OVERVIEW OF ERP & SAP PROJECT METHODOLOGY

IPL PROFILE
This company founded and established in the year 1924 is known to be one of the leading
fertilizer trading company in the country offering multiple products and successfully
running many subsidiary corporations. Being a large entity does not stop things from being
subject to scrutiny and internal audit. They are regularly implemented with the help of
committees who report to the selected members from the senior management. The
company is dedicated to providing laudable services to the stakeholders improve on the
quality and as thrive for innovations and improvements constantly.

COMPANY BACKGROUND:
The saga of Indian Potash Limited began with the vision and hard work of few dedicated
people in the early fifties. Prior to 1950, the use of Potash was sporadic, almost insignificant
and demographically confined to few southern states. Potash was unknown to Indian
farmers and by the dedicated field work there was acceptance of potash across India and
its success story is considered one of the most remarkable sagas in annals of Indian
fertilizer industry. .
In the light of the above, Indian Potash Limited was incorporated under Indian Companies
Act with the objective of promoting balanced use of Potash. Indian Potash Limited has
stood the test of time in spite of decontrol of Phosphatic and Potasic fertilizers in 1992.
Without in any way diluting balanced fertilizer promotion, the company diversified into
Dairy, Cattle Feed, Sugars and Rural Warehousing and has a plan to build a break bulk
port in Southern Gujarat. Of course, the common thread that remains through all these
activities-focus on farmers .
Having crossed sixty years from its incorporation the company marching towards
achieving the goals set before and to help agrarian growth and farmers upliftment..
Introduction to ERP:
ERP or Enterprise Resource Planning is IT software that integrates business activities
across an enterprisefrom product planning, parts purchasing, inventory control, and
product distribution, to order tracking. ERP may also include application modules for the
finance, accounting and human resources aspects of a business. SAP and Oracle are the
two ERP leading vendors.
From a business perspective, ERP today has expanded from simply coordinating
manufacturing processes to being the integrator of enterprise-wide backend processes. ERP
has also evolved technologically from a monolithic legacy implementation into flexible,
tiered, client-server architecture.
The critical success factors of ERP systems mainly include proper implementation and
usage. Beside this there are several other factors that decide the regular functioning of ERP
in organizations.
While many organizations have not incurred the necessary benefit in terms of money and
other measures there are lots who have witnessed multiple profits. Studying them will help
in understanding the critical success factors for ERP implementation. They will help in
deciding ERP success.

ERP Business Benefits:

ERP is an enabler of business benefits, and should not be viewed as a standalone initiative
with the requirement to pay back its implementation cost. The most immediate ERP
benefits include.
(1) Improved visibility of procurement spend and savings from improved sourcing policies,
(2) Decrease of work-in progress and days-of-sale-outstanding,
(3) Improved productivity through better sales order handling, better procurement
operations and more efficient planning.
However, the most important business benefits will often be delivered after the ERP
backbone is established, by other initiatives that use the ERP backbone:
 Integrated supply chain: from network planning through scheduling and
Manufacturing Execution Systems (MES)
Easier integration of business processes with business partners
Shared services and outsourcing of support functions
Increased information transparency to enable better decisions
Agility in acquisitions and carve-outs or divestments
Increased regulatory compliance
Robust and future-proofed backbone systems

There are cost savings on the IT side, often around 10-15%, especially when different
ERP implementations are being harmonized. These IT savings include:
Reduced ERP implementation costs due to a common template
Reduced application maintenance costs
Lower integration cost due to standard interfaces
Lower infrastructure costs

With an awareness of the best practices and a good understanding of ERP project
complexities, the risks in an ERP implementation are usually outweighed by the benefits.
The ERP discussion on investment return is one of mindset more than one of standalone
business cases.

