Outgrowing the legacy system
In the competitive gas distribution industry with its dynamic requirements, the company faced rising hydrocarbon prices and pressure from customers vis-a-vis rising energy costs. Further, in order to fulfill the requirements of profitability as well as accountability to stakeholders, it had to reduce its operating costs.Super Gas was using a customized Tally solution for its operations in 25 plants countrywide for its core functions-order processing, inventory control and accounting. The excise module was also outside the Tally systems running separately. One of the primary limitations of the Tally systems was that each of the 25 plants has its own database, leading to inaccurate and duplicate data. Data from all the core operations across the 25 plants was manually synchronized with the corporate headquarters (HO) in Hyderabad. The lack of timely availability of structured data was resulting in delayed decision-making and having an impact on the productivity of the organization. Atul Kumar Gupta, general manager-IT, SHV Energy says, "Other legacy application such as customer master data were sent by mail to our HO and updated manually. For example, customer orders were entered at the regional office and sent to the plant commercial officer. The data was then synchronized at the plant. At the same time, an invoice was raised and entered into the excise separately. Similarly pricing sheet, payroll and asset management were entered in the same manner leading to duplication of work and data. If there was any data mismatch in uploading a file at the plant level-incorrect inventory pricing would be raised leading to customer dissatisfaction." Additionally all these legacy applications were not integrated. VN Diwakar, vice-president, business development and special projects, SHV Energy says, "A major portion of our business was done through manual controls and methods, and although carried out with good procedures and practices, it often resulted in duplication of data and work, which was frustrating and people developed their own processes. We wanted checks and controls that would improve our processes and help us become more competitive. We wanted to improve our efficiency within the organization and our customers better.
Additionally Diwakar says,” "These legacy applications were not scalable enough to meet our growing demands and did not support any new functionality. Even the employee productivity was low. Accounts closure used to take more than the stipulated time. The planning for the same would start 20 days before closure." Super Gas wanted to simplify the management of multiple systems it had acquired over the years for facilitating various business processes. Hence, it decided to do away with its legacy systems and replace them with an ERP solution.
Vendor evaluation
Before evaluating ERP vendors, Super Gas spent considerable time in understanding how the ERP could work in a real-time scenario, understanding the processes and what changes it would have to make in its processes. This experience was valuable as it helped the company reduce the implementation time. The company evaluated as many as six ERP vendors, including SAP, Oracle, Microsoft, Ramco and SSA Global. Only SAP and Oracle came close to meeting the company's requirements. Gupta explains, "SAP has a strong experience in India and globally, sufficient trained skills on SAP and hence its case was stronger than the others. We were impressed with its experience, expertise and large customer-base. Additionally SAP's ERP solution is tightly integrated with good control systems. We concluded that SAP will take us in the right direction and that we will benefit in the long run."
Big-bang implementation
Super Gas has managed to achieve Go Live' in six months covering seven modules in 25 locations simultaneously using the big-bang approach of implementation. The project was kicked off on February 1, 2006, and was completed on August 1, 2006. The modules implemented include production planning, sales and distribution, materials management, financial accounting, controlling, project systems, plant maintenance, customer service and the payroll module in HR. After evaluating two to three vendors, the company selected Hyderabad-based Intelligroup as the implementation partner for the project. The project started with a focused team headed by Diwakar. "It meant participation of various personnel across the organization which had an impact on running the business on a day-to-day basis, but active involvement contributed to the project's success," says Diwakar. There were 18 members from Super Gas and an equal number from Intelligroup. Commitment and support of the top management also helped.
One of the biggest challenges was deciding to go live at all 25 locations simultaneously. Gupta says, "The idea of taking a big-bang approach to implement at 25 locations within six months was two-fold-we had gained enough expertise on implementing ERP before the evaluation-and had re-engineered our business processes to suit the package's requirements. Rolling out the ERP in parts would have given an impression of us lacking confidence in the system and there could have been a possibility of the Western region using Tally and the South being on SAP. It would have created data problems.”
Diwakar adds, "Although change management was a big thing, there was no resistance to the new package." With SAP in place, the organization has seen a sea change in all its major business areas and this necessitated realignment of processes as the company moved from a manual to an integrated system. Today, there are about 100 users and the implementation is stable. Being an integrated package, each employee realizes that what he does ultimately has an impact on the others in the organization.
Visibility into the core business
Accurate real-time data helps make decisions faster: "With SAP, there is improved visibility and control across processes at Super Gas and now we are more confident in our decision-making because of the availability of timely, consistent and accurate data. We are still getting used to the system and we have started realizing the benefits," says Diwakar. The company has done away with many manual procedures and approvals which has reduced paperwork dramatically. Diwakar continues “Earlier, papers moved from one table to another in many areas. Now, such approvals are part of the system and the delays due to paper work have been eliminated. With SAP, the entire process of order processing to delivery to customers is more streamlined. For example our plant commercial officer instead of entering data into two separate systems [one of raising invoice and excise, will now be making one entry. Since the duplication of data and work is not there, it has increased on employee productivity.”
Better forecasting and increased efficiency: with the Project Systems module, the company is executing projects at customer locations faster and with greater efficiency saving time and cost. Actual performance can be measured against what had been originally planned. Gupta says, ” The Plant Maintenance and Customer Service will enable us to respond better to customer- calls and provide better service to our end customers. All customer complaints will be visible for the senior to our end customer’s .All customer complaints will be recorded and tracked online and will be visible for the senior management to review. There is better cash flow and we know what payments are due, what is the inflow of cash and so on. Similarly Payroll and other aspects in the HR module should streamline a lot of activity in the Human Resources area.”
Diwakar adds that the company can quickly check the status of new projects, efficiency of the same and budget more accurately. In the long-run, SAP lays a good foundation for providing improved service to our customers.” This will help Super Gas to quickly adapt its processes and systems to changing market conditions. For Super Gas, it has been satisfying to see the initial impact SAP has had on its organizational efficiencies so far. The company is in the process of trying to extract the maximum benefits from the system. “With SAP, our focus is going to be on continuous improvement. It is expected to improve our over-all efficiency and productivity and give us more time to invest in value-added tasks and activities,” says Diwakar.
|
