CRITICAL EVALUATION OF THE IMPACT OF ERP

IMPLEMENTATION (MATERIALS MANAGEMENT MODULE)

REPORT OF PROJECT WORK DONE AT HOCL, KOCHI UNIT

Submitted to the

Cochin University of Science and Technology

In partial fulfillment of the requirement for the award of the degree of

Master of Business Administration (FT)

by

RAKESH K. Reg. No. 85201029

Under the Guidance of

Prof. (Dr.) Jagathy Raj V. P.

SCHOOL OF MANAGEMENT STUDIES

COCHIN UNIVERSITY OF SCIENCE AND TECHNOLOGY

KOCHI-22, KERALA

April 2012

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Declaration

I hereby declare that this project report entitled “Critical evaluation of the

impact of ERP implementation (materials management module) -Work done

at HOCL Kochi Unit “submitted to the Cochin University of Science and

Technology in partial fulfilment for the award of the degree of MBA is the

original work carried out by me under the supervision of Dr.Jagathy Raj V.P.,

Professor, School of Management Studies and Mr. Vijayakumar Menon, Chief

Materials Manager & ERP Coordinator - HOCL Kochi unit.

This work did not form part any other project work submitted for award of any

degree or diploma, either in this or any other University.

Place: Kochi

Date: Rakesh K.

3

4

Certificate

This is to certify that the project entitled “Critical evaluation of the impact of

ERP implementation (materials management module) -Work done at HOCL

Kochi Unit “,submitted to the Cochin University of Science and Technology for

the award of the degree of MBA is the original work carried out by Mr.Rakesh K.,

under my supervision and guidance.

This work did not form part any other project work submitted for award of any

degree or diploma, either in this or any other University.

Place: Kochi Dr.Jagathy Raj V.P.

Date: Project Guide

Director,

School of Management Studies,

Cochin University of Science and Technology

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Acknowledgement

I thank Almighty for giving me the strength and power required to carry out the work

assigned to me.

I wish to place on record, my profound gratitude and indebtedness to Dr. Jagathy Raj

V.P., Professor, School of Management Studies for his guidance and encouragement

during the course of the project.

I express my sincere thanks to Mr.Vijayakumar Menon, Chief Materials Manager &

ERP Coordinator - HOCL Kochi unit, who despite his busy schedule guided us on this

project right from the basics of ERP in a very detailed manner.

I am thankful to the employees of HOCL Kochi Unit for their co-operation and support

during my study.

I take this opportunity to thank all those who have directly or indirectly helped me in

successful completion of this project.

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Executive Summary

Implementation of Enterprise Resource Planning (ERP) systems is one of the key

solutions organizations make use of to make its business more efficient and effective. The

implementation of ERP systems has helped corporations, significantly improve their

business metrics by process optimization, improving the entire supply chain process,

integration across functionalities and increasing transparency across the organization.

The success of ERP implementation is measured by various factors. This study was

undertaken to evaluate the impact of ERP implementation at HOCL Kochi Unit (A

Govt.of India Enterprise) in the post implementation phase. The study measures the

effectiveness of ERP implemented, benefits obtained due to implementation of ERP and

level of satisfaction among the users on various aspects like training, ease of use etc. A

survey instrument was constructed to gather data from the users and the data was then

analyzed to arrive at conclusions.

The study shows that ERP implementation at HOCL Kochi Unit has brought many direct

and indirect benefits.ERP implementation has led to changes in performance measures.

The user satisfaction is found to be positive. There still exist some areas for improvement

that have been identified based on the inputs gathered and data studied.

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CONTENTS

Chapter Title Page No.

Chapter 1 INTRODUCTION 14

1.1 Introduction 14

1.2 Enterprise Resource Planning 15

1.2.1 Need for ERP 16

1.2.2 ERP System Components 16

1.2.3 ERP Vendors 16

1.3 SAP 16

1.4 Materials Management Module 18

1.4.1 Main Procurement Cycle Documents 18

1.4.2 Purchase Requisitions 19

1.4.3 Material Master 19

1.5 Background of the Study 20

1.5.1 Hindustan Organic Chemicals Limited (HOCL) 20

1.5.2 HOCL moves to ERP System 20

1.6 Objectives of the Study 21

1.7 Scope of the Study 21

Chapter 2 LITERATURE REVIEW 22

2.1 Expected Benefits from ERP Systems Implementation 22

2.2 Success of ERP implementation 24

2.3 Key Performance Metrics of ERP Implementation 26

2.4 Downsides of ERP 27

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Chapter 3 COMPANY PROFILE 29

3.1 Products and their use 29

3.2 ERP implementation at HOCL 30

3.2.1 Project Preparation 31

3.2.2 Business Blueprint Preparation 31

3.2.3 Development phase 31

3.2.4 Master data Creation 31

3.2.5 Testing 32

3.2.6 Preparation of training manuals 32

3.2.7 Allocation of user licenses 32

3.2.8 Creation of User roles 32

3.2.9 Go Live 32

3.3 SAP Modules Implemented 32

3.4 Material Goods Movement 33

3.4.1 Issue of Materials to Functional Departments 34

3.4.2 Issue of Materials to Contractors 34

3.4.3 Return of issued materials 35

3.4.4 Goods issue for stock transfer 35

3.4.5 Scrap receipt & issue 35

3.5 Purchase 37

Chapter 4 RESEARCH METHODOLOGY 39

4.1 Rationale for the Study 39

4.2 Objectives 39

4.3 Scope of the Study 39

4.4 Methodology 39

4.5 Development of the Questionnaire 40

4.6 Type of Research 40

4.7 Sources of data 40

4.7.1 Primary Data 41

4.7.2 Secondary Data 41

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4.8 Sampling Technique 41

4.9 Sample Size 41

4.10 Sample Description 41

4.11 Summary 41

Chapter 5 ANALYSIS AND INTERPRETATION 43

5.1 SAP User Profile 43

5.2 Questionnaire Evaluation 44

5.3 Benefits Realized after implementation of SAP 44

5.4 Quality of Information 48

5.5 Training 49

5.6 Availability of Training documents 51

5.7 User friendliness of SAP 51

5.8 Other Factors 55

5.9 Improvements in performance areas 57

5.10 Comparison with legacy system 59

5.11 Descriptive Statistics for variables 59

5.12 Correlation Analysis 62

Chapter 6 SUMMARY, FINDINGS AND SUGGESTIONS 64

6.1 Summary 64

6.2 Findings 64

6.2.1 Benefits Realized after implementation of SAP 64

6.2.2 Quality of Information 65

6.2.3 Training 66

6.2.4 Availability of Training documents 66

6.2.5 User friendliness of SAP 66

6.2.6 Availability of proper rights/roles 67

6.2.7 Other Factors 67

6.2.8 Improvements in performance areas 67

6.3 Suggestions 69

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Chapter 7 CONCLUSION 70

7.1 Impact of ERP implementation 70

7.2 Effectiveness of ERP implementation 71

7.3 Suggestions 71

7.4 Limitations of the study 72

Bibliography 73

Annexure I Questionnaire 77

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LIST OF TABLES

Table Title Page No.

Table: 5.1 Level of expertise in using SAP 43

Table 5.2: Benefits realized after ERP implementation 46

Table 5.3 Information Quality after ERP implementation 48

Table 5.4 User Friendliness of SAP 52

Table 5.5 Responses recorded on other aspects 54

Table 5.6 Other Factors 55

Table 5.7 Improvements in Performance Areas 57

Table 5.8 Mean Values of changes in performance measures 60

Table 5.9 Mean Values of Benefits Realized 61

Table 5.10 Mean Values of Other Variables 61

Table 5.11 Correlation Analysis 62

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LIST OF FIGURES

Figure Title Page No.

1.1 3-Tier Architecture 17

1.2 Integration of Business Processes 17

1.3 Overview of Material Management 18

1.4 Purchase Requisitions 19

5.1 Level of expertise in using SAP 44

5.2 Types of Benefits Realized 46

5.3 Information Quality 49

5.4 Aspects of Training 50

5.5 Availability of Training Documents 51

5.6 User Friendliness 53

5.7 Other Aspects 54

5.8 Other Factors of successful implementation 56

5.9 Improvements in Performance Areas 58

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LIST OF ABBREVIATIONS

ABAP Advanced Business Application Programming

BCG Boston Consulting Group

BPML Business Process Master List

CSF Critical Success Factors

DN Demand Notes

ERP Enterprise Resource Planning

HOCL Hindustan Organic Chemicals Limited (HOCL)

IDES International Demonstration Education System

IV Issue Voucher

KPI Key Performance Indicators

LAN Local Area Network

PR Purchase Requisition

PSU Public Sector Undertaking

R/3 Real Time 3-Tier

RFQ Request for Quotation

RN Return Note

SAP Systems Applications and Products in data Processing

SD Standard Deviation

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CHAPTER 1

INTRODUCTION

1.1 Introduction

In today’s challenging economic environment, companies are faced with having to cut

costs and improve efficiency within their organizations. Enterprise resource planning

(ERP) has become a solution many companies use to integrate internal and external

management information across organizations. The purpose is to simplify and expedite

information flow to all areas within a business to improve efficiencies. Information

availability can play a vital role in monitoring the business. A research done by a

consulting firm tells suggests that more than six out of 10 companies (63.8-percent)firms

implement ERP to improve efficiencies(source:2012 ERP Report, Panorama Consulting

Solutions). Other reasons for implementation include better integration of systems across

multiple locations and standardization of global business operations. Though the end

result of any ERP implementation project is to reduce costs and improve time spent on

business functions; ERP implementations are lengthy by nature and require due diligence

in accurate the documentation of requirements, business process blueprinting and

organizational change management.ERP implementation is not a one-time process but a

lifelong process as changes need to be accommodated with changing times or business

scenarios/needs.ERP softwares are costly and the return on investment can be measured

by the benefits obtained.

The direct advantages include improved efficiency, information integration for better

decision making, faster response time to customer queries etc.The indirect benefits

include better corporate image, improved customer satisfaction, improved relations

between departments, better transparency, improved communication, etc.