ERP IMPLEMENTATION:
IPL deserves lot of credit for implementing ERP because of the fact that many
organizations in the global level have given up the very idea of ERP due to the fact that
there are lots of failures associated with it even in the implementation stage. ERP
implementation did in wrong manner have caused havoc to organizations more than
bringing profits. This being the case it is natural to expect a large company (in terms of
Size and volume of operations) like IPL to discourage the idea of Enterprise resource
planning. However IPL proved to be different from the others by choosing ERP in the right
time and implementing it in a proper manner. They have also reported a whooping profit
and reduction of costs in the whole process. Another amazing fact is that they implemented
it into the whole systems in one single spree. The method of implementing it in one spree
carries a lot of risks especially for a bigger company. Infact the success rate of this method
itself is low in general and very low as far as bigger companies are concerned. In case of
the rare success organizations will experience effective results in their enterprise
operations. IPL has achieved that by way of meticulous handling and professionalism. The
net results of their ERP software have been described to be path breaking and a trendsetting
one.

WHY ERP IN IPL:

IPL faced two major problems from the systems that existed for a long time. Firstly they
were not customer friendly. The whole system was tuned to the process and very little
attention was paid to the customer demands. Secondly the systems were outdates and the
modalities of operation were too complex and not error free. In order to rectify these issues
which would otherwise prove to be major setbacks to the company the organization
resolved to take up ERP. This was instigated by the concerned departments. Leading
consultants were hired and the business structure was studied and suitable plans were
drafted accordingly.

What Should They Do?

Lets say youre the CEO of a large multi-national Fertilizer company, and youre running
a global operation with plants on four continents. You need to make good business
decisions, and you rely on your IT systems to provide the data to make those good
decisions.

But your IT systems are not well integrated. There are too many different systems, and too
many gaps between them, a legacy of the companys history of mergers, acquisitions, and
improvement initiatives. You need a common information backbone. Youve heard that
ERP systems can do that, but youve also heard about ERP project failures from years ago.
Can ERP handle the challenges of a Fertilizer company today? And will that lead to
business benefits for the company? Answer are yes, and yes.

ASAP PROJECT METHODOLGY:

SAP leverages a core set of methodologies and tools designed to deliver rapid, reliable
results, and to help our customers get the most from their solutions. These include the
ASAP Methodology framework (content the project team follows to implement SAP
software efficiently), and the SAP Solution Manager application management suite.
ASAP methodology framework delivers structured methodology content processes,
procedures, accelerators, checklists, links to standard SAP documentation, etc. necessary
for the implementation of SAP solutions.
The ASAP methodology framework builds on solid foundation from ASAP 7 that includes
transparency of value realization through consistent business case reflection. Efficient
guidance for SOA, BPM and traditional implementation projects through the entire project
life-cycle from evaluation through delivery to post project solution management and
operations. And it delivers revised content in all the traditional areas needed for efficient
project teams project management, solution management, organizational change
management, training, blueprinting, configuration, testing, cutover planning and execution,
and others.
ASAP methodology framework v8 adds prescriptive guidance to the methodology through
detailed description of tasks including accountability for their completion. This
harmonized structure enables both project leaders and project teams to focus on
information that is highly relevant for their role. ASAP methodology framework v8
contains comprehensive description of deliverables and associated tasks, thus connecting
the project management view with subject matter expert needs.

Diagram ASAP:
IMPLEMENTATION PHASES:

Phase 1 Project Preparation

Phase 2 Business Blueprint
Phase 3 Realization
Phase 4 Final Preparation
Phase 5 Go-Live and support

ASAP Methodology Phase 1 : Project Preparation

Phase-1 initiates with a retrieval of information and resources. It is an important time to
assemble the necessary components for the implementation. Some important milestones
that need to be accomplished for phase 1 include
 Obtaining senior-level management/stakeholder support
Identifying clear project objectives
Architect an efficient decision-making process
Creating an environment suitable for change and re-engineering
Building a qualified and capable project team.

ASAP Methodology Phase 2- Business Blueprint

SAP has defined a business blueprint phase to help extract pertinent information about
your company that is necessary for implementation. These blueprints are in the form of
questionnaires that are designed to probe for information that uncovers how your
company does business. As such, they also serve to document the implementation.
Each business blueprint document essentially outlines your future business processes and
business requirements. The kinds of questions asked are germane to the particular
business function, as seen in the following sample questions:
1) 1) What information do you capture on a purchase order?
2) 2) What information is required to complete a purchase order?

