Impact of ERP on Organizational Functions in Retail Sector

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A dissertation submitted in partial
fulfillment of the requirements for
the award of MBA Degree of
Bangalore University.
BY
Under the guidance of
Professor
HTTP://WWW.PROJECTSKART.COM/ ASSOCIATE
BHARATIYA VIDYA BHAVAN. BANGALORE-560001
JUNE-JULY 2007
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DECLARATION
I hereby declare that the research work embodied in the dissertation entitled “Impact of
ERP on organizational functions in Retail sector” is the result of research work carried
out by me, in partial fulfillment of my course under the guidance and supervision of Prof,
Professor, M.P.Birla Institute of Management, Bangalore.
I also declare that this dissertation has not been submitted to any University/Institution
for the award of any Degree/Diploma.
Place: Bangalore
Date:

ACKNOWLEDGEMENT
I take this opportunity to sincerely thank Prof who
introduced me to the intriguing subject of impact of
enterprise resource planning and sharing his encyclopedic
knowledge on the subject, which is going to be
instrumental in shaping my career in the area of
enterprise resource planning.
I also thank Dr N.S. Malavalli (Principal) for giving me
the opportunity to explore my areas of interest by
consistently lending support in terms of his expertise
and also supplying valuable inputs in terms of resources
every step of the way.
Lastly, I would like to express my heart-felt gratitude
to my friends and family who stood by me, right
throughout this project and have been a constant source
of support and strength.

CONTENTS
SL No. Page No.
1. Executive summary 01
2. Introduction 02
3. Literature view 20
4. Industry profile 26
5. Design of the Study 30
6. Data Analysis and Interpretation 33
7. Findings 51
8. Conclusions 52
9. Bibliography 53
10. Annexure 54

LIST OF GRAPHS
Graph Title Page No
no.
Graph -1 Graph showing the type of ERP vendor 33
Graph -2 Graph showing year of 34
Implementation
Graph -3 Graph showing sufficiency of 35
Information
Graph -4 Graph showing satisfaction level w. r. 36
to ERP package
Graph -5 Graph showing strategic advantages 37
Graph -6 Graph showing inbound logistics 38
Graph -7 Graph showing outbound logistics 39
Graph -8 Graph showing operations 40
Graph -9 Graph showing marketing and sales 41
Graph -10 Graph showing customer service 42
Graph -11 Graph showing human resource 43
Management
Graph -12 Graph showing technology 44
Development
Graph -13 Graph showing procurement of 45
Resources
Graph -14 Graph showing supply chain 46
Graph -15 Graph showing merchandise planning 47
Graph -16 Graph showing ERP up gradation 48

CERTIFICATE
I hereby certify that this dissertation entitled “Http://www.projectskart.com/al functions
in Retail sector” is the result of the research work carried out by Mr. Mohammed Shakeel
ur Rahman under my guidance and supervision.
I also certify that he has fulfilled all the requirements under the covenant governing the
submission of dissertation to the Bangalore University for the award of MBA degree
Place: Bangalore Prof. Jai Raj Nair
Date: Professor

CERTIFICATE
This is to certify that this dissertation entitled “Http://www.projectskart.com/al functions
in Retail sector” is the result of the research work carried out by Mr. Mohammed Shakeel
ur Rahman under the guidance and supervision of Prof. Jai Raj Nair, Professor, M.P.Birla
Institute of Management, Bangalore.
I also certify that he has fulfilled all the requirements under the covenant governing the
submission of dissertation to the Bangalore University for the award of MBA degree
Place: Bangalore Dr.Nagesh.S.Malavalli
Date: Principal

EXECUTIVE SUMMARY
The business environment has changed more in the last five years than it did in the
previous five decades. Winning in today’s business climate requires more than just
providing high-quality, low-cost products to customers, when and how the customers want
them. The ability to respond to new customer needs and seize market opportunities as they
arise, without compromising on the profitability of the firm is critical for the success of any
organization. Competitive pressures frequently force manufacturers to decrease prices in
spite of the fact that their internal costs continue to rise. Enterprises are continuously
striving to improve themselves in the areas of quality, time to market, customer satisfaction,
performance and profitability. Making informed business decisions in this manner would
enable organizations to accomplish their business growth and at the same time enable them
to utilize the information to competitive advantage. To make it possible for the companies
to execute this vision, there is a need for an infrastructure that will provide information
across all functions and locations within the organization and this is the Enterprise
Resource Planning (ERP) solution available in the market today.
This Research is an attempt to study the impact of ERP on the organizational
processes in the retail sector. The study aims to find the strategic advantages that the
company has gained due the implementation of ERP package. The study also shows the
performance level in various functional areas of the organization due to implementation
of ERP package. The study also helps organizations identify the potential users for their
ERP implementation and how they could further leverage the implementation to achieve
higher returns on investments.

CHAPTER 1 INTRODUCTION‐
A CONCEPTUAL FRAME WORK ON ERP
1. ENTERPRISE RESOURCE PLANNING
An amalgamation of a company's information systems designed to bind more closely
a variety of company functions including human resources, inventories and financials
while simultaneously linking the company to customers and vendors.
2. ERP – AN INTEGRATED SUITE OF APPLICATIONS
Beginning in the 1980s, ERP became one of the most significant events of the 1990s. Over
80% of global Fortune 1000 companies have installed ERP systems. More and more
companies ‘turbo-charged’ their business to run at breakneck speed on a transactional
backbone called Enterprise Resource Planning (ERP) system. So, what is ERP? ERP is not a
single system, but a framework that includes administrative applications (finance, accounting),
manufacturing resources planning applications (sales, procurement, production, planning), and
human resources applications (payroll, benefits).ERP unites major business processes – order
processing, general ledger, and production within a single family of software modules. ERP is
the backbone of e-business. ERP supports day-to-day business activities, which provide data
to everyone in the company, from shop floor engineers to the executive suite, for making
decisions and taking actions faster, and more intelligent.
3. ERP – THE WAY TO RUN YOUR BUSINESS
ERP buying intention remains strong, even in 2002. A William & Blair LLC survey
revealed that 20% of companies were in the process of making a significant investment in
ERP. Another 25% indicated a willingness to buy in the future. Another 50% had stable
ERP systems. Only the rest 5% were unclear. Companies are rushing to buy ERP systems
to address their business needs. The underlying drivers come from both the business and
technology side. The business drivers that compel companies to add brand new ERP
systems or replace homegrown, function specific legacy systems are:

¾ Gaining greater visibility and control. Too many administration headaches and
information breakdown. Managers want to know instantly and accurately:
Can we build it?
What will it cost?
Do we have the necessary materials?
Where is it?
When will we ship it?
Did we make any money?
How much have we sold?
What is the complete inventory status?
What is the quality this week?
As one manger of a large company said, “You can’t manage what you don’t know
before ERP implementation, it was four to six weeks after the close of the month before
we had information reconciled, and we still weren’t sure of the accuracy. Previously,
information was integrated manually and, therefore, was not reliable or timely”.
¾ Improving decision integration across the enterprise. ERP links information
islands. Often, finance doesn’t talk to production, and production doesn’t talk to
purchasing and planning. This detached infrastructure can create confusion,
misunderstanding, and errors and limit company asset utilization.
The technology forces driving ERP are:
The need to integrate a broad range of disparate technologies, along with
processes they support, into a common denominator of overall functionality.
The need to create a foundation on which next generation applications can
be developed.
ERP acts as the central nervous system. As a fully integrated system, ERP automates all
departmental information into a single relational database. As the entire quotation through
shipping process uses the same information from a single dataflow, data is entered only
once which improves accuracy and reduces cycle time. Information is retrieved quickly
and easily for real hands-on decision making. ERP breaks the information bottleneck and
provides up-to-the minute information to the right person at the right time.