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The success of ERP implementation can be measured by various factors. These include

the acceptance of the system by the users, the training provided, the knowledge of the

end-user, the support extended by the core team in resolving issues, user friendliness of

the software, key benefits obtained after implementation, information quality and

availability, improvement in the key performance areas, readiness to upgrade for future

requirement etc. The benchmark would be to compare with the process improvements or

savings in time or money after implementation of ERP.

1.2 Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) refers to a computer information system that

integrates all the business activities and processes throughout an entire organization. ERP

systems incorporate many of the features available in other types of manufacturing

programs, such as project management, supplier management, product data management,

scheduling, etc. The objective of ERP is to provide seamless, real-time information to all

employees throughout the enterprise. Companies commonly use ERP systems to

communicate the progress of orders and projects throughout the supply chain, and to

track the costs and availability of value-added services.

The goal of ERP is to make the information flow dynamic and immediate, therefore

increasing the usefulness and value of the information. In addition, an ERP system acts as

a central repository eliminating data redundancy and adding flexibility.

1.2.1 Need for ERP

In today’s competitive environment success depends on speed. Speed in product

development, speed in assembly/packaging and speed in delivery and service to dealers

and customers. To stay on the fast track to success, integration of OEMs, suppliers,

dealers, and customers is essential. By implementing an ERP solution, the following

benefits can be realized

Provides the opportunity to examine and adopt the Best Practices from across Industries

Increased Accuracy & Elimination of Duplicity

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Increased Information Availability

Integration of various Functions

Reduction in Inventory

Reduction in Cycle Times

1.2.2 ERP System Components

An ERP system depends on hardware(i.e., servers and peripherals),software(like

operating system and database),information(i.e., organizational data from internal and

external resources),process(i.e., business processes, procedures and policies)and

people(end users, implementation team,consultants,IT staff etc.).These components must

work seamlessly for the implementation to be successful.

1.2.3 ERP Vendors

The key vendors of ERP include SAP AG,Baan,PeopleSoft,Oracle,Microsoft,IFS,Sage

and Infor.There also exist local players like Ramco Systems,etc. and few proprietary in-

built ERP systems developed in-house by a few companies. The ERP market is evolving

and with innovative products competition is becoming bigger.

1.3 SAP

SAP AG is a leading ERP vendor. SAP stands for Systems Applications and Products in

data Processing. SAP saw the future potential for the delivery of information to the end-

user via the PC, so SAP reinvented and developed their product further by developing a

business solution for the client/server architecture environment; this became known as

R/3 and was released in 1992. In the 1990s SAP and its R/3 solution would go on to

become the dominant ERP solution, and also become one of the world’s biggest software

houses.

SAP R/3 applications are a range of software modules. They can be used either alone or

combined to form business solutions. SAP state that their R/3 applications offer

comprehensive functionality for all standard business needs within an enterprise. SAP

R/3 uses a programming language called advanced business application programming

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(ABAP).The R stands for real-time and 3 stands for three-step system architecture i.e.

Database server, Application server and Graphical User Interface (PC‘s user interface).

The following are SAP R3’s application modules: financial accounting, treasury,

controlling, enterprise controlling, investment management, production planning,

materials management, quality management, project system, human resource

management, sales and distribution, and plant maintenance and service management.

The three tier architecture is represented in the Fig.1.1 below.

Fig.1.1 3-Tier Architecture

Fig1.2 represents how the SAP integrates different business processes.

Fig. 1.2 Integration of Business Processes

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1.4 Materials Management Module

The materials management or MM module supports the procurement and inventory

functions occurring in day-to-day business operations. Procurement is a component of the

Materials Management module that supports the purchase of materials and / or services

by an organization from sources outside the organization. The overview of processes

involved in material management and its interaction with other modules is shown in fig

1.3.

Fig.1.3 Overview of Material Management

1.4.1 Main Procurement Cycle Documents

The main documents include:

� Purchase Requisition

� Request for Quotation

� Quotation

� Outline Agreements

� Contract

� Scheduling Agreement

� Purchase Order

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� Goods Receipt

� Invoice Verification

� Vendor Payment

1.4.2 Purchase Requisitions

The diagram shown below depicts the flow of purchase requisition.

Fig 1.4 Purchase Requisitions

1.4.3 Material Master

The material master contains all the information about procurement, production, storage

and sale of a material. As a central data object, the material master refers to a uniform

data structure for all material related data that can be used for all different materials.The

basic structure is defined in R/3 in the following manner:

• Organizational structure of a company via the organizational levels in SAP R/3.

• Data technique structure via the view concept by SAP R/3.

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1.5 Background of the Study

1.5.1 Hindustan Organic Chemicals Limited (HOCL)

Hindustan Organic Chemicals Limited (HOCL) was set up by the Government of India in

1960 with the objective of attaining self-reliance in basic organic chemicals needs and to

reduce country’s dependence on import of vital organic chemicals. The products of

HOCL Kochi unit include Phenol, Acetone and Hydrogen Peroxide.

1.5.2 HOCL Moves to ERP System

It was decided by the Government of India to implement ERP in PSUs.HOCL being a

PSU had to comply with this directive. Prior to implementation of ERP, HOCL Kochi

Unit used in-house developed legacy systems. The major disadvantage of the legacy

systems was the fact that they were independent units and thus no integration was

available.

The ERP implementation at HOCL first took place in the Kochi Unit and Marketing

Branch offices at Mumbai, Hyderabad, Chennai and Delhi in Phase I. Implementation at

Rasayani unit will be in Phase II and has not yet started. Go-live was on 16th Sept 2010.

ERP implementation can be termed successful only if the organization starts realizing the

benefits projected by implementation of ERP system. Other critical success factors lie in

the activities involved after implementation which include identifying user concerns,

training needs, providing necessary training, competency of the core team etc.

This study attempts to find out the direct and indirect benefits obtained after

implementation of ERP.It tries to identify any areas of concern by conducting an in-depth

study. It gauges the level of satisfaction among the end users. The study is limited to the

material management module of SAP used by persons of various departments at HOCL

Kochi Unit.

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1.6 Objectives of the Study

The objectives of study are:

� To study the ERP implementation in various departments of HOCL, Kochi Unit.

� To critically evaluate the impact of ERP implementation.

� To measure the level of satisfaction among the end-user in using the ERP

package.

� To identify the benefits obtained after implementation of ERP.

� To identify any specific areas of concerns and suggest solutions for the same.

1.7 Scope of the Study

The present study is a critical evaluation of the ERP implemented with focus on the

material management module at HOCL Kochi Unit. It evaluates the users of ERP system

to ascertain the level of satisfaction.

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CHAPTER 2

LITERATURE REVIEW

The review of literature is undertaken to learn and understand from the experience and

knowledge of others who have done worked on similar areas. Publications by various

authors helped in identifying the critical success factors that define success in an ERP

implementation.

2.1 Expected Benefits from ERP Systems Implementation

ERPs are designed to help manage organizational resources in an integrated manner. The

primary benefits that are expected to result from their implementation are closely related

to the level of integration that is promoted across functions in an enterprise. The

professional literature has been proactive in determining the types of benefits that

companies might anticipate from their ERP systems and to what extent organizations had

actually attained those benefits on a post-implementation basis. Expectations for

improved business performance after adoption may result from both operational and

strategic benefits. The most significant intangible benefits related to internal integration,

improved information and processes, and improved customer service, while tangible

benefits related to cost efficiencies in inventory ,personnel, procurement and the time

needed to close books, as well as improvements in productivity, cash/order management,

and overall profitability. In assessing the extent to which they had actually attained those

benefits, however, on a post-implementation basis, it was evident that they were not able

to improve profitability or lower personnel, inventories, or system maintenance costs as

much as they had hoped. On the other hand, respondents noted better-than-expected

results in overall productivity and in order-management cycle time, as well as

procurement, on-time delivery, and the ability to close financial cycles.

The tangible and intangible benefits are given below:

� Reduced planning cycle time

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� Reduced manufacturing cycle time

� Improved customer service- Customer satisfaction means meeting or exceeding

the customers requirement for product or services .ERP systems have proved that

they can produce goods at flexibility of Made to order approach without loosing

the cost & time benefits of made to order operations means that each customer

will get individual attention & feature that he/she wants. Also with the

introduction of web enabled ERP systems, the customers can place orders, track

the status of order & make payment sitting at home.

� Decreased lead time -The time elapsed between placing an order & receiving it is

known as lead time. If a stock is not available on time, problems like missing a

delivery schedule, losing the customer goodwill due to delayed delivery or

loosing the customer completely occur. In order to avoid this, large buffer stock is

maintained or a high reorder level is maintained which leads to high inventory

costs.

ERP avoids this by maintaining & processing the individual lead times of

different materials in a inventory which at times could run into thousands of

different materials & a efficient system is established.

� Reduced cost: The implementation of ERP eliminates clerical tasks. Hence

resources could be better deployed. The control and monitoring facility helps in

cost reduction. Manpower reductions, lesser inventories, lesser quality costs are

reduce costs.

� Reduced inventory: By having a real-time information and visibility, inventory

management is made very easier with ERP.

� Reduced error in ordering

� Increased throughput

� Increase in sales volume

� Improved competitive position

� Better coordination between managers

� Improved forecasting

� Reduced information delay: Information is available at the click of a button.

There exists no dependency on others to get the required information.

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� Improved decision making: Because of the ease of analysis of information of

various different sectors of a organization and by ready to use comprehensive

overview of the things in general ERP systems greatly help in decision making

which becomes often tedious & time consuming otherwise. Information accuracy

also assures that the decisions which are made are accurate enough &

commercially viable.

� Streamline the business processes

� Improved competitive position

� Improved communication: There exists no chance of hiding of information.

Features like SAP Mail available in SAP enhance the communication, allowing

users to share information instantly.

