Assessment of Organizational Preparedness for ERP Implementation in NTPC (DISSERTATION REPORT) INFORMATION TECHNOLOGY Knowledge Management System ERP

IMPLEMENTATION Key Words : Communication, Change LAKSHYA, End Users, Process Owners Management, Project Submitted by : Anup ji Agarwal, Sr. Manager(C&M), Unchahar, 9415501234, anupjiag arwal@ntpc.co.in 03/12/2007

. Assessment of Organizational Preparedness for ERP Implementation in NTPC A Dissertation Proposal for XIX National Management Program by Anup Ji Agrawal under the guidance of Shri T. Mukherjee DGM(C&M) NTPC, Unchahar Prof. Anjali Kau shik IT Deptt. MDI, Gurgaon Management Development Institute Gurgaon - 122 001 31th August, 2007

Assessment of Organizational Preparedness for ERP Implementation in NTPC A dissertation submitted in partial fulfillment of the requirements for the awar d of Post-Graduate Diploma in Business Management by Anup Ji Agrawal XIX National Management Program Management Development Institute Gurgaon - 122 001 August, 2007

Assessment of Organizational Preparedness for ERP Implementation in NTPC A dissertation submitted in partial fulfillment of the requirements for the awar d of Post-Graduate Diploma in Business Management by Anup Ji Agrawal under the guidance of Shri T. Mukherjee DGM(C&M) NTPC, Unchahar Prof. Anjali Kau shik IT Deptt. MDI, Gurgaon XIX National Management Program Management Development Institute Gurgaon - 122 001 August, 2007

Certificate of Approval The following dissertation titled "Assessment of Organizational Preparedness for ERP Implementation in NTPC" is hereby approved as a certified study in manageme nt carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post- Graduate Diploma in Business Management for which it has been submitted. It is understood that by this approval the und ersigned do not necessarily endorse or approve any statement made, opinion expre ssed or conclusion drawn therein but approve the dissertation only for the purpo se it is submitted. Dissertation Examination Committee for evaluation of dissert ation Name _______________________ _______________________ _____________________ __ Signature ___________________ ___________________ ___________________

Certificate from Dissertation Advisory Committee This is to certify that Mr. Anup Ji Agrawal, a participant of the XIX National M anagement Program, has worked under our guidance and supervision. He is submitti ng this dissertation titled "Assessment of Organizational Preparedness for ERP I mplementation in NTPC" in partial fulfillment of the requirements for the award of the Post-Graduate Diploma in Business Management. This dissertation has the r equisite standard and to the best of our knowledge no part of it has been reprod uced from any other dissertation, monograph, report or book. Faculty Advisor Prof. Anjali Kaushik IT Deptt Management Development Institute G urgaon Date: Organizational Advisor Shri T. Mukherjee DGM(C&M) NTPC Unchahar Date:

(A) List of Figures: Fig. 1: Taxonomy of ERP research Fig. 2: A Classification o f Organizational Research in ERP Fig.3: Organizational Pre-requisites Research M odel Design for Enterprise-Wide Systems Fig. 4: Classification of CSFs of ERP im plementation into Markus and Tanis (2000) process-oriented ERP life cycle model F ig. 5: A suggested Framework for managing change associated with ERP Fig. 6: A M odel of Successful ERP Adoption Fig. 7: Need of Project LAKSHYA - Current Realit y vs. NTPC Vision Fig. 8: NTPC Vision DISHA to LAKSHYA Fig. 9: Broad Outline of Project LAKSHYA Fig. 10: ERP Coverage Fig. 11: IT Architecture at NTPC Fig. 12: SRM: e- tendering Process Flow Fig. 13: Project management Process Flow Fig. 14: Process Flow for Engineering & QA Fig. 15: Importance vs. Performance Gap End U sers Fig. 16: Importance vs. Performance Gap Process Owners (B) List of Tables: Table 1: Issues of Concern in ERP Implementation Table 2: Mean ranking of CSFs b y degree of importance in ERP implementation Table 3: Survey of critical success factors in ERP implementations Table 4: User Licenses for NTPC Table 5: Mean sc ores for Sub-factors (End Users) Table 6: Mean scores for Sub-factors (Process O wners) Table 7: Highest & Lowest Mean Scores for sub-factors (End Users) Table 8 : Highest & Lowest Mean Scores for sub-factors (Process Owners) Table 9: Signifi cant gap for Sub-factors (End Users) Table 10: Significant gap for Sub-factors ( Process Owners)

(C) List of Appendices: Appendix 1: Questionnaires I. II. III. IV. Format for Pe rsonal details of Respondents Questionnaire for End Users Questionnaire for Proc ess Owners Questionnaire for Project Sponsors Appendix 2: SPSS DATA A) End User I. SPSS Data View & Variable View II. SPSS Out put Correlation Coefficient between Sub-factors & Overall perception III. SPSS O utput Correlation Coefficient between CSFs & Overall perception IV. SPSS Output Correlation Coefficient between Demographic Factors & Overall perception B) Proc ess Owners I. SPSS Data View & Variable View II. SPSS Output Correlation Coeffic ient between Sub-factors & Overall perception III. SPSS Output Correlation Coeff icient between CSFs & Overall perception (D) Abbreviations: BPR - Business Proce ss Re-engineering C&M - Contracts & Materials CC - Corporate centre CO - Commerc ial Office COFD - Consumer operated Fuel Depot COLD - Consumer operated Lub. Dep ot CSF - Critical Success Factors DoP - Delegation of Power (of NTPC) EDC - Empl oyee Development Centre ERP - Enterprise Resource Planning F&A - Finance & Accou nts GR - Goods Receipt GW - Giga Watt (unit of energy) HQ - Head quarter HR - Hu man Resources IO - Inspection Office IT - Information Technology JIT - Just in t ime LOA - Letter of Award MB - Measurement Book MDCC - Matl. dispatch clearance Certificate MIS - Management Information System MNE - Multinational Entreprises MOM MPIC MTN MW NCR O&M OEM OES ORT PAC PC PF PM PMI PO PPA PR QA R&D R&M RA RCM RFQ - Minutes of Meeting - Material Planning & Inventory Cell - Material Transf er Note - Mega Watt (unit of energy) - National Capital Region - Operation & Mai ntenance - Original Equipment Manufacturer - Original Equipment Supplier - Opera tion Review of Targets - Proprietary Article Certificate - Personal Computer - P rovident fund - Preventive Maintenance - Power Management Institute - Purchase O rder - Power Purchase Agreement - Purchase Requisition - Quality Assurance - Res earch & Development - Renovation & Modernization - Running Account - reliability Centered Maintenance - Request for Quotation

RO SIV SRV - Regional Office - Stores Issue Voucher - Stores Receipt Voucher TC TDS TQM - Tender Committee - Tax deduction at Source - Total Quality Management

ABSTRACT This paper lays the foundation for a model of organizational pre-requisites for enterprisewide integration projects. The main objective of the paper is to provi de an objective tool to the managers using which they can assess their organizat ions readiness for ERP projects. This study presents a literature-based model whi ch lists the factors that are critical for assessing the organizational prepared ness prior to undertaking these expensive projects. These are the must dos & donts for any organization, to reap desired benefits from ERP implementation. Six main factors identified from the ERP literature as critical to the organizations prep aredness for ERP Project were: (1) Communication; (2) Change management; (3) BPR ; (4) IT Infrastructure; (5) ERP team composition & (6) Top management support. The importance of each factor with respect to organizations preparedness is discu ssed on the basis of the extensive frame-work given by the Markus and Tanis fou r-phase ERP life-cycle model and few other relevant studies. This study examines NTPCs (a 28 GW integrated power utility) preparedness towards ERP implementation . Selected software solution SAP-R/3 is being provided by M/s. SAP. It shall be implemented by M/s. SAP along with its implementation partner M/s. Siemens Infor mation Systems Ltd. However modules on operational parameters shall be provided by RWE npower, UK. Unchahar unit of NTPC has been selected as sample for this st udy. It is to be covered under phase # 3 of the implementation schedule. Identif ied CSFs as mentioned above, have been further broken into sub-factors and their correlation with overall perception has been determined to find their criticali ty and pinpoint the areas where efforts seemed less compared to the importance o f the variable. The paper examines the perceptions of the process owners & end u sers on each of these critical sub-factors. Additionally, efforts were made to v erify these perceptions with the perceptions of the project sponsors. This also gave the opportunity to do a comparative study of the perceptions held by these three sets of respondents. Findings from the study indicate that additional thru st is required towards creating awareness about the ongoing activities both at t he unit level and at organizational level. It is currently limited to the people directly concerned with implementation task. Limited awareness combined with le ss than adequate training efforts might end up with end users who are under-prep ared and have apprehensions in adapting the new system. They would be unable to bear dual onslaught of technological changes as well as changes in long establis hed procedures & work culture. Majority of the respondents feel outdated & unwar ranted processes need to be weeded out, in order to achieve operational efficien cy. ERP implementation gives one such opportunity to undertake a major BPR exerc ise, resulting into simplification and standardization of procedures. They also feel that NTPC might not be able to operate in a paperless environment with the present set of guidelines and regulated environment. NTPC DoP might also need to be amended suitably to simplify the decision making process. On the positive si de, top management of NTPC is fully committed to implement the ERP project with minimum customization. It has strategic vision and wishes to leverage its operat ional efficiency through this initiative. Also, a sizeable portion of respondent s feel that the existing legacy systems do not meet their present and future bus iness needs. Thus, it might motivate them for better acceptance of the ERP imple mentation. Despite the fact that awareness level of end users needs further impr ovement, a large majority of

end users have negated most of the apprehensions related to ERP implementation. Also since, end users in NTPC are accustomed to work on legacy applications, the y are likely to adapt to it with relative ease.

ACKNOWLEDGEMENTS I wish to express my sincere gratitude to the following people, who have activel y helped me in throughout this work: First & foremost to my faculty guide, Prof. Anjali Kaushik, IT Deptt., MDI, whose active direction and guidance was availab le throughout this work. Prof. C. P. Gupta, Chairman, NMP, MDI, who gave not onl y introduced us to the concepts of Research Methodology, but also followed it up with valuable insights on how to practice, during the course of this study. Shr i. T. Mukherjee, DGM(C&M), NTPC, Unchahar - my organizational guide & mentor who extended all help from the organization side and facilitated smooth culmination of this work. NTPC management, which gave me opportunity at this stage of my ca reer to update my knowledge. All my respondents, who participated actively in th e perception survey and became a source of information through which meaningful conclusions on organizational preparedness could be drawn. Staff of MDI Library & Computer centre, who were more than willing to extend all help, anytime I need ed. Finally, all those unnamed person who have extended any help directly or ind irectly, in fructification of this work.

TABLE OF CONTENTS TABLE OF CONTENTS .............................................................. ................................................ 13 1. INTRODUCTION ............ ................................................................................ ......................... 14 1.1 THE RESEARCH PROBLEM .......................... .................................................................. 16 1.2 LITERA TURE REVIEW .................................................................... ................................. 17 1.2.1 TAXONOMY OF ERP...................... ........................................................................... 17 1 .2.2 NEED FOR IDENTIFICATION OF CSFs IN INTELLIGENCE PHASE...................... . 19 1.2.3 CRITICAL SUCCESS FACTORS IN PRE-IMPLEMENTATION PHASE OF ERP ..... 21 1.4 SUCCESSFUL BPR IMPLEMENTATION STRATEGY...................................... ................ 38 1.5 IMPORTANCE OF KNOWLEDGE INTEGRATION..................... ....................................... 48 1.6 IMPACT OF CUSTOMIZATION ......... ................................................................................ 51 1.7 PROPOSED MODEL FOR ASSESSING ORGANIZATIONAL PREPAREDNESS ............ 52 2. ERP IMPLEMENTATION IN NTPC : AN OVERVIEW ................................... .......................... 58 2.01 INTRODUCTION ................................ ................................................................................ ... 58 2.02 CRITICAL SUCCESS FACTORS FOR ERP IMPLEMENTATION .................... ................................ 60 2.03 ROLES AND RESPONSIBILITIES ............ ................................................................................ 60 2.04 NTPCS VISION : FROM DISHA TO LAKSHYA ....................................... .......................... 61 2.05 KEY ERP BENEFITS ............................ ............................................................................... 65 2.06 COVERAGE OF ERP PACKAGE ................................................ ............................................ 65 2.07 MODULES IN SAP ............ ................................................................................ .................. 66 2.08 FUNCTIONAL SCOPE .................................... ....................................................................... 66 2.09 LICENSES FOR NTPC............................................................... .......................................... 70 2.10 SOLUTION ARCHITECTURE FROM SA P............................................................................... .. 72 2.11 SAP BUSINESS INTELLIGENCE KEY CAPABILITIES .......................... ................................... 74 2.12 MODULES BYRWE NPOWER ............... ................................................................................ 75 2.13 IT ARCHITECTURE........................................................ ................................................. 76 2.14 GEOGRAPHICAL SCOPE ... ................................................................................ ................... 76 2.15 PROJECT TIMELINES .................................. ........................................................................ 77 2.16 NEW SAP TERMS ................................................................. ............................................. 81 2.17 KEY PROCESS CHANGES ...... ................................................................................ .............. 87 2.18 KEY ROLE CHANGES ........................................ .................................................................. 91 3. THE RES EARCH DESIGN ................................................................... ................................. 114 3.1 SAMPLE SET............................ ................................................................................ .......... 114 3.2 QUESTIONNAIRE DESIGN ........................................ ............................................................ 114 3.3 DATA COLLEC TION PROCEDURE ................................................................. ........................ 116 3.4 RESEARCH METHODOLOGY .......................... ...................................................................... 116 4. SP SS ANALYSIS .................................................................... .............................................. 118 4.1 OBSERVATIONS ............ ................................................................................ ..................... 118 4.2 INTERPRETATION OF OBSERVATIONS ................... ................................................................ 122 4.3 COMPARI SON OF THE PERCEPTIONS OF THE THREE SETS OF RESPONDENTS ........................

. 127 4.4 GAP ANALYSIS ......................................................... ..................................................... 129 4.4.1 Interpretation o f Performance Gaps.............................................................. ........ 129 5. CONCLUSIONS .................................................... ................................................................ 133 5.1 RECOMME NDATIONS........................................................................ ............................ 134 5.2 LIMITATIONS OF THE STUDY................... ..................................................................... 135 6. REF ERENCES ........................................................................ .............................................. 137 7. APPENDICES................ ................................................................................ ........................ 141

1. INTRODUCTION All successful corporations today are run through dynamic interaction amongst it s customers, suppliers & its own internal requirements. These corporations antic ipate, respond, and react to the ever changing demands of the marketplace on a c ontinual basis. In a fiercely competitive environment, business strategy is the key to business survival & it is leveraged through aggressive & efficient use of information technology. Advent of Enterprise resource planning (ERP) systems wa s one of the most innovative developments in information technology (IT) of the 1990s. ERP systems have replaced most of the legacy systems in large and multina tional companies (Holland and Light 1999a, 1999b). An increasing number of multi national enterprises (MNE) have adopted ERP systems in the hope of increasing pr oductivity and efficiency as a means of leveraging organizational competitivenes s (Davenport 1998; Wagle 1998). An enterprise resource planning (ERP) system pro vides integrated solution for organizations information-processing needs in its c ore activities such as manufacturing and logistics, finance and accounting, sale s and marketing and human resources. It enables a company to manage its resource s (materials, human resources, finance, etc.) most efficiently and effectively. An ERP system helps different parts of the organization to share data and knowle dge, reduce costs, and improve management of business processes. Some of the mos t significant advantages of ERP are: Automation, Integration & Standardizatio f business processes; Multiple point data entry & retrieval Real-time Data proce ssing abilities Ability to manage core and support processes Assists decision ma king through tailor made reports Supports flexible client/server architecture Dr ives effective business process re-engineering (BPR) Inculcates TQM & Best Pract ices across the industry

Implementation of ERP is an extensive, time-consuming and costly process, runnin g into millions of dollars, depending on the size of the organization, complexit y of its operations and its current state of IT readiness. The investment relate s to software itself and associated services such as consulting, implementing, t raining, and system integration (Parr et al. 1999). However, many ERP systems fa il (Stratman and Roth, 1999). Many ERP systems face implementation difficulties because of end users resistance. Another impediment that is encountered relates t o Knowledge Integration in an ERP implementation. As knowledge is embedded withi n various cross-functional business processes, its integration becomes critical. KI is an on-going process of constructing, articulating and redefining shared b eliefs through collective interaction of organizational members. These difficult ies and high failure rate in implementing ERP systems have led to research on cr itical success factors (CSFs) in ERP implementation. This research is an effort to identify the CSFs for organizational preparedness for ERP Implementation, bas ed on various published research papers. These identified factors have been used to make generic model for testing organizational preparedness & identify the ga ps for medium and large corporations.