4. ERP DECISION - ENTERPRISE ARCHITECTURE PLANNING
Market leaders embraced ERP in order to gain operational efficiencies, but the process
is not pain-free. Remember that ERP provides a business foundation. Selecting and
installing a new ERP solution is one of the most important and most expensive endeavors
an organization will ever undertake. It’s also the single business initiative most likely to go
wrong. Technology itself isn’t the only challenge in managing transformation. Adopting
ERP significantly affects a company’s architecture, processes, people and procedures. As
one manage recently said: “ERP is not a mere systems change. You are changing the way
people have done their jobs for the past 20 years”.
4.1 Selection Criteria
Not all ERP systems are created equal. Selecting the right technology and solution provider
is the key to success. Anyone can promise, but few can actually deliver. Deloitte & Touche
conducted a study of 1,500 companies, all of which had to replace systems purchased within
the previous 24 months. Here are the top ten purchasing criteria for selecting software: As
companies gained more experience and knowledge of ERP systems, they refocused on vendors
who have a proven track record and can make systems work rather than initially offering low
prices. It is clearly an expensive lesson learned in a hard way.
1st time 2nd time Criteria
8 1 Level of support provided by the vendor and local
partner
10 2 Vendor’s track record of performance
7 3 Software’s ability to fit the business
4 4 Growth potential of the software
1 5 Price of the software
9 6 Quality of documentation
5 7 Functionality of the software
3 8 Ease of use
2 9 Ease of implementation of new system
6 10 Software compatibility of existing hardware

4.2 Build vs. Buy
Manufactures who are considering building an in-house system must know the
associated costs and risks.
¾ High total cost of ownership and complexity associated with developing
and maintaining
¾ Custom-designed applications.
¾ Software development may not be the core competency. It is estimated that more
than 70 percent of internal software projects fail.
¾ Internal development is time consuming. Installed applications are becoming
technically outdated and the ongoing redesign of the business process makes
existing software functionally obsolete.
¾ Off-the-shelf solutions integrate the best business practices from a variety
of companies.
¾ The ability to import and adopt these best practices from leading PCB
manufacturers translates into bottom-line improvement.
¾ With Vendor’ Software Maintenance, companies can stay with the latest
functions and technology at fractions of cost.
4.3 Vendor Selection
Besides product capabilities, the vendor and local support should be carefully evaluated.
The vendor history:
¾ Size of the organization. How many project managers, consultants, systems
and hardware engineers, trainers and support personnel, software developers
are available? How long have these employees been with the firm?
¾ Length of time in business. Vendors who have been in business longer than five
years are generally more stable and more likely to continue in business. Beware of
small firms with less than five employees, or firms that have been in business less
than two years.

¾ Current Software Version. Does the Vendor provide software upgrades during the
course of the products life cycle. Early versions tend to be bug prone, and require
lots of improvement. Avoid those risks, use products that have proven track record.
¾ Size of the vendor’s client base. The size of a vendor’s client base is directly related to
the success of the firm and its level of experience and expertise. Focus on the client
base with a similar profile as your business in terms of company size, production
environment. If you find three or more profiles similar to yours, the probability of a
successful implementation increases greatly. Hours of operation. Learn about vendor’s
business operations, and support work hours. Employee profile. Company and
employee profiles show the years of experience and depth of knowledge a firm has
acquired. Request these profiles and use them as tools for comparison. Extent of
business services. The vendor should have a broad range of knowledge and expertise to
address a total manufacturing solution and future growth needs. Measuring customer
satisfaction. Vendors focused on customer satisfaction have programs in place to
measure their effectiveness. Ask the vendor how they measure it. On-site client visit.
Once a vendor has been selected. Arrange an on-site visit to the vendor’s client who is
similar in size and operating environment, transaction volumes. Make a list of questions
and to ask, and spend some time alone with the client.
¾ Documentation. Ask the vendor to provide sample implementation, training
documents, such as help and user manuals. Well-documented vendors are
usually prepared for implementation.
The Vendor Technology:
¾ Is the vendor using viable technologies and platforms for the long term?
¾ Does the vendor use objects and components to architecture the system?
¾ Does the vendor have open or proprietary system?
¾ Is the system web enabled or web based? What is the vendor’s Internet vision?
¾ Does the system have XML, EDI capabilities for data integration and
transactions with other systems internally or externally?
¾ Is the system Web Service ready?

The Total Cost of Ownership:
One time software license fee of core and optional
modules Server license fee
¾ Client or database license fee
¾ Other required software (e.g. reports, SPC)
¾ Hardware, LAN costs
¾ Software annual maintenance fee
¾ Implementation fee (consulting, development, test, configuration,
documentation, installation, training)
4.4 Common Mistakes
Do avoid common mistakes that cause project failures.
¾ All software is the same
¾ The cheapest solution is the best
¾ My friend told me to buy it
¾ Beware the “demo trap”
5 ERP IMPLEMENTATION – CATCHING THE BULL BY THE HORNS
¾ 49% project over schedule, over budget with less functionality
¾ 40% failed to achieve their business case
¾ 75% experienced “productivity dip” within first 6 months
¾ 20% terminated ERP projects
Picking the right product is just the start of an ERP project. All of these should be well
planned in implementation. There are five important lessons to be learned from other
companies who have been through a less than fully successful ERP implementation:
1 Operating strategy did not drive business process design and deployment.
2 The implementation took much longer than expected.
3 Pre-implementation preparation activities were poorly done.
4 People were not well-prepared to accept and operate the new system.
5 The cost of implementation was much more than anticipated.

The road map for rapid implementation: Understand business needs, simplify process,
and introduce automation. Here is an example of how leading ERP vendors implement
ERP systems using a Stage and Gate process.
5.1 Stage 1: Analysis
Objectives:
¾ Gather and document requirements related to functions within project scope.
¾ Minimize or eliminate the amount of development work.
Project Milestones:
¾ Conduct requirements-gathering meetings.
¾ Conduct business analysis review sessions.
¾ Conduct business process improvement sessions.
¾ Document data migration and integration strategy.
¾ Identify and train key users in different business units.
Project & Change Management:
¾ Assess impact on users and manage concerns and expectations.
¾ Create project schedule and training, support plan.
Gate 1: Key Deliverables
¾ Project team formation, senior management sponsor, and project kick off.
¾ Functional requirement document and gap/fit analysis.
¾ Project schedule and plan including the estimation of project resources, costs,
and duration of each activity.

5.2 Stage 2: Design
Objectives:
¾ Determine how to design and implement the required functionality based on
business process.
¾ Design, data structure.
¾ Create a specification for configuration ad programming (if needed).
Project Milestones:
¾ Conduct information-gathering regarding customization needs.
¾ Write software requirement specifications for custom-developed functions
(if needed).
¾ Create a test plan (if programming is required).
¾ Assess current infrastructure.
¾ Develop data collection, input and test plan.
¾ Finalize project plan and schedule, and present to senior management.
Gate 2: Key Deliverables:
¾ Present and get approval of updated project plan, schedule.
5.3 Stage 3: Development and Testing
Objectives:
¾ Complete and test software and database required.
¾ Ensure that required infrastructure (hardware, network) is in place.
Project Milestones:
¾ Configure software and database to match the structure of the company with
desired business process.
¾ Develop standard and custom functions and integration.

¾ Manage software incidents and change requests.
¾ Update project plan for next release on an ongoing basis.
Gate 5: Key Deliverables:
¾ Ensure that all business requirements are met.
¾ Measure the new system benefits to determine ROI.
5.4 Implementation Leadership Skills
Implementation is where ‘rubber hits the road’. It requires skilled project leadership
from both vendor and client sides. Qualified vendors usually assign a seasoned project
manager who has “seen” many businesses like yours, and who thoroughly understands your
business issues and knows how to deliver what the software has to offer. Of Utmost
importance, however, is that top executive sponsorship and a strong internal project leader
is required to make the project implementation successful. The project leader must possess
a broad range of skills including:
Strategic thinking. What are we trying to accomplish? How well does the ERP
align with your business strategy? Should the priority be costs, speed of
implementation, or functionality?
Process reengineering. You cannot implement large-scale systems without
first changing processes. An ERP system is really a collection of
business rules and procedures. Therefore, implementing an ERP system
involves replacing one set of rules and procedures with another.
Managing implementation complexity. Vendor partnership, shared goal
and objectives, detailed planning, clear roles and responsibilities are the
keys to overcoming complexity.
Transition management. Coordinating a smooth transition and overcoming
employee resistance can be critical factors for the successful completion of a
project. The internal project leader should have the authority to make changes
happen quickly and who has a sense of urgency and true accountability for
completing the preparation and implementation activities on-time.