2.2 Success of ERP implementation

Firms emphasized Critical Success Factors (CSFs) required for the maintenance and

successful deployment of these complete ERP systems. One of the first researches about

CSF in ERP implementation is accomplished by Holland in 1999 titled “A Critical

Success Factors Model for ERP Implementation”. He divided CSF in two dimensions

including of strategic and technical, then he classified legacy system, business vision,

ERP strategy, top management support and project schedule and plans under strategic

dimension and client consultation, personal, software configuration, client acceptance,

monitoring and feedback, communication and trouble shooting under technical

dimension.

Initially most firms did not pay adequate attention to managing organizational and people

issues across the ERP implementation cycle. But studies prove that acceptance of ERP

systems by the end-user and the end-user satisfaction is an important factor to measure

the success of ERP implemented. Training is another important factor that determines

success of ERP implementation. A powerful tool in the hands of wrong person can prove

to be a nightmare. It is thus necessary to provide the required training to all users before

an ERP rollout. Assessing the training needs and then providing the training at right time

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is a must. Training needs must be accessed at different times and a refresher course can

be planned.ERP implementation is facilitated by a core team. The competency of the core

team in handling both the technical and people issues plays a vital role in terming the

implementation as successful. User friendliness is the aspect which needs to be

considered. The good feel and usability of screens, the ease of data entry, and availability

of reports in required formats reduces the burden on the user. Many a times users

complain of double work being done even after implementation of ERP as the reports

generated by ERP system may not be in the format required by the end-user. The ease of

data entry and ease of finding the necessary columns or fields is important. The screen

design should be ergonomic and clarity should prevail regarding which entry to be

selected. In most of the cases there exist legacy systems. The employees in an

organization are so used to the legacy system that they may find migrating to a new

system very difficult. Resistance to change or still following the old manual procedures

can lead to failure of an ERP system implementation. For example, despite availability of

documents in servers people may still resort to maintaining unnecessary copies of

physical records.

Availability of training documents and manuals act as a Bible when a new person joins

the organization. Training in most of the ERP implementation follows the approach that

the trainer trains the user. This means that the core team gets training from the

consultants directly and then they transfer the knowledge to end-users within the

organization. The core team generally consists of persons who are experts in their

functional area. The core team prepares training documents and manuals which consist of

transaction codes, procedures and help documents.

End users are ultimate users of the ERP system. These are the people who were doing the

functions that are being automated or computerized by the ERP system. Employees may

fear that the new system is hard to learn. Job profiles may change and people will be

forced to undergo to develop new skill sets. If these fears are not addressed then the

organization may find itself in trouble.

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2.3 Key Performance Metrics of ERP Implementation

Effectiveness of an ERP implementation can be somewhat gauged by Key Performance

Metrics/Indicators (KPIs) of business processes. KPIs are benchmarks with quantitative

or qualitative values that help an organization assess the success and effectiveness of the

processes that have been implemented in the ERP. However it may not be appropriate to

expect significant improvement in these values immediately after the implementation. An

organization needs to give itself the time to absorb and imbibe the changes brought about

in by the ERP to realistically achieve the KPI targets. Examples of these metrics are as

follows:

Financial Perspective: The cost savings, budgetary compliance etc.

Customer Perspective: The internal and external customers are included. The metrics

could be in form of percentage reduction in billing errors, percentage of transactions

finished on schedule, percentage increase in the on-time shipments.

Internal Process Perspective: These include reducing the operational problems. Process

improvements caused due to ERP implementation etc are also covered here.

Human Resource Perspective: Examples include the level of user satisfaction, time

spent on training, etc.

Business benefits aside, ERP gives an information system three important capabilities:

consistency and reliability of data across the organization, streamlined transaction

processing, and provides operations level reporting. These capabilities, basic and

important as they are, ensure that companies are ready for specific solutions that enhance

performance.

Improvements measured as a result of ERP implementation (Study by Aberdeen Group)

shows some interesting findings. There has been 20% reduction in operating costs,18%

reduction in administrative costs,22% reduction in inventory costs,17% improvement in

on-time shipments,48% better utilization of resources,40 % reduced time to decision

making,55% reduction/redeployment in headcount and a very good increase in sales and

profit.

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2.4 Downsides of ERP

The ERP systems are generally very costly in terms of initial investment. They also come

with many hidden charges in the form of license fees, upgradation charges, consultation

fees, training costs etc.Some of the downsides of ERP systems include

� Dependence on vendor for upgrades

� Expensive customization

� Staff leaving for better salaries

� Others

ERP may be a panacea but a panacea after all needs to be administered with finesse and

professionalism. The hurdles in the path of a successful ERP implementation in the

Indian Mid Market context are:

Expectations from ERP: There is a feeling that ERP is an intelligent wand that solves

all business problems. The fact is that it is an application framework which has to be

tuned to the organization’s requirement and run by humans who make the decisions. On

the flip side ERP is often classified with an off the shelf accounting package whereas the

fact remains that an ERP is an integrated framework that addresses most of the

organization’s business functions.

Unstructured Processes: A majority of the mid market segment organizations are

closely held businesses where the business processes have evolved over years. Realigning

of these business processes and streamlining of data to suite the ERP requirement is a

major exercise where the participation of the clients is critical.

Commitment from Management: Any ERP implementation is phased over a period of

time. In quite a few cases it has been observed that there is a wane in the interest and

commitment of the management during the implementation process. This result is cost

and time overrun and in some cases the process gets nipped in the bud.

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Cost Benefit Utopia: A common expectation is to get the “skies for nothing”. Although

there have been efforts to optimize the total cost of ownership, the fact remains that value

which one can expect is proportional to the investment. An imbalance in terms of trying

to derive more can lead to skewed delivery in turn the Quality suffers.

A study by Boston Consulting Group (BCG) highlights that some 20 percent of the

organizations implementing ERP reported that they could have achieved similar business

value for 50-60 percent less. Many of their expenditures had gone towards false starts,

non-essential features and over-reliance on expensive external consultants.

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CHAPTER 3

COMPANY PROFILE

Hindustan Organic Chemicals Limited (HOCL) is a leader in Chemical Industry and was

incorporated in 1960 under the Ministry of Chemicals & Fertilizers with its registered

office at Rasayani in Maharashtra. Hindustan Organic Chemicals Limited (HOCL) is a

chemical company, engaged in the manufacture and sale of various organic chemicals. It

is headquartered in Mumbai, India. The Government of India set up HOCL with the

objective of attaining self-reliance in basic organic chemicals needs and to reduce

country’s dependence on import of vital organic chemicals.

In the 1980s HOCL diversified its activities. Kochi had been identified as a growth centre

due to the availability of raw materials, man power and other infrastructural facilities. As

a result, HOCL Kochi unit came into existence.

3.1 Products and their use

Products of HOCL Cochin unit are Phenol, Acetone and Hydrogen peroxide.

Phenol is a versatile industrial organic chemical. The largest end use of Phenol is in

Phenol-formaldehyde resins used in wood additives as well as moulding and laminating

resins, paints, varnishes and enamels. Phenol is also used in the manufacture of

preservatives, disinfectants, lubricating oils, herbicides, insecticides, pharmaceuticals,

etc.

Acetone is an important commercial solvent and raw material with wide usage in the

chemical explosives and lacquer industry. It is commonly used as a solvent for Cellulose

Acetate, Nitrocellulose, Celluloid, Cellulose Ether, chlorinated Rubber, various resins,

fats and oils and an absorbent for Acetylene Gas.

Hydrogen Peroxide has wide application in paper and textile industries for bleaching

purpose as a substitute for hazardous chlorine. It is also used in electronic and

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metallurgical industries, effluent treatment plants, sewage treatment and for removal of

toxic pollutants from industrial gas streams.

3.2 ERP implementation at HOCL

It was the Government of India directive which required all the PSUs to implement ERP

systems.HOCL being a PSU had to comply with the decision. The Head of MSS

department, Shri K.V.Varkey was appointed as the Project manager for ERP

implementation in June 2008. Wipro was appointed as the ERP Consultant in June 2008.

A core committee was formed by the Project manager consisting of suitable officers from

all departments of HOCL to facilitate the consultancy works. Wipro consultants

interacted with the core committee members and department heads to ascertain their

requirements, to study existing business processes and for doing the gap analysis.

Steering Committee was formed by CMD including the Directors, General Managers and

Project manager in August 2008.Project manager was given authority to communicate in

star model with all steering committee members for faster decision making. The Steering

committee was formed to take major ERP related top management decisions.

Through interaction with the individual departments and core committee members,

Wipro team collected all data required for understanding existing business processes,

identifying expectations of personnel/ pain areas/ extent to which IT is currently used and

identifying gaps if any in IT Skills of personnel for remedial action, acquiring sufficient

knowledge to prepare process maps, FRS etc.that is required for tendering process related

to buying ERP package / appointing ERP development consultant.

The Key personnel of HOCL were involved in the ERP package selection process. SAP

was selected as the ERP package after review by the key personnel and ERP vendors

made presentations before key personnel regarding the strengths/ features of their ERP

packages and the fitness for HOCL use.

31

After this, the perceptions of key personnel regarding the relative suitability of ERP

packages in the HOCL context were collected using a questionnaire.TCS was appointed

as the consultant for the project. Different stages of the project are given below.

3.2.1 Project Preparation

The TCS consultants studied the HOCL Business processes. Core team members were

given Level 1 training in the IDES (International Demonstration Education system)

system of SAP. They gained knowledge on functionalities available in SAP. The BPML

(Business Process Master List) was prepared module wise briefly covering the key

business processes.

3.2.2 Business Blueprint Preparation

Business Blue prints were prepared by the core team members. Blue prints were prepared

business process wise, giving a detailed account of various situations faced in business.

The TCS module consultants carried out the process mapping, explaining how each

process step will be carried out in the SAP scenario and what lies beyond the scope of

SAP.

3.2.3 Development phase

During this phase, the SAP system was configured and customized by TCS consultants as

per the documented blue prints. Level II training of the core team was carried out in this

phase. Tests were jointly conducted by TCS consultants and core team members

concerned after configuration and customization.

3.2.4 Master data Creation

While the TCS module consultants were busy with the development work, the core team

members prepared the master data. Excel templates given by the module consultants were

used to furnish data in a structured fashion and easy uploading into SAP.

