Project -“SAP Implementaion”

ERP Implementation in NSPCL

NSPCL Rourkela
by
ERP Team
On
20th SEPTEMBER 2013

1
 Agenda

• From Business Imperative to ‘ERP’

• Why ERP for NSPCL?
• What is ERP?
• Benefits of ERP
• ERP Critical Success Factors
• Role of Individuals in ERP
• ERP Progress - so far
• Summary
• Case Studies (BPCL / IOCL / HLL)

2
 From Business Imperative to ERP
NSPCL’s
NTPC’s Vision
Vision
Business Imperative ERP Implementation

Growth Support project management efforts to deliver

Growthiningenerating
generating
capacity projects on time and on cost
capacity

Diversification Support diversification into new business areas –

Diversification seamless interface

Facilitate management control through flexible

data/ analysis aided decision making

Support operating cost reduction efforts -

“Efficient Power
efficiency in procurement and other operating
Producer” and
Operational
Operational systems
“Value to
excellence
Stakeholders” excellence
Improve Capacity utilization

Support topline (revenue) improvements –

Strategic
receivables and working capital management
Efficiency
Facilitate stakeholder interaction – e-enable
Stakeholder Stakeholder
Stakeholder channels with suppliers and customers
management
management
Create a transparent and learning organisation –
knowledge management, HRM 8
3
Source: AT Kearney
 Why ERP for NSPCL?
Changing Business Needs Existing IT Scenario
User friendliness
Online applications in use since 2008
Seamless Integration
Faster response to change • easy
Limited
navigability
integration
Knowledge Management • webVarying
basedtechnology
e-enabling external interfaces Needs upgradation
Integration End-User
• seamless data flow
between applications
• no duplication of effort
Reliability
• data integrity Mgmt.
BPR • system audit
Better MIS & Knowledge mgmt.
• report consistency
• real-time data
• unified reporting for all Sr. Mgmt.
plants
• Creation of knowledge
workers
Adoption of Best Practices
User’s Expectations

4
 Why Lakshya for NTPC?
Changing Business Needs Existing IT Scenario

Project Disha
ERP
BPR

Adoption of Best Practices User’s Expectations

5
 Enterprise Resource Planning?

Enterprise Resource Planning (ERP)

is an integrated set of applications
that help manage and automate a
business, involving best practices
thereby improving the performance.

ERP incorporates all elements of a business -

finance, materials, maintenance, production,
projects and marketing activities etc. into a
unified whole that operates more effectively
and efficiently.
 Potential Benefits
Business Specific
General
• Effective cost / budgetary
• Uniform Application control
across the Enterprise • Fast and accurate
• Adoption of Best reconciliation of project
Practices and Procedures expenditure with built-up
assets and faster
• More productive time for completion of projects
Managerial and Strategic • Reduction in inventory
decision making
• Upgradation of Packages • Reduction in internal
is taken care of procurement cycle time
• Reduction of Paper • On-line visibility of status
Reports on procurement, stocks,
easy search, payment
status etc.
• Better maintenance
practices, leading to
improved equipment
availability

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 Critical Success Factors

 Total Management Commitment &

Business Process Managers Ownership
(Top Driven)
 Change Management: Business Process
owners / User readiness to adopt best
practices.
 Business Process Re-engineering (BPR)
 Timely and Adequate Manpower and
Resource Allocation.

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 Success of ERP Implementation depend upon…
57% People!!!
• Change Management
• Internal Staff Adequacy
• Training
• Project team
• Consultants 20% Processes
• Priorization/Resource Allocation • Program Management
• Ownership (of benefits)
• Process Reengineering
• Top Management Support
• Benefit Realization
10% Technology
• Stage/Transition
• Software Functionality
• Application Portfolio Management 13 % others
• Enhancements/Upgrades

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Managing People in the Organisation

Involvement

Enrolment

Engagement

Ownership

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 Post ERP Applications Scenario
End state architecture Illustrative

Business Warehouse

Messaging/ email

Business Application Layer Local

EDMS Design TPT/ABT Reqts

Consultancy Engg. & QA Commercial

and Billing
HRMS

Project Management Maintenance Distribution

HR

C&M F&A Planning Mining

Integrated Environment, R&R,

Core Operations R&D
Ash Utilisation
Add-on’s or Bolt-on’s
DAS/DDCMIS, Analytical seamlessly integrated
GIS, PMS
GDAMS, Toolkits
OPPMS

Intranet, Knowledge Portal

Extranet

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 ERPs can cover future business requirements also