6 START YOUR ERP JOURNEY NOW
Every long journey starts with the first step. Any ERP selection should include the
following four critical phases of system selection. It is a lengthy process that can last three
to twelve months. The earlier you start, the better. Don’t be left behind.
6.1 Phase I: Identify Business Goals and Objectives
In order to align goals and objectives, and identify issues and priorities,
management needs to ask tough questions and make sure the answers are fact-based.
¾ Will ERP help us to improve customer satisfaction? How? How much? When?
¾ Will ERP contribute to increase in our market share? How? How much? When?
¾ Will ERP decrease our operating expenses? How? How much? When?
¾ Will ERP help reduce inventories? How? How much? When?
¾ Will ERP help increase revenues? How? How much, and when?
¾ Will ERP shorten our order-to-delivery cycle time? How? How much, and when?
¾ Will ERP help us keep pace with or surpass our competition? How? How much?
6.2 Phase 2: Create a Project Team
It is essential that this includes an Executive sponsor, someone high enough in the
organization (i.e. CEO, CFO, CIO) to cut across departmental lines and deliver the
executive’s view of the system. Other critical members of the team are users from
various departments, as well as technical representatives. It is important that top
management is committed to the project and is willing to support it from beginning.
Top management support checklist:
¾ Are the sponsors and manager totally committed to making it happen?
¾ Is there an executive ‘sponsor’ representing the project team effectively to
top management?
¾ Does top management delegate the necessary authority and responsibility to
the project team?

¾ Is the project getting the resources it needs?
¾ Is the project endorsed by the sponsor?
A project team determines the result of the project.
Resource checklist:
¾ Are there enough resources to achieve the plan?
¾ Do project team members understand their role and how to measure performance?
¾ Is adequate training available for the team?
¾ Are the team members willing to compromise elsewhere to ensure its success?
¾ Do people believe in the project and demonstrate a strong team spirit?
6.3 Phase 3: Requirements Definition and System Evaluation
Through interview and observation techniques, critical system information is collected
with respect to your present data flow and system requirements. The gap between what you
are currently using and what you ultimately require should be evaluated. It’s easy to get lost
in the details. Without clearly defined requirements, there is little else to base your decision
on. You will most likely focus on the cost of the systems and look for the least expensive
offering – as opposed to the system that will provide the greatest return on your investment.
Project definition checklist:
¾ Does everyone identify with and understand clearly the nature, purpose and
benefits of the project?
¾ Is there an effective process for defining and documenting objectives, assessing
risks and producing an outline plan?
¾ Some ERP Vendors provide a Functionality Checklist for you that can be a
“starting point” for your objectives and vendor comparisons.

7 ERP AND COMPETITIVE ADVANTAGE
In order to gain a sustained competitive advantage, an analysis of markets at the micro-
level is essential. A detailed analysis of the markets served by an organization will throw
up different qualifiers and order winners and this necessitate a change in the erroneous
belief the manufacturing and support processes in terms of processing requirements and
infrastructure investments would be the same in all markets. The strategic process hence
needs to be based on a clear understanding of the markets and the differences within a
market. Companies that approach strategy in general terms and undertake strategy using
general courses of action will find themselves at a serious disadvantage. Once an
organization identifies the manufacturing approaches to support its different markets, it
needs to adopt the same approaches in all the other plants also. And the only way such an
approach can be successfully implemented is through ERP.
8 HOW CAN ERP IMPROVE A COMPANY’S BUSINESS PERFORMANCE?
ERP's best hope for demonstrating value is as a sort of battering ram for improving the
way your company takes a customer order and processes it into an invoice and revenue
otherwise known as the order fulfillment process.ERP takes a customer order and provides
a software road map for automating the different steps along the path to fulfilling it. When
a customer service representative enters a customer order into an ERP system, he has all
the information necessary to complete the order (the customer's credit rating and order
history from the finance module, the company's inventory levels from the warehouse
module and the shipping dock's trucking schedule from the logistics module, for example,
People in these different departments all see the same information and can update it.
When one department finishes with the order it is automatically routed via the ERP system
to the next department. To find out where the order is at any point, you need only log in to
the ERP system and track it down. With luck, the order process moves like a bolt of
lightning through the organization, and customers get their orders faster and with fewer
errors than before. ERP can apply that same magic to the other major business processes,
such as employee benefits or financial reporting.

People don't like to change, and ERP asks them to change how they do their jobs. That is
why the value of ERP is so hard to pin down. The software is less important than the changes
companies make in the ways they do business. If you use ERP to improve the ways your
people take orders, manufacture goods, ship them and bill for them, you will see value from the
software. If you simply install the software without changing the ways people do their jobs,
you may not see any value at all—indeed, the new software could slow you down by simply
replacing the old software that everyone knew with new software that no one does.
9 HOW LONG WILL AN ERP PROJECT TAKE?
Companies that install ERP do not have an easy time of it. The companies shouldn’t
get fooled when ERP vendors tell them about a three or six month average implementation
time. Those short (that's right, six months is short) implementations all have a catch of one
kind or another: The company was small, or the implementation was limited to a small
area of the company, or the company used only the financial pieces of the ERP system (in
which case the ERP system is nothing more than a very expensive accounting system).
And that kind of change doesn't come without pain. Unless, of course, the company’s
ways of doing business are working extremely well (orders all shipped on time,
productivity higher than all your competitors, customers completely satisfied), in which
case there is no reason to even consider ERP.
The important thing is not to focus on how long it will take real transformational ERP
efforts usually run between one and three years, on average but rather to understand why
you need it and how you will use it to improve your business.
10 WHAT WILL ERP FIX IN A BUSINESS?
There are five major reasons why companies undertake ERP. Integrate financial
information: As the CEO tries to understand the company's overall performance; he may
find many different versions of the truth. Finance has its own set of revenue numbers, sales
has another version, and the different business units may each have their own version of
how much they contributed to revenues. ERP creates a single version of the truth that
cannot be questioned because everyone is using the same system.

¾ Integrate customer order information: ERP systems can become the place where
the customer order lives from the time a customer service representative receives it
until the loading dock ships the merchandise and finance sends an invoice. By
having this information in one software system, rather than scattered among many
different systems that can't communicate with one another, companies can keep
track of orders more easily, and coordinate manufacturing, inventory and shipping
among many different locations at the same time.
¾ Standardize and speed up manufacturing processes: Manufacturing companies
— especially those with an appetite for mergers and acquisitions— often find
that multiple business units across the company make the same widget using
different methods and computer systems. ERP systems come with standard
methods for automating some of the steps of a manufacturing process.
Standardizing those processes and using a single, integrated computer system
can save time, increase productivity and reduce head count.
¾ Reduce inventory: ERP helps the manufacturing process flow more smoothly, and
it improves visibility of the order fulfillment process inside the company. That can
lead to reduced inventories of the stuff used to make products (work-in-progress
inventory), and it can help users better plan deliveries to customers, reducing the
finished good inventory at the warehouses and shipping docks. To really improve
the flow of your supply chain, you need supply chain software, but ERP helps too.
¾ Standardize HR information: especially in companies with multiple business
units, HR may not have a unified, simple method for tracking employees' time
and communicating with them about benefits and services. ERP can fix that.
In the race to fix these problems, companies often lose sight of the fact that ERP packages
are nothing more than generic representations of the ways a typical company does business.
While most packages are exhaustively comprehensive, each industry has its quirks that make it
unique. Most ERP systems were designed to be used by discrete manufacturing companies (that
make physical things that can be counted), which immediately left all the process manufacturers
(oil, chemical and utility companies that measure their products by flow rather than individual
units) out in the cold. Each of these industries has struggled with the different ERP vendors to
modify core ERP programs to their needs.

11 WHAT DOES ERP REALLY COST?
Meta Group recently did a study looking at the total cost of ownership (TCO) of ERP,
including hardware, software, professional services and internal staff costs. The TCO
numbers include getting the software installed and the two years afterward, which is when
the real costs of maintaining, upgrading and optimizing the system for your business are
felt. Among the 63 companies surveyed— including small, medium and large companies in
a range of industries— the average TCO was $15 million (the highest was $300 million and
lowest was $400,000). While it's hard to draw a solid number from that kind of range of
companies and ERP efforts, Meta came up with one statistic that proves that ERP is
expensive no matter what kind of company is using it. The TCO for a "heads down" user
over that period was a staggering $53,320.
12 WHEN WILL A COMPANY GET PAYBACK FROM ERP – AND HOW
MUCH WILL IT BE?
The company shouldn’t expect to revolutionize its business with ERP. It is a navel-
gazing exercise that focuses on optimizing the way things are done internally rather than
with customers, suppliers or partners. Yet the navel gazing has a pretty good payback if the
company is willing to wait for it— a Meta Group study of 63 companies found that it took
eight months after the new system was in (31 months total) to see any benefits. But the
median annual savings from the new ERP system were $1.6 million.
13 WHAT ARE THE HIDDEN COSTS OF ERP?
Although different companies will find different land mines in the budgeting process,
those who have implemented ERP packages agree that certain costs are more commonly
overlooked or underestimated than others. Armed with insights from across the business,
ERP pros vote the following areas as most likely to result in budget overrun.
¾ Training: Training is the near-unanimous choice of experienced ERP implementers as
the most underestimated budget item. Training expenses are high because workers
almost invariably have to learn a new set of processes, not just a new software
interface. Worse, outside training companies may not be able to help you.