32

3.2.5 Testing

Unit testing and Integration testing were conducted to ascertain the suitability of the

developed ERP system.

3.2.6 Preparation of training manuals

Training manuals with screen shots were prepared by core team members and circulated

among the users. Training sessions were conducted to prepare the users for the post-

implementation scenario.

3.2.7 Allocation of user licenses

The user licenses were allocated in an optimum manner between users. User licenses

were allocated to individuals where traceability is critical and shared in cases of lower

volume of work on SAP system.

3.2.8 Creation of User roles

User roles were created for allocating to users. A user role is a set of SAP transactions.

All users are not authorized to execute all transactions.

3.2.9 Go Live

The black out period commenced on 1st Sept 2010. Legacy system was stopped and a

black out period of 10 days was planned. However it was delayed to due unavoidable

reasons. The Go-live was on 16th Sept 2010. Finally by 1st Oct 2010 live transactions

were carried out in SAP.

3.3 SAP Modules Implemented

The following SAP Modules were implemented at HOCL

� MM (Materials Management)

� PP (Production Planning)

� SD (Sales & distribution)

� PM (Plant maintenance)

� PS (Project systems)

33

� HCM (Human Capital management)

� FICO (Financials & Control)

� QM (Quality management)

� HSE (Health, Safety & Environment)

3.4 Material Goods Movement

Materials purchased by Materials department and stocked in the stores have to be issued

for consumption by other functional departments or contractors performing various

service contracts in HOCL as and when required by them. Also, issued materials will

have to be returned to the stores by the functional departments / contractors if not

consumed.

Benzene if purchased from any source other than BPCL-Kochi Refinery will mainly have

to be received by sea at Cochin port and discharged from the ship into Storage tanks hired

by HOCL at one of the Storage tank installations at Cochin port. Stock transfer (Issue) of

the Benzene so received at Storage tank terminal will have to be carried out to transport

the product to HOCL plant for subsequent production consumption. Stock transfer of

Phenol drums from Kochi plant to Rasayani depot plant of HOCL for subsequent sale is

another kind of goods movement. Materials are issued to functional departments from

Stores based on DEMAND NOTES signed by authorized officers in the functional

departments. Materials are issued to contractors on the basis of a request letter from the

contractor containing list of materials to be issued to them, duly endorsed by the

authorized officer in the department managing the contract. ISSUE VOUCHER is

prepared against issue of materials to contractors and the contractor is made to

acknowledge receipt of materials in the Issue voucher. The Benzene received by sea at

Storage tank terminal at Cochin port is issued for transportation using DELIVERY

CHALLANS of HOCL. Phenol drums are issued for transportation to Rasayani depot

plant through CENVAT INVOICES.

34

3.4.1 Issue of Materials to Functional Departments

1. Materials in stock in HOCL stores are issued to functional departments against

DEMAND NOTES (DN) signed by the authorized officers of the department.

2. The Demand note shall indicate the Cost center code, Demand note date, Item

code, Description, unit, Quantity demanded and signature of the authorized

officers.

3. The Stores officer assigns the DN to the Storekeeper in charge of the materials.

4. The Storekeeper verifies the availability of the materials as per DN before issuing

the materials.

5. The Storekeeper enters the DN details in the LAN system including the actual

quantity of issue and posts the DN.

6. The Computer generated DN serial number is written on the DN.

7. Periodically, the Stores officer sends hard copies of DN to Finance department.

3.4.2 Issue of Materials to Contractors

1. In the case of issue of materials to Contractors, the Contractor submits a request

letter to the Stores officer indicating the contract details and material

requirements. The functional dept managing the contract endorses the letter for

issue of materials.

2. The Stores officer prepares ISSUE VOCHER (IV) in the name of the contractor

indicating the contract reference no, IV date, Itemcode, Description, unit,

Demanded quantity and Actually issued quantity.

3. The IV is signed by the contractor as proof of having received the materials.

4. The IV is entered in the LAN system and posted by the Storekeeper.

5. The Computer generated IV serial number is written on the IV.

6. Periodically, the Stores officer sends hard copies of IV to Finance department so

that the recoveries as applicable can be made by Finance dept from the

contractors bills.

35

3.4.3 Return of issued materials

1. Incase of return of materials earlier issued by Stores to functional departments and

Contractors, RETURN NOTE (RN) is used.

2. The RN indicates the details of the returning department/ contractor, details of

materials returned such as item code, description, unit, quantity returned.

3. The Storekeeper enters the actual quantity received at Stores in the RN after

ensuring that the materials are in acceptable condition.

4. The Storekeeper enters the RN details in the LAN system including the actual

quantity of return and posts the RN.

5. The Computer generated RN serial number is written on the RN.

6. Periodically, the Stores officer sends hard copies of RN to Finance department for

further action.

3.4.4 Goods issue for stock transfer

1. In the case of stock transfer of Phenol drums to Rasayani Depot plant, marketing

dept creates a Sale order for the whole year with HOCL Rasayani as the buyer

and consignee.

2. Transportation contract is executed for transportation of Phenol drums to

Rasayani on stock transfer basis.

3. Excise cum tax invoice is prepared for each truckload and cenvat applicable is

paid as in the case of sales.

4. The invoice is created at Nil tax since it is stock transfer.

3.4.5 Scrap receipt & issue

1. Scrap materials may be of two types (1) Scraps generated in the plant (2) Those

generated due to conversion of obsolete/ nonmoving materials in stock to scraps.

2. In the case of scraps generated in the plant, the functional department concerned

sends the same to Stores officer along with a note. In many cases, scraps are

generated as lots. In some cases, like M S scrap, materials are weighed and

quantity ascertained before the materials are delivered at the SCRAP YARD.

36

3. In the case of nonmoving/ obsolete items, approval of competent authority is

taken for treating the same as scrap. Depending on the type of material, it is

suitably classified into one of the scrap categories like MS scrap, SS scrap,

Aluminum scrap, Copper scrap etc.

4. Entries are made in the scrap register kept by the Stores officer. No entries are

made in the LAN system.

5. The Stores officer gives the details of scraps available for disposal to Purchase

dept.

6. The HOD of Materials dept calls a meeting of the SSIDC committee (surplus –

scrap identification & disposal committee). The committee inspects the

accumulated scraps in the scrap yard or other locations as applicable. The

committee recommends the segregation of scraps if required and the mode of

disposal.

7. Depending on the value, the SSIDC may recommend disposal through limited or

open tender.

8. Depending on the value of scrap available, as recommended by SSIDC, limited or

open tender is resorted to by purchase section.

9. The purchase department has a list of scrap vendors. Incase of limited tender, a

tender will be floated as per the list of scrap vendors. Incase of open tender,

newspaper advertisement is published, and tender documents are uploaded in

HOCL website.

10. The quotations along with EMD will be opened on the stipulated date of opening

in the presence of attending bidders.

11. EMD will be forwarded to Finance.

12. Comparative statement of prices is prepared including all taxes and duties as

applicable.

13. Proposal for scrap disposal is put up by the officer concerned for disposal of

scraps to the highest quoting bidders. Approval is obtained from the competent

authority.

14. Sale order for scrap is placed on the successful vendor.

15. Scraps are sold based on the sale order against advance payment.

37

3.5 Purchase

The functional departments of HOCL require various materials to carry out their

operations/ works. These departments raise indent (PR) for the procurement of the

required materials. The Stores section under the Materials department initiates the

replenishment of stocks of certain items (called stock items). PR is raised by stores

section for such items. The Materials department floats open tender, limited tender or

single tender for the procurement of the materials depending on the value and type of

materials. In the case of open tender and some limited tenders, two-bid system is

followed with techno commercial and price bids. In the case of limited tender, Enquiry

(RFQ) is floated as per approved vendor list of HOCL. The quotations are subjected to

technical evaluation and PO is placed on the lowest technically acceptable bidder after

financial concurrence and approval of competent authority.

The vendor list based on which RFQ is floated may contain indigenous as well as

foreign vendors. Similarly, in the case of open tenders, offers may be obtained from both

foreign and indigenous vendors. Where the lowest technically acceptable offer is from an

indigenous vendor the procedure detailed below is followed.

Purchase activity starts with an approved indent (PR), which may be raised by any

functional department of HOCL. The value of purchase, availability of sufficient vendors

for the item in the approved vendor list, and the category of the material decide the

method of floating tender. In the case of spare parts, Enquiry (RFQ) is sent only to the

OEM or authorized agent (single tender). Where the value exceeds Rs 75 lakhs, it is

mandatory to resort to open tender procedure unless exempted by certain provisions of

the purchase policy of HOCL. Where sufficient vendors are not available or where there

is no chance of getting sufficient quotations through limited tender, open tender is

followed.

Indents (PRs) raised are of four types (1) PR for nonstock items (Nonstock items are

those items where the Materials departmentt is not expected to replenish the stock) – PR

of this category is raised by all user departments (2) PR for stock items (Stock items are

those items where the stores section initiates action for replenishment) – used only by

38

Stores section of materials department (3) PR for Emergency purchase – used in cases

where the emergency situation is specified and approved by Unit in charge (4) PR for

cash purchase – used only for procurement of locally available items of value below Rs

2500/-

39

CHAPTER 4

RESEARCH METHODOLOGY

This chapter deals with the aspects of research methodology used and the work done to

develop the final instrument used for data collection. It also describes how the

information has been organized and analyzed.

4.1 Rationale for the Study

Most of the organizations spend a huge amount of money on improving their business

function in order to gain competitive and strategic advantage. ERP (Enterprise Resource

Planning) has become a business solution and backbone of business activities.

This research aims at studying the impact of ERP implementation on the organization

functions and performance areas. It tries to measure the benefits obtained after

implementation of ERP.The study measures the benefits derived after post-

implementation phase and tries to identify any gaps between the expectations and

realizations.

4.2 Objectives

The specific objective is to ascertain the advantages obtained by implementing ERP and

to study the effectiveness of ERP implemented. Further the study tries to measure any

bottlenecks that may exists and suggest measures for improvement.