Mining Generation Transmission Distribution

• Maintenance • Maintenance • Maintenance • Maintenance

• Materials • Materials • Materials • Materials
• Contracts • Contracts • Contracts • Contracts
• Finance • Finance • Finance • Finance
• Project Management • Project Management • Project Management • Project Management
• Engineering and QA • Engineering and QA • Engineering and QA • Engineering and QA
• Environment, Health & • Environment, Health and • Environment, Health and • Environment, Health
Safety Safety Safety and Safety
• HR • Operations and Generation •HR •Operations
• Mining operations planning • Billing and Metering • HR
• Sales • HR • Transmission planning • Retail Billing
• Transfer pricing •Billing • Transmission scheduling • CRM
• Risk Management •Transmission billing • Metering
• Trading
• Logistics Business specific solutions

•SAP •SAP •SAP •SAP

•J D Edwards •J D Edwards •J D Edwards •J D Edwards
•PeopleSoft •PeopleSoft •PeopleSoft
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Other potential businesses and related ERP solutions: Logistics (BAAN), Telecom (SAP, J D Edwards, BAAN)
 IT ARCHITECTURE

BSNL, Faridabad Mumbai

Central
Database
Server Application
Server

DISASTER
ERP DATA
MGMT. SITE
CENTRE
CC/Other
Different Seismic Zones

Leased Line
Plants
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 Role of individuals in ERP
Role of HOP/HOD/Section Heads
• To ensure that all the project/station related processes are
taken care of

• Identify people who have aptitude for envisioning the future

and appoint them as Change Agents in project

• Identify people who are experts of processes in their areas

and appoint them as Power Users, to coordinate with the
core team and users as & when required

• Take ownership of the processes related to project / station

• Regular interaction with the ERP team

…contd.
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 Role of individuals in ERP (Contd.)
Role of Change Agents / Power Users

• Power Users should be open to sharing

information as well as their expectations from
ERP, with the core team and users
• Involvement in fine tuning of existing
processes and removal of redundant
processes

• Change Agents to interact with core team and

spread information about ERP
• They should also act as opinion makers &
generate awareness among their colleagues

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 KEY STEPS INVOLVED IN ERP IMPLEMENTATION

Zero Date : 6th August 2013

Pre-Implementation Stage
 Formation of cross functional core team & Steering committee
 Identification of change agents & process anchors
 Listing of Functional Requirement for present & Future business
Processes of NSPCL
 Selection of ERP and its implementation partner
Implementation Stage
 Expansion of ERP Core Team
 Study of Processes and gap analysis
 Identifying Processes not covered by ERP and need for integration
 Final process blueprint
 System configuration / customization
 Data Migration
 Preparation of Data Center in R&D building
 Testing H/W and Networking
 User training
 Roll out at all locations February 2014

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 Progress as on date

• Formation of Cross Functional Core Team and its orientation

through training, workshops and presentations by ERP vendors
• Formation of Steering Committee
• Workshops for major functions for validation & draft Finalization
of Functional requirement
• Appointment of services of Industry Expert for Review of ERP
procurement
• Communication meet started at the NSPCL stations and various
departments at Corporate centre
• Finalisation of Hardware specifications

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 Change Management
In the implementation phase, there will be significant challenges which
would need to be addressed

• Change Management
– Communication Meetings / Seminars
– Trainings
– Change Agents
– Power Users
• Communication
– ERP Newsletter
– Intranet
– Videos & CDs

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 LEARNINGS FROM OTHER ORGANISATIONS WHO HAVE IMPLEMENTED ERP

• INVOLVEMENT OF PEOPLE AT ALL LEVELS WITH LEADERSHIP FROM TOP

MANAGEMENT
• TIMELY DEPLOYMENT OF CROSS FUNCTIONAL TEAM RANGING FROM 20 TO
100.
• MINIMUM CUSTOMIZATION
• PROPER AND ADEQUATE TRAINING TO IMPLEMENTATION TEAM & END USERS
• ADAPTABILITY TO CHANGE
• BENCHMARKING BPR WITH THE BEST IN INDUSTRY
• ACTIVE ROLE BY POWER USERS & CHANGE AGENTS
• APPOINTMENT OF EXPERIENCED CONSULTANT FOR SELECTING THE PRODUCT
• FAST IMPLEMENTATION EITHER AT ONE GO OR MODULE WISE ACROSS THE
ORGANISATION
• NO APPRECIABLE CUT IN MANPOWER BUT EMPLOYEES CHANGED FROM
ROUTINE WORK MANAGERS TO KNOWLEDGE MANAGERS
• MAINTAINING SUPPORT CENTRE POST IMPLEMENTATION STAGE
• IMPERATIVE TO DEVELOP INTERNAL EXPERTISE AS OUTSIDE CONSULTANTS
ARE NOT ECONOMICAL IN POST IMPLEMENTATION STAGE
 Summary
ERP Project is a Business and Change
Management initiative, driven by the Top
Management. It should not to be taken as
an IT project for mere automation.