ASAP Methodology Phase- 3 Realization:

With the completion of the business in phase 2, functional experts are now ready to
begin configuring SAP.
The Realization phase is broken in to two parts.
1) 1) Your SAP consulting team helps you configure your baseline system, called the
baseline configuration.
1) 2) Your implementation project team fine-tunes that system to meet all your business and
process requirements as part of the fine tuning configuration.
The initial configuration completed during the base line configuration is based on the
information that you provided in your blueprint document. The remaining
approximately 20% of your configuration that was not tackled during the baseline
configuration is completed during the fine tuning configuration.
Fine tuning usually deals with the exceptions that are not covered in baseline
configuration. This final bit of tweaking represents the work necessary to fit your special
needs.
Configuration Testing-

With the help of your SAP consulting team, you segregate your business processes into
cycles of related business flows. The cycles serve as independent units that enable you to
test specific parts of the business process. You can also work through configuring the
SAP implementation guide (IMG). A tool used to assist you in configuring your SAP
system in a step by step manner.

Knowledge Transfer-

As the configuration phase comes to a close, it becomes necessary for the Project team to
be self-sufficient in their knowledge of the configuration of your SAP system.
Knowledge transfer to the configuration team tasked with system maintenance (that is,
maintenance of the business processes after Go-live) needs to be completed at this time.
In addition, the end users tasked with actually using the system for day-to-day business
purposes must be trained.

As phase 3 merges into phase 4, you should find yourselves not only in the midst of SAP
training, but also in the midst of rigorous functional and stress testing.
Phase 4 also concentrates on the fine tuning of your configuration before Go-live and
more importantly, the migration of data from your old system or systems to SAP.
Workload testing (including peak volume, daily load, and other forms of stress testing),
and integration or functional testing are conducted to ensure the accuracy of your data
and the stability of your SAP system. Because you should have begun testing back in
phase 2, you do not have too far to go until Go-live.
Now is an important time to perform preventative maintenance checks to ensure optimal
performance at your SAP system. At the conclusion of phase 4, take time to plan and
document a Go-live strategy. Preparation for Go-live means preparing for your end-users
questions as they start actively working on the new SAP system.

ASAP Methodology Phase 5 Go-live and Support

The Go-live milestone is itself is easy to achieve; a smooth and uneventful Go-live is
another matter altogether. Preparation is the key, including attention to what-if scenarios
related not only to the individual business processes deployed but also to the functioning
of technology underpinning these business processes and preparation for ongoing
support, including maintenance contracts and documented processes and procedures are
essential.

Information Systems For A Quickly Changing Fertilizer Industry:

In a quickly changing industry like Fertilizer, one need information systems

which quickly provide them the data they need. We believe that ERP,
especially in its mature implementations, is the crucial component for a
companys IT data backbone. ERP can play an essential role in:

Driving accurate and fast decisions (product profitability, procurement

spend) with consistently defined data
Running broadly known and supported applications
Harmonizing and optimizing back-office processes across the
enterprise that comply with finance requirements such as SOX and
IFRS
 Enabling best-practice demand planning for supply-chain processes
Future-proofing global applications that support global enterprises

Six ERP Design Challenges for Fertilizer Companies

A Fertilizer company presents six industry-specific design challenges for

implementing ERP, as described below. A successful ERP project will start
by analyzing these challenges in detail across all of the companys integrated
processes. This analysis will result in the basic decisions that will be the
foundation of the ERP project.

Challenge 1: More than one planning strategy

Fertilizermakers often use a combination of production planning strategies.

Typically the flat or strip products are make-to-order, whereas the long
products are make to- stock. Depending on the existence of a de-couple
point, finish-to-order could be a relevant planning strategy as well. Such a
combination of planning strategies affects the design of most ERP processes,
including supply chain processes as well as the financial/cost control
processes. Cost control in make-to-stock tends to go for standard price
approaches, but in a make-to-order environment costing happens on an
individual order cost collection and forecast basis. ERP systems today can
handle this kind of complexity.

Challenge 2: Complex product variations

A Fertilizer product is made up of a large number of characteristics, making
the product difficult to configure when entering it in the ERP system.
Configuration in the make-to-order entries is typically done while entering the
order, whereas for the make-to-stock entries, configuration is done in the
product definition, that is, on the material master.

