Sap in delhi metro

1. Computers in Management Assignment

Articles related to Enterprise Resource Planning
Implementation in Business Organizations





SAP IMPLEMENTATION IN
DELHI METRO RAIL CORPORATION LIMITED














SUBMITTED BY: -
KINSHOOK CHATURVEDI
ROLL NO N-35
FMS PART TIME MBA 2009-12
SECOND SEMESTER

2. Enterprise Resource Planning System: -

Enterprise resource planning (ERP) is
an integrated computer-based system used to
manage internal and external resources including
tangible assets, financial resources, materials, and
human resources. It is an application and software
architecture whose purpose is to facilitate the flow
of information between all business functions
inside the boundaries of the organization and
manage the connections to outside stakeholders.
Built on a centralized database and normally
utilizing a common computing platform, ERP
systems consolidate all business operations into a
uniform and enterprise wide system environment.
An ERP system can either reside on a
centralized server or be distributed across modular
hardware and software units that provide
"services" and communicate on a local area
network. The distributed design allows a business
to assemble modules from different vendors
without the need for the placement of multiple
copies of complex, expensive computer systems in
areas which will not use their full capacity
Enterprise Resource planning system is a
fully integrated business management system
covering all departments of the business like
Finance, Accounting, Human Resources, Production
and Logistics.
The ERP solutions seek to streamline and integrate
operation processes and information flows in the
company to synergies the resources of an
organization namely men, material, money and
machine through information.
ERP is the latest business, Information
Technology (IT) tool in the corporate world today.
ERP is a high-end solution offered by IT to
effectively tackle the problems of a business.

Advantages and disadvantages of ERP
Advantages
In the absence of an ERP system, a large
manufacturer may find itself with many software
applications that cannot communicate or interface
effectively with one another. Tasks that need to
interface with one another may involve.
ERP systems connect the necessary software in
order for accurate forecasting to be done. This
allows inventory levels to be kept at maximum
efficiency and the company to be more profitable.
Integration among different functional
areas to ensure proper communication,
productivity and efficiency
Design engineering (how to best make the
product)
Order tracking, from acceptance through
fulfillment
The revenue cycle, from invoice through
cash receipt
Managing inter-dependencies of complex
processes bill of materials
Tracking the three-way match between
purchase orders (what was ordered),
inventory receipts (what arrived), and
costing (what the vendor invoiced)
The accounting for all of these tasks:
tracking the revenue, cost and profit at a
granular level.
ERP Systems centralize the data in one place.
Benefits of this include:
Eliminates the problem of synchronizing
changes between multiple systems -
consolidation of finance, marketing and
sales, human resource, and
manufacturing applications
Permits control of business processes
that cross functional boundaries
Provides top-down view of the enterprise
(no "islands of information"), real time
information is available to management
anywhere, anytime to make proper
decisions.
Reduces the risk of loss of sensitive data
by consolidating multiple permissions
and security models into a single
structure.
Shorten production leadtime and delivery
time
Facilitating business learning,
empowering, and building common
visions
Some security features are included within an ERP
system to protect against both outsider crime, such
as industrial espionage, and insider crime, such as
embezzlement. A data-tampering scenario, for
example, might involve a disgruntled employee
intentionally modifying prices to below-the-
breakeven point in order to attempt to interfere
with the company's profit or other sabotage. ERP
systems typically provide functionality for
implementing internal controls to prevent actions
of this kind. ERP vendors are also moving toward
better integration with other kinds of information
security tools.
Disadvantages
Problems with ERP systems are mainly due to
inadequate investment in ongoing training for the
involved IT personnel - including those
implementing and testing changes - as well as a
lack of corporate policy protecting the integrity of
the data in the ERP systems and the ways in which
it is used
Disadvantages
Customization of the ERP software is
limited.
Re-engineering of business processes to
fit the "industry standard" prescribed by

