Organizational Context: Industry Type Iron and Steel, in The B2B Segment

1.
Organizational Context
Industry Type
Iron and steel, in the B2B segment.
Geographical Presence
Headed in Mumbai, Maharashtra and has its marketing units and plants in more than 50
countries around the globe.
Product Lines
Soft iron, Iron, Cast Iron, Alloy.
Major products
Locomotive parts, Agricultural equipment, Machinery, tinplate, Cable and wire Rebars, flat
steel products, long steel products and steel plates etc.
2. History
Tata iron and steel company came into effect on 26 August 1907 by Jamshedji Tata. The
company is operating since then as one of the key steel manufacturing firm in India.
In 1990 the company initiated extensive expansion plans and established its subsidiary in New
York named Tata Inc. The company changed its name from TISCO to Tata steel in 2005.
3. Company overview
Started in Jamshedpur, Jharkhand (then Bihar) the company now operates at a gigantic level
with its operations based in 26 countries and commercially in over 50 countries employing
around 1,00,000 people.
The company’s motto is to deliver quality over profit by which it serves its diverse group of
customers. It has the second highest domestic production measured in metric tonnes after SAIL
(Steel Authority of India limited).
4. Information Intensity Matrix
IRON
BANKING,NEWS
AND PAPERS
STEEL
RAILWAY
CEMENT
TICKET,GOLD
5. What was Proposed

ERP implementation of SAP was proposed after a lot of in-depth analysis and studies on costs,
time, compatibility, esteem, operability, support and future organizational requirements
The ERP was selected to integrate the newly proposed systems with the existing set of systems.
The goal associated with this implementation was to have a continuous learning and change.
The ERP implementation was done to solve two problems:
1. Integrate new and old systems after mergers and acquisitions.
2. To make the complete systems customer friendly.
The ERP system was selected after rigorous analysis to provide transparency, customer
satisfaction, quick decision-making and credibility of data and improve responsiveness to
customers across all areas.
Although the ERP implementation and it’s success ratio is quite low in most of the industries
but still the implementation of ERP was rolled out to around 47 strategic locations across the
country under big-bang approach in just a short period of 8 months
6. How to Measure Success

TISCO ERP implementation is viewed as a big success in the world of ERP implementation,
the fact that they went on through a Big Bang approach in such a huge organization was in
itself a big achievement.
The in total benefits of the project were-
 IT enabled supply chain management and inventory planning led to a decrease in inventory
carrying cost from Rs.190 per ton to Rs.155 per ton while the overdue outstanding came
down to 4033 million in June 2000 from 5170 million in 1999.
 After implementation of ERP, TISCO got a double-digit growth rate in turnover for the first
time (13%).
 The manpower cost decreased to 140 $ from 200 $ two years ago.
 Increased communication across geographies through video conferencing, online threads etc.
 In the first few months itself TISCO saved 33 crores while the total cost of the
implementation was 40 crores.
 There was a drastic fall in amount owed to creditors.
 Rapid delivery systems enabled quick and better sales.
 E-enablement such as e-auction, e-procurement led to saving of time and less costs involved.
 The company could update their customers on a daily basis with implementation of SAP and
this made customer management easier.
 The business processes became more consistent across locations and the audit trail was
available for all business transactions.
 Because the employees could do the tasks assigned at the job in an easier manner, the
satisfaction among the employees increased.
 With implementation of ERP, TISCO was able to perform debtor ageing more efficiently and
this helped the company to ascertain which debtors are to be sold to Asset Reconstruction
Companies.
 Tracking and monitoring of legal compliances became easier.
7. Implementation
General Approaches:
1. Enterprise wide full installation – Big Bang Approach