This burdens the early discussions during the design phase of an ERP
implementation. Fundamental decisions need to be made very early in the
project about how many (finished product) materials should be defined: one
extreme is to define by material group which needs to be configured
completely in the order, or the other end of the spectrum is to define all
possible/feasible characteristic combinations which can possibly explode into
an extremely large number of finished product definitions.

A Fertilizer product tend to explode towards the end of production processing;

in other words, the bill of material stands on its head or is v-shaped, as
shown in Figure 1. This means that the later in the process you define a
product, the higher the number of products to be defined becomes. ERP
solutions today can readily handle the complexities this of the V-shaped bill
of material. They allow characteristics based product configuration with
automatic deduction of characteristics, characteristic value inheritance from
sales order header to item level, entry of multiple order units such as pieces,
tons, dimensions, and so on. Characteristics then drive production, shipping
and purchasing processes across the supply chain
Challenge 3: Flexible planning

Planning for Fertilizermaking often needs to happen on short notice, with

unstable production processes and unplanned outputs. This requires
continuous re-assignment of products to processes and orders dependent on
the Characteristics described above. ERP systems today allow re-assigning
flexibly to handle these situations.

Challenge 4: Specific Customer Service Requirements

To cope with high-demanding customer segments such as automotive and

construction, tight integration with business partners on forecasts, electronic
customer orders (EDI, internet etc.) are typically needed. ERP systems today
support electronic integration with partners.

Challenge 5: Complex production scheduling combining both

continuous and batch production

Figure 2 below illustrates the flow in a typical Fertilizer mill. While the blast
furnace and converter work in batches, the caster works continuously and the
finishing lines work in batches again.
The batches need to be selected based on characteristics during production,
preparation and shipment planning. This means that the planning process
needs to be able to derive batches with characteristics inheritance and history
tracing. Finally, the scheduling part of the planning system needs to be able
to work with multiple and dynamic bottlenecks that is, bottlenecks which
can change based on incidents such as production problems in certain process
steps. ERP systems today can handle all of these situations.

Challenge 6: Detailed margin analysis

In todays Fertilizer industry when prices are high and capacity short, margin
analysis becomes the essential method to tell what money is being made on
which customer/product segments. On top of segment analysis, it is also
essential to differentiate between strategic materials (cokes and ore, Ni and
Cr for stainless) and the other cost elements that may be easier to control. ERP
systems provide the tools to support these decisions.

The ERP system will also need to work closely with the companys Business
Information Systems (BIS) to optimize the business benefits. Working
together, the ERP and BIS systems can, for example, improve inventory
allocation to late orders
Integrated IT Model for Fertilizer

An integrated IT model as in Figure 3 is important because it lets you see the

systems involved in planning and production. A typical flow would be:

The Supply Chain Management (SCM) application provides the rough-

cut planning in Demand Planning. The result is planning blocks of
similar products which are then handed over to production planning.
 When orders are being entered, availability checks assign the order to
a block (unless inventory already exists that meets the order) and feeds
back a promise date (at the end of the block to allow for the flexibility
of possibly moving to an earlier date).

The mill optimizer then typically would re-shuffle orders in between

the blocks, and feed results back into the SCM application in order to
optimize the load balancing.

Right before production starts, planned orders from the SCM

application are converted into production orders and, via the ERP
system, are transferred into the MES layer. It is at that time when
quantities are being translated into pieces (slabs, coils etc.).

Detailed scheduling then takes place, sequencing and combining pieces

from various orders throughout the mill into lots for optimization.

Production completion then posts an updated status of the orders into

the ERP system, including stock receipts of finished products, and so
forth.
Figure 3 is also important because it lets you identify gaps among a companys
different IT systems. A typical gap occurs between the ERP and MES (process
control and machine control) systems, where the system is actually
combination of custom-built applications and manual spreadsheets. Bridging
this gap properly is essential forrealizing the business benefits of the IT
investments.

If the applications in Figure 3 are to provide true value, they need to be robust,
integrated and cost efficient. A recent IBM survey indicates that Fertilizer
clients process control and MES systems are custom-built applications 66%
of the time, and that these custom-built applications usually differ from mill
to mill. Clearly, this risks creating sub-optimal processes and leaves the
company open to all the problems of maintaining custom-built, legacy
applications.

