Catch ’em young
Through a case study, Satish Pendse analyses why world-class ERP is important from the early stage and what can be the drivers for the young and growing construction organisations to implement it
In this issue we will discuss implementation of world-class ERP such as SAP for young construction organisations or organisations which are at initial stage of their lifecycle and are growing rapidly. One of the myths about world-class ERP implementation includes, you have to be an old organisation, with matured processes, for being able to fully leverage benefits of the ERP systems.
Many young organisations have endless list of concerns for not going for world-class ERPs. ‘We are new in the business’; ‘we do not need a big ERP for managing our organisation’; ‘we can manage with local ERP software’ – are some of the common ones.
Neptune Group is a Mumbai based group established in December 2002. It is mainly into low cost housing, premium residential, commercial, retail and townships. The Group is managed by a group of young, dynamic and ambitious professionals according to whom the group is, ‘one of the brightest stars on the horizon of the real estate development industry in India’. Though a relatively young organisation, Neptune with its pioneering budget home concept in Mumbai and associations with some of leading global organisations in construction business is demonstrating a glimpse of big things to come from in future. The Group completed the SAP implementation with Hindustan Construction Company (HCC) as their implementation partner. Before SAP, it tried a local ERP software and persisted with it for 3-4 years. With the growth of the group, the software was not providing the expected control over data as well as processes. Moreover the software had its own inherent problems and Neptune found itself at the receiving end of the innate errors in the ERP software. Enough was enough and the Group decided to make a move to SAP.
Nayan Shah, President-Operations, Neptune Group justifies the decision by stating, “Our group is all set to grow, with operations being planned and carried out in various regions in India. We wanted the best ERP system which will support and enhance our growth. SAP being a world-class solution and the leader in ERP it was the obvious choice for us.” Neptune evaluated SAP on various parameters. It checked about the performance of SAP with realty companies who have already implemented it and are using it. A thorough analysis was done on the benefits vis-à-vis the costs. At the end of this exercise the Group realised SAP is the need of the hour.
Anindya Mitra, CFO, Neptune Group, further puts the decision in perspective by saying, “We are a young organisation which believes in fast decision making. We took the bold step of going ahead with SAP.” For the implementation, Neptune decided to go ahead with HCC because of its construction domain as well as the SAP implementations experience. While talking about the experience, Shah says, “We are very happy working with HCC. We are getting excellent service. The team is high quality contributor and gets at people level to sort out the problems, which is very important for the success of this kind of new initiative”.
The Neptune management is happy with the implementation. It has been instrumental in instilling the much needed discipline and providing control over costs and schedules in the organisation. For every transaction now there is evidence in the system. To give a small example, there cannot be any spends without proper authorisation and budget being defined in the system. SAP has quantified the decision making process for the management and has provided the information across the board, thus making the functioning transparent while eliminating inefficiencies of the system. Shah summarises the benefits as: “It provides us better control on operations. From top management perspective it provides better monitoring, better reporting of different locations. We implemented SAP three months back and it is too early to comment on the direct value benefit of implementation however now all the processes are managed online and in real-time which are the biggest benefits for us.”
The implementation of SAP at Neptune is a testimony to how organisations can leverage SAP at an early stage. The Neptune management is very confident that SAP implementation is going to be a great success and are 100% committed to the adoption of SAP throughout the organisation. Their advice is to go for the world-class enterprise software rather than local software as SAP provides better control over systems and processes while increasing efficiency. They also advise to go with an implementation partner who has good industry knowledge.
Key benefits of world-class ERP for growing organisations
• Comprehensive enterprise-wide solution supportive of organisational growth
• Ensures discipline in day-to-day working
• Working in ERP environment from early stage ensures culture of collaborative working rather than working in silos
• While defining the processes, they are aligned to ERP environment.
• A world-class ERP ensures process alignment to the global best practices
• Better control over cost and schedule
• From top management perspective provides better monitoring and reporting
• Increases efficiency of operations and responsiveness to customer needs
• User adoption of ERP is much easier in younger organisations.
Satish Pendse works as the chief information officer for Hindustan Construction Company (HCC), which has started offering IT services to the infrastructure industry. This also includes implementation of the tendering & estimation software. Through this column in Construction Week India, the author brings out the increasing significance of Information Technology in the construction industry. He can be reached on email@example.com