They are focused on telling people how to use software, not on educating people
about the particular ways you do business. Prepare to develop a curriculum yourself
that identifies and explains the different business processes that will be affected by
the ERP system Remember that with ERP, finance people will be using the same
software as warehouse people and they will both be entering information that affects
the other. To do this accurately, they have to have a much broader understanding of
how others in the company do their jobs than they did before ERP came along.
Ultimately, it will be up to your IT and businesspeople to provide that training.
¾ Integration and testing: Testing the links between ERP packages and other
corporate software links that have to be built on a case-by-case basis is another
often-underestimated cost. A typical retail company may have add-on applications
from the major e-commerce and supply chain to the minor sales tax computation
and bar coding. All require integration links to ERP. If you can buy add-ons from
the ERP vendor that is pre-integrated, you're better off. If you need to build the
links yourself, expect things to get ugly. As with training, testing ERP integration
has to be done from a process-oriented perspective. Veterans recommend that
instead of plugging in dummy data and moving it from one application to the next,
run a real purchase order through the system, from order entry through shipping
and receipt of payment the whole order-to-cash preferably with the participation of
the employees who will eventually do those jobs.
¾ Customization: Add-ons are only the beginning of the integration costs of ERP.
Much more costly, and something to be avoided if at all possible, is actual
customization of the core ERP software itself. This happens when the ERP software
can't handle one of your business processes and you decide to mess with the
software to make it do what you want. You're playing with fire. The customizations
can affect every module of the ERP system because they are all so tightly linked
together. Upgrading the ERP package no walk in the park under the best of
circumstances becomes a nightmare because you'll have to do the customization all
over again in the new version. Maybe it will work, maybe it won't. No matter what,
the vendor will not be there to support you. You will have to hire extra staffers to do
the customization work, and keep them on for good to maintain it.

¾ Data conversion: It costs money to move corporate information, such as customer
and supplier records, product design data and the like, from old systems to new
ERP homes. Although few CIOs will admit it, most data in most legacy systems is
of little use. Companies often deny their data is dirty until they actually have to
move it to the new client/server setups that popular ERP packages require.
Consequently, those companies are more likely to underestimate the cost of the
move. But even clean data may demand some overhaul to match process
modifications necessitated— or inspired— by the ERP implementation.
¾ Data analysis: Often, the data from the ERP system must be combined with data
from external systems for analysis purposes. Users with heavy analysis needs should
include the cost of a data warehouse in the ERP budget— and they should expect to
do quite a bit of work to make it run smoothly. Users are in a pickle here:
Refreshing all the ERP data every day in a big corporate data warehouse is difficult,
and ERP systems do a poor job of indicating which information has changed from
day to day, making selective warehouse updates tough. One expensive solution is
custom programming. The upshot is that the wise will check all their data analysis
needs before signing off on the budget.
¾ Consultants ad infinitum: When users fail to plan for disengagement, consulting
fees run wild. To avoid this, companies should identify objectives for which its
consulting partners must aim when training internal staff. Include metrics in the
consultants' contract; for example, a specific number of the user company's staff
should be able to pass a project-management leadership test— similar to what Big
Five consultants have to pass to lead an ERP engagement.
¾ Replacing your best and brightest: It is accepted wisdom that ERP success depends
on staffing the project with the best and brightest from the business and IS
divisions. The software is too complex and the business changes too dramatic to
trust the project to just anyone. The bad news is a company must be prepared to
replace many of those people when the project is over. Though the ERP market is
not as hot as it once was, consultancies and other companies that have lost their best
people will be hounding yours with higher salaries and bonus offers than you can
afford— or that your HR policies permit. Huddle with HR early on to develop a
retention bonus program and create new salary strata for ERP veterans.

¾ Implementation teams can never stop: Most companies intend to treat their ERP
implementation as they would any other software project. Once the software is
installed, they figure the team will be scuttled and everyone will go back to his or
her day job. But after ERP, you can't go home again. The implementers are too
valuable. Because they have worked intimately with ERP, they know more about
the sales process than the salespeople and more about the retail process than the
retail people. Companies can't afford to send their project people back into the
business because there's so much to do after the ERP software is installed. Just
writing reports to pull information out of the new ERP system will keep the project
team busy for a year at least. And it is in analysis— and, one hope, insight— that
companies make their money back on an ERP implementation. Unfortunately, few
IS departments plan for the frenzy of post-ERP installation activity, and fewer still
build it into their budgets when they start their ERP projects. Many are forced to
beg for more money and staff immediately after the go-live date, long before the
ERP project has demonstrated any benefit.
¾ Waiting for ROI: One of the most misleading legacies of traditional software project
management is that the company expects to gain value from the application as soon as it
is installed, while the project team expects a break and maybe a pat on the back.
Neither expectation applies to ERP. Most of the systems don't reveal their value
until after companies have had them running for some time and can concentrate on
making improvements in the business processes that are affected by the system.
And the project team is not going to be rewarded until their efforts pay off.
¾ Post-ERP depression: ERP systems often wreak cause havoc in the companies that
install them. In a recent Deloitte Consulting survey of 64 Fortune 500 companies, one in
four admitted that they suffered a drop in performance when their ERP system went
live. The true percentage is undoubtedly much higher. The most common reason for the
performance problems is that everything looks and works differently from the way it did
before. When people can't do their jobs in the familiar way and haven't yet mastered the
new way, they panic, and the business goes into spasms.

CHAPTER 3 LITERATURE VIEW‐
Article 1: Beyond Plain Vanilla ERP
By: Professor Sowmyanarayanan Sadagopan is the Director of the Indian Institute
of Information Technology, Bangalore (iiit-b).
A large number of corporations have moved with the ERP wave and implemented
one or other of the leading edge ERP software be it SAP R/3 or Baan Series or Oracle
Applications or Ramco Marshal. Many of them reaped significant benefits by way of cost
reduction, improved customer care, shorter supply chain, reduced inventories and in turn
healthy bottom-line. The ERP wave also helped major hardware, networking & software
vendors; in fact in the last years ERP was the catalyst behind large corporate IT
investments. Several consulting houses & training establishments also benefited by the
wave. However several companies also burnt their fingers; they could not either manage
the resulting organizational change or manage the expectations of end users from ERP.
This in turn led to lots of criticism that started questioning the very utility of ERP.
That apart, ERP has come to stay. Significant numbers of corporations have either
implemented ERP or implementing ERP. The natural question that arises is what next?
Anticipating that ERP growth would taper off and end users would clamor for
things beyond ERP several ERP software vendors & consultants have been propagating a
number of ideas that could be a natural extension to ERP. This in turn led to three distinct
directions of growth
¾ Looking beyond the limits of enterprise one would like to extend the notion of an
enterprise to suppliers and the management of their enterprises. Supply Chain
management (SCM) and the resulting optimization of logistics, production planning
and control in the form of Manufacturing Execution Systems and Advanced Planning
Systems. I2 Technologies in particular are the pioneers in this area.
¾ Extending the notion of the enterprise all the way to the end consumers led to
another area generally known as Customer Relationship Management (CRM).
Tools such as data mining find extensive use in this area and IBM did some
pioneering work in this area.