Implementation Approaches for ERP

The key element for ERP success is to know how to implement an ERP
project. Past experiences recommends best practices such as:

Rapid/realistic project timelines due to external pressures (acquisition

synergies, legal reorganization)
Command-and-control approaches from a central project management
office
A global business process owner who has the authority and credibility
to approve process designs and business model/ organization changes
However, theres much more to it than these few general principles.
Implementing ERP is complex and takes a team of knowledgeable and
experienced ERP professionals to successfully implement an ERP project.

Implementation Process At IPL Fertilizer

The company knew well that they had a tough time especially to implement
the software in one stroke. They had to choose top ERP software in order to
ensure that it meets the demands of a big firm like IPL GROUP OF
COMPANIES. They went ahead with associating and implanting IPL
GROUP OF COMPANIES to all the stakeholders so that they become
compatible. These ideas also contributed to the success. They were also
shrewd enough in adopting the modern and most recent technology available
in the market. The period set for implementation seemed to be another major
challenge. The time granted for the process was 8 months.

The business process was divided into two main segments. The core functions
were denoted to be major ones. Similarly the supporting functions were
named minor ones. A plan of action on the proposed ERP's impact was drafted
depicting their relation to one another and to the business process. All of them
were made to bear in mind the fact that ERP's implementation was imperative
and that the deadlines were not very comfortable. The company took all
efforts to ensure that the change did not produce any sort of resentment in the
organization. This was done by educating everyone on the need and
desirability of change. In addition all apprehensions relating to change were
discussed and clarifications made to the fullest satisfaction.

It sounds almost Utopian doesn't it? But that's exactly the result of IPL
GROUP OF COMPANIES's ERP implementation completed within eight
months. IPL GROUP OF COMPANIES is Asia's first and India's largest
integrated private sector Fertilizer company. It has a state-of-the-art 3.5
million tonne Fertilizer plant and is capable of meeting the most rigorous
demands of its customers worldwide.

The company adopted ERP technology to take a lead in the competitive

Fertilizer industry and through constant learning, innovation and refinement
of its business operations, has transited seamlessly from a production-driven
company to a customer-driven one. The existing technology was a simple
replication of the manual system. Not only did it operate as individual islands
of information but the technology had outlived its lifetime and was completely
obsolete. The employees and management at IPL GROUP OF COMPANIES
faced a cumbersome task exchanging and retrieving information from the
system.

Further, the reliability of information obtained was questionable because of

inconsistency and duplication of data from different departments. Also there
was no built-in integrity check for various data sources. Besides, several times
the information against certain items was found missing.

An Early Response

Responding to changing customer needs started as early as 1991, with a study

on cost competitiveness and a formal business plan, followed by ISO 9002
certification and benchmarking initiatives. Realizing the need to further
support the re-engineered core processes and quickly align the business
processes to radical changes in the market place, IPL Fertilizer decided to go
for a new robust solution.

Design

In 1998-99 a small cross-functional in-house team along with consultants

from Arthur D. Little (Strategy Consultants) and IBM Global Services (BPR
Consultants) redesigned the two core business processes: Order Generation &
Fulfillment and the Marketing Development processes. This was done to
improve customer focus, facilitating better credit control, and reduction of
stocks. In keeping with this commitment it adopted the latest production and
business practices to offer innovative processes that meet the changing
demands of its global and local customers.

Choosing The Platform And Technology

The management at IPL Fertilizer wanted the software to seamlessly integrate

with its existing information system and further provide compatibility with its
future implementations. After an in-depth study of functionality, cost, time,
compatibility, esteem, operability, support and future organizational
requirements was done, SAP topped the list of contenders.

The implementation of SAP software was associated with certain strategic

goals in mind. With this implementation, IPL GROUP OF COMPANIES
wanted to bring forth a culture of continuous learning and change. This would
enable IPL GROUP OF COMPANIES to achieve a world-class status for its
products and services and strengthen its leadership position in the industry.
Besides this, IPL GROUP OF COMPANIES also wanted the software to
result in quick decision-making, transparency and credibility of data and
improve responsiveness to customers across all areas.