3. the ERP system may lead to a loss of
competitive advantage.
ERP systems can be very expensive (This
has led to a new category of "ERP light"
solutions)
ERPs are often seen as too rigid and too
difficult to adapt to the specific workflow
and business process of some
companies—this is cited as one of the
main causes of their failure.
Many of the integrated links need high
accuracy in other applications to work
effectively. A company can achieve
minimum standards, then over time
"dirty data" will reduce the reliability of
some applications.
Once a system is established, switching
costs are very high for any one of the
partners (reducing flexibility and
strategic control at the corporate level).
The blurring of company boundaries can
cause problems in accountability, lines of
responsibility, and employee morale.
Resistance in sharing sensitive internal
information between departments can
reduce the effectiveness of the software.
Some large organizations may have
multiple departments with separate,
independent resources, missions, chains-
of-command, etc, and consolidation into a
single enterprise may yield limited
benefits.


SAP implementation in DMRC: -
SAP stands for Systems, Applications and
Products in Data Processing. It uses the concept of
modules ("individual programs that can be
purchased, installed, and run separately, but that
all extract data from the common database"). SAP
AG, the company that provides the enterprise
resource planning solution has upgraded the
package and launched it as SAP ECC 6.0 in 2005.
ECC stands for ERP Central Component. The
purpose of positioning it as ECC is to enable SAP to
build and develop an environment of other
products that can function upon the foundation of
the central component.
SAP's ERP solution includes several
modules that support key functional areas - some
of them are -
SAP ERP Financials
SAP ERP Logistics
SAP ERP Human Resource Management

SAP India partnered with Siemens
Information Systems for the implementation of its
ERP solution at Delhi Metro Rail Corporation
(DMRC); a significant part of the ERP implemented
at the DMRC was for project management. SAP-
India and Siemens Information Systems limited
implemented ERP for DMRC from 14th November
2002. Financial Accounting/controlling module,
Material Management Module, Real Estate Module,
Human Resource Module has been implemented.
DMRC is building a Mass Rapid Transit System
(MRTS) in Delhi, the objective being to provide a
safe, reliable and integrated transport network that
will meet the rising demand for inter-city transport
in the capital. An IT system was required to
smoothen the flow of information, support
planning tools, provide vital reports for decision
making, reduce administration time, better utilize
the organization’s resources, and let DMRC
concentrate on its core competence. The
programmed, code-named ‘Shikhar’, is an
Enterprise Resource Plan (ERP) programmed
whereby human resources, maintenance, stores,
accounts, project execution and property
development activities will be inter-linked and
fully computerized, thus avoiding manual delays,
heavy Documentation and duplication of inter-
department activities. This will establish a
databank of information within the DMRC, which
will be Available to all departments round the clock
and will thus help in improving efficiency and
increasing productivity of the corporation. The
software used for the ERP is SAP and a dedicated
team is involved in implementing the project
currently in the DMRC.
The best ERP Software, which is
implemented in DMRC, is SAP R/3, which is
provided by world’s largest enterprise software
company SAP AG. SAP R/3 is acronym for Systems
Applications and Products in data processing. R/3
means Runtime System, Three Tier Architecture.

Advantages and disadvantages of SAP ERP: -
Advantages:
ERP allows easier global integration
(Barriers of currency exchange rates,
language, and culture can be bridged
automatically)
Updates only need to be done once to be
implemented company wide
Provides real-time information, reducing
the possibility of redundancy errors
Creates a more efficient work
environment making it easier for
employees to do their job which leads to
effectiveness[8]
Vendors have past knowledge and
expertise on how to best build and
implement a system
No hardware purchase or maintenance
costs
No developer training costs and the
vendor will train the users
Disadvantages:

4. Locked into relationship by contract and
manageability with vendor - a contract
can hold a company to the vendor until it
expires and it can be unprofitable to
switch vendors if switching costs are too
high
Inflexibility- vendor packages may not fit
a company's business model exactly and
customization can be very expensive
Return on Investment may take too long
to be profitable
SAP ERP implementations have a risk of
project failure