1.1 THE RESEARCH PROBLEM 1.1.1 The Problem Statement: To assess the Organizational preparedness of NTPC on ERP Implementation 1.1.2 Genesis of the Research Problem: NTPC Ltd - the largest power utility in India generating close to 28 GW of power - is in the midst of an organization wide ERP implementation. Pilot projects at two locations have al ready gone live and further implementation is being taken up in different region s in a phased manner. Entire organization is scheduled to run on ERP by March, 2 008. NTPC, Unchahar (a 1050 MW unit of NTPC) is to be covered in the third phase of the ERP implementation and is scheduled to go live by 28th Dec., 2007. Prepa ratory work like data cleansing work with regard to Material master, Vendor Mast er & Equipment master etc. is currently on. End users are being made aware of th e ERP systems in general to sensitize them towards a new work culture. 1.1.3 Rat ionale for the study: Thus, the proposed study is most timely in respect of its scope & intent. With the pilot implementation at Ramagundam and Faridabad just b eing over and phase-wise implementation across all units just started, it would provide useful guidance to the Project implementation team, process owners and e nd users as well. 1.1.4 Objective of the Present Study: The objective of the pre sent study is to assess the organizational preparedness of NTPC on ERP implement ation (adoption & use), using the model derived on the basis of identified CSFs for organizational preparedness through literature study. Going further, this st udy aims to identify the gaps on various sub-factors related to ERP implementati on and finally suggest remedial measures.

1.2 LITERATURE REVIEW To establish the authenticity of the current research project and provide theore tical underpinnings, various published articles from electronic resources and pr inted material have been studied. These research papers produced by eminent rese archers in this field provided valuable guideline and framework for carrying on the present research. As the developments in this field are happening at a rapid pace, recent studies have been referred to as far as possible. In order to conc eptualize the Critical Success Factors relevant to the research problem & arrive at the framework for assessing the Organizational preparedness, efforts have al so been made to include practitioners views on the matter. These are enumerated i n the next chapter where consultants to NTPC ERP project have identified some CS Fs. 1.2.1 TAXONOMY OF ERP The figure given below facilitates understanding of va rious issues involved with ERP. Author has based it on a comprehensive review of available material on ERP. Figure 1 highlights the major streams of ERP researc h (Majed Al-Mashari, 2003).

Figure 1: Taxonomy of ERP research

1.2.2 NEED FOR IDENTIFICATION OF CSFs IN INTELLIGENCE PHASE Despite well identif ied difficulties in ERP implementation, research on Critical Success Factors in i ntelligence phase is very limited. To further illustrate this point, a number of i ssues of concern have been identified around the current implementation of ERP, a s illustrated in Table 1(Sammon, David). Figure 2: A Classification of Organizational Research in ERP The issues of concer n assume critical significance as many of these problems experienced in later pha ses of the ERP system life-cycle originated earlier but remain unnoticed or unco rrected. Hence, there is a need for research into the Intelligence phase of the de cision making process for ERP software selection, highlighting the critical fact ors for both selection and implementation of an ERP package in a pre-planning pha se environment, therefore, facilitating a vendor/consultant independent, methodol ogy independent, and pre-implementation thought process(Sammon, David). In suppo rt of this argument, Stafyla and Stefanou (2000, p.293) state that given the cost and the permanent nature of ERP investments, an understanding of the way decisi ons are taken concerning the adoption, evaluation and selection of ERP software can be very useful for both academic research and practice. However, Esteves and Pastor (2001) go one step further by highlighting the important issue concerning the definition of those decisions organizations face prior to implementing an ERP system. Caldas and Wood (1998) and Wood and Caldas (2001, p.5) called for the ut ilization of a broader [alternative] perspective to its [ERP implementation] com prehension, one that would challenge the reductionism and information technology biases that have characterized the prevailing approach to the subject. Therefore , we propose that a key milestone in, and radical approach to, enterprise-wide s ystems integration research will

involve the identification and development of an organizational pre-requisites m odel for project implementation.

Table 1: Issues of Concern in ERP Implementation 1.2.3 CRITICAL SUCCESS FACTORS IN PRE-IMPLEMENTATION PHASE OF ERP The adoption o f ERP system in an organization requires intense efforts, focusing on both techn ological and business themes of implementation. Critical to the success of these efforts is the adequate organizational preparedness for embarking on ERP. Vario us models and frameworks have been propounded by different researchers for asses sing success of an ERP Project. However, keeping in view the scope of the curren t

study, relevant portions of each of these works by eminent researchers is being mentioned in the following sub-sections.

1. Model for Organizational Pre-Requisites: Enterprise-Wide Systems Integration Projects The model (Figure 2) for enterprise-wide systems integratio n projects could potentially be used by organizations to internally assess the l ikelihood of ERP and Data Warehousing project success, and to identify the areas that require attention (Sammon, David). Figure 3: Organizational Pre-requisites Research Model Design for Enterprise-Wid e Systems This research model for ERP facilitates the examination of the degree o f criticality of the factors across the three conceptual phases (Existing, Planne d and Implemented). Due to the fact that the critical factors for ERP implementa tion are generated based on a synthesis of existing literature on ERP project im plementation, one noticeable area of omission is that of the data factors, highl ighting the lack of focus being placed on the importance of data for the impleme ntation of an ERP project. This new era of enterprise wide systems integration p rojects introduces an increased level of complexity to an already complicated or ganizational initiative. Therefore, an implementing organization needs to be awa re of the increasing complexities of the ERP systems and focus on their requirem ents in relation to enterprise-wide systems integration project requirements.

2. CSFs as per Rao (2000): A comprehensive frame-work has been developed by Rao (2000) with respect to the CSFs to be considered in the preparation stage of ERP implementation: Infrastructure resources planning making sure that adequate infrastructure is pl anned for in a way that it becomes reliably available well in time (both for the pre-implementation and the post- implementation stages). Local area network ensuring network support for any ERP or other applications. Servers deploying adequate server/network, even during the training/modeling pha se. PCs introducing new PCs with latest configuration that would be quite adequate f or most ERPs. Training facilities establishing adequate training center to work as competency center. Human resources planning focusing on building a teamwork environment where team size spans across the entire organization. Education about ERP ERP education should be carried out across the organization about ERP success and failure practices. Commitment to release the right people ERP is recognized as a difficult but nece ssary project, and the best people must work full-time on the project. Top managements commitment top management must have a change mindset through lear ning at all levels. Commitment to implement vanilla version ensuring minimal customization and quick i mplementation. Ability and willingness to consider an ongoing site as a Greenfield site. Reason ably well working manual systems carrying out audit exercise to find the current

status and corresponding corrective actions. Strategic decision on centralized versus decentralized implementation.

However, out of the given twelve factors, some are decided at the conception sta ge of an ERP implementation. Hence, although these are important factors in the preimplementation phase, all of the above factors are not relevant to the scope of the present research.

3. CSFs as per Fiona Fui-Hoon Nah et al (2001): Through a comprehensive review of the literature, 11 factors were found to be cr itical to ERP implementation success ERP teamwork and composition; change manage ment program and culture; top management support; business plan and vision; busi ness process reengineering with minimum customization; project management; monit oring and evaluation of performance; effective communication; software developme nt, testing and troubleshooting; project champion; appropriate business and IT l egacy systems. Author classified these CSFs into the respective phases (charteri ng, project, shakedown, onward and upward) in Markus and Tanis ERP life cycle mod el. 1. 2. 3. 4. Chartering decisions defining the business case and solution con straints; Project getting system and end users up and running; Shakedown stabili zing, eliminating bugs, getting to normal operations; Onward and upward maintainin g systems, supporting users, getting results, upgrading, system extensions. The chartering phase comprises decisions leading to conception of the ERP projec t. Key players in the phase include vendors, consultants, company executives, an d IT specialists. Key activities include initiation of idea to adopt ERP, develo ping business case, decision on whether to proceed with ERP or not, initiation o f search for project leader/champion, selection of software and implementation p artner, and project planning and scheduling. The project phase comprises system configuration and rollout. Key players include the project manager, project team members (mainly from business units and functional areas), internal IT speciali sts, vendors, and consultants (generally referred to as implementation partners) . Key activities in this phase include software configuration, system integratio n, testing, data conversion, training, and rollout. The shakedown phase refers t o the period of time from going live until normal operation or routine use has been ac hieved. Key activities in this phase include bug fixing and rework, system perfo rmance tuning, retraining, and staffing up to handle temporary inefficiencies. T he onward and upward phase refers to ongoing maintenance and enhancement of the ERP system and relevant business processes to fit the evolving business needs of the organization. Key players include operational managers, end users, and IT s upport

personnel (internal and external). Key activities include continuous business improvement, additional user skill building, upgrading to new software releases, and post-implementation benefit assessment. As different factors are important in different stages, it is important to classify the 11 CSFs identified into the phases of ERP implementation life cycle where the factors may come into play. F igure 3 shows the classification of these factors into an integrative framework. Table 3: Survey of critical success factors in ERP implementations

Figure 4: Classification of CSFs of ERP implementation into Markus and Tanis (200 0) process-oriented ERP life cycle model

4. CSFs as per Somers & Nelson (2001): The work of Somers and Nelson was based upon a large scale meta-study of the cas e study literature in the area of ERP implementation from which they identified twenty-two critical success factors. Their study also solicited information from respondents to ascertain the stage at which their implementation had reached, i dentifying from the data the top five CSF by stage. Table 2 shows Somers and Nel sons results, providing the mean rankings of CSFs by degree of importance in ER P implementation, Table 2: Mean ranking of CSFs by degree of importance in ERP i mplementation (Somers & Nelson, 2001) Critical Success Factor Top Management Support Project Team Competence Interdepartmental Co-operation Cl ear Goals and Objectives Project Management Inter-departmental Communication Man agement of Expectations Project Champion Vendor Support Careful Package Selectio n Data Analysis and Conversion Dedicated Resources Steering Committee User Train ing Education on New Bus, Processes BPR Minimal Customization Architecture Choic es Change Management Vendor Partnership Vendor Tools Use of Consultants Mean 4,29 4,20 4,19 4,15 4,13 4,09 4.04 4,03 4,03 3.89 3,83 3,81 3.97 3,97 3,76 3,68 3,68 3.44 3,43 3,39 3,15 2.90 The aim of the research was to better understand project managers perceptions o f critical success factors (CSFs) as they affect the outcome of ERP implementati ons at

distinct stages of the implementation. These CSFs were subsequently reviewed by many researchers, since these emerged as sound pieces of research yielding typic al results.

5. CSFs as per Gupta (2000): As per this study, the key to successful implementation of ERP are related to Se curing top management commitment, Forming cross-functional task forces to link p roject management with business units, Carrying out an assessment exercise of ha rdware requirements, Making deployment in a step-by-step introduction rather tha n all at once, Starting early planning on user training and support, Streamlinin g decision making to move implementation quickly, and Being patient as ERP imple mentation takes time. Gupta (2000) illustrates several common problems associated with ERP implementat ion. Among these is the resistance to change, when, for example, some employees become reluctant to learn new techniques or accept new responsibilities. Another problem is related to unplanned cost associated with new requirements emerging after the freezing stage. A third problem is poor training of end-users, who, wh en the system is up and running, do not know how to use it and maintain it conti nually.

1.3 IMPORTANCE OF CHANGE MANAGEMENT IN ERP IMPLEMENTATION While implementing an enterprise resource planning (ERP) system, top management should, proactively de al with the hostile attitude from potential users instead of reactively confront ing it. Thus an integrated, process oriented approach is required for dealing wi th the complex social problem of workers resistance to ERP. In spite of their m any tangible & intangible benefits, some ERP systems fail (Stratman and Roth, 19 99) while others face implementation difficulties because of workers resistance . Al-Mashari and Zairi (2000) assert that effective implementation of ERP requir es establishing five core competencies, among which is the use of change managem ent strategies to promote the infusion of ERP in the workplace. Change managemen t strategies for ERP implementation Improvement strategies, such as ERP implemen tation, commonly involve change. Hence, responsiveness to internal customers is critical for an organization to avoid the difficulties associated with this chan ge (Al-Mashari and Zairi, 2000; Aladwani, 1999; Aladwani, 1998). To assist top m anagement with the complex organizational problem of workers resistance to ERP implementation, an integrated, process-oriented conceptual framework consisting of three phases (Figure 5): knowledge formulation, strategy implementation, and status evaluation has been suggested (Adel M. Aladwani, 2001). Knowledge formula tion phase The first step in effectively managing change introduced by IT is to identify and evaluate the attitudes of individual users and influential groups ( Aladwani, 1998). The answers to the following fundamental questions may offer a good starting point in determining the sources of employees resistance to the E RP system. Who are the resisting individuals and/or groups? What are their needs ? What beliefs and values do they have? What are their interests? According to Hultman (1979), employee-raised facts, beliefs and values are good indicators of what may cause their resistance to change. Their apprehensions wit h regard to computer illiteracy, redundancy of an ERP system or job security or familiarity

with such a system may indicate the cause of resistance. Yet another group of us ers may be concerned about losing existing power and authority.

Strategy implementation phase Management can use the knowledge regarding potenti al users to overcome users resistance and convince as many users as possible to adopt it (Aladwani, 1998). An action sheet for implementing the selected strate gies based on three-level adoption process (think-feel-do) provides a good frame work. Communication plays a decisive role in changing the cognitive component of users attitudes of potential users of ERP. One effective communication strateg y is to inform potential users of the benefits of ERP. In many cases, ERP implem entation failed because of lack of communication (Al-Mashari and Zairi, 2000). W hile knowledge about what the system may help, unrealistic workers expectations may deepen the resistance problem. Moreover, the success of future introduction initiatives depends on building a cumulative base of credibility by management. ERP users are expected to be reluctant to welcome the new system if they do not know how it works. Thus, training various user groups how the ERP system works is important in creating awareness (Stratman and Roth, 1999). It is therefore ve ry important from the outset that potential users know how the ERP system is goi ng to work along with role clarity for each of the user. In all cases, it is of paramount importance that the support staffs responsible for executing these com munication strategies possess adequate political skills (Aladwani, 1999). The se cond step in the strategy implementation phase is to influence the affective com ponent of users attitudes. It could be addressed either through cost minimizati on or differentiation. The marketing intellectual, Porter (1985), proposed the l ow-cost strategy has a useful implication for ERP. Change agents must be able to convince ERP users that their net outcome of the adoption process will be posit ive, in order to create a positive adoption attitude (Amoako-Gyampah, 1999). The cost minimization strategy should be developed in such a way that it affects bo th individual workers and influential groups. These groups within the organizati on are also looking at the cost aspect of the implementation effort. Many a time new systems fail due to change in the balance of power in an organization, Mark us (1983). Another strategy that could help affect the adoption attitude of pote ntial users is differentiation. Users perceived high quality of the ERP system has a positive impact on their attitudes toward that system, Aaker (1992). Norma lly, system users are not

equipped to scientifically measure quality attributes of the system, they constr ucts their perception about the system based on their hands-on experience. Train ing offers a good opportunity to help users adjust to the change and helps build positive attitudes toward the system. Thus, trained users can better appreciate the quality attributes of the system and its potential benefits. The last part in the strategy implementation phase is the cognitive stage. Getting the endorse ment and support of key individuals, leaders of the influential groups and opini on leaders is the first strategy that can be used. To succeed, management has to capitalize on its efforts in the second stage when it tried to build users int ention to adopt the ERP system by minimizing the adoption costs of the groups. A lso, convincing group leaders to effectively participate in the implementation p rocess and make them feel that they are key players (because they are making key decisions) will ensure their valuable commitment. Because of their commitment, leaders of the groups will try to convince their colleagues that the ERP system is to their benefit. Another strategy is carefully timing the introduction of th e new system. Attitude is one of the critical factors that must be taken into ac count when timing the introduction of a product. An ERP system should not be int roduced until a positive attitude (i.e. an intention to adopt) is built and sust ained among potential users. For example, do not introduce an ERP when a critica l mass of your employees feels threatened by the system or feels forced (neither convinced nor encouraged) to accept the new system. Last but not least, top man agement commitment is critical for the success of the whole ERP implementation p rocess (Gable and Stewart, 1999; Stratman and Roth, 1999). Change requires a str ategic vision to ensure its long-term success (Aladwani, 1999). In a survey by Z airi and Sinclair (1995), leadership was ranked the number one facilitator of la rge transformation efforts. Management commitment and support is the ultimate st rategy that will secure the necessary conditions for successfully introducing th e change brought by ERP into the organization. Status evaluation phase The proce ss of monitoring and evaluating change management strategies for ERP implementat ion is the last component of the suggested framework. Performance measurement sy stem must monitor the progress of ERP change management efforts. The status eval uation phase provides feedback information to top management in a

dynamic manner. In order to be useful, the feedback should be timely, accurate, and systematic. Based on status evaluation phase outcome, top management takes a ppropriate action. An agile top management may want to re-identify users needs and re-evaluate the execution of adopted change management strategies to find an acceptable fit between the two. Thus, to overcome users resistance to change, top management has to: Study the structure and needs of the users and the causes of potential resistance among them; Deal with the situation by using the approp riate strategies and techniques; and Evaluate the status of change management ef forts. Figure 5: A suggested Framework for managing change associated with ERP