The Real Challenge

B Muthuraman, MD (consultant), said, "Implementing any ERP system is a

challenge for an organization because of the declining success rate of ERP
implementations world-wide. The challenge is compounded if the ERP
provider is a world leader - SAP. At IPL Fertilizer however the real challenge
for us did not lie in successfully implementing SAP or in rolling it out to our
46-odd geographic locations across the country under a big bang approach in
just eight months. The real challenge lay ahead in building a conducive
environment where SAP will be embedded in the hearts and minds of the
people and the customers of IPL Fertilizer. They all looked forward to
knowledge-based, successful organization. It is inspiring to know that our
TEAM ASSET with support from Pricewaterhouse Coopers and SAP
successfully lived up to our axiom and truly demonstrated leadership skills by
going live across 46 locations within a record time frame of eight months.

Mapping Technology To Business Processes

The path was set to achieve success through SAP. All the branches, which had
huge numbers of transactions and complexity, were identified as a HUB while
the smaller branches along with the consignment agents were defined as
SPOKES which were attached to these branches. In January 99 the team from
IPL GROUP OF COMPANIES was decided and christened 'TEAM ASSET'
an acronym for Achieve Success through SAP Enabled Transformation. The
TEAM ASSET had two simple axioms:

Go-Live date - 1st November 1999

There are only 24 hours a day

Preparatory task forces activities were conducted and core business processes
were mapped to SAP modules. Also another parallel activity called 'Change
Management' was initiated within the company. The prime objective of
'Change Management' was to reach out to people involved non-directly in the
project to apprise them of the developments taking place. "We wanted that
IPL Fertilizer be the number one in the Fertilizer industrywe wanted to be
the first to have the latest systems" said Mr. Sandipan Chakravortty, GM
(Sales), IPL GROUP OF COMPANIES.
IPL Fertilizer planned a big-bang approach of going live with all the modules
at the same time, in just a span of eight months. Driven against the speed of
time, the pace of implementation was fast with all activities backed by a lot
of thought process and meticulous planning. On 1st November 1999 IPL
Fertilizer pulled off a big bang implementation of all SAP modules at one go
across 46 countrywide locations, as per the set deadline.

Achieving Business Agility Through SAP

Marching ahead, Web enabling of SAP R/3 is on the cards. On the surface, it
means it would allow anyone to access our SAP R/3 over the Internet. But
beneath it, the implications are tremendous, as it would result in sharing of
information with enterprise accounts and key customers. The success in
Marketing and Sales has prompted a re-visit of the existing system in the
works and a detailed rollout is expected as below.

Phase I - To Extend SAP in Works with FI, CO, MM, PP & QM

Phase II - To implement SAP modules such as Asset Management &
Budget management sub-modules of FICO, Plant maintenance, Human
Resources, Production Optimizer (such as SAP APO)
Phase III - SEM (Strategic Enterprise Management)

The company also plans to adopt the my SAP Customer Relationship

Management solution to enhance its customer relationships in the near term
and eventually realize its dream of a becoming the most efficient and
competitive company in the world in its vertical.
 THE OUTCOME
SAP ERP solutions produced a remarkable result to the company in terms of
financial technical and managerial parameters. The effective handling and
speed delivery resulted in greater sales .Similarly there was a drastic fall in
the amount owned to creditors. The systems were made more user friendly
without any complexities and procedural lacunas. This improved the quality
of work and lessened the time taken for work and thereby increased the
productivity. This was followed by a massive change in terms of
accountability administration and control.

Future Moves
This exercise undertaken by IPL GROUP OF COMPANIES has been a
motivating factor for both companies and ERP vendors. IPL GROUP OF
COMPANIES is not determined to stop ERP or attain a saturation point now.
They are working on to improve and increase the scopes of enterprise resource
planning software in the organization so that it benefits the stakeholders in all
possible manners. Organizations can take this as a model guide and combine
it with the critical success factors for ERP systems and critical success factors
for ERP implementation in order to enjoy ERP success.

Conclusion

ERP is a key backbone application for companies in a fast changing industry

like Fertilizer. Given an awareness of the best practices and a good
understanding of the project complexities, the risks in an ERP implementation
are usually outweighed by the benefits. The ERP discussion is often one of
mindset more than one of standalone business cases. While implementing
ERP can be challenging and demands sustained commitment from top
executive levels, it is fundamental to enhancing the competitive position of a
company in the dynamic environment of the Fertilizer industry today.