ERP is :
•People Driven
•Process Oriented
•Technology Enabled

Business Transformation Program 20

!

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CASE STUDIES
Bharat Petroleum Corporation Ltd.

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 BPCL : ERP Methodology
• Appointed M/S ADL (Arthur D.Little) as consultant for
restructuring exercise in 1996
• BPR was not carried out by the Consultant
• A Team of 40 persons from different functional groups was
formed to carry out detailed Business Process
Rationalization (“As-Is”&“To-Be” processes)
• RFP (Request for Proposal) floated to three parties viz.
SAP, Oracle and RAMCO for the supply of Software
licenses
• All offers technically evaluated and the best suited
solution(T1) short listed & price negotiation carried out
• Awarded the contract to SAP for supply of 2500 licenses
(extendable to another 500 lic.)

Time taken from RFP to Ordering - Approx. 5 months

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 ERP Methodology

Implementation

• A 2-phase approach adopted by BPCL for

implementation of SAP
– 1st phase - Conceptual Design Planning (CDP)
– 2nd phase - Actual implementation
• Contract awarded on L1 evaluated party (Cooper
Liebert)
• For 2nd Phase, discussions were carried with SAP
and contract awarded to SAP Consulting & PWC.

Implementation team had peak strength of 200-250 persons

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 ERP Benefits

• Global On-line oil price change

• Reduction in procurement cycle time
• Better cost planning and budgeting of projects
• Reduction in inventory of surplus/slow moving
inventory
• Reduction in generation of surplus material
• Improved service levels
• Reduction in equipment breakdown
• Foray into B2B, B2C etc.
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Indian Oil Corporation Ltd.

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 IOCL : Major Project Components

• Implementation of ERP Software

– SAP R/3 (4.6c), IS-OIL (4.6c), CIN (4.0a)
• Installation, Customisation and Implementation of Add-
On Software Packages
• Procurement and Installation of Infrastructure
– Hardware, i.e., Servers, Storage Systems, PCs, etc.
– Communication Networks, WAN, MAN & LAN
• Development & Commissioning of Disaster Recovery
Site

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 Major Benefits From ERP

Documentation of all Business Processes and their

validation by functional heads from all Divisions

Standardisation of Business Processes

Common codification and standardisation of Master Data:

• Material
• Customers
• Vendors
• Assets
• Chart of Accounts, etc.

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 Communication thro’ IT Channels
Manthan sites launched on Intranets at
Divisional HQs in January 2001.

CD on Project Manthan developed in-

IT
house in Oct. 2000 and launched on
Divisional Intranets, shared with unit heads,
training departments, Change Managers,
etc.

CD-ROMs on SAP Modules - MM, PS, FICO and PM -

developed in-house for hosting on Intranets and local LANs.
CDs on HR, SD modules underway.

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 Face-to-face Communication
Awareness programmes
Commenced by project team in Feb.2K.
As on date, the Project Team on its own
conducted over 60 Programmes in various
Face-to-Face locations covering over 1800 colleagues.

Beginning in Aug. 2000, Change Managers have been nominated

by pilot sites and major locations.

Periodical Workshops being conducted for Change Managers.

Roles defined, communication packages provided to facilitate
information-sharing in respective sites.

Information kits/updates being provided to facilitate

awareness/status update programmes by Change Managers.

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 HLL (MFG/PRO) 1995

The objective was to integrate manufacturing, financial and

distribution to improve the Working Capital Management and to
standrdise business processes across different business units

First module took 2 1/2 years to implement but adopted a package

rollout policy to implement all other modules across 240 sites (120
depos, 40 factories & 13 branches) within the next two years

Now extending to cover SCM,HRM and CRM, plans to go for FMCG

Portal

Major Benefits

Excellent achievement in Working Capital Management

Substantial Reduction in Stock Replenishment Cycle

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!
 NSPCL – Strengths & Threats

• High operational efficiency & sound financial

health
• Good track record of project completion &
follows good practice & procedure in many areas

BUT!
• May have to face competition in near future
• Plans to diversify into newer areas

BPR gives the necessary competitive edge & agility

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 BPR - Process Reengineering

• Shift from Functional to Process

orientation, Department/Plant to
Enterprise orientation

• Innovate & adopt improved way of

working

• Benchmark against Best practices

• Re-assess processes & procedures

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 Process Improvement through