Figure 6: A Model of Successful ERP Adoption

1.4 SUCCESSFUL BPR IMPLEMENTATION STRATEGY 1.4.1 Introduction "Business Reengine ering is the fundamental rethinking and radical redesign of business processes t o achieve dramatic improvements in critical, contemporary measures of performanc e, such as cost, quality, service, and speed." -- Dr. Michael Hammer Business Process Reengineering could bring about complete overhaul of organizati onal structures, technology. Successful BPR can result in revolutionary improvem ents for business operations through enormous reductions in cost or cycle time, substantial improvements in quality, customer service, or other business objecti ves. However, recent surveys estimate the percentage of BPR failures to be as hi gh as 70%. Some organizations have put forth extensive BPR efforts but could ach ieve marginal or even negligible benefits. Others have succeeded only in destroy ing the morale and momentum built up over the lifetime of the organization. Thus , confusion seems to be prevailing on how successful BPR attempts could be made or what are the factors that should be considered for a successful BPR. But ther e is no generic prescription for all. It all depends on the unique needs of thei r industry, people, and culture. BPR is a management concept that has been forme d by trial and error --or in other words practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent. "Reengineering is new, and it has to be done." 1 .4.2 PERFORMING BPR: COMMON STEPS Phase 1: Begin Organizational Change Phase 2: Build the Reengineering Organization Phase 3: Identify BPR Opportunities Phase 4 : Understand the Existing Process -- Peter F. Drucker management systems, employ ee responsibilities and performance measurements, incentive systems, skills deve lopment, and the use of information

Phase 5: Reengineer the Process Phase 6: Blueprint the New Business System Phase 7: Perform the Transformation Phase 1: Begin Organizational Change Activities: - Assess the current state of the organization - Explain the need for change - I llustrate the desired state - Create a communications campaign for change The fi rst step is to examine the operating procedures and the bottom-line results that are generated by them. The purpose of performing the analysis described below i s to determine whether dramatic change by doing BPR is really necessary. Aspects of the business that need to be evaluated are: how things are currently done, w hat changes may be occurring, and what new circumstances exist in our business e nvironment. The deciding factor should be whether or not the organization, in it s current state, is able to meet the needs of the markets it serves. The consequ ences of inaction should be identified and well understood. Finally, the proper future direction of the organization should be decided. The future "vision" of h ow the business must operate will serve as a clear and concise guide with measur able goals derived from business plans and strategies for employees to focus on. BPR requires significant changes throughout an organization, thus it must begin with a communications campaign to educate all those who will be impacted by thi s change. Communication to all levels of personnel must remain active from start to finish to keep everyone involved and working towards a common goal. It would do away with confusion and uncertainty that could result in build up of resista nce. In order for change to be embraced, everyone must understand where the orga nization is today, why the organization needs to change, and where the organizat ion needs to be in order to survive. Phase 2: Build the Reengineering Organizati on Activities:

- Establish a BPR organizational structure - Establish the roles for performing BPR - Choose the personnel who will reengineer An infrastructure must be establi shed to support reengineering efforts. Who are the people that will be chartered to reengineer the business? What will their responsibilities be? Who will they report to? These are the questions that must be answered as the reengineering st aff is gathered together to communicate, motivate, persuade, educate, destroy, c reate, rebuild, and implement. An effective leadership is most essential for BPR initiative. Without the commitment of substantial time and effort from executiv e-level management, most BPR projects cannot overcome the internal forces agains t them. The executive leader, should be a high-level executive, who has the auth ority to make people listen and motivational power to make them follow. There sh ould be a process owner for each specific high-level process being reengineered. It brings in expertise and accountability to the whole exercise. A reengineerin g team is constituted of current insiders, who perform the current process and a re aware of its strengths and weaknesses, along with outsiders who can provide o bjective input to spark creative ideas for redesign. Credibility of selected per sons plays an important role in reducing the internal resistance to the new proc ess. They diagnose the existing process and oversee the redesign and implementat ion. Lastly, a reengineering specialist can be an invaluable addition to the ove rall effort. A reengineering specialist can assist each of the reengineering tea ms by providing tools, techniques, and methods to help them with their reenginee ring tasks. Phase 3: Identify BPR Opportunities Activities: - Identify the core/ high-level processes - Recognize potential change enablers - Gather performance metrics within industry - Gather performance metrics outside industry - Select p rocesses that should be reengineered

- Prioritize selected processes - Evaluate pre-existing business strategies - Co nsult with customers for their desires - Determine customers actual needs - For mulate new process performance objectives - Establish key process characteristic s - Identify potential barriers to implementation In this phase, the entire orga nization is divided into high-level processes rather than the usual vertical bus iness areas such as marketing, production, finance, etc. These processes -usuall y less than a dozen- are the major or core processes of the organization. This a ctivity is slightly difficult because it requires us to identify the process bou ndaries (where the process begins and where it ends), that will help set the pro ject scope for those processes that are to be reengineered. At this point, it is helpful to begin thinking about potential change levers which may lead to drama tic changes in the organizations processes. These are: the use of information, th e use of information technology, and human factors. Once the major processes hav e been defined, we need to decide which of our high-level processes needs to be reengineered. Typically, organizations use the following three criteria: Dysfunc tion (which processes are the most ineffective), Importance (which processes hav e the greatest impact on our customers), and Feasibility (which processes are at the moment most susceptible to accomplish a successful redesign.These can show quick success and help build the much needed momentum and enthusiasm at all leve ls of the organization. Prioritizing the processes we have chosen to reengineer guides us in scheduling the order we will reengineer these processes. Going afte r the highest priority process first, we assess the preexisting business strateg y which governed its component tasks. Process goals and objectives can be determ ined by combining customer needs with competitor benchmarks and "best of industr y" practices (metrics on the best performers of a similar process in other indus tries). In addition to goals and objectives, we need to complete the conception of the new process

by identifying key performance measures, key process characteristics, critical s uccess factors, and potential barriers to implementation. Phase 4: Understand th e Existing Process Activities: - Understand why the current steps are performed - Model the current process - Understand how technology is currently used - Unde rstand how information is currently used - Understand the current organizational structure - Compare current process with the new objectives At this stage, it i s important to understand the underlying reasons why the existing process is car ried out the way it is. By now new process objectives have been clearly defined (in Phase 3), existing processes can be measured in terms of the new objectives to see where we are and how far we have to go. Modeling the current process is a n important part of this phase. It not only helps us to better understand the ex isting process, but also helps with planning the migration from the old to the n ew process and executing the physical transformation of personnel, organizationa l structures, information requirements, and how technology is used. Information that should be included in the models are process inputs (such as task times, da ta requirements, resources, demand, etc.) and process outputs (such as data outp uts, cost, throughput, cycle time, bottlenecks, etc.).Understanding how and why the current processes use information is also important. We need to end up with an estimate of the current cost, robustness, and functional value of each techno logy and information systems currently being used. Phase 5: Reengineer the Proce ss Activities: - Ensure the diversity of the reengineering team - Question curre nt operating assumptions - Brainstorm using change levers

- Brainstorm using BPR principles - Evaluate the impact of new technologies - Co nsider the perspectives of stakeholders - Use customer value as the focal point During this phase, the actual "reengineering" begins. The "inside" perspective m ay reveal information about the existing process that was not uncovered in Phase 4. Equally important is the "outside" perspective of someone who will look at t he process with a "fresh eye" and raise questions about operating assumptions th at may not be obvious to the insider who might be too close to the process to se e this. Including both outsiders and technologists on the team will help spark " out-of-box" thinking (thinking creatively above and beyond the current restricti ons - the walls of the box).Lastly, a technologist will provide insight as to ho w technology can be applied in new and innovative ways. Having developed a good understanding of how the existing processes work in the previous phase, it is no w necessary to question the operating assumptions underlying the processes. The Reengineering Team is now tasked with brainstorming to create new process ideas. According to Hammer, brainstorming sessions are most successful when BPR princi ples are considered. BPR Principles: Several jobs are combined into one; Workers make decisions; The steps in a process are performed in a natural order; Proces ses have multiple versions; Work is performed where it makes the most sense; Che cks and controls are reduced; Reconciliation is minimized; A case manager provid es a single point of contact; Hybrid centralized/decentralized operations are pr evalent. Phase 6: Blueprint the New Business System

Activities: - Define the new flow of work - Model the new process steps - Model the new information requirements - Document the new organizational structure - D escribe the new technology specifications - Record the new personnel management systems - Describe the new values and culture required This phase of the project takes the reengineered process developed in the previous phase, and provides th e details necessary to actually implement it. In BPR, blueprints must be created to identify all the necessary details of the newly reengineered business system and the information required to support it. Blueprinting involves modeling the new process flow "to be" models derived from the "as is" process and information requirements in Phase 4. The blueprints should also contain models of the redes igned organizational structure. In addition, detailed technology specifications required to support the new process should be defined. Included in the blueprint s should be the new management systems and values or belief systems of this rede signed area of the business. New management strategies, along with new performan ce measurements, compensation systems, and rewards programs should be outlined. The reengineered process may require a change in the values or belief systems of the company. The redesign may require an entirely different culture, or atmosph ere, than what is prevalent in the organization today. It is critical to have th ese areas, and their responsibilities, defined as we go into the implementation phase. Phase 7: Perform the Transformation Activities: - Develop a migration str ategy - Create a migration action plan - Develop metrics for measuring performan ce during implementation - Involve the impacted staff

- Implement in an iterative fashion - Establish the new organizational structure s - Assess current skills and capabilities of workforce - Map new tasks and skil l requirements to staff - Re-allocate workforce - Develop a training curriculum - Educate staff about the new process - Educate the staff about new technology u sed - Educate management on facilitation skills - Decide how new technologies wi ll be introduced - Transition to the new technologies - Incorporate process impr ovement mechanisms After having communicated, strategized, analyzed, reengineere d, and blueprinted the ideas for the new process, organization is ready to be tr ansformed. This is where all of the previous efforts are combined into an actual business system. The first step in transforming the organization is to develop a plan for migrating to the new process. To achieve this, a path is required whi ch can connect the current state of the organization, to the state where organiz ation wants to be. Migration strategies include: a full cutover to the new proce ss, a phased approach, a pilot project, or creating an entirely new business uni t. An important point to consider is the integration of the new process(es) with other existing processes. The reengineered processes must be flexible enough to be easily modified later on, so as to integrate it with other reengineered proc esses. Successful transformation depends on consciously managing behavioral as w ell as structural change, with both sensitivity to employee attitudes and percep tions, and a tough minded concern for results. BPR Implementation requires the r eorganization, retraining, and retooling of business systems to support the reen gineered process. The new process will probably require a new organization, diff erent in structure, skills, and culture. The new management structure should res ult in the control paradigm being

changed to the facilitation paradigm. The new process team structure should resu lt in the managed paradigm being changed to the empowered paradigm. Once the new structures are established, tasks should be mapped in the process to functional skill levels, and ultimately to individuals. Transforming the workforce begins with an assessment of the current skills or capabilities of the workforce to inc lude soft skills, operational skills, and technical skills. This inventory may r equire personal evaluations including areas of interest, peer evaluations and su pervisor evaluations. Feedback should be provided to all personnel to ensure acc uracy of current skills and interests for all staff. Knowing the new process ski ll requirements and a current skills inventory, the gaps can be assessed. An edu cational pyramid is an effective way to transfer knowledge of team building, sel f mastery, and subject matter knowledge. Systems training is essential to underst anding the use of new information systems and how to take advantage of their cap abilities. Process training may be needed to help employees think beyond a linea r process to a more holistic interdependent process. Facilitation training for m anagement is critical to develop their abilities to listen, allow mistakes, hand le disputes among process experts, and transition to a coach/facilitator role. E ducation may be necessary for Total Quality Management (TQM), Statistical Proces s Control (SPC), or Continuous Process Improvement (CPI) if these mechanisms are designed into the new processes. Finally, a structured on-the-job training (OJT ) program is instrumental in providing continuity of the new process during peri ods of personnel turnover or attrition. As with any dramatic change, people will have personal difficulties, to varying degrees. Almost all new process implemen tations are surrounded by confusion, frustration, and sometimes panic. The best transition strategy is one that minimizes, as much as possible, the interference caused to the overall environment. Transforming information systems to support the new process may involve retooling the hardware, software, and information ne eds for the new process. One approach to this transition could be a controlled i ntroduction. The method would ensure that each part of the system is operational for a segment of the business before going on to the next module to implement. Although the risk may be low while the bugs in the new system are ironed out, it may be difficult to integrate the hybrid old/new systems in a step-wise manner. The flash cut approach is where the entire system is developed in parallel to t he

existing system, and a complete transition occurs all at once. This may put the organization at a higher risk if the systems do not function properly at first, but it is the more common approach. Most reengineered processes function in an e ntirely different manner than existing processes; thus, even a stepwise introduc tion would, most likely, not be fully functional until all steps were introduced anyway. An important reason to justify the flash cut approach is that the reeng ineering benefits can be realized much sooner than with a controlled introductio n. Data systems used to support the old process may have poor data integrity, in correct data, or insufficient data to support the new business needs. Thus, info rmation requirements of the re-engineered processes may be distinctly different from that of the earlier system. In these cases the data must be expanded to fil l the gaps in the existing data and supply the new information requirements of t he re-engineered process. (Balasubramanian, S., Excerpts from the article)

1.5 IMPORTANCE OF KNOWLEDGE INTEGRATION Most of the studies focus mainly on the potential benefits and critical success factors associated with ERP implementati on. Very few have explored the important issues of impediments encountered, espe cially from a knowledge integration perspective. Following factors can be consid ered are primarily contributing to this process: (1) knowledge embedded in compl ex organizational processes; (2) knowledge embedded in legacy systems; (3) knowl edge embedded in external processes; and (4) knowledge embedded in the ERP syste m. (Shan L. Pan et al 2001) 1.5.1 IMPEDIMENTS TO KNOWLEDGE INTEGRATION 1. Knowle dge embedded in Complex Organizational Processes An ERP implementation is, in es sence, an integrative mechanism connecting diverse departments so as to establis h an integrated process (Hammer 1999). However, in the case of a decentralized o rganizational structure, where different BUs have autonomy, there are an abundan ce of highly adaptive and effective logistic and financial systems. This makes E RP implementation very difficult in a matrix-based organization structure due to conflict of interest among various BUs. It has to be overcome before their resp ective knowledge could be effectively integrated. To achieve this, standardizati on and transparency of knowledge throughout the organization is essential. 2. Kn owledge embedded in Legacy Systems Knowledge is also embedded in legacy systems. Users are interested in comparing how consistent and similar the new ERP system was with the legacy systems. This concern stemmed partly from users awareness o f failures encountered in earlier ERP implementations in other regions. This ten dency of benchmarking against the legacy systems illustrates users reluctance to change and re-learning. This can be seen from two angles: a) as a technological constraint and b) as a social issue from a mindset change perspective. In order to overcome this problem, the ERP system can be made to look outwardly similar to the legacy system. This can be done by integrating knowledge through

mapping the information, processes, and routines of the legacy system into the E RP systems with the use of conversion templates.

3. Knowledge embedded in External Processes Another problem that is generally en countered is with regard to integrating the organizations internal knowledge with external knowledge - for example those of suppliers, consultants and contractor s. Although, linking internal processes with externally based knowledge is diffi cult as the ERP system is designed to be internally focused, it is required to i ntegrate with external systems. In order to overcome the difficulty of integrati ng the internal processes with externally based knowledge, some of the knowledge is embedded in the ERP system, especially after it is implemented. 4. Knowledge embedded in the ERP System: Post-implementation After the ERP is implemented, m uch of the knowledge that is embedded within the newly created ERP system is ina ccessible from existing personal networks. Yet, in order to exploit the full pot ential of the ERP system, this embedded knowledge needs to be integrated with in ternal and external knowledge. To overcome this problem, knowledge-enabling stru ctures like electronic knowledge sharing forums can be set up by the organizatio n with the aim of encouraging formal knowledge sharing and movement toward syste matic organizational memory accumulation. It also improves structural integratio n across the organization which is likely to support improved innovation in the future. Thus knowledge integration is a key problem in an ERP implementation. Th e need for knowledge integration continues even after implementation, if the sys tem is to be fully appropriated. Knowledge integration does not happen automatic ally as the implementation of ERP is not merely a technological task influenced by users perceived usefulness, but a cross-functional knowledge integration proc ess structurally enabled by the establishment and maintenance of knowledge-based social relationships intra- and inter-organizationally. This process is strongl y influenced by, the socio-technical, structural, and relational constructs foun d in the organization.