4.3 Scope of the Study

The study is restricted to the users of material management module of ERP.Users of this

module from various departments have been studied.

4.4 Methodology

The following methodology was followed for conducting the study:

• Detailed study of the organization and the processes involved.

• Detailed study about ERP with more emphasis on SAP R/3 software.

40

• Study of benefits of ERP and challenges associated with it.

• Derivation of objectives.

• Development of the questionnaire.

• Pre-testing and validation of the questionnaire.

• Data Collection

• Data Analysis and interpretation.

• Preparation of findings and suggests remedial actions for concerns.

The study involves use of survey tools to capture data from various users of ERP.

Questionnaire was developed to collect data from the users. In-depth Interview with users

was held to collect data and responses were recorded.

4.5 Development of the Questionnaire

The questionnaire was framed to get the necessary inputs from the users. To ascertain the

user satisfaction responses were recorded on a 5-point scale. Some of the questions

demanded either yes or no response. To get further details, open-ended questions were

also put forward. To get comparison between the old and new systems, the questions

asked user to respond regarding the changes after implementation. The questionnaire is

appended in Annexure I.

4.6 Type of Research

Descriptive Research has been used for this project. Descriptive research includes

surveys and fact-finding enquiries of different kinds. The major purpose of descriptive

research is description of the state of affairs as it exists at present. The study is both

quantitative and qualitative in nature. The study is based on the data collected from the

users of ERP.

4.7 Sources of data

Data has been collected from various sources; there is a combination of both primary and

secondary data that has been used in this research.

41

4.7.1 Primary Data

The primary data has been collected by conducting “In -depth Interview” with the ERP

users. Primary data has also been collected through questionnaire from 28 employees

using ERP.

4.7.2 Secondary Data

Articles have been sourced from magazines and journals dealing with current issues in

ERP.Internet resources, research publications & text books related to ERP have been a

major secondary source for the extraction of the expert’s opinion. The documents related

to ERP provide by HOCL also helped in the study.

4.8 Sampling Technique

The study here is concerned with the material management module and hence judgment

sampling is considered appropriate for the study. The users of the material management

module were considered.

4.9 Sample Size

This research is restricted to a sample size of 28. The study deals with material

management module only and the sample size which covers all the users and serves the

purpose well.

4.10 Sample Description

The sample under this study consists of ERP system users of materials management

module of SAP. The users belong to various departments and are the users of MM

module. Some of the users have been the part of the core implementation team also.

4.11 Summary

The data collected using the questionnaire was analyzed .Classification into different

categories helped to understand the specific aspects under study. The percentages were

calculated. Charts and bar diagrams have been used to depict the results. Inferences have

been drawn from these findings. The aspects studied include the usability of the ERP

42

system, benefits released after implementation of ERP, quality of information, aspects of

training, improvement in performance areas, comparison with the previous legacy

systems, user’s level of satisfaction and areas of further improvements. MS Excel and

SPSS 16.0 were used for analysis of the data.

43

CHAPTER 5

ANALYSIS AND INTERPRETATION

In this chapter, the data collected using the instrument have been analyzed and the

interpretation made.

All users of the material management module of SAP were interviewed and

questionnaires were completed during the interviews. Other informal sessions were held

to extract information required for analysis. The data gathered through these instruments

were analyzed using statistical tools.

5.1 SAP User Profile

All the users surveyed are using SAP on daily basis. The level of expertise in SAP is

shown below in the Table 5.1.

Table: 5.1 Level of expertise in using SAP

Profile

No. of

Respondents

Beginner 13

Well Versed 13

Expert 2

44

Fig.5.1 Level of expertise in using SAP

Level of expertize in SAP

47%

46%

7%

Beginner

Well Versed

Expert

The majority of users have a rich experience working for more than 10 years at

HOCL.Considering the fact that ERP implementation at HOCL has taken place recently,

these figures are encouraging.

5.2 Questionnaire Evaluation:

The benefits realized after implementation of ERP were recorded on a Likert type scale

ranging from strongly disagrees to strongly agree. The questions have been regrouped

and classified under various aspects of the study.

5.3 Benefits Realized after implementation of SAP

The benefits realized by implementation of SAP have been given below.

Tracking of records: This refers to tracking of documents. In earlier systems, tracking

was a difficult task as the required document had to be tracked from the file rack

physically. This lead to loss of productive time and unnecessary hardships. Besides there

45

existed a high probability of loss of the document during transit or a user denying having

received the documents. With ERP systems the tracking of documents are made easy.

Reduction in paper work: The implementation of ERP brings with itself the benefit of

having all records on the server. Hence a concept of paperless office is possible. As files

are available online, even routing for approvals can be done by sending a soft copy rather

than a physical copy or using SAP’s approval work flow.

Improvement in transparency: Decisions in organizations need approval of many

authorities. By hiding of data, there could be a shift in the balance of transparent

dealings.ERP eliminates such a situation as now information is readily available online.

Enhancement in Decision Making: ERP integrates the data and information is available

across various departments. This means departments can plan based on the inputs from

the other. In earlier cases information was not readily available. The delay in having right

information can cause delay in decision making process. With implementation of ERP,

decision making is bound to be simpler and faster.

Improved cooperation between departments: Any organization will have departments

whose objective may be conflicting with others. For example Finance department wants

to keep the costs down but any maintenance or repair work would require consumption of

materials.ERP implementation helps in justifying an action. When actual needs are

understood the differences are meted out and firm gains by improved cooperation

between the departments.

46

Table 5.2: Benefits realized after ERP implementation

Benefits Realized

Strongly

Agree Agree Neutral Disagree

Strongly

Disagree

Tracking records made easier 13 13 0 2 0

Reduced Paper Work 9 12 4 1 2

Improved Transparency 13 12 2 1 0

Enhanced real decision-making 9 13 5 1 0

Improved co-operation between

departments 6 11 8 3 0

The responses recorded on the aspect of benefits obtained after ERP implementation has

been shown in the Table 5.2.Fig.5.2 shows the graphical representation of the same.

Benefits Realized

0

2

4

6

8

10

12

14

Tracking records made

easier

Reduced Paper Work Improved

Transparency

Enhanced real time

decision-making

Improved co-operation

between departments

Type of benefit

Strongly

Agree

Agree

Neutral

Disagree

Strongly

Disagree

Fig 5.2 Types of Benefits Realized

47

Interpretation

There have been many tangible and intangible benefits obtained after implementation of

SAP. It is clear from the study that there have been improvements in record tracking,

transparency and cooperation between departments after ERP implementation. About

93% of the users agree to the point that ERP implementation has made tracking of

records easier.75% of the users agree that there has been reduction in paper work after

ERP.The remaining 11% do not subscribe to the point that ERP has reduced paper work

and 14% remained neutral on this aspect. On the aspect of improvement in transparency,

about 89% of the users are of opinion that transparency has improved after ERP.79% of

the users also felt that ERP has enhanced the real time decision making.61 % of the users

say that ERP has led to improved cooperation between the departments, while 29% chose

to remain neutral on this aspect and remaining felt no changes.

With ERP documents can be tracked with minimal efforts. Besides it has been much

more transparent now as one need not depend on others to view official files or

documents. With data available with the click of few buttons, information availability has

been made much faster. Earlier these data needed to be extracted from files. The tiring

effort of finding files or searching for information in old files is now eliminated. Thus the

cost of communication has come down significantly.

The amount of paper consumed has also come down significantly. It could be noted that

the paper and other stationery has come down by about 40 percentage. This is a

significant change as in government organizations, the routing for approvals require

various copies of documents for different levels of authority. Now with the data made

available via SAP, all routing is done via SAP mail. We also understand that the concept

of paper-less office cannot be implemented in a government organization. People still

follow the routine of taking a hard copy printout fearing loss of data.

48

5.4 Quality of Information

Other parameter analyzed was whether the information available was accurate and

available on time. We understand that ERP implementation has improved the accuracy of

data. The old system had its own loopholes or demerits. Once a request is given in

physical form, there exist very high chances of it being lost. Besides possibility of

duplication and manipulation can cause serious consequences. This is eliminated by use

of ERP system. Timely information should be available to make timely decisions and the

quality of information is vital. By implementation of ERP these have been well

addressed. Particularly the use of SAP mail facility enables sharing of information and

tracking for later use. The sales person sitting in Mumbai office can now know how many

truck loads of benzene or phenol have been issued from the plant. The responses have

been shown in the Table 5.3.

Table 5.3 Information Quality after ERP implementation

Information Quality after ERP

implementation

Strongly

Agree Agree Neutral Disagree

Strongly

Disagree

Improved Accuracy 11 15 1 0 1

Information Availability made

easier 6 16 6 0 0

Timely availability of information 11 15 2 0 0

49

Fig 5.3 Information Quality

Information Quality

0

2

4

6

8

10

12

14

16

18

Improved Accuracy Information Availability made easier Timely availability of information

Strongly

Agree

Agree

Neutral

Disagree

Strongly

Disagree

As seen from the Fig 5.3, about 93 % of the users felt that ERP has improved accuracy of

information. About 79% of the users agree on the point that ERP has made information

availability much easier.93% of the users had information at the right time when

compared to earlier systems.

5.5 Training

Training is one of the most important aspects in ERP implementation. A tool in the hands

of an inexperienced or untrained user can do more harm than good. It is thus very

important to measure the aspects of training. In the study we have tried to ascertain

whether training provided has been sufficient. We also tried to gather the user’s training

needs. Training and updating the user knowledge is a continuous process. This means

that a proper tracking mechanism to capture their needs must be in place. The

responsiveness of the training team or the core team plays a vital role in user accepting

50

the new system and adapting to the changes. Training sets the environment for

organizational work culture to change to the ERP system.

In the study the following outcomes were observed. About 75% of the user felt that they

have been provided sufficient training. The remaining 25% felt that they needed more

training on aspects like configuration, report generation, searching for specific data. Few

of the requirements were technical aspects like methods of calibration, financial aspects

like capitalization of goods purchased etc.There was a mixed response to the question

whether mechanism to track training needs are available. This could be possible due to

the fact the training requirements were communicated by word of mouth and there exist

no specific requirement recording mechanism. About 82% of the respondents were

confident that the core team has the ability to handle the users’ need and make changes.