¾ From a technological perspective the concept of enterprise component objects is a
major breakthrough that is being mastered currently; the enabling technology
behind this activity is the use of COM & DCOM, CORBA and Enterprise Java
Beans (EJB) technologies. Use of component technology would lead to "plug &
play" of the modules either from the same ERP software vendor or even across
different ERP software vendors; in addition "extensibility" would also be possible.
Naturally there is a lot of excitement surrounding all these three developments. But all
the three developments leave the very core of ERP untouched. We call such extensions
"horizontal extensions" -in the sense that the processes get extended beyond the boundaries
of the enterprise. Typical ERP currently implemented address the broad "common business
processes" such as order processing, purchase, retail planning, logistics, invoicing and
accounting processes. Generally these processes are common to all industries and are also
invariant with the scale of operation, holding pattern or geographic location. In such a
generic environment ERP does a great "clean up" operation removing the "mess" among
disparate functional information systems, integrates the sub-systems, brings in phenomenal
efficiencies and in turn build up a solid "information infrastructure" for an organization. But
what such "plain vanilla ERP" software's miss out is the leveraging of features unique to a
firm or an industry. It is true that ERP provides initial competitive advantage; once most of
the firms start implementing ERP, many of the firms loses out on the initial competitive
edge gained through the implementation of ERP. That is when they start looking for
"beyond plain vanilla ERP", that provides "vertical" extension of the very roots of ERP.
In the recent years ERP software vendors have partially addressed this problem by the
introduction of "ERP verticals". Typical such solutions are specific to "vertical market
segments -Oil, Automotive manufacturing, Banking, Telecom, Food & Beverage, Media,
Government etc. These are re-packaged solutions based on extensive experience gained by
a specific software vendor through dozens of implementations in many firms that are key
players in a chosen industry. Such re-packaged solution leads to significant gains in
implementation time & quality. However, they continue to maintain the "plain vanilla"
nature of the ERP software by way of addressing mainly the "common business processes".

For sustained competitive advantage firms should start leveraging the "special
processes" that give distinct competitive advantage. Such an activity must be driven by the
"core competence" of the firms and not by ERP software vendors alone.
For example, for firms where product designs, development, deployment &
maintenance constitute the "core competence"; current generation of ERP software only
addresses the peripheral functions. Industries in this segment would include Shipbuilding,
Machine tools, Capital goods manufacture, Aircraft manufacturers, Railway equipment
manufacturers, Power plant manufacturers etc. In these industries product development is
the key. Engineering designs and project management that are generally outside the ERP
software must start driving the enterprise; mere importing of product data from AutoCAD /
UG II or the import of ERP data into project management software such as Primavera
would not be sufficient. Design & development processes must be integrated into the very
core of the organizational business processes. This would imply design data including 3D,
rendering, and surface & machining characteristics must be integrated into basic workflow,
viewing, searching, version control & access control. Current generation of ERP software
does not implement all these, though they would support all these functions. Once again
design focused companies would need very sophisticated product data handling for lifetime
support, warranty calculations etc. The emerging area of Product Data Management (PDM)
addresses these issues; but PDM alone would not be sufficient to meet the enterprise needs.
ERP software vendors will not be able to provide full PDM functionality, though many of
them provide very limited PDM functionality. What is called for is the next generation of
ERP software that truly integrates such "core functionality" specific to engineering
industry. Such PDM enabled ERP would be "engineer's ERP" quite different from the
current plain vanilla ERP that is practically an "accountant's ERP".
One could cite many similar examples. Many airlines have implemented ERP; but their
core functions such as "seat reservation system" continue to be outside the main ERP. To
fully leverage their operations airline industry would need a "seat reservation enabled
ERP". Similarly mining industry would need "mine planning enabled ERP" and refineries
would need "process control enabled ERP". In all these cases the firms would depend
heavily on their "core competencies" and standard ERP solutions that address only the
common business processes would not give sustained competitive advantage. That is the
place for the next generation of "beyond plain vanilla ERP".

Article 2 ERP as Information Infrastructure
By: Professor Sowmyanarayanan Sadagopan is the Director of the Indian Institute
of Information Technology, Bangalore (iiit-b).
There are many views to ERP in the organizational context – as a competitive
weapon, a means to improve productivity and reduce costs, a tool to integrate information
systems etc. In this note we will take yet another view, namely, ERP as the infrastructure
for corporate information systems.
An infrastructure has some key features
¾ Shared by all
¾ Available readily
¾ Reliable enough to be depended upon
¾ Forms the backbone of all activities
¾ Leveraged by many value-added services
To be really useful ERP should meet all the key features mentioned above. First and
foremost, it must be shared by all departments across the organizations and owned
by all users. ERP is NOT one more project initiative from EDP/ MIS/ IT
departments. We do not necessarily mean a “big bang” approach to ERP
implementation. Even if Finance and Logistics modules alone are implemented
other related functions like Production & Quality must be interfaced or externally
integrated so that the base-data of ERP truly reflects the state of affairs across the
organization. There are enough tools available today, both from ERP vendors or
other tools vendors to accomplish this. Even Microsoft Back office can be used for
this external integration. More important the users in the departments where ERP
modules are currently not implemented should be as much part of ERP as those
departments where ERP is being implemented. The essence of ERP is integration
and this must not be lost sight of under any circumstances.
The second feature of ready availability is important, particularly in Indian scenario.
The per user licensing cost of ERP being high, the tendency in many Indian

companies going for ERP is to restrict ERP access to key managers and senior
personnel. While the logic is correct from cost point of view it beats the very
purpose of ERP, which is “data ownership”. If the order -entry clerk has to own the
data that person will own the data only if he / she were responsible for the data
creation / updating. The access control and infrastructure management tools are
sufficiently evolved today that data sensitivity can be mapped to the user hierarchy
without hardware-based control. As such there is no need even to have separate
ERP access terminals; ERP access can be through the same PC / Workstation/
Terminal that every user routinely accesses for e-mail / word-processing / Internet /
Intranet. What is important though is the widespread access to every point of data
generation and modification so that data ownership can be maintained.
Infrastructure must offer highest levels of reliability. Naturally the choice of
servers, disk systems, network devices & access devices must be such that one can
take ERP availability as granted. While data processing or word processing can
wait for a few hours or a few days of downtime, ERP cannot and one should not
resort to “offline” operations with later adjustments except in rare circumstances.
Thanks to distributed processing some of these “buffered” transactions take place
behind the screen but end-users should not be forced to resort to off-line
processing. This calls for better planning particularly on uninterrupted electric
power supply using appropriate UPS devices both for back-end servers, network
equipment & front-end terminals / workstations.
The fourth aspect is the nature of ERP as the information backbone of the
organization. There is no point in every user department maintaining individually
“private systems” even after ERP has been implemented. The organization would
be “back to square one” with multiple data for key elements beating the very
purpose for which ERP was put in place
The most important part of ERP, viewed as infrastructure is the support it provides for a
host of value-added services through applications. A well-implemented ERP would
pave the way for organizational level data discipline. Users will not have to chase others
for information; no need to set up reminders, follow-up groups and meetings.
“Information would be available on tap”; however it is important that the users start

planning for innovative use of this information for planning & analysis. Ultimately
the real use of information is to provide insight; information per se will be of little
use, except where required from statutory point of view. It is important to plan for
Supply Chain Management, Customer Relations Management, Data warehousing &
Data mining (OLAP) and other initiatives right away so that with the high quality
information infrastructure provided by ERP the organization can leverage the high
quality information systematically generated & maintained by ERP towards
Corporate excellence.
Finally infrastructure should not be viewed from a narrow “cost benefit” and ROI
perspective. The true benefits of ERP are not necessarily apparent on day1. Accordingly benefit
cost ratio might unduly overemphasize costs that are apparent and underemphasize benefits that
may not be apparent. Like every other infrastructure -roads, sea-ports, airports, telecom and
railways – information infrastructure in the form of ERP needs a different mindset too. This is
particularly true in India where we have a distorted view of infrastructure
– planning to build it incrementally through a meter gauge, broad gauge, single track,
double track and finally electrical three track system taking decades to build the track,
putting millions of users to enormous inconvenience, choking the business growth and
running into cost & time over runs and the attendant CAG Audit queries on the poor
engineers! What was necessary on day 1 was to plan a world-class 3 track electrified rail
line or a four-lane free way that would have changed the very face of Indian industries.
Hopefully we will not repeat the same mistakes in building the information infrastructure in
organizations. It must be noted that investments in infrastructure pays by the innovative
ways in which the infrastructure is put to use – investments in roads pays off through
returns from trucking industry, business generated through phone calls pays for investments
in telecom network – similarly innovative use of data generated through ERP would pay for
ERP investments. One should not just stop at ERP implementation alone. The improved
organizational agility provided by ERP must be put to good use.