1.6 IMPACT OF CUSTOMIZATION Customization has been a major source of pain for ma ny organizations during implementation of Enterprise Resource Planning (ERP) sys tems. It affects the organization in an on-going fashion through increased maint enance costs, increased complexity and less flexibility of the system. For these reasons, most people strongly advocate a vanilla implementation, i.e. without cus tomization. However, when business processes in an organization cannot be modele d in an ERP system without customization, the impact of a decision to not custom ize becomes relevant. The choice lies between two extremes - the requirement to customize to include business processes and the desire to successfully implement an ERP system without additional complexity; additional maintenance costs, and less flexibility. Thus all customizations are not created equal, and a certain t ype of customization is beneficial. Specifically, strategic customizations will enhance the IT infrastructure strategic alignment with the business strategy. No n-strategic customization, such as consistency customization, will impact the sy stem agility of the corporation. The critical success factors concerning customi zation shall include information about the strategic nature of the customization . It should be judged on the basis of outcomes in terms of strategic alignment a nd systems agility. However, the perceived importance of these factors may diffe r across implementation partners such as top executives, users, project team mem bers, internal IT specialists, vendors, and consultants. With a better understan ding of the issues involved in ERP implementations, management will be able to m ake critical decisions and allocate resources that are required to make ERP impl ementation a success. (Ashley Davis, 2005)

1.7 PROPOSED MODEL FOR ASSESSING ORGANIZATIONAL PREPAREDNESS 1.7.1 Identificatio n of Critical Success Factors & their sub-factors After going through the resear ch work of many eminent scholars in this field, the LifeCycle framework (Markus and Tanis, 2000) and CSFs for organizational preparedness (Rao, 2000) were consi dered to be most appropriate and relevant to the current study. It was also noti ced that many research works done in this field, have referred to the lifecycle approach. While selecting the sub-factors also, various research works enlisted against each of them have been referred. 1. Communication: Targeted & Effective Communication (Falkowski et al, 1998; Wee , 2000) Communication among stakeholders (Holland et al, 1999; Shanks et al, 200 0) Expectations communicated at all levels (Holland et al, 1999; Rosario, 2000; Shanks et al, 2000; Sumner, 1999) Project progress communication (Holland et al, 1999; Sumner, 1999) 2. Change Management: Recognizing the need for change (Falkowski et al, 1998) En terprise wide culture & structure management (Falkowski et al, 1998; Rosario, 20 00) Commitment to Change Perseverance & determination (Shanks et al,2000) User E ducation & training (Bingi et al,1999; Holland et al, 1999;Murray & Coffin,2001; Roberts & Barrar, 1992; Shanks et al,2000) Analysis of user feedback (Holland e t al, 1999) 3. Business Process Re-engineering: (Bingi et al,1999; Holland et al, 1999;Murra y & Coffin,2001; Roberts & Barrar, 1992; Shanks et al,2000; Wee, 2000) Level of complexity of operations Robustness of the existing system Level of documentatio n Flexibility in the system for BPR

Minimum Customization (Murray & Coffin, 2001; Rosario,2000; Shanks et al,2000; S umner, 1999)

4. IT Infrastructure: Hardware -Server Capacity (Rao,2000) Network (LAN /WAN) co nnectivity (Rao,2000) Adequacy of bandwidth (Rao,2000) PCs & Peripherals - Adequ acy wrt configuration & numbers (Rao,2000) IT workforce re-skilling (Sumner, 199 9) User support organization & involvement (Wee, 2000) 5. ERP Team Composition: Best people on Team (Bingi et al,1999; Buckhout et al,1 999; Falkowski et al, 1998; Rosario, 2000; Shanks et al,2000; Wee, 2000) Balance d & Cross-Functional Team (Holland et al, 1999; Shanks et al, 2000; Sumner, 1999 ) Partnership, Trust, Risk sharing & Incentives (Stefanou, 1999; Wee, 2000) Proc ess & Technical knowledge of Team members & Consultants (Bingi et al,1999; Shank s et al, 2000; Sumner, 1999) 6. Top Management Commitment: Approval & support from top management (Bingi et a l,1999; Buckhout et al,1999;Murray & Coffin, 2001; Shanks et al, 2000; Sumner, 1 999) Top management publicly & explicitly identified the project as top priority (Shanks et al, 2000; Wee, 2000) Allocate resources (Holland et al, 1999; Robert s & Barrar, 1992; Shanks et al, 2000) 1.7.2 Critical Success Factors for Organiz ational Preparedness 1. Communication A shared vision of the organization and th e role of the new system and structures should be communicated to employees. Man agement of communication, education and expectations are critical throughout the organization (Wee, 2000). User input should be managed in acquiring their requi rements, comments, reactions and approval (Rosario, 2000). Communication include s the formal promotion of project teams and the advertisement of project progres s to the rest of the organization (Holland et al., 1999). Middle managers

need to communicate its importance (Wee, 2000). Employees should be told in adva nce the scope, objectives, activities and updates, and admit change will occur ( Sumner, 1999).

2. Change Management Change management is the most critical to any ERP implement ation. It starts at the project phase and continues throughout the entire life c ycle. Enterprise wide cultural and structural changes should be managed (Falkows ki et al., 1998). An emphasis on quality, a strong computing ability, and a stro ng willingness to accept new technology would aid in implementation efforts. Use rs must be trained, and concerns must be addressed through regular communication , working with change agents, leveraging corporate culture and identifying job a ids for different users (Rosario, 2000). 3. Business Process Re-engineering (BPR ) Another important factor that begins at the project phase is BPR and minimum c ustomization. Aligning the business process to the software implementation is cr itical (Holland et al., 1999; Sumner, 1999). Organizations should be willing to change the business to fit the software with minimal customization (Holland et a l., 1999; Roberts and Barrar, 1992). Modifications should be avoided to reduce e rrors and to take advantage of newer versions and releases (Rosario, 2000). Busi ness process reengineering should begin before choosing a system. While configur ation, large amount of reengineering should take place iteratively to take advan tage of improvements from the new system. Then when the system is in use reengin eering should be carried out with new ideas (Wee, 2000). Quality of business pro cess review and redesign is important (Rosario, 2000). In choosing the package, vendor support and the number of previous implementers should be taken into acco unt (Roberts & Barrar, 1992). 4. IT Infrastructure Capacity of servers required would generally depend on the type of ERP system selected and the complexity & expanse of business operations. However, network structure (LAN/WAN) and connectivity (adequacy of bandwidth) f or all locations/users is essential to reap full benefit out of the system. Thus , a suitable network backbone using optic fibre cable can be planned in advance. From the point of view of end users,

availability of PCs and peripherals need to be assessed and augmented if require d. (Rao,2000) Training, re-skilling and professional development of the IT workf orce is critical. On-site support should be available during implementation, in the form of trained hands, help desk or online user manual (Wee, 2000). 5. ERP Team Composition ERP team should be a cross-functional team consisting of the best people in the organization (Buckhout et al., 1999; Bingi et al., 1999; Rosario, 2000; Wee, 2000). It should have a mix of consultants and internal sta ff (Sumner, 1999), as business and technical knowledge both are essential for su ccess (Bingi et al., 1999; Sumner, 1999). Team members need to be assigned full time to the implementation (Wee, 2000). The team should be given compensation an d incentives for successfully implementing the system on time and within the ass igned budget (Wee, 2000). 6. Top Management Commitment Top management needs to publicly and explicitly ide ntify the project as a top priority (Wee, 2000). It should be visible through th eir own involvement and willingness to allocate valuable resources for the proje ct (Holland et al., 1999). Apart from this, alignment with strategic business go als (Sumner, 1999) is a must. Managers should legitimize new goals and objective s. New organizational structures, roles and responsibilities should be establish ed and approved. Policies should be set by top management to establish new syste ms in the company. In times of conflict, managers should mediate between parties (Roberts and Barrar, 1992).

2. ERP IMPLEMENTATION in NTPC : An Overview 2.01 Introduction Enterprise Resourc e Planning (ERP) is a cross - functional, multi-module integrated application pa ckage that help manage and automate a business, involving best practices thereby improving the performance. A single database provides access to all application s, programs and services within an enterprise. decision making is done. ERP inco rporates all elements of a business - finance, materials, HR, maintenance, opera tions, projects and commercial activities etc. into a unified whole that operate s more effectively and efficiently. It is a structured approach to optimizing co mpanys internal & external value chain. Implementation of ERP imparts cutting edg e advantages to an organization by Integrating their business processes Extendin g their competitive capabilities Ensuring a better return on investment at a low er total cost of ownership Transaction data are converted into useful informatio n and analyses, based on which operational and strategic Worldwide Trend External analysis revealed that leading Utilities are using comm ercial ERP solutions and there are no observed instances of a Custom Build approac h to develop and integrate core applications. Most global fortune 500 firms use ERP solutions. Top Thermal Power Generators globally and in South Asia have ERP or are evaluating ERP to support core processes in Generation business. Some of the prominent names include Eskom, Reliant Resources, RWE Enpower, AEP, Enel, Xc el Energy, KenGen, Tokyo Electric Power Company, etc. Several leading Public sec tor enterprises like IOC, BPCL, HPCL, ONGC, VSNL, DMRC, CONCOR, NLC, BHEL and Pr ivate companies like Telco, ITC, ABB, TISCO, BSES, Tata Power, Godrej, MRF, M&M, Hero in India are adopting ERP backbone to integrate core processes. NTPC awarded the contract for Procurement of ERP and its Implementation to SAP India on 2nd Ma y2006 with Siemens Information Systems Limited (SISL) as their Implementation Par tner.

SAP & SISL: An Introduction M/s. SAP AG, based at Waldorf (Germany) is a world r enowned concern for ERP solutions and implementation generates revenues in exces s of $ 13.3 bn. It has done approximately 69,700 installations in 21,600 compani es across the world. It has end-toend solutions available for 25 industries whic h embed Industry best practices. It has more than 12 million users in 120+ count ries. It is backed by a strong R&D setup, with a total annual budget of over $ 1 bn. M/s. SAP established itself in India in 1996. It has two R&D Centre at Bang alore & Delhi Country wide Offices and a Customer Care Centre at Bangalore. With over 2000 customers and over 200 technology partners, which numbered less than half almost a year ago, SAP is poised for rapid growth. It has the third largest employee base in India after Germany & the US. M/s. Siemens Information Systems Limited (SISL) is system integrator and total solution provider to a global cli entele. It has already implemented 120+ SAP implementations and undertaken 1000+ SAP related consultancy assignments from various reputed organizations in India & abroad. It is a SEI CMM level 5 & SEI P-CMM level 3 certified company. Offere d Solution M/s. SAP AG, has offered SAP-R/3 solution to NTPC. SAP stands for Syst ems, Applications and Products in Data Processing. R/3 stands for Real Time 3-Tie r architecture. The 3 Tier consists of Client i.e, PC or lap-top, Application Serve r (SAP) and Data base server. Timelines NTPC opted for a phased implementation of S AP. The strategy was to implement the configured solution first at 5 pilot sites i.e at Ramagundam, Faridabad, Koldam, Corporate centre and NCR HQrs by 1st June 2007, followed by rollout at other locations in a phased manner. The final roll out would be completed by 31st March 2008. Tangible And Intangible Benefits Som e of the tangible benefits expected out of an ERP implementation are inventory r eduction, reduction in procurement lead time, reduction in procurement cost etc.

Examples of Intangible benefits are improved and standardized business processes , better planning, control on accounts receivables and payables, transparent rea l time information, faster response to customers and employees, visibility of in ventory across NTPC, tracking of status of various activities like project execu tion etc. It also acts as foundation for e-business and enables managing busines s changes consistently. Global Best Practices SAP Solution has been developed ov er the years based on the best practices used by Industry leaders across the glo be. By adhering to Standard Solution, one automatically gets process with best p ractices. SAP Best Practices industry packages are designed to meet industry-spe cific needs, for example SAP Best Practices for integrated Power majors. 2.02 Cr itical Success Factors for ERP implementation Some of the critical success facto rs identified with regard to ERP implementation are listed below: Senior Managem ent Commitment & Participation - Commitment and ownership to the implementation by all levels of people in the organization Readiness to Change - Change in mind set and behavior of end use to shift from legacy way of working to ERP environm ent Teamwork - Best People Full Time Communication Good Project Management Skill s - Periodic Review & Quality Audit Business Process Re-engineering - just after mapping As Is processes End User Empowerment & Involvement - Clarity of roles and JIT training of end users Infrastructure Availability - Adequate hardware and c onnectivity at locations Using Standard Functionality - least customization Able Implementation Partner 2.03 Roles and Responsibilities 1. 2. Process Owners Tak e ownership of the improved processes and give approval Head of Projects Act as driver to ensure effective implementation of ERP at their location. Motivate all location people to adopt to the new way of working

To ensure availability of infrastructure facilities in time To ensure completion of codification exercise well in time at their location To expedite data migrat ion activities at their location 3. Process Anchors Act as a link between the co re team and users Help ERP Team in identifying As is processes & functionalities a nd in defining To be processes Fine tune existing processes and remove redundancie s in the processes Share information as well as expectations from ERP Maintainin g communication through document exchange, e-mails, workshops conferences etc. A ct as Trainer, once trained 4. Change Agents Interact with ERP Team Act as opini on maker and generate awareness among colleagues Disseminate information about E RP, its advantages, features, limitations, success factors, precautions. Hold wo rkshops / seminars on ERP at their locations 2.04 NTPCs Vision : From Disha to Laksh ya NTPC management realized at the dawn of this millennium that operational effic iency and strategic effectiveness can be leveraged through an integrated, flexib le and standardized information system architecture. Appropriately named project DISHA (direction) was conceptualized with the help of professional consultants. S ubsequent to this initiative, project Lakshya (target) towards organization wide ERP implementation was taken up.

NTPCs Vision An Integrated, Flexible and Standardised Information Systems architecture to pos ition towards fundamental competitive advantage Bridging the Gap through Enterpr isewide Resource Mgmt. System Current Reality Function based Organisation, Multiple stand alone packages, Time lag between mar ket realities and decision making Figure 7: Need of Project LAKSHYA - Current Reality vs. NTPC Vision NTPC has an ambitious target of reaching the generation targets of 51 GW by 2012 and 75 GW b y 2017. In the recent years, NTPC has gone in for forward & backward integration to graduate into a fully integrated power utility. It is actively expanding its base by adding coal & gas equity to its portfolio besides going in for power di stribution and trading, to reap the benefits of a liberalized power regime post Electricity Bill, 2003. It has responsibility towards all of its stakeholders. I t has added many verticals to its portfolio like hydro-electric power generation , Nuclear power generation and Powerplant equipment manufacture apart from being in consultancy for power plant erection & commissioning and R&M activities for all other existing players in this field like SEBs etc.

NTPCs Vision DISHA Business Imperatives Growth in generating Growth in generating Capacity capacity Diversification Dive rsification LAKSHYA Support project management efforts to deliver projects on time and on cost Suppo rt diversification into new business areas Seamless interface Facilitate managem ent control through flexible data/ analysis aided decision making World class Integrated power Major powering Indias growth Operational Operational Excellence excellence Support operating cost reduction efforts Efficiency in procurement and other ope rating systems Improve Capacity utilization Strategic Efficiency Stakeholder Stakeholder Stakeholder Management management Support topline (revenue) improvements Receivables and working capital managemen t Facilitate stakeholder interaction e-enable Channels with suppliers & customer s Create a transparent & learning organization knowledge management, HRM Figure 8: NTPC Vision DISHA to LAKSHYA It would be preposterous to think of a giant that NTPC is - as on date and keepi ng in view the future expansion plans - without an integrated resource planning system. Thus, it was only natural to go for an ERP based system architecture, wh erein flexibility of resource deployment, system agility to respond to dynamic c hanges in the business environment and e-enabling of all internal & external int erfaces all could be achieved in one go. It also brings in

Project LAKSHYA: Need of the Hour Changing Business Needs Seamless Integration Dynamic response to changes in business environment Knowled ge Management e-enabling external interfaces Existing IT Scenario Stand-alone Legacy Systems in use since 1994 Limited integration Varying technol ogy Needs upgradation Project Disha BPR Adoption of Best Practices Users Expectations End User User friendliness Easy navigability Web based integration Seamless data flow bet ween applications No duplication of effort Middle Management Reliability Data integrity System audit Top Management Better MIS & Knowledge mgmt. Report consistency Real-time data Unified reporting for all plants Creation of knowledge workers Figure 9: Broad Outline of Project LAKSHYA

2.05 Key ERP Benefits Single Data entry at source Integration across modules and Processes Standardization of Processes Online real time information Single vers ion of Truth Visibility of Inventory across NTPC Improved Planning Process Onlin e approvals Audit Trail Effective Business Process control through Authorization Employee self service Accountability at all levels Faster closing of Accounting Books No reconciliation 2.06 Coverage of ERP package Engineering Projects and QA Contracts Site Procurement & Materials Operations Ma intenance Corporate Planning Fuel Management Commercial Finance, Human Resources R & D, TQM , IT Rehabilitation and Resettlement Legal & Secretarial Safety, Security, Vigilance Consultancy Corporate Communications Em ployee Health Ash Utilisation Environment Figure 10: ERP Coverage In addition SAP will also include the following Business Intelligence Business Information Warehouse Knowledge Management Workflow Docum ent Management System

Xchange Infrastructure (XI) for integration with other packages / legacy applica tions Capability to support future business areas of NTPC including Coal Mining, Power Distribution, Power Trading etc. 2.07 Modules in SAP FI Finance CO Contro lling MM Material Management PS Project System PM Plant Maintenance QM Quality M anagement SRM Supplier Relationship Management PP Production Planning SD Sales & Distribution LDM Lifecycle Data Management IS-U Industry Solution - Utilities H CM Human Capital Management BW Business Warehouse BPS Business Planning & Simula tion KM Knowledge Management 2.08 Functional scope Core Processes Corporate Plan ning Functional Module Strategic Enterprise Management - Business planning & Sim ulation / Business information Warehouse SAP Functionality Supports implementati on of planning in conjunction with balance sheet, profit & loss and investment p lanning. Financial and Strategic reports for Business Managers and Company Direc tors. The input data for BW will be extracted from R/3 system. Some of these BW reports will address predefined KPI reporting needs. Internal Projects and Turnk ey Projects. Customer Project management (External Projects for Consultancy Busi ness) Material planning / Issue of material to projects Progress reporting and M onitoring Projects / Engineering and Quality Assurance / Contracts Project Systems

Quality Management Collaborative Project Engineering Document Management System QM in materials management in Procurement C-Projects C-Folders Product ideas are often collected in the form of drawings or descriptions.