The core team also scored 24 out of 28 respondents praising them for the responsiveness

to the users’ need. There also exists proper mechanism to handle the complaints and

issues that might arise in normal course of working with ERP.

Fig 5.4 Aspects of Training

Training Aspects

0

5

10

15

20

25

30

Sufficient training has

been provided

System in place to track

training needs

Core team competent to

handle issues

Responsiveness of core

team to user needs

Mechanism to handle

issues and complaints

Yes

No

51

5.6 Availability of Training documents

Training documents and manuals forms the Bible of an ERP implementation. They are

the medium to train the users as well as documentation for future purpose. The majority

of the users responded that the training documents are complete and available and they

were aware how to access them.

Fig 5.5 Availability of Training Documents

Availaibility of Training Documents

57%

7%

32%

4%

Available

Available

but not Clear

Available but incomplete

No idea

5.7 User friendliness of SAP

User interface is an important factor in any software. In case of ERP too, if the look and

feel of the ERP system is not comfortable to use then the user may spend more time.

Customizations are possible in SAP but the drawback is that too much customization can

be a costly affair.

The users were quizzed whether the use of SAP is comfortable with respect to data entry,

report generation, location of data etc.26 users out of 28 agree on the fact that the screen

and usability of features is satisfactory. There were little concerns of the report generated

52

as the format of these do not match the users’ requirement and hence further modification

is required before being finally put to use. We also tried to find out whether the ERP

system (SAP) implemented has built in feature to prevent wrong entry. We understand

these features are available and being put to use in cases like automatic blocking of

transporters in case of expiry of licences.The SAP does not allow selecting the

transporters whose licenses have expired. This is a kind of system like “prevention is

better than cure”, a type of alert mechanism where in the user can alert the transporter to

renew the licence.This has great significance at HOCL as materials carried are chemicals

and transporters are required to have valid licenses else consequences will be

severe.Similarily the system prevents wrong entry which makes it a security feature of

SAP. Such systems were tailor-made for HOCL requirements to prevent a lapse in

security.

The responses have been shown in the Table 5.4 below.

Table 5.4 User Friendliness of SAP

User Friendliness Strongly

Agree Agree Neutral Disagree

Strongly

Disagree

Format of report generation

matches the need 2 11 10 4 1

System has features to

prevent wrong entry 3 16 8 1 0

53

Fig 5.6 User Friendliness

0

2

4

6

8

10

12

14

16

18

Format of report generation

matches the need

System has features to

prevent wrong entry

Strongly

Agree

Agree

Neutral

Disagree

Strongly

Disagree

An effective SAP implementation is realized when the user has the necessary rights and

authorization to access the data required. We learn that there are no such problems

observed at HOCL with regard to users not having rights, roles to access features he/she

needs during his/her normal course of work. We also learn that issues like slowdown do

occur rarely but the cause is attributed to the fact that simultaneous use of ERP systems

by many users at a peak time might cause a delay in output. All the hardware was

upgraded before ERP implementation to match the requirements of SAP system. Thus the

slowing down is a minor issue occurring very rarely. One critical observation was the

point that despite the availability of data in the system, the traditional files and paper

work was still being used. We learn that this is due to needs from higher authorities who

seek physical records despite data being available in SAP. There was a fear among few

employees that in case of an enquiry, data in the system may not be available and thus

they were taking physical copy of records for their own future reference.

54

Table 5.5 Responses recorded on other aspects

Strongly

Agree Agree Neutral Disagree

Strongly

Disagree

Availability of proper rights/roles 7 16 4 1 0

System Slowdown 1 7 9 9 2

Use of traditional files/documentation 3 11 8 5 1

Fig 5.7 Other Aspects

0

2

4

6

8

10

12

14

16

18

Availability of proper rights/roles System Slowdown Use of traditional files/documentation

Strongly

Agree

Agree

Neutral

Disagree

Strongly

Disagree

55

5.8 Other Factors

There exist other critical success factors which affects the success of ERP

implementation. For example, if there exists a false data in ERP, then the report

generated at the end may not reflect the actual situation. The data uploaded must be

updated in the server. To access such factors usually an audit is done. There also exist

possibilities that in normal course of work, the ERP system is not available either due to

major upgradation or maintenance. In such cases the user must have a backup plan else

the work will get affected. There could be scenario that the person having the necessary

roles or authorization is on a long leave. In such cases there should be another user who

could manage in his/her absence.

To assess these factors which play a vital role in post implementation phase, the

following questions were raised to the user.

� Whether any false data still exists?

� Whether the data is up-to-date?

� Whether the reports generated from SAP are misunderstood?

� Possibility of Work getting affected due to non-availability of SAP?

� Availability of backups for data access in case of system unavailability?

The responses are tabulated in Table 5.6 below.

Table 5.6 Other Factors

Other Factors Yes No

Existence of False Data 19 9

Data is up-to-date 25 3

Reports being misunderstood 20 8

Work getting affected due to

non-availability of SAP 22 6

Availability of backups for data

access in case of system

unavailability 19 9

56

0

5

10

15

20

25

30

Existence of False Data Data is up-to-date Reports being

misunderstood

Work getting affected

due to

non-availaibility of

SAP

Availability of backups

for data access

in case of system

unavailability

Yes

No

Fig 5.8 Other Factors of successful implementation

Interpretation

As seen from the figure above, majority of users reported existence of false data. The

respondents were referring to false or irrelevant data which still exists in SAP.Possibily a

data cleansing needs to be undertaken considering the higher number of users

highlighting this.

Another concern was the point that the SAP reports as such might be misunderstood if

not viewed properly. About 71% felt that reports could be misunderstood. More training

on report generation and interpretation can solve this issue.

Though a majority (about 79%) of them agreed that their work might get affected due to

non-availability of ERP system, they were of opinion that such a prolonged non-

availability is very rare and manageable. There exist proper backups for data access in

57

case of system unavailability. Hence the preparedness in case of non-availability is not a

concern at HOCL.

5.9 Improvements in performance areas

The aspect studied here are reduction in inventory, reduction in purchase cycle time,

easier vendor evaluation, better tracking of consignments, on-time shipment time, end

customer satisfaction, ease in auditing, ease in stock verification, tracking of cost at micro

level. Findings are tabulated in Table 5.7

Table 5.7 Improvements in Performance Areas

Improvement in performance areas

Strongly

Agree Agree Neutral Disagree

Strongly

Disagree

Reduction in inventory 1 12 12 2 1

Reduction in purchase cycle time 3 10 12 3 0

Easier vendor evaluation 6 8 12 1 1

Better Tracking of consignments,

stock movements etc 7 12 7 2 0

On-time Shipments improved 2 6 19 1 0

End customer Satisfaction 2 12 12 2 0

Auditing has been made easier 3 13 11 1 0

Stock taking/verification made easier 6 16 5 1 0

Tracking costs at micro level made easier 6 20 1 1 0

58

improvement in performance areas

0

5

10

15

20

25

Reduction in inventory

Reduction in purchase cycle time

Easier vendor evaluation

Better Tracking

On-time Shipments improved

End customer Satisfaction

Auditing made easier

Stock verification made easier

Tracking costs at micro level made easier

Strongly

Agree

Agree

Neutral

Disagree

Strongly

Disagree

Fig. 5.9 Improvements in Performance Areas

Interpretation

The major raw material used at HOCL is readily available via the pipe lines from BPCL

plant. Hence there would be less impact of ERP on these. But there exist other items. The

term inventory would refer to those items. About 46% of the users agree that there has

been a reduction in inventory after ERP implementation, while the remaining 43%

remained neutral on the aspect and 11% disagreeing on this aspect.

On the point of reduction in purchase cycle time, majority of them were of view that

there has been no significant impact due to ERP.This could be attributed to the fact, the

regulations set by the government stipulate a minimum period for tender approvals. Thus

the lag is built in the system and beyond the scope of ERP.

Evaluation of the suppliers has been made easier than before. It is now easier and

convenient to track the consignments or material movement. For example, we can get

59

data like the registration number of the truck currently in the premises. Majority of the

users do not see any considerable improvements in shipment time after ERP.About 68%

remained neutral on this aspect.

Majority of them agreed that ERP has led to better customer satisfaction. Customer

queries could now be better responded with solid data.

The auditing and stock verification have been made easier by use of ERP.The major

benefit is the ability to track and monitor costs at the micro level.93% of the users felt

that with ERP it is now possible to track the cost at various levels. Thus monitoring and

controlling aspects could be done in a better manner.

5.10 Comparison with legacy system

It is to be noted that few departments had their own legacy systems before ERP

implementation. These were however standalone systems. The SAP R/3 cannot not be

compared to these legacy systems in terms of features available. However an attempt was

made to gauge the user perspective towards the ease of use compared to ERP.All but one

of the respondents agree that ERP system is much easier to use than the legacy system.

5.11 Descriptive Statistics for variables

In this section of the chapter, the descriptive statistics for the key variables in the study

are discussed. The means and standard deviations for the changes in performance

measures attributable to the ERP system implementation are presented in Table .The

changes in performance measures were recorded on a Likert type scale ranging from

5=Strongly Agree to 1= Strongly Disagree.

60

Table 5.8 Mean Values of changes in performance measures

Performance Means SD

Reduction in inventory 3.4 0.83

Reduction in purchase cycle time 3.3 0.91

Easier vendor evaluation 3.6 0.99

Better Tracking of consignments, stock

movements etc 3.7 1.01

On-time Shipments improved 3.3 0.59

End customer Satisfaction 3.5 0.75

Auditing has been made easier 3.6 0.79

Stock taking/verification made easier 4 0.74

Tracking costs at micro level made

easier 4.1 0.63

It can be seen from the above table the ERP implementation has brought maximum

benefits in form of tracking costs at micro level (mean=4.1,SD=0.63).Stock verification

is another area where the users felt ERP implementation had made the process

easier(mean=4 ,SD=0.74).The other performance measures also show good

improvement. There has been reduction in inventory (mean=3.4, SD=0.83).Vendor

evaluation has also been made easier (mean=3.6, SD=0.99).The tracking of consignments

has improved as now after ERP it is easier to track them (mean=3.7, SD=1.01).End

customer Satisfaction (mean=3.5, SD=0.75) and improvements in auditing (mean=3.6,

SD=0.79) are other improvements observed. The reduction in purchase cycle time

(mean=3.3, SD=0.91) and improvements in the on time shipments (mean=3.3,SD=0.59)

have the least improvements.

