         Go-live and support phase sign-off.

  Prerequisites of a good Implementation Partner

·         Previous experience of chemical industry implementation

·         Structured implementation methodology with experienced team members.

·         Understanding of business

·         Good documentation & quality management procedure

·         Other modules developed in ABAB language

·         Proximity.

Benefits and learning during implementation :

·         Change Management (Process & Attitude)

·         Business Process Re-engineering

·         Introduction of profit centre, cost centre & systems

·         Introduction of team building and collaboration

·         Structured data build-up in each function

·         Information technology infrastructure implemented

·         Issues to be discussed and resolved as soon as possible.

Conclusion :

The timely implementation with as little turbulence on ‘go live’ helped the company to run the operations effectively and efficiently. The Managing Director appreciated the efforts of the entire team and specially the Chief Internal Auditor and IT Head for working as one team to ensure quick hassle-free implementation. Managers experienced a sea change in their working environment with better transparency and data being available for decision making which was otherwise difficult to get during manual operations.

It led the internal auditing function to be elevated to deliver business solutions.

 

Article by Deepjee Singhal, Manish Pipalia chartered accountants.

 

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