Core Processes Contracts / Site Procureme nt & Materials / Fuel Manageme nt Functional Module Materials Management SAP Functionality Procurement of Materials Direct, Consumables, Indirect, Stores and Spares, Miscellaneous. Maintenance of relevant masters viz. Material / vend ors / services Procurement of services Source administration External Procuremen t of Materials Direct, Consumables, Indirect, Stores and Spares, Miscellaneous I nternal Procurement Material Classification and Codification External Procuremen t of services Service Classification and Codification, Creation of Service Maste rs Internal Procurement of Services Inventory Management & Decentralized Warehouse Management mySAP Supplier Relatio nship Management Quality Management India Localization Goods Movements for all divisions Warehouse management for inbound shipments and outbound shipments It covers the full supply cycle, from strategic sourcing to operational procurem ent and supplier enablementleveraging consolidated content and master data QM in materials management in Procurement Excise Duties, Sales Tax and With-holding T ax functions only

Core Processes Maintenance Functional Module Plant Maintenance SAP Functionality Damage Related maintenance, Planned maintenance, Refurbishment -based maintenance Additional Requirements Project-based maintenance processing Work Clearance Management Environment, Health, Safety Work Permits issuance The area of environment, health and safety is subject to m any regulations, laws, and, last but not least, company requirements. mySAP PLM Environment, Health and Safety / Emissions Management supports you in meeting al l these requirements, with as little effort as possible to achieve the most effe ctive results. This means: Automated processes Automatic safety Integration into the overall business solution of SAP Core Processes Commercial Finance and Accounts (Including Payroll) Functional Module IS-Utilities Financial Accounting and Reporting SAP Functionality Energy Data Management Global settings and General Ledger proc essing Accounts payable processing Accounts receivables processing Funds Managem ent Cash Management Bank Accounting Investment Management Investment program handling

Asset Management Handling of Fixed assets Direct capitalization Core Processes Human Resource Functional Module Human Resources Module SAP Functionality Organizational Management Employee database, Payroll , Time Ma nagement, Personnel Area and Personnel Administration Cost planning Actual Costi ng / Revenue allocation Period-end closing Business Consolidation Managerial Accounting Cost and Revenue accounting Overhead cost controlling Core Processes Operation Functional Module RWE nPower Functionality Cost of Availability Losses (+ Optige n) Cost of Losses EOH ILM E-lerts Emissions Reports EDL OIS Reportwriter Epilog Gas & Load Predictor Merit Order Package 2.09 Licenses for NTPC Table: 4 Sl 1 2 3 Item/Activity Transactional Users Mediu m Users Low/Occasional Users Qty 5,000 4,000 16,000

4 5 Payroll Employee records RWE nPower (11 modules) 25,000 Corporate 125,000 Tags or as required for the entire NTPC capacity as men tioned in the RFP, whichever is higher, and implementation at all OPC Compliant units & units becoming OPC Compliant till roll-out 6 OSI (PI Historian)

2.10 Solution Architecture from SAP (A) mySAP Business Suite SAP R/3 enterprise mySAP Product Lifecycle Management (mySAP PLM) Engineering and design and manage ment of ongoing engineering changes mySAP Supplier Relationship Manager (mySAP S RM)# e-Procurement mySAP Supply Chain Management (mySAP SCM)# To manage entire supply network from supply chain design to material sourcing and from forecasting demand to scheduli ng mySAP Customer Relationship Manager (mySAP CRM)# Includes state-of-the-art fe atures and functions to help find, attract, and retain customers. Tightly integr ated with the utility-specific functions of Billing, Invoicing and A/R, Transact ions Exchange and Energy Data Management. Strategic Enterprise Management (SEM) Enables to execute strategies quickly and successfully while managing business p erformance throughout the entire organization; performance supports monitoring, integrated business strategic planning, and consolidation effective stakeholder communication, thus enabling valuebased management. Indust ry Solution for Utilities covering Energy Data Management, Billing & Contract Ma nagement (mySAP Utilities)# A customer information and billing system for utilit ies companies, is tailored especially to the demands of the utilities industry.

# The implementation of these modules is to the extent of meeting the specified functionalities in the RFP.

(B) Platform and Integration Components - SAP NetWeaver (C) Application platform for all SAP solutions - SAP Web Application Server (SAP WAS) (D) Information In tegration - mySAP Business Intelligence (mySAP BI) (E) Access Integration - mySAP Enterprise Portals (mySAP EP) Portal Infrastructu re Knowledge Management Collaboration (F) Process Integration - mySAP Xchange In frastructure (mySAP XI) (G) Third Party Products Powermaster from Siemens Optibi z software technologies RWE npower 2.11 SAP Business Intelligence Key Capabiliti es Data Warehousing (SAP BW Administrator Workbench) Extraction, transformation, and loading Data warehouse management Business modeling BI Platform Online anal ytical processing (OLAP) Data Mining Alerting Meta Data Repository Planning Fram ework BI Suite of Tools (SAP BW Business Explorer) Query Design Managed Reportin g and Analysis Visualization Web Application Design Collaboration Pre-configured Business Content

2.12 Modules byRWE nPower SAP has proposed RWE nPower to address certain specifi c requirements within the Operations part of Functional Requirements. This solut ion would get integrated to the SAP solution through a standard middleware The o ffered modules are as follows: Cost of Availability Losses (+ OptiGEN) To highli ght areas of poor plant performance that affect the maximum output of the unit. Cost of Losses (Coal) To analyze the components of the plant process, calculatin g actual heat losses and comparing them with condition-based target values. Inte grated Load Management (ILM) To monitor and display the conformance of generatio n performance against energy dispatch instructions and load dispatch centre requ irements Load & Gas Predictor To simplify the process of nominating the quantity of natural gas required for the expected Gas Turbine load. EOH Monitoring To va lidate the GT manufacturers Equivalent Operating Hours (EOH) or Operational Data Counter (ODC) systems Emissions Report To meet the reporting requirements of a l ocal monitoring and inspection agency OIS E-lerts provides event based e-mailed alerts for OSI software PI systems Electronic Dispatch & Logging (EDL) Manages t he dispatch process for generation plant and co-ordinates and manages the commun ication and instruction commercial processing between the market operator and th e plant operator Electronic Operations Log (EpilOG) To replicate and enhance the paper-based logs that are traditionally used in power station control rooms OIS Report Writer To write reports based on PI data.

2.13 IT ARCHITECTURE Central Database Server Application Server ERP DATA CENTRE DISASTER MGMT. SITE Regional HQs Plants Corporate Offices Figure 11: IT Architecture at NTPC 2.14 Geographical Scope Phase I Different Seismic Zones 2 MBPS Leased Line VSAT Link 4 MBPS Leased Line The Corporate Centre offices located at Delhi and NOIDA Regional headquarter- NC R HQ at NOIDA Gas Station - Faridabad

Coal Station - Ramagundam Hydro power project at Koldam including Hydro Region P hase II In Phase II of the implementation, all modules as in the pilot phase wil l be implemented across the remaining locations of NTPC. Group1 1 Coal (Badarpur ), 2 Gas (Anta, Auraiya), 1 Hybrid (Dadri), 2 COs (Chandigarh & Jaipur) 3 Coal (Korba, Sipat, Vindyachal), 2 Gas (Kawas, Gandhar), 4 COs (Raipur, Baroda, Bhop al, Jabalpur), 2 IOs (Mumbai, Bhopal), 1 RO (Mumbai), 1 T&CC (Mumbai) 4 Coal (S ingrauli, Rihand, Unchahar, Tanda), 1 RO (Lucknow) & 1 IO (Hardwar) 1 Coal (Simh adri), 1 Gas (Kayamkulam), 5 IOs (Hyderabad, Bangalore, Chennai, Ranipet, Trich y), 3 COs (Bangalore, Tiruvananthapuram, Chennai), 1 RO (Hyderabad ), 1 T&CC (C hennai ) 4 Coal (Farakka, Kahalgoan, Talcher (2)), 1 RO (Patna), 2 COs (Bhubane swar & Ranchi), 1 IO (Kolkata), 1 T&CC (Kolkata) Group 2 Group 3 Group 4 Group 5 2.15 Project Timelines Phase Milestone Start Finish Pilot Phase Implementation of all the core processes at pilot sites Plants (Rama gundam, Faridabad & Koldam), NOIDA RO and NOIDA Corporate HQ Project Preparation and Team Training Business Blueprint Realization Baseline & Final Final Prepara tion Go-Live Support & Rollout Preparation Week 1 Week 10 Week 25 Week 43 Week 5 3 Week 9 Week 24 Week 42 Week 52 Week 60 Phase 1.1 - Rollout at Northern Region- A - 1 Coal (Badarpur), 2 Gas (Anta, Aura iya), 1 Hybrid (Dadri), 2 COs (Chandigarh & Jaipur) Final Preparation Post Go-L ive Support Week 61 Week 70 Week 69 Week 73

Phase 2.1 Rollout at Western Region - 3 Coal (Korba, Sipat, Vindhyachal), 2 Gas (Kawas, Gandhar), 4 COs (Raipur, Baroda, Bhopal, Jabalpur), 2 IOs (Mumbai, Bho pal), 1 RO (Mumbai), 1 T&CC (Mumbai) Final Preparation Post Go-Live Support Week 61 Week 70 Week 69 Week 73

Phase Milestone Start Finish Phase 1.2 - 4 Coal (Singrauli, Rihand, Unchahar, Ta nda), 1 RO (Lucknow) & 1 IO (Hardwar) Final Preparation Week 73 Week 80 Post GoLive Support Week 81 Week 84 Phase 2.2 - 1 Coal (Simhadri), 1 Gas (Kayamkulam), 5 IOs (Hyderabad, Bangalore, Chennai, Ranipet, Trichy), 3 COs (Bangalore, Tiru vananthapuram , Chennai), 1 RO (Hyderabad), 1 T&CC (Chennai) Final Preparation W eek 73 Week 80 Post Go-Live Support Week 81 Week 84 Phase 1.3 - 4 Coal (Farakka, Kahalgoan, Talcher (2)), 1 RO (Patna), 2 COs (BBN & Ranchi), 1 IO (Kolkata), 1 T&CC (Kolkata) Final Preparation Week 85 Week 91 Post Go-Live & Support Custome r Competence Centre (CCC) ASAP Methodology Overview Week 91 Week 53 Week 95 Week 156 Customer Competence Centre (Central Team NOIDA), Offsite Support

Project organization and standards Prepare project charter Initial project plann ing Level 1/2 training for project team Technical requirements planning Prepare executive kickoff meeting Customer requirements gathering , Gap Analysis, Create the Business Blueprint Sy stem installation Management review of Business Blueprint Level 3 training Baseline Configuration Final Configuration/ Integration Test De sign, develop and test interfaces, reports, and conversions Go-live plan End-user training Integration, volume and stress testing Establish internal help desk Data migration Cut-over to productive environment Application support Verify accuracy of productive system Measuremen t of busines s benefits

2.16 New SAP Terms Legacy Terminology SAP Terminology

Materials Management Material Code Material Code directory Vendor code directory Indent Contracts LOA Enquiry Rate Contract MTN SIV MIS/SRV GR Register Stock items Amendment Vendor code Bid updation PR/PO Approval Bill certification Verification Material Number Material Master Vendor Master Purchase Requisition Service Service P.O RFQ Cont ract Stock Transfer Order Issue Slip Mat. Document (G R) Inbound Delivery MRP it ems Version Vendor Id. Maintain Quotation PR/PO Release LIV (Logistic Invoice ve rification) Bid Invitation (RFQ in R/3) Purchase Requisition ( PR) Conditions (p ricing) Vendor Purchase Order Package/Contract Supplier Relationship Management Tender Indent Pricing Schedule Contractor/Supplier Billing Breakup Contract/NOA/ LOA Plant Maintenance PM (Preventive Maintenance) Work order Permit Work specification Corrective Main tenance Predictive maintenance Isolations Work order closed Assembly/Sub assembl y PM ( Plant Maintenance) Notification Maintenance order Task List Break down Ma intenance Condition based maintenance Work clearance Management Notification com pleted (NOCO) Functional Location

Destination department Work centre

Legacy Terminology SAP Terminology

Project Systems Projects Budget Control Budget Preparation Purchase Indent MRC SIV RA Bill Bill Certification CWIP Asset Capitalization Project definition, Project Structure (W BS element) Availability Control Cash Flow Planning Purchase requisition GR(Good s Receipt) GI (Goods Issue) Service Entry Sheet (SES) Release strategy for SES S ervice Acceptance Asset under Construction (AUC) Project Settlement Business Are a Inter Business Area transaction Logistic Invoice Verification Financial Accounting Project Code Inter Unit Advice Bills Processing Commercial REA Data - KWH REA Data Others e.g. Entitlement, Settlement logic Disconnection Notice Collection Centre Billing Region New Beneficiary Activation Deactivation of Beneficiary PPA Beneficiary Sectoral Players Plant Plant-Stage Tariff Billing Components e.g. FC, VC, FPA etc Register Facts ( Installation / Rate Cat/ Rate) Clearing Rules Dunning Cash Desk Portion Move-in Move-out Contract Contract Par tner General Business Partner Business Area Rate Category Rate/Line Items Positi on (distinct post held by each employee) DWS (daily work schedule - 9 am, lunch 1-1.30 pm, 5.30 pm) PWS (Period work schedule - pattern, shift roster) HR Nil Shift Rota

Legacy Terminology Engineering & QA Project Phase of a Project Document Bill of Quantity (BOQ) Approval /Commenting Modification/ documents Revision Number Approved vendor List Manufacturing/Refer ence/ Quality Plan Inspection Call Regional Inspection Office Assignment of Insp ection call to inspector Non Conformity Report Standard/Field Version Number Q I nfo record updation in approved Plant SAP Terminology View of a Plant ( Under iPPE Module ) Document Info Record ( DIR ) Bill of Materia l ( BOM ) Status change Engineering Change Management (ECM ) Document Info Record and Inspection Plan Inspection Lot Inspection Type Assign u ser status in the inspection lot Quality Notification 2.17 Key Process Changes Materials Management Legacy Process Decentralized mater ial vendor Code Allotment. No codes for services at most locations. Stores depar tment raises indents for stock control items. Approval of competent authority is required for all indents. SAP Process New code will be allotted by central codi fication cell based on request sent by the users across NTPC. System automatical ly generates indents for MRP items based on MRP parameters maintained in the sys tem. Indents created by system through MRP run and based on ABB stands approved and no separate approval will be required. (under approval) Key Process Changes Centralized codification process. Process simplification and lead time reduction. Process simplification and lead time reduction.

Manual approval of indents. On line approval of indents. Moving towards paperless environment.

Legacy Process Approval required for inviting tenders. SAP Process No approval will be required for calling tenders in case of single t ender on OEM/ OES/ PAC/ standardized vendors, Open tender and in cases of Limite d tender where vendors are enlisted/ standardized and enquiries are being given to all the enlisted/ standardized vendors. (under approval) System automatically values the material based on terms and conditions maintained in the PO. Where e ver SRV is to be prepared, regularizing PO to be created in the system. Material pending for inspection is part of NTPC inventory. Key Process Changes Process simplification and lead time reduction. Valuation of materials is done by Finance. Regularizing POs for cash purchases a re normally not maintained in the system. Material supplied becomes the part of NTPC inventory only after inspection and acceptance and taken in to stock by cus todian. Accounting documents are created by Finance based on documents (SIV, SRV etc.) created by Materials Department. Material is valued on the basis of month ly weighted average price. Material issued from main stores is charged to consum ption. All the pricing conditions to be maintained in the PO. Regularizing POs are to b e created if SRV is to be prepared. Material in NTPC premises is part of NTPC in ventory. Accounting documents are created automatically by the system when a Material doc ument is saved. Material is valued at moving average price which changes on each transaction. Material lying in sub stores will be part of inventory. Spares can either be issued against Maintenance Work Orders or moved on stock transfer fro m main stores. Auto creation of accounting document based on Material document. Real time valua tion of Material. Material lying un utilized will be part of inventory irrespect ive of location of storage.