61

Table 5.9 below shows the descriptive statistics for the benefits realized after ERP

implementation.

Table 5.9 Mean Values of Benefits Realized

Benefits Realized Mean SD

Tracking records made easier 4.3 0.82

Reduced Paper Work 3.9 1.1

Improved Transparency 4.3 0.77

Enhanced real decision-making 4.1 0.81

Improved co-operation between

departments 3.7 0.94

From Table 5.9,it can be observed that tracking of records (mean=4.3,SD=0.82) and

improvement in the transparency(mean=4.3,SD=0.77) are the greatest benefits obtained

after ERP implementation.Realtime decision making has also improved

(mean=4.1,SD=0.81).There has been improvements in the cooperation between

departments(mean=3.7,SD=0.94) and in the amount of paper work

involved(mean=3.9,SD=1.1).Hence overall we observe benefits after ERP

implementation.

Descriptive Statistics for other variables are given in the table below.

Table 5.10 Mean Values of Other Variables

Others Mean SD

Improved Accuracy 4.2 0.83

Timely availability of information 4.3 0.62

Format of report generation matches the

need 3.3 0.95

System has features to prevent wrong

entry 3.8 0.7

Availability of proper rights/roles 4 0.74

System Slowdown 3 1.04

Use of traditional files/documentation 3.4 1.03

ERP implementation has improved accuracy (mean=4.2,SD=0.83) and information is

now available on time(mean=4.3,SD=0.62).The use of traditional files and

62

documentation stills continues (mean=3.4, SD=1.03) while the system slowdown issues

are also observed (mean=3, SD=1.04).The user being quizzed whether necessary rights or

roles were available to him/her to carry out transactions responded in positive (mean=4,

SD=0.74).

5.12 Correlation Analysis

Correlation tests are used to examine relationships between variables. They measure the

strength and direction of a relationship between variables. Karl Pearson’s coefficient of

correlation(r) is the most widely used method of measuring the degree of relationship

between two variables. The value of ‘r’ lies between -1 and +1.Positive values of r

indicate positive correlation between two variables whereas negative values of r indicate

negative correlation. A zero value indicates that there is no association between the

variables. The value if r nearer to +1 or -1 indicates high degree of correlation between

two variables.

Correlation analysis has been presented in the Table 5.11 below. It explains the

correlation between timely availability of information and aspects like decision making,

transparency and co-operation between departments.

Table 5.11 Correlation Analysis

Info_Availability_on_Time

Pearson

Correlation

Coefficient*

Enhancement_in_Decision_Making 0.697

Improvement_in_transparency 0.714

Improvement_in_cooperation_between_dept 0.683

*Correlation is significant at the 0.01 level (2-tailed).

With ERP the information is available on time. We can observe that the availability of

information on right time has a high degree of correlation with enhancement in real-time

decision making.Similarily timely availability of information improves transparency. It

63

also has a high degree of correlation with the aspect of improvement in co-operation

between departments. Providing right information on right time avoids conflicts, fosters

cooperation and improves transparency. Faster the information available ,faster can be

the decision-making process.

64

CHAPTER 6

SUMMARY, FINDINGS AND SUGGESTIONS

6.1 Summary

This study is a critical evaluation of ERP implementation at HOCL.It can thus be inferred

from the study that ERP implementation at HOCL has brought many benefits. The ERP

implementation has been successfully carried out.ERP implementation has led to

improvements in transparency, better cooperation between departments, faster decision

making, reduction in the paper work etc.There exist some concerns regarding training

needs as more training were requested by some of the users in specific areas.ERP

implementation has brought in changes in performance measures. The high cost of

investment is justified from the fact that SAP is the best available ERP solution and the

return on investment can be seen in long run in form of employee reduction and gaining

competitive advantage.

6.2 Findings

The findings are grouped under various heads based in various aspects of study. The

agreements and disagreements of the employees to various questions are considered

while arriving at the findings.

6.2.1 Benefits Realized after implementation of SAP

Tracking of records About 93% of the users agree to the point that ERP implementation

has made tracking of records easier. With the documents now available online, tracking

them is only a matter of few clicks as compared to earlier system of tracking the files or

records. Thus the tedious task has been eliminated. This means savings in time as no

more productive time will be wasted in locating a record.

65

Reduction in paper work When the files are available online and the workflow is

managed via the ERP system the amount of paper work may come down.75% of the

users agree that there has been reduction in paper work after ERP.The remaining 11% do

not subscribe to the point that ERP has reduced paper work and 14% remained neutral on

this aspect. There has been a 40 percentage reduction in paper and stationary.

Improvement in transparency On the aspect of improvement in transparency, about

89% of the users are of opinion that transparency has improved after ERP

implementation.

Enhancement in Decision Making 79% of the users also felt that ERP has enhanced the

real time decision making. This can be contributed to the fact that the information is

dynamic and readily available.

Improved cooperation between departments Different departments have different

objectives and sometimes a conflicting situation may arise that leads to straining of

relations.ERP helps in justifying an action. When the actual needs are understood, the

differences are meted out and firm gains by improved cooperation between the

departments. According to this study, about 61 % of the users say that ERP has led to

improved cooperation between the departments, while 29% chose to remain neutral on

this aspect and remaining felt no changes.

6.2.2 Quality of Information

We understand that ERP implementation has improved the accuracy of data. The old

system had its own loopholes or demerits. Once a request is given in physical form, there

exists very high chances of it being lost. Besides possibility of duplication and

manipulation can cause serious consequences. This is eliminated by use of ERP system.

About 93 % of the users felt that ERP has improved accuracy of information. About 79%

of the users agree on the point that ERP has made information availability much easier.

About 93% of the users had information at the right time when compared to earlier

systems.

66

6.2.3 Training

Training is one among the most important aspects in ERP implementations. A tool in the

hands of an inexperienced or untrained user can do more harm than good. In the study the

following outcomes were observed. About 75% of the user felt that they have been

provided sufficient training. The remaining 25% felt that they needed more training on

aspects like configuration, report generation, searching for specific data. Few of the

requirements were technical aspects like methods of calibration, financial aspects like

capitalization of goods purchased etc.There was a mixed response to the question

whether mechanism to track training needs are available. This could be possible to the

fact the training requirements were communicated by word of mouth and there exist no

specific requirement recording mechanism. About 82% of the respondents were confident

that the core team has the ability to handle the users’ need and make changes. The core

team also scored 24 out of 28 respondents praising them for the responsiveness to the

users’ need. There also exists proper mechanism to handle the complaints and issues that

might arise in normal course of working with ERP.

6.2.4 Availability of Training documents

Training documents in complete form are available in majority of the cases. The user is

aware of these documents and the methods of accessing them.

6.2.5 User friendliness of SAP

The users were quizzed whether the use of SAP is comfortable with respect to data entry

,report generation, location of data fields etc.26 users out of 28 agree on the fact that the

screen and usability of features is satisfactory. There were little concerns of the report

generated as the format of these do not match the users’ requirement and hence further

modification is required before being finally put to use. In few cases the data after being

extracted to an excel sheet was reworked or reorganized to get reports in required format.

But the overall score in terms of user friendliness of SAP is very good.

67

6.2.6 Availability of proper rights/roles

All the users had necessary roles and authorizations to carry out the transactions in SAP.

In case the users wanted a change in rights, the same was managed by the MSS team

using SAP Basis after approvals from the authority concerned.

6.2.7 Other Factors

Existence of False Data Majority of users (68%) reported existence of false data. The

respondents were referring to false or irrelevant data which still exists in SAP.

Possibility of Reports being misunderstood SAP reports as such might be

misunderstood if not viewed properly. About 71% felt that reports could be

misunderstood if not interpreted properly.

Data is up-to-date Data is updated on the server instantly and hence data on the server

reflects the up-to-date data.

Work getting affected due to non-availability of SAP Though a majority (about 79%)

of them agreed that their work might get affected due to non-availability of ERP system,

they were of opinion that such a prolonged non-availability is very rare and manageable.

Availability of backups There exist proper backups for data access in case of system

unavailability.HOCL team is well prepared in case of unavailability of main server as

backup is available in another server.

6.2.8 Improvements in performance areas

The aspect studied here are reduction in inventory, reduction in purchase cycle time,

easier vendor evaluation, better tracking of consignments, on-time shipment time, end

customer satisfaction, ease in auditing, ease in stock verification, tracking of cost at micro

level.

The major raw material used at HOCL is readily available via the pipe lines from BPCL

plant. Hence there would be no significant impact of ERP on these. But there exist other

items that are procured from outside. The term inventory would refer to those items.

68

About 46% of the users agree that there has been a reduction in inventory after ERP

implementation, while the remaining 43% remained neutral on the aspect and 11%

disagreeing on this aspect.

On the point of reduction in purchase cycle time, majority of them were of view that

there has been no significant impact due to ERP.This could be attributed to the fact, the

regulations set by the government stipulate a minimum period for tender approvals and is

beyond the scope of ERP.

Evaluation of the suppliers has been made easier than before.

It is now easier and convenient to track the consignments or material movement. For

example, we can get data like the registration number of the truck currently in the

premises.

Majority of the users do not see any considerable improvements in shipment time after

ERP.About 68% remained neutral on this aspect.

Majority of them agreed that ERP has led to better customer satisfaction. Customer

queries could now be better responded with solid data.

The auditing and stock verification have been made easier by use of ERP.

About 93% of the users felt that with ERP it is now possible to track the cost at various

levels. Thus monitoring and controlling aspects could be done in a better manner.