• Removal of Redundant activities

• Functional Automation

• Simplification of day to day

transactional processes

• Process Re-design

BPR results in set of optimized, streamlined and integrated processes

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 Need for BPR

Non-value
New financial
adding activities
practices Redundant
activities

Multiple stages –
Better Maint.
Validation/ Capturing same data
Practices
Approval at different sources

On Average
250 PO per
year per site

Duplicate/
Triplicate
Item Code - Different 97.45 Crores of
Improve project
10 Lac Codes at Spares Inventory
cycle time
Codes !!! Different at one location
Sites

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 Existing Process
Process : Indent Requisition of Spares
No
Check Raise Indent Approving Send PR to
User High Value
Common requisition Authority C&M
spares status
Common Spares D/B Yes

Get FQA/FES Can be

FQA/FES Clearance
Eliminated in
case, yearly
Spares
Get MPIC
Clearance Budget is
MPIC
approved
once.
Req. validation
S.C. by screening.
comm
Elapsed Time:
40 days
Get Budget
F&A Certification
38
 Existing Process After Pre Approved Budget
Process : Indent Requisition of Spares
No
Check Raise Indent Approving Send PR to
User High Value
Common requisition Authority C&M
spares status
Common Spares D/B Yes

Get FQA/FES
FQA/FES Clearance
Approved Yearly Maint. Budget

Get MPIC User checks against item/value

MPIC Clearance Budget

Req. validation
S.C. by screening.
comm
Elapsed Time:
20 days
Get Budget
F&A Certification
39
 Existing Process After Pre Approved Budget-Further Simplified

•Check stock
across NTPC
•Check Item
Budget
•Check Value
User Budget
•Assess Technical
Raise Indent Approving Send PR to
Spec.
requisition Authority C&M
•Assess
Registered
Vendors
•Assess LPP
across NTPC

CENTRAL
DATABASE

Elapsed Time:
Yearly Yearly 5 days
Procurement Maintenance
Plan Approval Plan Approval
 BPR - Outcome
IT is an Enabler in BPR …………………..
• Improved Process

• Enterprise Integration, Integration

with stake holders

• Process Orientation

• More knowledge work than routine

work

In short a highly competitive, agile, flexible, integrated business network

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 BPR - IT as enabler

IT ensures operation of these re-designed, optimized,

stream-lined processes in standardized, disciplined and
secured way, enables integration of information both
inside & outside the organization and support
decentralized working with a centralized, protected
information warehouse.

CHOICE:
• In-house development - Limited integration, Less Quality
• Package Development - Time Consuming & Support Issue
• COTS packages - Supports BPR, State-of-art tech.

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 COTS is the way to go…..
External analysis reveals that leading Utilities are using commercial ERP solutions
and there are no observed instances of a “Custom Build” approach to develop and
integrate core applications

Most global fortune 500 firms use ERP solutions

Top Thermal Power Generators globally and in South Asia have ERP or
are evaluating ERP to support core processes in Generation business
Several leading Public/ Private companies in India are adopting a “ERP
backbone” to integrate core processes

Global Power
Utilities

PSUs IOC, BPCL, HPCL, ONGC, VSNL, DMRC, NTPC, NLC, BHEL..

Private Sector Telco, ITC, ABB, TISCO, BSES, Tata Power, Godrej, MRF, M&M, Hero..

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Source: AT Kearney
 Investments in the existing IT foundation will be leveraged

• Existing business • The data from

applications will be fully instrumentation
utilized till the integrated Applications Process which is accessed
IT application is • Plant Mtc. Instrumentation through SCADA
implemented • Switches, sensor
• Finance will be sustained
• Specific applications will • MM(FoxPro) etc. at plants
be interfaced with the
integrated IT application
going forward
Existing
o E.g. EDMS, Design
IT
software, GIS etc. Investments • Existing networking
• The existing hardware hardware will be fully
inventory will be assessed IT Hardware Networking Hardware utilized in strengthening
for utilisation – potentially • Servers • VSATs the communication
in development and QA • Workstations • Routers backbone
systems, intranet, extranet • Modems o Investments in
etc. VSAT protected

• Incumbent hardware
procurement will need to
be in line with future
configuration requirements

Primary area of impact of

integrated solution 44
 ERP Driven Process Improvement Key Steps

Process Mapping & Functionality Requirement as per Present &

Future need of the organization, is validated by Power Users &
approved by Process Owner

Selection of ERP product which best-fit Functional requirement at

lowest cost.

Gap Analysis of ERP processes with current processes along with

process anchors

Preparation of Blue print of ‘To-Be’ processes after BPR along

with Process anchors, Finalized & approved by Process Owner

Management approval of ‘To-Be’ processes for NTPC 45