In case of vendor owned inventory, (COLD,COFD) no SRV is raised at the time of r eceipt. GR is to be made as and when a consignment is received. However, vendor stock wi ll be shown separately and will not be part of NTPCs valuated stock. Vendors stock at NTPC premises is visible.

2.18 Key Role Changes Materials Management Legacy Role Custodian SRV. finally po sts Role post SAP GR is posted at Receipts & Inspection stage. Central codificat ion cell will allot Material codes. System automatically Accounting document. po sts Key Role Changes Custodian has no role in SRV clearance. Site MPIC will have no role in allotting new Material codes. PSL group has no role. MPIC allots Material code at plants. PSL group valuates documents like SRV,SIV e tc POs are always created by Materials department. Cash purchase regularizing PO will be made by indenter. (under approval) New role of Indenter as Purchaser. SRM - SAP Process Flow: (Figure 12) SRM eTendering Process Flow Material Management (R/3) C&M / CC&M External Requirement in SRM SRM C&M / CC&M Prepare documents manually Yes Bid Document Available ? Supplier No Having Vendor Code / user id ? No Get SRM Vendor Code / user id ? Yes Upload documents in cFolder (digtl. sign) Prepare Draft Bid Invitation Docum ent Complete Bid Invitation Document Open Tender Yes Login to SRM No Paid the Bid Fees Pay (online / Offline) & Proceed Logout View/Download Bid Document Aprroval No Bid Published on the eTender Site (digtl sign.) Quote for the Bid ? Yes Agree to Terms & Conditions ? Yes No Released P/ R (SRM Procurement) Complete Bid Document & submit (digtl sign.) Upload documents in cFolder (digtl sign.)

SRM - SAP Process Flow SRM eTendering Process Flow R/3 Tender Committee C&M / CC&M Bid Opening date reached Yes Open Bid Document Technical Evalutaion (Documents d ownloaded from cFolder) Offline N o SRM (Composite Bidding) Engineering Supplier Can not open Bid Document Bid Evaluation CS in BW Convert Bid to Live Auction (Draft) Yes No Reverse Auction Opted ? Complete Auction Document & Publish Accept the Bid Conduct Live Auction Return EMD amt to other bidders (FI Process) Approval Approved Bid Create Purchase Order Create Purchasing Contract with best bidder SAP Process Decision Predefined Process On-page Reference Terminator Manual Operation

Key Process Changes - SRM Legacy Process Codification of Equip./ System/ Sub sys tem Presently these are not codified. Last contract price against each of these equipments/ System/ Sub system are entered separately and maintained in isolated system. PR creation Note sheet is moved for each package by contract coordinato r after cost estimate approval. Approval of Bid document & TC Nomination Bid doc ument approval and TC nomination as per present DOP on paper. On-line approval o f Bid document Presently all approvals are done on paper. Indenter (Engineering/ Coal Mining & Washeries/ Energy Technology, etc.) would create the PR. Bid docu ment approval would be by HOD electronically. TC nomination will be restricted t o maximum three + 1 level approval. (under approval) Use of standard bidding doc uments as far as possible. Further it is proposed to have approval of bid docume nt through release strategy/ workflow (under approval) Total tendering process w ould be through e-procurement, to be introduced in phases. Bid document will be available in soft form. Participating vendors submit their Bids on-line. would P R would be prepared by indenter instead of written communication. Number of redu ced. approvers SAP Process Equipment/ System/ Sub system will be coded and will flow into BPS. Vendors would quote against each of these codes separately. Infor mation on last contract price will be available from the system without any manu al entry. Key Process Changes Equipment codification. Electronic approval instead of paper approval. Standard bidding documents used. Number of approvers reduced. Electronic approval instead of paper approval. e-pr ocurement Submission of Bids online. On line reverse auction. Comparative statem ent created in the system. Introduction signatures. of digital Tendering & Preparation of Comparative Statement Presently, tendering process is manual. In case to case basis, reverse auction would be conducted. Clarification on bids will be done on-line through C-Folder. Payment of tender fee through payment gateway.

Comparative statement would be created in the system. Legacy Process Approval of TC Award recommendation TC recommendation is signed o n paper by the TC members which is approved by the competent authority as per DO P. Package In charge (Contract Coordinator) handles all activities related to a package. Approver approves document on paper. the SAP Process Key Process Changes Number of reduced. approvers It is suggested to directly put up TC recommendation for nonboard case to the ap proving authority electronically (under approval). Same role now to be performed through the system. Electronic approval. Working on the system. Approver approves on line. Electronic approvals. Key Role Changes - SRM Legacy Role Reverse auction administrator role is being performed by WIPRO perso nnel. Role post SAP Package In charge would act as reverse auction administrator. Key Role Changes Reverse auction would be handled through SAP system only by the Package In charge and no separate system is used. Direct assignment of PR to co ncerned Package In charge. Electronically, Purchasing Group is changed in PR for assignment. Manual assignment respective packages various Package charge. of to In PR once received by the HOD would be assigned directly to concerned Package In c harge in consultation with Group Head.

Key Process Changes - Operations Legacy Process Daily performance data posting. SAP Process Daily performance data posting. Key Process Changes No dual posting. Single source posting (to the extent possible auto captured) to take care of al l MIS across company. Instead of operation posting and EEMG verifying, single po sting (editing facility available) will happen. MIS MIS No need for separate pos ting, fax, e mail etc. All MIS requirements across company will be generated aut omatically from the data posted locally at station. MIS reports would be availab le for authorized users. Trip report Trip report Instead of hard copy, soft copy will be maintained. Approval also happens through system. Available across comp any with customized search facility. Action taken reporting (of all reviews such as ORT, ROPR, Technical audit etc). Shift Logging Action taken reporting (of al l reviews). Instead of making need based reports, system will generate reports b ased on information in the system with filtering options. Shift Logging Instead of filling log book manually, pre defined log template will be updated b y the system (manual entry also possible). Instead of hardcopies, all documents like Tech audit, Energy Audit, re commissioning details, operation instructions etc will be available in soft copies linked to functional location or equipment. Document Management Document Management

Key Role Changes - Operations Legacy Role MIS-Reports presented to Senior Manage ment manually. Document (Hard copies) Management by departments. Document approv al in hard copies based on MOM, Communication etc. Role post SAP MIS-Reports to be viewed from the system. Documents available in soft form in the system. Key R ole Changes More automation and ease of access at the point of usage. Online rea l time information from the system. Need to check inboxes regularly and take act ions. Notifications will have to be raised by the concerned people on time. Document approval through system based on notifications. Key Process Changes - Plant Maintenance Legacy Process Breakdown Maint. Comprehe nsive codification is not there to capture break-down maint. History. This force s users to fill in details of maintenance as description, thus capturing of hist ory turns out to be cumbersome. Closing of work order card done by MTP. Shutdown / Opportunity Maintenance Same as B/D maint. Condition Based Maint. Done on SOS basis SAP Process The provision of catalog profile helps to define comprehensive codes for damage, cause of damage, object, task and effects. Codes can be easil y searched and entered in Notification by the users. The codes provide adequate flexibility to create desired reports for breakdown analysis, RCM etc. Closing o f order (TECO) to be done by maintenance department. Key Process Changes Reliable maintenance history expected. These histories will be great help to RCM . Same as B/D maintenance. Will be scheduled. Data can be directly entered in the system. Can automatically generate notifications through email. Faster action po ssible.

Preventive Maintenance Time based PM. Legacy Process Calibration Process Present ly done offline. Record is maintained in a stand alone PC. Refurbishment Process There is no effective provision of capturing the cost of refurbishment of a mat erial. The current value of refurbished material is not getting updated due to t his reason, hence the material is not returned to the main stores. General Maint enance There is no provision of separate accounting of jobs of general nature. C urrently, these are also booked under b/down category. This increases the no. of B/down Orders. Maintenance Procurement PR is raised by the concerned Maintenanc e department. Time, Performance and Strategic PM will be possible. SAP Process Notification wi ll be generated by the system and all the calibration history will be available online. Improved Reliability. Key Process Changes Calibration history of equipments available online. Refurbish able materials are identified in the system. Through the detailed refu rbishment process, the refurbishment cost is realistically updated on the curren t value of the material. Material can be now returned to main stores with this v alue. A separate Notification & Maintenance Order are created for jobs of general natu re. Thus the routine jobs can be effectively segregated from the actual breakdow n jobs. Requirement for 3 years will be generated by the Maintenance department. PR will be generated on the basis of MRP run. Separate PR will be generated by Maintenance department for items for which requirement has not been projected. ( subject to approval) The same is captured through the system. Maintenance depart ment will create a notification on the basis of which workshop will create order in which different activities will be captured. Lead time and Inventory level w ill reduce. Workshop Management Presently creation of job order card by Maintenance departme nt and workshop processes are done manually.

R&M jobs It takes a long time and requires extensive followup to get the R&M pro posals cleared from OS-R&M/ R&M-Engg and other agencies. The complete R&M process is mapped in Project mode from concept to completion. T he approval process will be handled through work-flow. The material & man-power availability can be monitored effectively through PSWBS elements. Legacy Process Major Overhauling Job Presently done offline. Record is maintaine d in a stand alone PC. O&M Documentation & Print Room Mgmt. Documents kept in lo cal plant file servers. RCM Based on no. of permits on an equipment / system and approximated cost of maintenance, generation losses etc, RCM is done. Spares De velopment Approval process is lengthy. Data of one project is not available to t he other project. Work Clearance Mgmt. Status of the job not known till PTW is r eturned. Common Process Changes Material is drawn separately by filling an SIV & it is required to be re-entered in the Job Card SAP Process Data will be available in the system which can be used for proper pl anning and budgeting. Key Process Changes To be handled through DMS (Document Management System). Equipment / System maintenance history and CBM data will be available online whi ch shall help in RCM process. Less approval time. Data can be shared at Client L evel. Proper selection of maintenance activities and frequency will help to optimize m aintenance cost. Easy to get the list of relevant vendors. Status will be known in the system. Helps in expediting. Material is required to be entered only once in the Maintenance Order (MO) and c an be drawn from stores using reservation slip created on MO release.

to relate it to specific maintenance job. Material once issued is treated as consumed by Finance. Approval process is very lengthy. The unused material can be returned to main Stores & actual material shown consu med in MO is only booked as consumed. Can be reduced using Work Flow. Reduction time. in process Legacy Process Jobs done by the contractors are not being captured item-wise in the Job card. A separate measurement record is required to be maintained for ver ification & filling up of MB. Material Procurement process is lengthy. SAP Process Standard Service Masters will be available for choosing external ser vice (contract) in the order. The required service can be copied from the contra ct, linking item wise job to the MO. Service entry sheet can be created directly from this. Lead time will reduce due to less approval time and better data capt uring (Specs & Vendors) in the system. Key Process Changes Saving of Area Engineers time in filling MB. More time will be available for other creative jobs. Project System - To Be Process Flow

Project Concept & FR Preparation FR Approval Pre award Engineering Pre Order Schedule Tendering & Award of Package Project Schedule Post Award Engineering Tracking of Materials Budgeting & Cash flow Planning Progress Monitoring Site Bills Management Site Execution Progress updation of Project Asset Capitalisation Contract Closing Project Management Process flow value chain in SAP NB: Process flow shown here may not all be sequential, some scenario might be ru nning in parallel. Figure 13: Project management Process Flow

Key Process Changes - Project System Legacy Process SAP Process Key Process Chan ges

Project planning & monitorin g based on standalon e networks & limited to critic al areas. A uniform basis for planning of future and ongoing projects. Concept of Project overall Progress in addition to Progress at package level. Real-time updation & actual expenses in an integrated manner at different levels of WBS, which will e nsure Quick & accurate settlement to AUC and then to Assets. Online reporting wi th provision of multiple plan comparison at different stages of Project. Milesto ne trend analysis will help to access the direction of progress tracking. Genera tion of repository for Material & cost related information vis a vis type of pro ject. Major improvement in terms of process integration cutting across functions & department through out the life cycle of the project. Online Project Structure from reference template or from Operating Project in th e System. Concept of Work Break Down Structure WBS to be used through out the life cycle. Cost planning with availability of Project related repository. All activ ities from concept till investment approval will be included and monitored, resu lting in improvement on time schedule. Improvement in timelines for FR preparati on. Project FR approval visibility online, thru workflow, will facilitate faster approval path/time. On line availability of schedules of all packages integrate d in one operative version of the schedule for the entire project. Provision of version comparison. Real time Collaboration between various internal department & vendors would help approvals & resolution of issues faster. Tracking of Vendor s materials, starting from Pre dispatch inspection, dispatch & receipt at site. A pproval of QA docs, inspection and FQA activities. Real time cost controlling fo r the project. Adopting planned cost for providing project budget. Provision of utilization. warning for checking budget Reports for Planned Vs actual, Variance analysis, Milestone monitoring, scheduli ng and crashing. Availability of Cost related report with drill down features. R eports related materials availability & utilization. Efficient management of own er supplied inventory. Tracking of contractor supplied inventory. System support in handling deviation. Fast and accurate Reconciliation of Materials & expendit ure facilitates faster contract closing.

Key Role Changes - Project System Legacy Role Only MNW and standalone L-2 networ ks are prepared. L-2 networks are not updated. Depending on the criticality, Mil estone based revised schedules are made as per the commitment dates to Top Manag ement. Material tracking is done based on the critical area requirements. Role p ost SAP There will be an integrated project structure consisting of WBS element and network activities. Approval of L-2 networks, Data sheets, Quality plans, & Engg drawings will be done through collaboration folder. Status of material at d ifferent stages will be available from the system. Key Role Changes Project stru cture creation and expansion will be done by CMG authorized person and validated by Corporate Finance. Updating of activities on L-2 networks will be carried ou t by authorized persons of concerned depts. MDCC status to be updated by RIO. Go ods receipt at site to be done by Site erection. Service entry & 1st level servi ce acceptance will be carried out by concerned site engineer in the system. Fina l Service acceptance by FQA will be done in the system after confirming to FQP r equirements. Invoice verification will be done by Engr-in-charge. Site measurement sheets and MB are done manually or using some help from standal one software. Service entry, service acceptance and invoice verification are to be carried out in the system. Key Process Changes - Commercial Legacy Process Tariff Data maintained by RBC. R EA Data RBC. entry by Tariff Data Commercial. REA Data Commercial. SAP Process m aintained uploading by by Corp Key Process Changes Regional Petition data obtained manually. Monthly details of fuel for billing obtained ma nually. Collection details sent manually. Petition data to be available thru system. Monthly details of fuel will be avail able through the system. Collection details to be available thru system.

MIS report consolidation for all regions was done manually. MIS report / analysis consolidation for all regions to be available thru system. Legacy Process Base Tariff data for billing entered by RBC. Monthly data for FPA entered by RBC. REA data entered by RBC. SAP Process Base Tariff data for billing to be entered by Corp Commercial. Month ly data for FPA to be uploaded by Regional Commercial. REA data to be uploaded b y Regional Commercial. Key Process Changes Key Process Changes - Financial Accounting Legacy Process All Postings in Genera l Ledger (GL) by F&A employees. Each Project/ Office maintains its own series of vouchers. SAP Process GL entries are also generated by transactions carried out by nonF&A employees. Number ranges for each document type will be common for NT PC. Key Process Changes Data entry and capture at source. Data at NTPC level wil l be available. Review will be linked to Business Area and authorized person for a transaction. Information will be available across the company for a party/Bus iness Area in case of Assets. No need for inter-unit reconciliation. Each Project has its own party codes and asset register. Various masters such as Vendor master, Customer Master, Asset Master, Employee M aster etc. would be at NTPC level i.e. common to all Projects. Inter project tra nsactions are handled thru authorizations to post inter business area (BA) trans actions whereby accounting entries are posted in all the relevant BAs. For inter-unit transactions advices are sent along with documents across project s requiring reconciliations.