69

6.3 Suggestions

The post implementation phase has gone well at HOCL.However there still exist scope

for improvements which are listed below.

1. The users felt a need for training in some specific areas like report generation

etc.These should be taken into account. Besides considering the fact that the youth of

today will be the managers of tomorrow, HOCL must train its young workforce. There

still exist many persons who do not understand the in-depth or background working of

SAP.

2. Since there exist a fear mentality regarding loss of data in case of crash, users are

taking hard copy print as back-ups.This is only a fear arising of non-availability of SAP

system in case of an enquiry etc.By allowing users a personal backup facility,

consumption of paper can be still reduced.

3. Many users felt that the document management system must be integrated into SAP.

This will enable more savings in time and reduce the complexity involved. Currently the

drawings are available in other software package and not integrated with SAP.

4. To track the training needs, a feedback mechanism can be put to use which will

generate the user’s need and areas to focus. It could be a excel sheet with shared access or

system based on employee id put up on the intranet portal.

5. A review of user licenses can be undertaken to study if any reductions are possible.

This could help in saving costs spent as licensing fee.

6. Reduction in the lag due to system regulations can be eliminated by tweaking them as

per the need. The specifications like minimum number of days required for approval etc.

needs some changes. This may require approvals from higher government officials.

7. Critical review for redeployment and labor reduction can be undertaken so as to derive

the benefits of automated workflow.

70

CHAPTER 7

CONCLUSION

The main objective of this study was the evaluation of the ERP implementation at HOCL

Kochi Unit and to find out the improvements that the ERP has brought. In order to

achieve this, various aspects were studied. The questionnaire was used to record user

responses on various aspects and in-depth interviews were held with the users to gain

more knowledge.

The study reveals that the company was successful in implementation of ERP.The

benefits obtained after implementation of ERP justifies the investment made. On the

aspect of satisfaction among the users regarding the use of ERP and training, majority of

the users are satisfied with the present system. There have been significant improvements

in the performance areas after implementation of SAP.

The support from the Top Management has played a vital role in successful

implementation. The implementation team was given authority to take decisions

independently. The effort by the core team has led to successful ERP implementation at

HOCL Kochi Unit. It is due to the dedicated effort of the core team that the ERP system

has been tweaked to include even the minute details. The ERP implementation has given

the company a competitive advantage.

7.1 Impact of ERP implementation

The users have been relieved of various monotonous tasks. There have been savings in

time and effective usage of resources. The biggest benefit is the seamless integration of

data across various departments. Better tracking saves time. The approvals, routing of

documents have been made much easier now. Even the customers and suppliers are

71

enjoying the fruits of the ERP implementation. For example, the payments can be made

instantaneously as all details regarding transactions with the parties are available online.

Real time monitoring is possible with SAP.SAP mail has enhanced the communication

aspect. There is a better coordination between various departments and an improvement

in transparency has been observed. Tracking of cost at various levels make the tasks of

controlling and monitoring easy.

7.2 Effectiveness of ERP implementation

Implementation is only a part of successful journey. The success of ERP implementation

is measured by various other factors. These factors include the acceptance of the ERP

system by the user, the features available in the ERP system, user training, ease of use of

the ERP system, dependability and reliability of information available etc.The study at

HOCL show that these aspects have been well taken care of. The needs of the user are

accessed and training is provided. Effective training has led to proper transfer of

knowledge. The core team is competent to handle issues arising. The team also finds

admiration in terms of responsiveness and support. To keep the cost down ,the amount of

customization has been minimized. Besides the core team has stuck to international

standards despite resistance. This is equally important considering that the international

terms and standards are well accepted and future up gradations will be easier. Above all

the learning culture has helped in effective implementation of ERP at HOCL.

7.3 Suggestions

There always exists scope for improvement. Some of the suggestions have been

summarized below. These suggestions are on the basis of data collected during the study

and interpretation of the data analyzed.

A need was felt by users to include training on report generation and other specific areas.

Currently there exist no formal system to track the users’ training needs. It is through

word of mouth that the training needs are communicated. A feedback mechanism can be

employed to track the training needs. Provision to reserve for training programmes can be

made available via the intranet. There exists a fear mentality regarding loss of data in

72

case of crash and users are taking hard copy print as back-ups.This is only a fear arising

of non-availability of SAP system in case of an enquiry etc.By allowing users a personal

backup facility, consumption of paper can be still reduced. Many users felt that the

document management system must be integrated into SAP. This will enable more

savings in time and reduce the complexity invoved.Currently the drawings are available

in other software package and not integrated with SAP. A review of user licenses can be

undertaken to study if any reductions are possible. This could help in saving costs spent

as license fees. Critical review for redeployment and labor reduction can be undertaken

so as to derive the benefits of automated workflow. We understand that some of the

departments are already working towards this which is a good sign. Some of the users

were of the opinion that there still exist wrong data in SAP. This could be their

perception and need not reflect the reality but the matter needs to be studied by the

experts. The implementation at other locations can consider the option of cloud based

ERP systems to minimize the costs involved.

7.4 Limitations of the study

1. Success of ERP implementation is dependent on various factors. It is possible that

this research may not have captured all those factors even though an extensive

literature review was conducted and experts in the area were consulted for inputs.

2. This study is limited to the users of material management module of ERP.

3. The study does not focus on the financial aspects like increase in profits, increase

in sales etc after implementation of ERP.

4. Some of the benefits of ERP implementation cannot be directly measured and are

visible only in the long run. These may include reduction of manpower etc.

73

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77

Annexure I

Questionnaire

Please take a few minutes to complete this survey. Your answers will be completely

anonymous. The following questions and their responses are for academic purposes only.

1. How long have you been working at HOCL?

Less than two years Two to ten years More than ten years

2. Level of SAP user

Beginner Well Versed Expert

3. Level of computer literacy

Beginner Well Versed Expert

4. Frequency of SAP usage

Used on daily basis Used occasionally Used for reports Used less

Please tick appropriate responses:

SA- Strongly agree, A –agree, N-Neutral, D-disagree, SD- strongly disagree

1. It is now easier to track documents/records. SA A N D SD

2. Information available is more accurate now. SA A N D SD

3. SAP has led to reduction in paper work involved. SA A N D SD

4. Compared to old system SAP definitely stands out,

easier to use and work. SA A N D SD

5. SAP gives timely information that has led to lesser

dependencies on others. SA A N D SD

6. SAP has led to higher transparencies. SA A N D SD

7. Real time decision making is easy using SAP. SA A N D SD

8. SAP has led to better cooperation between different

departments. SA A N D SD

9. It is now easier to track costs involved at

micro level basis. SA A N D SD

10 SAP covers all aspects of my work. SA A N D SD

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11. I have necessary rights, roles authorizations

to use SAP features relevant to my work. SA A N D SD

12. SAP has issues like system slowdown. SA A N D SD

13. Customized reports are available as per my need. SA A N D SD

14. There has been a reduction in the purchase SA A N D SD

cycle time.

14a.Avg. no of days between order placement and realization before SAP ……...

14b.Avg. no. of days between order placement and realization with SAP .….….

15. It is now easier to track the consignments, SA A N D SD

transporters, stock movement etc.

16. Vendor evaluation is possible with minimal SA A N D SD

efforts.

17. SAP has led to inventory reduction. SA A N D SD

17a.Change in inventory levels if any ………….

18. SAP has led to better on-time shipment. SA A N D SD

18a. Avg. Time taken earlier for dispatch along with preparation of documents. ………

18b. Avg. Time taken now for dispatch along with preparation of documents. ………

19. Customers appreciate implementation of SAP SA A N D SD

leading to better customer satisfaction.

20. Auditing has been made easier. SA A N D SD

21. Stock taking has been made easier now. SA A N D SD

22. Reliable information is available for planning

and operational control. SA A N D SD

23. SAP has features to monitor errors preventing SA A N D SD

wrong entry.

24. Traditionally used files and documentation SA A N D SD

are still used despite availability of

79

data in system.

25. Assume SAP does not work one fine day, Yes No

do you think work will be affected.

26. Are there any backups available/Provision Yes No

for data access in case of system unavailability.

27. There still exist irrelevant/false data in SAP which can Yes No

cause errors.

28. Extracted reports are misunderstood by few. Yes No

29. Data in the system is not current or up-to-date. Yes No

30. There exists proper mechanism to handle internal Yes No

complaints/doubts clearance.

31. Data updating(Master data, formula entry etc.) Yes No

needs support from consultants.

32. The implementation team has the ability to implement, Yes No

maintain, and upgrade the ERP system.

33. The implementation team is responsive to end-user needs. Yes No

34. I am satisfied with the training provided for using SAP? Yes No

If No, please specify the shortcomings of training

……………………………………………………………

35. Specify which area you would like to get more training:

Data Entry Searching for specific data Report Generation

Others Pls. Specify ………………………………………

36. I am comfortable working with SAP. Yes No

37. The look and feel or usability of screens is satisfactory. Yes No

38. Which area you find difficulty in using

Data Entry Field Name Label Name

Complex Screen design Others ……………

39. Employees are tracked to ensure that they have received Yes No

the appropriate ERP system training.

40. Any areas you would suggest for improving SAP Screen.

80

…………………………………………………………………………………..

41. The user guide, operation guide, manual etc required for the ERP system is

Unavailable Available Available but not clear

Available but Incomplete No idea

42. SAP mail has enhanced the communication (Convenience aspect) Yes No

I At times users will

bypass the system(do

not make use of SAP) Never Rarely Sometimes

Quite

often

Not At all

possible

II Input of incorrect data

occurs Never Rarely Sometimes

Quite

often

Not At all

possible

Please fill in your views

1. Work involved after implementation of SAP has been reduced Yes No

1a. If Yes, by what percentage ?

5-10 % 10-20% 20-40%

2. One area that SAP does not cover/not implemented and is relevant to my work.

……………………………………………………………………………………….

3. Please suggest some areas for improvement/ features to be added /features available

but not used yet

………………………………………………………………………………………………

………………………………………………………………………………………………

Thank you for taking the time to complete this questionnaire. Your assistance in

providing this information is deeply appreciated.