CHAPTER 4 INDUSTRY PROFILE‐
Etymology:
Retail comes from the French word retaillier which refers to "cutting off, clip and
divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a
"sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off,
shred, paring.
There are three major types of retailing. The first is the market, a physical location
where buyers and sellers converge. Usually this is done on town squares, sidewalks or
designated streets and may involve the construction of temporary structures (market stalls). The
second form is shop or store trading. Some shops use counter-service, where goods are out of
reach of buyers, and must be obtained from the seller. This type of retail is common for small
expensive items (e.g. jewelry) and controlled items like medicine and liquor. Self-service,
where goods may be handled and examined prior to purchase, has become more common since
the Twentieth Century. A third form of retail is virtual retail, where products are ordered via
mail, telephone or online without having been examined physically but instead in a catalog, on
television or on a website. Sometimes this kind of retailing replicates existing retail types such
as online shops or virtual marketplaces such as eBay or Amazon.
Retailing consists of the sale of goods or merchandise, from a fixed location such as a
department store or kiosk, in small or individual lots for direct consumption by the purchaser.
Retail in India:
India's vast middle class and its almost untapped retail industry are key attractions
for global retail giants wanting to enter newer markets. Driven by changing lifestyles,
strong income growth and favorable demographic patterns, Indian retail is expected to
grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by
2016. With the economy booming, competition in the marketplace is fierce
India is currently the ninth largest retail market in the world. While organised retail
in India is only two per cent of the total US$ 215 billion retail industry, it is expected to
grow 25 per cent annually, driven by changing lifestyles, strong income growth and
favourable demographic patterns.Organised retailing in small-town India is growing at a
staggering 50-60 per cent a year compared to 35-40 per cent in the large cities.

Segment wise Retail and organized retail sale:
Retail Organized % Share
Segment Sale Rs cr Retail Sale in Org.
Rs cr Retail
Clothing, Textile & 80,000 10,900 39
Fashion Accessories
Jewellery 43,500 850 3
Watches 2,800 1,110 4
Footwear 10,000 2,500 9
Health & Beauty Care 2,500 150 1
Services
Health & Beauty 30,000 550 2
Products
(Incl.Pharma)
Consumer Durables 32,000 2,500 9
Mobile Handsets & 13,000 840 3
Accessories
Furniture & 33,000 2,200 8
furnishings
Food & Grocery 6,15,000 2,950 11
Catering Services ( F 35,000 2,000 7
& B )
Books, Music & Gifts 8,200 800 3
Entertainment 25,000 650 2
Rs 9,30,000 Rs 28,000 100
Retailing formats in India:
¾ Supermarkets (Foodworld, Spencer’s)
¾ Hypermarkets (Big Bazaar, Trent)
¾ Department Stores (Shoppers Stop, Lifestyle)
¾ Specialty Chains (Spar)
¾ Discount Chains (Subhiksha)
¾ Cash ‘N’ Carry (Metro)
¾ Petro Convenience (In & Out, Shell)
¾ Traditional Format Retailers
¾ Kiranas: Traditional Mom and Pop Stores
¾ Kiosks
¾ Street Markets
¾ Exclusive /Multiple Brand Outlets

Recent Trends:
¾ Retailing in India is witnessing a huge revamping exercise as can be seen in the graph
¾ India is rated the fifth most attractive emerging retail market: a potential goldmine.
¾ Estimated to be US$ 200 billion, of which organized retailing (i.e. modern
trade) makes up 3 percent or US$ 6.4 billion
¾ As per a report by KPMG the annual growth of department stores is estimated at 24%
¾ Ranked second in a Global Retail Development Index of 30 developing
countries drawn up by AT Kearney.
¾ Multiple drivers leading to a consumption boom:
Favorable demographics
Raising aspirations: Value added goods sales
Growth in income
Increasing population of women
¾ Food and apparel retailing key drivers of growth
¾ Organized retailing in India has been largely an urban phenomenon with
affluent classes and growing number of double-income households.
¾ More successful in cities in the south and west of India. Reasons range from
differences in consumer buying behavior to cost of real estate and taxation laws.
¾ Rural markets emerging as a huge opportunity for retailers reflected in the share of
the rural market across most categories of consumption
ITC is experimenting with retailing through its e-Choupal and Choupal Sagar
– rural hypermarkets.
HLL is using its Project Shakti initiative – leveraging women self-help groups
– to explore the rural market.
Mahamaza is leveraging technology and network marketing concepts to act
as an aggregator and serve the rural markets.
¾ IT is a tool that has been used by retailers ranging from Amazon.com to eBay
to radically change buying behavior across the globe.
¾ ‘e-tailing’ slowly making its presence felt.
¾ Companies using their own web portal or tie-sups with horizontal players
like Rediff.com and Indiatimes.com to offer products on the web.
The retail road ahead:
The Indian retail market is estimated at US$ 350 billion. But organized retail is
estimated at only US$ 8 billion. However, the opportunity is huge--by 2010, organised
retail is expected to grow to US$ 22 billion. With the growth of organised retailing
estimated at 40 per cent (CAGR) over the next few years, Indian retailing is clearly at a
tipping point. India is currently the ninth largest retail market in the world.

After 50 years of unorganized retailing and fragmented kirana stores, the Indian
retail industry has finally begun to move towards modernization, systematization and
consolidation. Today, modernization is the catch phrase and the key to understanding retail
in the next decade. It is India's largest industry, accounting for over 10 per cent of the
country's GDP and around eight per cent of the employment. Retail industry in India is at
the crossroads. The total retail trade in India is estimated at about $240 billion or Rs
11,00,000 crore, out of which organised business accounts for only $3 billion or Rs 14,000
crore. The organised retail industry is poised to grow at 35 per cent per annum in the next
five years. It has emerged as one of the most dynamic and fast paced industries with
several players entering the market
Retailing in India is gradually inching its way toward becoming the next boom
industry. The whole concept of shopping has altered in terms of format and consumer
buying behavior, ushering in a revolution in shopping in India. A large young working
population with median age of 24 years, nuclear families in urban areas, along with
increasing working-women population and emerging opportunities in the services sector
are going to be the key growth drivers of the organized retail sector in India.
Recently, the government decided to allow 51 per cent FDI in single-brand retailing
which, has been welcomed by the industry. However, most are of the view that its impact
will be largely limited to attracting more luxury brands. The limited foreign direct
investment allowed by the government in the retail industry will not have much impact on
the Big Bazaars and Shopper's Stops but it will allow luxury brands like Marks & Spencer,
Louis Vuitton or Versace - which are currently taking the franchisee route - to open more
stores in the country.

CHAPTER 5 DESIGN OF THE STUDY‐
STATEMENT OF THE PROBLEM:
Has ERP implementation brought about strategic changes in your organization? This
research aims at studying the impact of ERP implementation on the organization
functions and performance areas.
OBJECTIVE OF THE RESEARCH:
Specifically the following objectives have been set for the research investigation:
¾ To identify the strategic advantages that ERP has brought to the organization.
¾ To identify the organizational processes that has improved due to
ERP implementation.
¾ To study the effectiveness of ERP on the organization
SCOPE OF THE RESEARCH:
This study is restricted to only ERP implemented companies. • Research is conducted
at Bangalore Metropolitan Area only.
RESEARCH METHODOLOGY:
1. Type of Research:
For the present study, the researcher has based her theme on Exploratory Research.
The major emphasis of Exploratory Research is on the discovery of ideas. Through
Exploration, the researcher develops concepts more clearly, establish priorities, develop
operational definitions, and improve the final research design. This research is both
quantitative and qualitative. This study is based on the data collected through “In -depth
Interview” with key personnel from ERP Implemented Companies.
2. 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.
Primary Data:
The primary data has been collected by conducting “In -depth Interview” with key
personnel from 17 ERP implemented companies. primary data has also been collected

through questionnaire from 23 companies. The data collected through this method
was adequate enough to make projections in the study.
Secondary Data:
Articles have been sourced from magazines and journals dealing with current issues
in ERP.
Internet & Text books related to ERP & Research Methodology have been a
major secondary source for the extraction of the expert’s opinion.
3. Sampling Technique:
Since this project deals with key personnel from ERP Implemented Companies,
Judgment Sampling is considered appropriate for making projections in the study.
Judgment Sampling occurs when a researcher selects sample members to conform to some
criterion. When used in the early stages of exploratory study, a judgment sample is
appropriate. When one wishes to select a biased group for screening purposes, this
sampling method is also a good choice. We have therefore chosen this sampling method.
4. Sample Size:
This research is restricted to a sample size of 30. Since the study deals with ERP
implemented companies in Bangalore city only, the sample size of this magnitude serves
the purpose.
5. Sample Description:
The sample under this study consists of key personnel from those companies that have
implemented ERP. In some companies, these key personnel were the ones who were
involved in actual ERP Implementation. In other companies, the key personnel were from
EDP (Electronic Department), ISY (Information System) Department and Computer
Department. Most of the key personnel whom the researcher interviewed were “Middle-
level Managers” and some of them were “High level Managers”.
6. Research Instrument:
In-depth Interview:
The primary data has been collected by conducting “In -depth Interview” with key
personnel from 17 ERP implemented companies. The data collected through this method
was adequate enough to make projections in the study.
Questionnaire:
The primary data has also been collected through questionnaires from 23 companies.