Rectification/ reversal of vouchers is relatively easy. Any reversal of a voucher would have to be done by the original creator. The rea sons for reversal would have to be recorded. Since one transaction creates multi ple documents in SAP, all the documents would need to be reversed. Important to ensure the correct data the first time every time. Quarterly Closing. Monthly Closing for almost all transactions including depreciation. SAP Process Updated information availability. Key Process Changes Capture information source . of at Legacy Process Receipt of a cheque/ draft in a department other than F&A is not captured leading to information gaps. TDS is deducted from the bills of the cont ractors/ third party. Quarterly return is then manually prepared and efiling is made. Coal receipts and issues are entered in the system in batch mode. Monitori ng servicing is activity. of Debt a manual The departments concerned would enter the details of receipt of cheque/ draft an d generate receipt thru the system. The entire process is automated. TDS Certifi cates are directly printed from the system and quarterly return for e-filing wil l be generated from the system. Reduction in efforts in routine activity. GR/GI would be on as received/ as issued basis. System will give alerts as well as create accounting entry for debt servicing based on last exchange rate availa ble. HR Payroll and Finance module are integrated and automatic postings of acco unting documents are made on processing of payroll. No manual intervention of Fi nance department is required. Most of the employee related transactions would be thru SelfService with in-built check of Real time information about stock position. System support for routine activitie s. FI & HR module are not currently integrated. At the end of the month, Payroll da ta is posted manually in Finance. Virtually no Self Service options to employees. Reduction in efforts. Faster processing of employee claims.

entitlements etc. Manual flow of data between NTPC and PF Trust. Most of the reports are created o utside any system leading to variations. Automatic posting in PF accounts and in NTPC GL. Trust No need reconciliations. for Reports would be generated thru the system leading to consistency. An authorized user would be able to view the information required thereby obviating the need to send reports. HR Payroll and Finance module are integrated and automatic post ings of accounting documents are made on processing of payroll. No manual interv ention of Finance department is required. Information available on the click of a button. FI & HR module are not currently integrated. At the end of the month, Payroll da ta is posted manually in Finance. Reduction in efforts. Key Role Changes - Financial Accounting Legacy Role Entire data entry in F&A boo ks are by F&A employees. Employee related data being maintained in F&A exclusive ly by F&A. Details of an invoice are not captured by anyone. No role of F&A pers on for capitalization of an asset prior to actual capitalization. All employee c laims are processed by F&A. Role post SAP Most of the data entry would be by the initiator of a transaction who in most cases would be a non-F&A person. The F&A books would be updated based on employee master maintained by HR. Invoice detai ls would be entered in the system by MM/ E-I-C. F&A person to assign the relevan t account/ vet WBS structure etc., leading to faster capitalization. The system to process certain claims such as multipurpose/ computer advance etc. Key Role C hanges Data entry by non-F&A employees. No need of data entry by F&A. F&A would verify the details, if required. New role of F&A. Reduction of F&A role.

All receipts accounted by F&A. Receipts would be also accounted by a receiver in other departments. Shift in role. Key Process Changes - HR Legacy Process Hiring an employee. SAP Process HR enter s the Name, Grade, Dept, Basic and gives user-ID to Employee. Employee to enter qualifications, dependents, nominations, prior work experience etc and submit pr oof. HR after due verification saves the data. Training Nomination . PMI Trainin g calendar / EDC Training calendar will be available in the system. Employee wil l enter the request for training. Approval through workflow (previous training d etails visible during approval process). Legacy Process Computer Advance. SAP Pr ocess Employee applies in system. Eligibility checks automatic. Amount gets disb ursed. Key Process Changes No Performa invoice. No recommendation Controlling of ficer. No restriction to 80% amount (max 40,000/-). of of All employees will hav e access to training calendar. Key Process Changes Employee enters the details, chances of errors in the data is minimized. One Employee master. (HR/Fin) No proof of utilization required. Key Role Changes - HR Legacy Role Role post SA P Key Role Changes

Controlling Officer Recommends all advances Conveyance reimbursement Internet re imbursement Incentive for higher education Incentive for family norms Withdrawal s Fund pursuing from small Nil Provident Transfer Pay Advance

Engineering and QA&I Modules Modules iPPE (Integrated Product & Process Engineer ing) DMS (Document Management System) C Folders (Collaboration Folders) QM (Qual ity Management) Interfacing with the following: PS (Project Systems) SRM (Suppli er Relationship Management) MM (Materials Management) HCM (Human Capital Managem ent) Engineering & QA - Process Flow in SAP Concept Engineering (FR) i P P E Basic Engineering (DIM) Pre-award engineering (Internal detailed engineering (FS C) Q M Post-award engineering (Detailed engineering ) As Built As Maintained

Figure 14: Process Flow for Engineering & QA

Key Process Changes - Engineering and QA&I Legacy Process Engineering Data/ info rmation of various phases of a project is: in various forms (hard/ soft) decentr alized/ available with Dealing Engineer/ respective Group Organized Package. in Project/ SAP Process All Data will be readily available in soft form in DMS and will be properly arranged in Hierarchal manner in the iPPE module for a Project. Reference Models of Power plant of same capacity and fuel type will be develope d in iPPE using modular approach (systems/ subsystems) and thus module wise requ irements (technical, Drawing / Document List) will be standardized. Quicker deve lopment of package scope from Reference Model of the Project (Drag and Drop) and facility to check the coverage of Projects entire scope in Packages. Real time C ollaboration within & outside Engineering (including vendors/ contractors) throu gh C Folders (browser based). Real time Interaction with Contractors/ Vendors. K ey Process Changes Creation/ Populating of iPPE Structure in hierarchal manner a s systems, sub-systems of a power plant. More focus on standardization and desig n consistency. Enterprise-wide availability information/ data. of While information sharing within Engineering is through eDesk/ DREAMS, the same with outside Engineering is through paper documents/ emails. Monitoring / Report ing process is largely manual, consuming Engineering effort and time in collecti on/ collation of inputs. Same information is to be reported in different formats . Changes carried out in approved documents /drawings are largely localized and tracking them with history is difficult. Monitoring data is getting captured in the system in due course of execution of various engineering processes. Standard Reporting formats as available in the sy stem will be used. Standardization of reporting. Saving in effort/time spent on the same. Robust ECM Change mechanism to change. (Engineering Management) control the The system will maintain the change record of each standard document/ approved d rawing along with history (who, when,

what & why).

Legacy Process Final Documentation (approved drawings / documents / O&M Manuals) is handed over by the contractor at the end of the contract. SAP Process Progressive design handover by the contractor as & when design of a particular system is getting finalized. O&M Manuals now will be finalized by OS Deparrtment who will be issuing CCP-04 for the same. Quality Plan document will be approved using C Folder & DMS. Inspection Plan for CHP stages will be created in the system with linkage of reference documents to facilitate inspection. Key Process Changes Step of Validation of documentation package eliminated. Role change of handling CCP-04 to OS department required for Contract Closing. Creat ion of Master Inspection Characteristics, Catalogues, Inspection Plan, for CHP p oints and linking of DIRs of Reference documents. Saving of inspection time & ef fort besides traveling cost. Since all the documents are pre-linked, entry of do cuments referred in CHP is eliminated. Quality Plan approval. Status of approval of the reference documents / BBUs being verified at the time of inspection only, and not at the time of raising of inspection call. Inspection call cant be raised if any of the reference documents is still un-appr oved. Deviations observed are being processed manually and in paper form, and their di sposition takes considerable time. Auto-generation of Quality Notification in case of deviation and its disposition getting recorded in the system. Quicker disposition of the deviations. Central repository of deviations which ca n be referred for improvement in specifications. Business Planning Process Business Planning Process

The Budget process has been included in the Business Plan to have one plan acros s NTPC. Integrated Planning process taking Inputs from Different units/ departme nts directly in system. Only Relevant Data is visible to relevant Responsible Pe rsons. Approval of proposed Budgets by Authorized person via Approval process in system. Monitoring of Actual vs. Planned through the System. All External repor ting would be derived from internal Business Plan. (Excerpted from SAP/NTPC Docu ments for ERP Implementation at NTPC) 3. THE RESEARCH DESIGN 3.1 Sample Set In o rder to meet the research objectives, employees of NTPC, Unchahar have been sele cted as sample set. A perception survey was conducted among the Process owners a nd End users using a structured questionnaire based on the CSF for organizationa l preparedness, identified through the literature review. Additionally, few of t he project sponsors were also contacted to assess the readiness of the organizat ion from their view point. End users form the largest chunk of the entire popula tion as they are the situated at the bottom of the pyramid. These are the most a ffected in terms of process functionalities and thus are most sensitive towards its operational effectiveness. Process owners are the functional heads of differ ent sections like HR, C&M, Finance & O&M etc. They are also custodian of systems , procedures and processes within their own functional domain. They constantly w atch out for any system deficiency and strive towards ironing out the same throu gh suitable remedial intervention. They are situated at the middle of the pyrami d. Project sponsors are the ones who have the conceptualized the whole project i n order to leverage strategic effectiveness and operational efficiency of the or ganization through this initiative. They are the key decision makers and provide resources & direction towards smooth culmination of the whole exercise. They ar e placed at the top of the pyramid. 3.2 Questionnaire Design

Questionnaire has been designed in such a way so as to address all the relevant issues, which concern these three distinct classes of respondents. That is why, three different set of questionnaires have been designed with special emphasis o n the issues of immediate concern to each of these classes of respondents. All t he questions have been formulated around the six identified factors. However, ca re has been taken while framing of the questions, to customize it to suit each o f these levels. Respondents were asked to mark their perceptions on a five point Likert scale, ranging from 1 (Not at all agree) to 5 (Completely agree). In cas e of Project sponsors, their perception has been converted into a rating which g ives organizational readiness towards ERM on 1-100 scale. (Keith Lanchbury, Caro l A. Ptak, 2000) [Appendix- 1]

3.3 Data Collection Procedure These questionnaires were administered in person b y the researcher to all the respondents, except in case of project sponsors, who were mailed/ posted with these questionnaires. They were also briefed about the objectives of the research and directions towards filling the same through a co vering letter. Respondents from each of these three subsets, namely end users, p rocess owners and project sponsors, were selected on random basis. However, care has been taken to cover only those respondents who had already been through ERP awareness program. 3.4 Research Methodology First of all, Critical Success Fact ors (CSFs) for assessing organizational preparedness were identified through lit erature study combined with practitioners view point. Subsequently, various sub-f actors likely to have significant impact on overall ERP preparedness were identi fied again through literature study. Finally, structured questions were designed around each of these sub-factors. Questionnaires were pre-tested on a group of respondents to check its validity & reliability. Entire data was collected, seri alized and codified for entry into SPSS software to elicit useful and implement able interpretation. Mean scores for each of the critical factors like 1) Commun ication, 2) Change Management, 3) Existing IT infrastructure & 4) Business Proce ss Re-engineering was calculated for end users and entered into SPSS data view. Correlation coefficient for each of these factors among themselves and with resp ect to the overall perception of the respondent was found to check the extent to which these factors are correlated and have some kind of impact on each other. For Process owners, two additional factors, ie, 5) ERP Team composition & 6) Top Management Commitment were also considered. Also, demographic factors like 1) D epartment in which respondent worked, 2) his/her Total work experience and 3) Av erage daily exposure on the existing legacy system were also factored in to find if any of these factors had any impact on the overall perception of the respond ent. Since questions posed to the end users and the process owners were differen t, separate SPSS charts were used to conclude the data interpretation for End us ers & Process owners. Data was analyzed using the following steps:

1. 2. Mean scores for each of the sub-factors was found for each of these two sets. Co rrelation coefficient for individual sub-factors with respect to overall percept ion level was found using mean scores, for each of these two sets. 3. Correlation co efficient for the identified CSFs with respect to overall perception level was found using mean scores for each of the sub-factors within each CSF. 4 . Finally, Gap analysis was done using individual sub-factor Correlation coeffic ient and their mean score. 5. 6. Interpretation of the obtained data with reference t o the objective of the research Suggestions and Recommendations

4. SPSS ANALYSIS 4.1 Observations (A) End Users: This set of respondents was posed with thirty structured question s on the following four factors out of the total six given in the Organizational preparedness matrix. These are: 1) Communication 2) Change Management 3) Existi ng IT infrastructure & 4) Business Process Re-engineering As per the SPSS analys is, the following facts are evident: Overall perception on successful ERP implem entation is positively correlated to the perceptions on Change Management effort s ( = 0.536) and to the level of awareness ( = 0.436) in a very significant way. P erceptions on level of BPR efforts ( = 0.224) and Level of existing IT infrastruc ture ( = 0.193) are also positively correlated to the overall perception level in very less significant way. Out of the four factors, level of awareness (communi cation) is positively correlated to the change management ( = 0.466) and the exis ting level of IT infrastructure ( = 0.557) in a very significant way. However, it is negatively correlated to BPR efforts ( = - 0.407) in a very significant way. It means better the awareness of the respondent, lower is the perception of the ongoing BPR efforts. Also, perception on Change management is positively correla ted to the perceptions on existing level of IT infrastructure ( = 0.286) and leve l of BPR efforts ( = 0.133) in a less significant way. Overall perception on ERP implementation is not significantly correlated to any of the three demographic v ariables like Department in which respondent worked, his/ her total work experie nce or their average daily engagement on the existing legacy systems. [Appendix1(II)]

 However, Department in which a respondent worked has positive correlation with t he level of communication ( = 0.306) and the level of existing IT infrastructure ( = 0.320), indicating uneven spread of these two factors. Average daily exposure of a respondent on the existing legacy systems is positiv ely correlated to the awareness level ( = 0.245) but strangely enough negatively correlated to the perception on BPR efforts ( = - 0.193) and the change managemen t ( = - 0.124) although very less significantly. [Appendix- 2(A)] Other notable observations from the mean score table for various sub-factors. [T able: 5] Table: 7 Main Factor Commn . Chg. Mgmt. IT Infra. Sub- factors scoring Lowest Software so ln. being used-SAP-R/3 Ongoing activities at the unit level Training imparted to users was very interactive and relevant Presently available bandwidth would be sufficient to cater to ERP connectivity Package may not be able to provide softw are support for non-routine decision making situations Mean Score 3 2.5 2.6 Subfactors scoring Highest ERP as business tool ERP implementation may kill creati vity at work IT personnel need to be trained and equipped in terms of resources to address users problems NTPC business processes need to be reworked before ERP can produce results Mean Score 3.9 4* (Disagree) 3.9 BPR 2.8 3.6 Note: Higher the score, more is the level of agreement. * scores on this questio n has been coded in the reverse order (negatively correlated) (B) Process Owners : This set of respondents was posed with a different set of thirty questions on all the six factors given in the preparedness matrix with a balanced focus on al l of them. The two additional factors, which are in addition to the four factors listed for the end users are: 5) ERP Team Composition 6) Top Management Commitm ent As per the SPSS analysis, the following facts are evident: Out of the six fa ctors of the preparedness matrix, two, ie, Top management commitment ( = 0.720) a nd ERP Team composition ( = 0.610) are found to be positively correlated to the o verall perception about successful ERP implementation in a significant way. [App endix- 1(III)]

 Next in order are level of Business Process Re-engineering ( = 0.585) and Communi cation ( = 0.581). These two are also positively correlated to the overall percep tion about successful ERP implementation in a less significant way. Incidentally, Level of existing IT infrastructure ( = 0.439) and Change Managemen t ( = 0.366) are also positively correlated, but very less significantly. All the six factors except Level of existing IT infrastructure are positively co rrelated to each other, to varying degrees. Level of awareness is positively correlated to perception on BPR efforts ( = 0.87 0), Change Management ( = 0.741) and ERP Team Composition ( = 0.717) in a signific ant way. It is also positively correlated with other two factors Top management commitment ( = 0.615) and existing level of IT infrastructure ( = 0.419), although in a less significant way. Change management is positively correlated to perception on BPR efforts ( = 0.641 ) and ERP Team Composition ( = 0.575) and Top management commitment ( = 0.483) apa rt from level of awareness in a significant way. Existing level of IT infrastructure is positively correlated to the perception o n Top management commitment ( = 0.471) apart from awareness in a significant way BPR is positively correlated to perceptions on ERP Team Composition ( = 0.756) an d Top management commitment ( = 0.644) apart from awareness in a significant way. Top management commitment is positively correlated to perceptions on ERP Team Co mposition ( = 0.700) and BPR efforts in a significant way and change management a nd existing level of IT infrastructure in a less significant way. ERP Team Composition is positively correlated to perceptions on BPR efforts, Top management commitment, level of communication and Change management in a signif icant way. No analysis was possible in this case with respect to their demographic profile. Each respondent was unique with respect to his work profile, had total work exp erience of more than 15 years and their average daily exposure on the existing l egacy system was uniformly low. [Appendix- 2(B)]

Some notable observations from the mean score table for various sub-factors. [Ta ble: 6]

Table: 8 Main Factor Commn. Sub- factors scoring Lowest Mean Score 2.6 3.9 2.3 3.7 2.8 3. 9 Sub- factors scoring Highest Project would save processing time Result in seam less flow of information ERP is the need of the hour as business tool Support st aff from IT are adequately trained and equipped to handle support functions effe ctively ERP would result in standardization of processes across the organization Team consists of persons from all functional disciplines adequately NTPC mgmt. giving top priority to ERP NTPC mgmt. monitoring the project reg. NTPC mgmt. com mitted to bring on time Mean Score 4.5 4.8 2.8 4.5 Team members regularly communicate the progress of ERP ERP is a must for doing b usiness Chg. Mgmt. with other ERP enabled org. Existing servers sufficient for I T Infra. storage and processing needs of ERP Data cleansing work is on, so as BP R to prepare it for migration to the ERP Members of ERP team shall get ERP Team incentives on successful Comp. completion Resources have never been a Top Mgmt. constraint in the execution of this Commit. project 3.9 4.1 Note: Higher the score, more is the level of agreement. 4.2 Interpretation of Observations Deduced findings from the observations as listed in the previous sub-sections ar e as under: (A) End Users On the Negative side: This set of respondents has low perception on all the four factors, ie, Level of Communication, Change Managemen t, Level of IT Infrastructure available & the Business Process Re-engineering. H owever, they are particularly concerned about long and arduous processes prevail ing in their respective work areas. Majority of them feel that outdated & unwarr anted processes need to be weeded out to achieve operational efficiency and high er level of maturity is required in data codification of material, equipments an d vendors. This set of population is barely aware of the ongoing activities both at the unit level and at organizational level. They are very less aware about w hat needs to be done to accomplish this target. End user involvement has also be en very low in the documentation of AS IS processes. These two facts taken togethe r are

alarming from the point of view of change management also. It is unthinkable tha t without their active participation an organization wide ERP implementation can be accomplished successfully. Their level of awareness is limited about the sof tware solution, SAP-R/3 & its attendant features strictly from the point of view of functionality. It is further supported by their low scores on training aspec t. Although, all the selected respondents (end users) have already attended awar eness sessions; it has not been able to do much to their advantage. Hence, forma l and more in-depth training combined with some on-hand experience of the respec tive functional module may boost their confidence and their acceptance of the ne w system. The level of IT infrastructure available in the form of PCs and periph erals seems to be less than adequate and the available Band-width is far too ins ufficient to cope up with the density of online system use. On the Positive side : However, a sizeable portion of respondents feel that the existing Legacy syste ms are not good enough to take care of their present and future business needs, which might motivate them for better acceptance of the ERP implementation. Also, a very large majority has negated most of the apprehensions about ERP. These ar e very commonly expressed concerns, when a massive system overhaul of this magni tude takes place in a large public sector undertaking like NTPC. (B) Process Own ers On the Negative side: This set of respondents has significantly low percepti on of two out of the total six factors, viz., Level IT Infrastructure available & the ERP Team composition. They are particularly doubtful about the abilities o f persons on the team in delivering the expected outcome. A large majority of th e people feel that implementation team shall not be given any additional incenti ve on successful completion. Their opinion could be biased due to their knowledg e of NTPC reward and recognition guidelines.