The process began with the selection of SAP
software after benchmarking it against various ERP
packages available in the market to see which of
them met DMRC’s requirements; soon after,
Siemens was chosen to implement and manage the
solution. The SAP system deployed by DMRC
supports multiple functions such as general ledger,
accounts receivable & payable, fixed asset
management, project planning, company structure
management, funds control, procurement
management, real estate management, materials &
warehouse management, maintenance and human
resource management. The systems’ c ore
modules—Financial, Costing, Materials
Management, Human Resources, Maintenance,
project Systems and Real Estate Management—
were tightly integrated and implemented in record
time. The SAP solution went live in nine months by
November 2002, as planned. It involved setting up
the software to meet DMRC’s requirements and a
complete change management process to handle
the change in traditional patterns of thought and
behavior at DMRC.

Major benefits
After going live, the entire project is being
handled through SAP Project Systems. All the
material and labor consumed is accounted for
online, and project systems are capable of creating
automatic indents for procurement of material and
services against existing contracts. DMRC can now
have a detailed view of activities and schedules,
and it gets advance warning of any slippage on
time lines, material or labor so that corrective
action can be taken. It also gets an accurate costing
of all project elements, and measures budgeted
costs against actual. Finally, DMRC is now able to
predict the exact time lines for upcoming phases,
and rapidly execute project activities while saving
time.

The other benefits are summarized as follows:-
TOP-LINE BENEFITS
Effective decision making due to
Easier access to information
Greater accuracy and timeliness of
information
Comprehensive information available
across functional areas and locations
Improved communication and
networking across the organization
Improved networking and knowledge
sharing within the organization
Better utilization of system resources
Increase in productivity of people

Finance: -
Tangible Benefits
Higher returns on Treasury operations
through better funds management
Increased control over Fixed Assets
through proper identification & linkages
Reduction in overheads through effective
cost control & monitoring
Faster closing of books due to better
financial information
Allows automatic reconciliation with
banks
Updates cash book automatically by
matching receipts/ payments with AP/
AR
Performs automatic generation of cheque
for payments made through the system
Intangible Benefits
Tracks if customer exceeds credit limit
Supports analysis of future cash flows,
variances, discounts taken
Provides reports on bad debts, ageing and
bounced checks

Human Resources:-
Tangible Benefits
Manages automation of the entire cycle of
salary/ benefit administration.
Improves accuracy of data – one point
data entry through integration of payroll
& HR systems.
Reduces work effort in maintaining and
reporting HR data.
Tracks manpower budgets and
determines number of people to be
recruited/ trained.
Allows automation of manpower
scheduling and improves manpower
planning.
Intangible Benefits:-
Assists in Retention of best people
Provides ability to identify and track top
performers
Ability to automatically identify potential
successors and candidates for promotion
Improves employee skill development
Integration of employee skills with career
planning, staffing, performance
management and training

5. Materials:-
Tangible Benefits:-
Reduces procurement lead time through
On-line documentation generation
Automatic generation of PRs for stock
items
On line approval of PRs and POs
Reduces in inventory costs
Improved inventory planning and
forecasting
Reduction in purchase prices through
better negotiations with vendors
On-line consolidation of purchases
Improved vendor performance analysis
Supports efficient management of term-
supply agreements and service contracts

Plant Maintenance:-
Tangible Benefits
Reduces maintenance costs due to
Improved estimation & control of
maintenance costs
Better planning of maintenance activities
Improves manpower productivity
Reduced time and effort in consolidating
and reporting all equip maintenance and
performance data
Reduced time and effort for planning
preventive maintenance
Supports generation of work order
automatically based on user-defined
trigger
Allows linkage of usage statistics for the
purpose of condition monitoring and
corrective maintenance
Intangible Benefits:-
Maintains reports on e quipment
downtime, ABC analysis, trend analysis
Manages the maintenance history of all
equipments
Maintains vendor analysis reports

Project System
Maintaining WBS, Networks and activity
Planning and Monitoring of Project
- Cost & time of the project at the
WBS Level
- Various plan versions
Budgeting
- -Shifting with in Project
Structure
- Budget supplement

Real Estate
Maintaining property rental unit
Easy identification of a space for renting-
out
Invoice generation