7. Tools used for Hypothesis Testing :
Two related samples test: these tests concern those situations in which persons,
objects etc are measured twice.
Null hypothesis H0: There is no increase in efficiency after implementation
of ERP.
Alternate hypothesis Ha: There is an increase in efficiency after implementation of ERP.
8. Plan of Analysis:
All data collected was carefully classified, tabulated and interpreted on the basis of
which, tables, charts and graphs were drawn up. Percentages were drawn from the
tabulated frequencies and the data have been analyzed. The analysis helped in drawing
inferences and for better understanding graphs were plotted.
LIMITATIONS OF STUDY:
¾ Research investigation is restricted to selected key personnel of the organization.
¾ The information given by few personnel deemed to be correct in the beginning,
but later on it was found to be partial incorrect, which caused in inconvenience.
¾ Many of the respondents gave a negative answer in order to finish the
interview quickly, which may affect the study.
¾ As the perception level of the respondents has not been tested, it is assumed that all
of them have perceived the questions in the correct way.
¾ The study is restricted to Bangalore city only.
¾ Despite of the limitations, maximum care was exercised to make the study
scientific & meaningful.

CHAPTER 6 DATA ANALYSIS & INTERPRETATION‐
1. Please indicate which software vendor supplied your ERP software?
SAP ORACLE OTHERS TOTAL
16 6 8 30
53% 20% 27% 100%
Graph -1 ERP Vendor 1
• Interpretation
The figure shows that 53% of the companies that the researcher visited are “SAP”
implemented companies, 20% companies have implemented “Oracle” and the remaining
27% have implemented ERP packages from Local Vendors.
Hence we could infer that most of the companies go in for SAP ERP package. Some of the
companies have implement packages developed by their in house team or their consultants.

2. Which year did you purchase your software?
SL No. Years No. of Users
1 Pre 2004 8
2 2005 6
3 2006 10
4 2007 6
Graph- 2 Year of Implementation
• Interpretation
The figure shows that out of 30 companies in the search, 6 companies implemented
ERP in the year 2005, 2007. 10 companies implemented ERP in the year 2006. 8 Companies
implemented ERP in pre 2003 period. This shows that most of the companies implemented
ERP in the year 2006. This shows companies prefer to adapt ERP packages in the recent past.

3. Does the ERP system provide the precise information you need
Strongly Disagree Disagree Agree Strongly agree Don’t know
2 5 14 7 2
7% 17% 46% 24% 7%
Graph -3 Sufficiency of Information
• Interpretation
The figure shows that out of 30 companies in the research, most of the companies
agree to the fact that ERP packages provide them with sufficient information, only few
companies disagree to this fact. About70% of the companies agrees that their ERP
package provide them with sufficient information. Only 20% of the companies are not
satisfied to the information provided by their ERP package. This shows that most of the
companies feel that their ERP package provide them with sufficient information.

4. How satisfied is your company with purchase of ERP package?
Unsatisfied Neutral Satisfied Very Satisfied Total
2 5 14 9 30
7% 17% 46% 30% 100%
Graph- 4 Satisfaction level w.r.t ERP
• Interpretation
The figure shows that 46% of the companies that the researcher visited are
satisfied with their ERP package, 30% are very satisfied, 17% are Neutral and 7% are
unsatisfied. Hence we could infer that majority of these companies are satisfied. Other
companies are unsatisfied or Neutral in their opinion because they have not reaped the
benefits from ERP implementation as they have recently implemented the ERP package.

5. Do you agree that ERP software has given your organization the following
Agree Agree Agree Agree
slightly very completely
moderately much
Better collaboration 5 15 9 1 30
Improved
4 8 18 0
30
Communication
Greater Flexibility 4 16 9 1 30
Increased efficiency 4 9 15 2 30
Reduced cycle time 3 13 12 2 30
Lower operating costs 11 9 8 2 30
Increased revenue 3 18 7 2 30
Higher profit margin 7 18 3 2 30
Graph - 5 Strategic advantages
The figure shows that the companies have agreed very much that the ERP has helped
them to gain better collaboration, improved communication, and increased efficiency. Most
companies agree that the ERP has helped moderately in lowering operating costs,
increasing revenues and gaining higher profits. Hence we can see that companies have
gained intangible benefits more tangible benefits.

6. For each of the organizational processes rate the improvement in the
performance areas (Productivity, Customer Satisfaction...) due to ERP. Using
the scale provided below.
1) Improvement in Performance Areas with reference to Inbound Logistics
Negligible Inferior Average Good Excellent Not
Applicable
Productivity 0.0 3.3 30.0 46.7 20.0 0.0
Customer
0.0 6.7 33.3 46.7 10.0 3.3
Satisfaction
Quality 0.0 0.0 50.0 36.7 13.3 0.0
Costs Reduction 0.0 13.3 36.7 46.7 3.3 0.0
Defects Reduction 0.0 10.0 40.0 46.7 3.3 0.0
Graph -6 Inbound Logistics
• Interpretation
The figure shows that the companies have performed better in increasing
productivity and reducing costs and defects. And performance in maintaining
organizational quality with respect to inbound logistics was average.

2) Improvement in Performance Areas with reference to Outbound Logistics
Applicable
Productivity 0% 3% 20% 57% 7% 13%
Market
0% 0% 47% 33% 3% 17%
Coverage
Costs
0% 10% 47% 20% 7% 17%
Reduction
Defects
Reduction 0% 1% 40% 40% 0% 17%
Graph-7 Outbound Logistics
• Interpretation
The figure shows that the companies have performed better in increasing
productivity and reducing defects. And performance in maintaining organizational quality
with respect to out bound logistics was average.

3) Improvement in Performance Areas with reference to Operations
Applicable
Productivity 0% 0% 47% 43% 10% 0%
Employee
0% 0% 53% 37% 10% 0%
Satisfaction
Costs
0% 7% 57% 37% 0% 0%
Reduction
Defects
Reduction 7% 7% 33% 47% 0% 7%
Graph - 8 Operations
• Interpretation
The figure shows that the companies have performed better in increasing productivity and
reducing defects. Performance was average in both cost reduction and employee satisfaction.

4) Improvement in Performance Areas with reference to Marketing and sales
Negligible Inferior Average Good Excellent
Not
Applicable
Productivity 0% 0% 37% 33% 3% 27%
Employee
0% 7% 33% 27% 7% 27%
Satisfaction
Market
0% 0% 47% 17% 10% 27%
coverage
Costs
0% 7% 47% 17% 3% 27%
Reduction
Defects
Reduction 0% 0% 43% 17% 13% 27%
Graph -9 Marketing and Sales
• Interpretation
The figure shows that the companies have performed better in increasing productivity
and customer satisfaction. Performance was average both in market coverage and in
reducing costs and defects.

5) Improvement in Performance Areas with reference to Customer services
Not
Applicable
Market
0 % 0% 40% 30% 0% 30%
coverage
Customer
0% 0% 52% 40% 0% 8%
Satisfaction
Costs
0% 3% 53% 10% 3% 30%
Reduction
Defects
0% 3% 50% 17% 0% 30%
Reduction
Graph -10 Customer Service
• Interpretation
The figure shows that ERP package has not helped the companies much in
customer services. The benefits are average in all performance areas. As the retail
sector is service oriented its benefits are good.

6) Improvement in Performance Areas with reference to Human
resource management
Applicable
Productivity 0% 7% 20% 40% 3% 30%
Employee
Satisfaction 0% 17% 37% 13% 3% 30%
Costs
0% 13% 43% 13% 0% 30%
Reduction
Defects
0% 20% 33% 17% 0% 30%
Reduction
Graph -11 Human Resource Management
• Interpretation
The figure shows that ERP package has not helped the companies much in Human
resource management. The benefits are average in all performance areas. In some of the
companies ERP is not in HR department. Most of work in HR department is done on
legacy system.

7) Improvement in Performance Areas with reference to Technology development
Not
Applicable
Productivity 0 3% 30% 27% 0% 40%
Costs
0 7% 43% 10% 0% 40%
Reduction
Defects
0 7% 47% 7% 0% 40%
Reduction
Graph -12 Technology Developments
• Interpretation
The figure shows that ERP package has not helped the companies much in technology
development. The benefits are average in all performance areas. Most of the companies
use different software for T&D.