2. Unit by Unit – Pilot or Phased approach
 Implementation process at Tata Steel:
Tata Steel decided to go with big-bang approach of going live with all the locations at the same
time. Time span allocated for this was 8 months. TISCO were aware that they will be having
tough time if they implement the software in one go. To counter this, they have to choose a top
ERP software to meet the demands of a big firm like TISCO. The period set for implementation
seemed to be a major challenge. The business process was divided into two main segments.
The core functions were denoted to be major ones. Similarly, the other assisting functions were
named minor ones. All of them were made to bear in mind the fact that ERP's implementation
was imperative and employees felt that the deadlines were not very comfortable. The company
made sure that that the change did not produce any sort of resentment in the organization. This
was done by educating everyone on the need and desirability of change and also all
apprehensions were discussed and clarifications made to the fullest satisfaction.
 Problems faced:
The existing technology was a simple replication of the manual system. Not only did it operate
as individual enclaves of information but the technology had outlived its lifetime and was
completely obsolete. The employees and management at TISCO faced a ponderous task,
bartering and fetching information from the system.
Further, the accuracy of information obtained was questionable because of deviation and
corollary of data from different departments. Also, there was no built-in honesty check for
various data sources.
 Choosing SAP:
Various strategic goals was associated while implementing the SAP software. TISCO wanted
to have an environment with evolved and continuous learning and set an industry standard.
This would enable TISCO to achieve a world-class status for its products and services and
strengthen its leadership position in the industry. Apart from this, TISCO wanted to improve
responsiveness to customers across all areas and also to have a faster decision-making process
and clarity and soundness of data.
 Challenges:
Implementing any ERP system is a challenge for any organization because of the failure rate
of ERP implementations was high world-wide. The challenge can be compounded if the ERP
provider is a world leader - SAP. The main challenge which was ahead in building more useful
environment where SAP will be embedded in the hearts and minds of the people and the
customers of Tata steel.
 Integrating the Business and Technology:

All the branches, which had more numbers of transactions and difficulty, were identified as a
HUB while the minor branches along with the distribution agents were defined as SPOKES
which were attached to these branches. In January 1999, 'TEAM ASSET' was formed with two
simple axioms:
 Go-Live date - 1st November 1999

 There are only 24 hours a day
Also another parallel activity called 'Change Management' was initiated within the company.
The most important objective of 'Change Management' was to reach out to the customers
involved partially in the project to notify them of the improvments taking place.
Tata Steel completed their big bang implementation of all SAP modules on 1st November 1999,
as per the set deadline and at one go across 46 countrywide locations.
 SAP R/3 Architecture:

Marching ahead, Web enabling of SAP R/3 is on the cards. SAP R/3 - Real time data processing
using 3 tier architecture – Database, Application server and Client (SAP GUI). 3 Tier
architecture at TISCO had their head office in Kolkata, Application server and Database server
were at Jamshedpur in a centralized locations and customers or clients at any remote locations.
They were connected in a VSAT network.
The company also plans to adopt ‘my SAP Customer Relationship Management’ solution to
eimprove its customer relationships in the near term and ultimately realize its dream of a
becoming the most efficient and competitive company in the world in its vertical.
 3 Tier Architecture at TATA Steel : Not Necessary

VSAT
netwo
rk Apps DB
Head
Serv serve
Office er r
(Kolkata
Central Location
) (Jamshedpur)
Sukinda Bamnipal Joda

Remote
locations
 Proposed way of better implementation:

Implementing ERP across 46 locations worldwide with a big bang approach is not the right
idea as the success rate of implementing ERP is low when compared to the failure rate. If the
implementation of ERP in TISCO had failed, there would have been a lot of negative
consequences.
Instead of a big bang approach, TISCO could have gone with a pilot or phased model
approach, where they could have selected one division or unit and then implemented the ERP
system in that unit and checked for all possible scenarios after which they could have
implemented it in all the locations.
The time period allocated for the implementation of ERP system was 8 months which was
very less as compared to the time taken by other companies for implementing ERP. Since the
ERP was being implemented in such a large scale, the time period for implementation could
have been extended and more training should have been given to the employees as well as the
customers, so that everyone benefits from the ERP implementation.

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1.

5. What was Proposed

6. How to Measure Success

1. Enterprise wide full installation – Big Bang Approach

 Integrating the Business and Technology:

 Go-Live date - 1st November 1999

 SAP R/3 Architecture:

 3 Tier Architecture at TATA Steel : Not Necessary

Sukinda Bamnipal Joda

 Proposed way of better implementation:

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