 Respondents have commented poorly on the lack of two way communication between t he functional experts and the team members. This could have a bearing on the BPR efforts and also on the change management. IT infrastructure available in the form of existing server capacity, network and support staff capability and resources seems to be less than adequate and needs augmentation. Many of these respondents are very skeptical about ushering into a new era of pa perless environment, wherein most of the decision making processes could be comp leted through an online transactions and authorizations. This set of respondents has the perception that we are not adequately prepared a t this point in time for the ERP implementation and lag behind with respect to t he LAKSHYA targets. On the Positive side: Despite the hurdles mentioned above, this set of responden ts acknowledges the need of going in for the ERP is a step in right direction. T hey are favorably inclined towards a new work culture where systems are integrat ed and data is easily accessible. They also acknowledge the fact that NTPC manag ement is giving full support to this initiative, to bring this project on time a nd with minimum customization. However, there is a catch. Their ratings are much less for the question no 30, where performance was an additional factor, leavin g enough doubt on this aspect of implementation. On the benefit aspect from this initiative, the respondents are cautiously optimistic. It is probably so becaus e of their long experience of working in a different work culture and the result ing inertia. However, since scores are not alarmingly low; it probably needs int ervention in the form of formal training and mass awareness campaigns. (C) Proje ct Sponsors Project sponsors were also provided with a structured set of twenty questions which revolved around strategic aspects of ERP implementation. As it i s, population of this

set of respondents is small in number, being at the top of the pyramid. Apart fr om that, their availability is a key issue. Although close to twelve such respon dents were randomly selected. Questionnaire was mailed / posted to them with a c overing letter detailing the objective of the study and detailed instructions on how to fill the questionnaire, only three of them responded. Despite such a poo r response, the available data is being analyzed to cull out some meaningful ana lysis. [Appendix - 1(IV)]

(1) There is fair amount of agreement on: I. People in NTPC are aware of the bus iness challenges being faced by the organization. This is a healthy sign for any organization. II. Performance measurement in NTPC has undergone a drastic chang e from being internally oriented to customer focused in the recent past. This ha s brought about a sea change in their outlook towards focus of their job. III. N TPC needs to reduce levels in the organizational hierarchy to smoothen its worki ng. This when implemented would certainly bring about increased manpower efficie ncy, greater accountability and faster decision making. IV. NTPC has graduated f rom traditional costing methods to value added costing. This cost centre concept has brought about cost consciousness in the units and greater accountability on the part of their managers. V. Greater collaboration would take place among fun ctional areas with the implementation of ERP System at NTPC. VI. NTPC DoP needs to be suitably modified to simplify the decision making process with the introdu ction of ERP. VII. Organization would become more receptive to change with the i ntroduction of ERP. VIII. Lot of emphasis is placed on continual learning in NTP C. IX. NTPC has benchmarked its performance against the "Best-in-class" practice s by the Global leaders in the industry. X. ERP would ultimately lead to reduced cost of operations. (2) However, there is ambiguity on certain issues like: I. NTPC has a flexible workforce and process capability. II. In NTPC, major busines s processes have been re-engineered and all redundant processes been eliminated. III. In NTPC, business processes across the organization have been standardized . IV. Existing Management Information Systems (MIS) is effective in terms of pro viding timely & quality information.

V. NTPC Performance Appraisal system assesses and recognizes both individual & t eam performance in terms of achievement of strategic & operational goals. VI. NT PC personnel are ready for operating in an integrated resource management system . (3) And there are strong reservations on the few issues like: I. It is not eas y to access the information/ knowledge available in a different station within t he organization. II. NTPC can not operate in paperless environment with the pres ent set of guidelines and regulated environment. III. NTPC does not have a forma l process of identifying and resolving process constraints. On the whole they fe el that NTPC would be able to meet ERP targets in terms of Schedule, Performance & Customization. As per the ERM checklist their mean score comes out to be 77 o n a 100 point scale. This can be interpreted as Organization is close to ready f or ERM (Keith Lanchbury, Carol A. Ptak, 2000). 4.3 Comparison of the Perceptions of the Three Sets of Respondents Of the four aspects of preparedness matrix, wh ich are common to both the set of respondents, Process owners have better scores in comparison to the end users on Awareness, Change Management and Business Pro cess Re-engineering. This is probably due to their greater exposure on the initi ative. However, Process owners are doubtful about adequacy of the existing IT in frastructure. Although Process owners seem to be more aware about the ERP implem entation initiatives, they are less sure of its success in comparison to the end users. Most of it emanates from their poor perception of the existing IT infras tructure and progress till date with respect to ERP targets. Though they seem to be convinced about its implementation to fairly reasonable levels, they have re servations about the expected performance of the ERP system. It can also be view ed in the context of usual apathy towards any new initiative in a public sector environment. As we go down the ladder among the three distinct sets of responden ts, ie, from the Project sponsor to the Process owner to the End user, it is fou nd that the

perception on adequacy of communication level reduces. It assumes lot of signifi cance due to its impact on the perception on many other factors in the matrix.

4.4 GAP ANALYSIS To find gap between perceptions of the respondents on the impor tance of the various sub-factors critical to ERP preparedness of the organizatio n vis--vis their performance an Importance vs. Performance matrix has been plotte d. All the sub-factors (ranging from 1 to 29) have been plotted on X-axis and th eir Correlation coefficient values (between individual sub-factor & the overall perception level, using SPSS) on Left y-axis. These correlation coefficients (ra nging from -1 to +1) define the extent to which these sub-factors affect the ove rall perception on ERP implementation of the respondents; thus their importance. Certain sub-factors were also found to be negatively correlated with the overal l perception. Mean scores of the performance (perception of the respondents abou t these sub-factors) has been plotted on the Right Y-axis. Their values range fr om minimum 1 to maximum 5. Here again, any value less than 3 (Agree) would be co nstrued as disagreement. Now the two points for each variable (sub-factor) can e asily be compared by looking at these two series in the plot. Wherever the Mean Performance plot is below the Correlation Coefficient plot, there is a gap betwe en the Importance and Performance. Those subfactors where gap between performanc e and importance was more than 10% (0.5) were considered to be significant. They need further efforts and attention, to bridge the gap in importance and perform ance. 4.4.1 Interpretation of Performance Gaps (A) End Users: Table: 9 Quest. No. 5 10 12 13 14 17 19 Sub-factor Description Awareness level about Soft ware soln. (SAP-R/3) Awareness about ongoing activities at unit level Awareness about intangible benefits from ERP End User involvement in As Is Documentation Suf ficiency of available Bandwidth for ERP NTPC business processes need to be rewor ked Usefulness of training provided Correlation Coeff. () 0.31 0.32 0.55 0.49 0.1 5 0.10 0.09 Mean Perf. 3.0 3.0 3.3 2.9 2.6 3.6 2.5 Perf. Gap 0.60 0.60 0.75 1.05 0.60 0.80 0.70 [Fig. 15, 16] Significant gap between Importance and Performance were found in the following s ubfactors:

 Efforts seem to be lacking in end user awareness and training. This set of respo ndents has not gained significantly from the awareness program being

organized. Thus, lot of effort may be required to strengthen these in order to s moothen the ERP implementation. Another very important factor which is found lac king is the involvement of all stakeholders. A two-way information sharing mecha nism may be put in place to avoid alienation of the vast majority of this set of respondents. It could prove to be crucial from the change management view point . The available Band-width is far too insufficient to cope up with the density o f online system use. The respondents are also concerned about long and arduous p rocesses prevailing in their respective work areas. Majority of them feel that o utdated & unwarranted processes need to be weeded out to achieve operational eff iciency. (B) Process Owners: Gap between Importance and Performance were found i n the following sub-factors: Table: 10 Quest No. 5 11 12 13 14 15 16 28 29 Sub-factor Description Manpower allocated fo r ERP best in their field Incentives to Impl. team on successful completion ERP team members seek feedback from experts Commn. about progress of the project by Impl team Sufficiency of existing server capacity for ERP Sufficiency of existin g LAN/WAN support Need of support staff (IT) training Progress of Data Cleansing work Current level of preparedness wrt Lakshya targets Correlation Coeff. () 0.6 2 0.29 0.46 0.67 0.19 0.23 0.65 0.64 0.69 Mean Perf. 3.10 2.80 3.00 2.60 2.30 2. 50 2.80 3.70 3.40 Perf. Gap 1.10 0.75 0.90 1.75 1.10 0.90 1.55 0.60 1.00 Significant gap between Importance and Performance were found in the following s ubfactors: The respondents at this level are very critical about the manpower al located for this project. Also, they are doubtful whether any incentive shall be paid to the member of the implementation team on successful completion. All of this could be result of their knowledge of NTPC reward and recognition policy.

 Process Owners perception about lack of communication among various stakeholders is similar to that of end users. It is yet another very crucial factor, which ha s bearings on Change management. Apart from this, preparations with respect to Project Lakshya targets seem to be l agging and that seem to tilt the overall perception of the process owners negati vely. As far as augmentation of IT infrastructure is concerned, it needs careful evalu ation by expert group for ERP execution. But, IT personnel need to be retrained to make sure that robust and efficient user support system is in place. These findings validate the conclusions drawn on the basis of mean scores.

5. CONCLUSIONS Based on the factors covered in this study it can be concluded that top manageme nt of NTPC is fully committed to bring the ERP project as per schedule. However, strategic vision of the top management would be realized only if the operationa l targets are achieved by all the involved functions. ERP is one such project wh ere each and every function of the organization is involved to some extent. Ther e are certain factors which need further strengthening to brace the whole organi zation structure into a tight knit team for this mammoth task. First and foremos t, awareness about the ongoing activities both at the unit level and at organiza tional level is limited to the people directly concerned with implementation tas k. Until & unless, percolation of knowledge and awareness reaches the bottom mos t layer of the pyramid; two fold advantage of user empowerment and increased acc eptance of the new system can not be achieved. There is near unanimity among the respondents that NTPC does not have a formal process of identifying and resolvi ng process constraints and there is urgent need to weed out outdated & unwarrant ed processes, in order to achieve operational efficiency. They are of the opinio n that NTPC can not operate in paperless environment with the present set of gui delines and regulated environment. NTPC DoP might also need to be amended suitab ly to simplify the decision making process. This calls for major overhaul of the organizational systems & procedures and culture as well. Finally, aspects like ERP team composition, existing IT infrastructure and IT support staff retraining & resource needs to be looked into to further strengthen it. Same may be augmen ted after objective need assessment. However, there are some silver linings amon g the dark clouds too. A sizeable portion of respondents feel that the existing legacy systems are not good enough to take care of their present and future busi ness needs, which might motivate them for better acceptance of the ERP implement ation. It also reduces their dependency on subordinate staff & provides reliable data. Also despite the fact that awareness level of end users needs further imp rovement, a large majority of end users have negated most of the apprehensions r elated to ERP implementation. When a massive system overhaul of this magnitude t akes place in a large public sector undertaking like NTPC, inherent inertia due to long established procedures and sudden

change in work culture are traditionally resisted by the end users due to their perceived fears about their ability to adapt to such changes. But since, end use rs in NTPC are accustomed to work on legacy applications, they are likely to ada pt to it with relative ease. Still, managing smooth transition from the existing legacy systems to the new system would be a major challenge. Teething troubles during pilot implementation have already provided us the insights into what is no t to be done. Although this is a huge task and requires surgical precision in exe cution, many multi-national organizations have done it successfully in the past. It could be a jerk free ride! Option is with us!! 5.1 RECOMMENDATIONS Following are the recommendations for effective implementation of ERP at NTPC, based on t he factors considered in the present study: 1. Training & Communication: Profess ionally managed, in-depth training sessions coupled with on-hand experience in u sing the ERP functionalities, is urgently needed for all the end users. It could also include some sort of evaluation process to assess their proficiency at the end of it. It would add objectivity to the whole exercise and prepare them for smooth implementation. Communication needs to be improved at all costs as early as possible. It could be arranged with the help of professionals to manage it in the form of mass media campaign, within the organization. Active use of all the available media options (printnewsletters & magazines, electronic intranet & TV ) is the need of the hour. Another option is to organize games and events on ERP to promote awareness in an informal way. Training would remove their ill founde d apprehensions and common concerns; ultimately leading to informed and confiden t users, who would be ready to adapt the new system with minimal jerk. 2. Simpli fy Business Processes: BPR related issues need to be hammered out well in advanc e to see that these are properly mapped into To Be processes. These changes need t o be identified in consultation with process owners and end users as appropriate ly as possible. Bold

leadership initiatives may be needed to effect major policy changes and manage c hanges in the organizational culture due to absorption of these changes. All out efforts should be made to bring in a paperless work environment, wherein most o f the decision making processes could be completed through an online transaction s and authorizations. Implementation of ERP should be seen as a major opportunit y to weed out outdated and unwarranted processes. If this opportunity is missed, we would be missing out on one of the major advantages that could bring about s ignificant gains on operational efficiency, flexibility in deployment of resourc es and strategic agility while responding to dynamic situations. 3. Enhance User Involvement: User involvement can only be increased through increased participa tion by all. It could be in the form of allocation of ERP related task like Data cleansing work, documentation work etc. Also, users feedback on various functio nalities can be assessed and incorporated if deemed fit. Two way communication c hannels would go a long way in dealing with this problem. 4. Strengthen ERP Impl ementation setup: As per the perception of the respondents across the spectrum, ERP team composition calls for urgent attention in terms of skill set and profic iency of the manpower staffing, to strengthen it further. 5. Improve IT Infrastr ucture: Also, existing IT infrastructure in terms of Server capacity, network ca pacity & connectivity and IT support structure needs to be augmented. Shortage o f PCs and peripherals at workplaces and network connectivity could seem to be a minor constraint but might convert into a major irritant in ERP implementation e fforts. 5.2 LIMITATIONS OF THE STUDY 1. Although, researcher has strived to make this study as comprehensive as possible with respect to the issues concerning o rganizational preparedness on ERP implementation, completeness of the same can n ot be claimed.

2. Also, conscious efforts have been made to maintain utmost neutrality & object ivity while dealing with the study, some amount of subjectivity can not be ruled out, as researcher is also a stakeholder in the organization under study.

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7. APPENDICES Appendix 1: Questionnaires V. VI. VII. VIII. Format for Personal d etails of Respondents Questionnaire for End Users Questionnaire for Process Owne rs Questionnaire for Project Sponsors Appendix 2: SPSS DATA A) End User V. SPSS Data View & Variable View VI. SPSS Out put Correlation Coefficient between Sub-factors & Overall perception VII. SPSS O utput Correlation Coefficient between CSFs & Overall perception VIII. SPSS Outpu t Correlation Coefficient between Demographic Factors & Overall perception B) Pr ocess Owners IV. SPSS Data View & Variable View V. SPSS Output Correlation Coeff icient between Sub-factors & Overall perception VI. SPSS Output Correlation Coef ficient between CSFs & Overall perception