8) Improvement in Performance Areas with reference to Procurement of Resources
Not
Applicable
Productivity 0% 23% 7% 7% 33% 30%
Employee
0% 30% 7% 7% 27% 30%
Satisfaction
Costs
0% 17% 13% 3% 37% 30%
Reduction
Defects
0% 33% 7% 3% 27% 30%
Reduction
Graph- 13 Procurement of Resources
• Interpretation
and reducing costs and defects. Performance was average in market coverage.

9) Improvement in Performance Areas with reference to supply chain
Applicable
Productivity 0% 23% 7% 7% 33% 30%
Costs
0% 17% 13% 3% 37% 30%
Reduction
Defects
0% 33% 7% 3% 27% 30%
Reduction
Graph -14 Supply Chain
• Interpretation
and Costs reduction. Performance was average in defect reduction.

10) Improvement in Performance Areas with reference to Merchandise planning
Not
Applicable
Productivity 0% 3% 30% 27% 0% 40%
Costs
0% 7% 43% 10% 0% 40%
Reduction
Defects
0% 7% 47% 7% 0% 40%
Reduction
Graph - 15 Merchandise Planning
• Interpretation
The figure shows that the companies have performed better in increasing Defect
reduction. Performance was average both in productivity and in reducing costs.

7. Does your company plan to upgrade to new ERP package in the recent future.
SL. No Responses No. Of Responses
1 Yes 4
2 No 26
Graph - 16 ERP up gradation
• Interpretation
The figure shows that out of 30 companies in the research, just four companies are
planning to upgrade the ERP package where as others are willing to continue with the same
package. And around 26 companies do not have plans to upgrade their ERP package. Only
14% of the companies are planning to upgrade their ERP package. Remaining 86% of the
companies are happy with the ERP package which already exists in their organization.

HYPOTHESIS:
SL.NO D D²
1 20 400
2 20 400
3 10 100
4 30 900
5 30 900
6 0 0
7 45 2025
8 0 0
9 40 1600
10 35 1225
11 30 900
12 30 900
13 30 900
14 20 400
15 20 400
16 10 100
17 0 0
18 20 400
19 40 1600
20 10 100
21 30 900
22 35 1225
23 20 400
24 10 100
25 30 900
26 0 0
27 20 400
28 10 100
29 10 100
30 40 1600
∑D =645 ∑D²=18975

n=30
X=∑D/n = 645/30 = 21.5
Y= ∑D²/n=18975/30 =632
SD =
SD = 13.137
Tcal = 8.964
Two related samples test: these tests concern those situations in which persons, objects
etc are measured twice.
1. Null hypothesis H0:
There is no increase in efficiency after implementation of ERP.
2. Alternate hypothesis Ha:
There is an increase in efficiency after implementation of ERP.
Statistical test:
The paired samples t-test is chosen because there are repeated measures on
each company, the data are not independent.
3. Significance level : level = .05, with n=30, D.o.f = 29
4. Calculated value :
Tcal = 8.964
Ttab = 1.699
5. Interpretation:
Since Tcal > Ttab, reject null hypothesis
6. Conclusion: There is an increase in efficiency after implementation of ERP.

CHAPTER 7 FINDINGS‐
Findings of the research was basically on the responses which were received from
the organizations which have participated in the research
Success depends on the point of view from which we measure it. By analyzing the
different responses which were received during the course of the research one thing came
out was that people often meant different things when they meant about ERP success. For
example, people who were involved in the implantation of ERP often define success plan in
terms of completing the project on time and within budget. But people whose job is to
adopt ERP systems and use them to adopt business results tended to emphasize having a
smooth transition to stable operation with the new system, achieving intended business
improvements like costs, defect reduction, productivity, Market coverage, employee and
customer satisfaction and gaining improvement in decision support capabilities.
Overall analyzing the responses it was found that the ERP package has helped
the organizational functions of retail sector in improving their performance and yielding
much better results. The findings show that the companies are on costs reduction and
defect reduction with improved productivity.
The employee and customer satisfaction has increased in the past after the ERP
package was implemented with increase in performance in productivity and market coverage.
Most of the organizations which have participated in the research agree to the fact
that the implementation of ERP in their organization has opened the gateway for a more
systematic work processes.
The fallacies in a discovery are the gateway to a better version and scope
for wider improvement
Even though ERP implementations have acted as a boon for many organizations,
but like two sides of a coin, there are some problems which are faced by the companies
after ERP implementation.
Many companies are not satisfied with the response that they receive from their
ERP packages. Some companies were not satisfied with the response, accuracy, precision
of the information reports generated by their ERP package.

CHAPTER 8 CONCLUSION‐
This project work is done to know the impact of ERP in organization functions
in retail sector.
The implementation of ERP system in organizations is an enormous complex
undertaking. ERP systems can affect nearly every aspect of organizational performance
and functioning, and measures of ERP system success must reflect this fact.
Retail sector companies were looking toward IT as a necessary expenditure; almost all
of them felt that IT was necessary to leverage their existing capabilities in a competitive world.
The employee and customer satisfaction has increased in the past after the ERP package was
implemented with increase in performance in productivity and market coverage.
Thus it enhances the effectiveness and efficiency of organizational functions in
every aspect of retail sector.

CHAPTER 8 BIBLIOGRAPHY‐
1. Business Research Methods --Donald R. Cooper
2. Enterprise Resource planning --Alexis Leon
Websites:
¾ www.google.com
¾ www.wikipedia.org
¾ www.imtma.org
¾ www.microsoftbusinesssolutions.com

Questionnaire: Impact of ERP in organizational functions in retail sector
I am a student of M P Birla Institute of Management, Bangalore pursuing MBA
Program. I am carrying out a research investigation on impact of ERP in retail sector
in Bangalore. In this research, people will be asked to complete a questionnaire that
asks questions about impact of ERP implementation. There are no foreseeable risks
associated with this project. Your responses will be strictly confidential.
Mohammed Shakeel ur Rahman
1. Please indicate which software vendor supplied your ERP software?
SAP Oracle Others
2. Which year did you purchase your software?
Pre2004 2005 2006 2007
3. Does the ERP system provide the precise information you need
Yes No
4. How satisfied is your company with purchase of ERP package?
Unsatisfied Neutral Satisfied Very Satisfied
5. Do you agree that ERP software has given your organization the
following strategic advantages?
Agree Agree Agree very Agree
slightly moderately much completely
Better Collaboration
Improved Communication
Greater Flexibility
Increased efficiency
Reduced cycle time
Lower operating costs
Increased revenue

6. For each of the organizational processes rate the improvement in the
performance areas (Productivity, Customer Satisfaction...) due to ERP.
Using the scale provided below.
1) Improvement in Performance Areas with reference to Inbound Logistics
Applicable
Productivity
Customer
Satisfaction
Quality
Costs Reduction
Defects Reduction
2) Improvement in Performance Areas with reference to Outbound Logistics
Applicable
Productivity
Market
Coverage
Costs Reduction
Defects
Reduction
3) Improvement in Performance Areas with reference to Operations
Applicable
Productivity
Employee
Satisfaction
Costs Reduction
Defects
Reduction

4) Improvement in Performance Areas with reference to Marketing
and sales
Applicable
Productivity
Employee
Satisfaction
Market
coverage
Costs
Reduction
Defects
Reduction
5) Improvement in Performance Areas with reference to Customer services
Applicable
Market coverage
Customer
Satisfaction
Costs Reduction
Defects Reduction
6) Improvement in Performance Areas with reference to Human
resource management
Negligible Inferior Average Good ExcellentNot
Applicable
Productivity
Employee
Satisfaction
Costs Reduction
Defects Reduction
7) Improvement in Performance Areas with reference to
Technology development
Applicable
Productivity
Costs Reduction
Defects Reduction

8) Improvement in Performance Areas with reference to Procurement
of Resources
Applicable
Productivity
Market coverage
Costs Reduction
Defects Reduction
9) Improvement in Performance Areas with reference to supply chain
Applicable
Productivity
Costs Reduction
Defects Reduction
10)Improvement in Performance Areas with reference to
Merchandise planning
Applicable
Productivity
Costs Reduction
Defects Reduction
8. Does your company plan to upgrade to new ERP package in the recent future.
Yes No
Name:
Age:
Occupation:
THANK YOU SPARING YOUR VALUABLE TIME IN GIVING THE RESPONSE

Impact of ERP on Organizational Functions in Retail Sector

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