SAP as a business tool
When Ahmedabad based Montecarlo Constructions needed a rugged software to integrate its business functions, HCC helped it with SAP. Satish Pendse writes how
During the last issue, I had written about importance of world-class ERP such as SAP for a construction organisation.
The key advantage is the availability of single set of figures giving end-to-end view of the business in an on-line, real-time manner. There are organisations in the Indian construction industry that have a profound vision and have a well drawn roadmap to achieve the same. Ahmedabad based M/s Montecarlo Constructions is one such organisation. Let’s discuss their SAP implementation.
M/s Montecarlo Construction was incorporated in the year 1995 and has worked on many construction projects in the road, irrigation and mining sectors, in various states across the country including Madhya Pradesh, Gujarat and Maharashtra.
Today, Montecarlo is experiencing a rapid growth and hence a need is felt to have a strong and rugged software that integrates its business functions. Real-time reliable data of business operations will facilitate this firm to closely monitor the projects and drive timely and cost-effective execution. Mrunalbhai Patel, the young and dynamic joint managing director took up the challenge upon himself. Montecarlo was using local ERP solution earlier. “The local ERP solution was catering to our inventory management and accounting in a reasonable manner; however it was not providing costing or project management information,” Patel says.
“After careful evaluation of the available options, we selected SAP as I found SAP to be extremely user-friendly. It’s like fill-in-the-blanks,” claims Patel. He is quick to point out that in the small & medium enterprises (SME) segment the human dependency is quite high and SAP implementation is expected to reduce the said dependency, which is a strategic advantage. Montecarlo found that SAP will help them to improve resources utilisation, reduce inventory and also meet various statutory obligations.
Montecarlo treated the SAP implementation as a business project and not an IT project; this philosophy is reflected everywhere. Accordingly, they selected Hindustan Construction Company (HCC) and not any typical IT company as the implementation partner.
Patel justifies the same: “HCC is a big player in the construction field and hence the company has domain knowledge of this business. Unlike in the case of typical IT organisation, we did not have to tell HCC the ‘as-is’ processes. HCC has a good understanding of all aspects before coming to Montecarlo. Our partner also understands the issues of the construction industry and the possible ways to handle them in SAP.” Patel is quite happy about his choice. The Montecarlo implementation happened within four months.
“Change management is the most critical challenge,” claims Patel. Years of established practices get questioned while implementing SAP and that is the intent too. However any change is never easy to accept. ‘Patience’ is Patel’s mantra to achieve a lasting change. This change is an evolution and not the revolution. He gave an example of one of Montecarlo’s projects that had three logical units. Prior to SAP implementation, they were viewed it as three separate projects.
Now the company took a conscious decision to treat them as one single project in SAP. This had an impact on how inventory management, accounting, equipment management and so on were done. Of course, a lot of patience and convincing was required before the same got accepted.
Patel attributes the success of SAP implementation to two factors. Firstly, both Montecarlo and the implementation partner treated it as a construction business project. “We treated SAP not as an IT tool but as a business tool, just like equipment or manpower,” says Patel. Secondly the clear and visible commitment by the top Management was critical for the success. The joint MD sponsored the project and was actively involved at various stages. The CMD too demonstrated his commitment from time to time.
Today, Patel has high expectations from the SAP implementation. “We will easily be able to manage at least double the number of projects simultaneously,” he explains. “Unlike in the past, the top management need not spend its time in gathering information and verifying the accuracy. It can be assured of timely and accurate reports. The same time can now be spent for business development. Decision making too will improve since the information will be more accurate and timely.”
Initially, Montecarlo had a concern regarding availability of trained manpower at remote locations to feed-in data into SAP. As the principle of garbage-in-garbage-out is applicable, the incorrect data is obviously going to result into incorrect information. Today, however the concern is no longer valid. The new breed is IT savvy.
Many of the industries including the SME segment have now adopted SAP as a part of their business infrastructure. One therefore gets people who have at least some experience of SAP based working. In the beginning, there was a concern about connectivity from remote project locations. The post implementation experience however has been quite satisfying for the company.
Based on his experience, Patel strongly recommends SAP for construction industry for large as well as SME enterprises due the following reasons:
1. Timely and accurate information about the entire business leading to faster and better decisions.
2. Reduced dependency on human resource.
3. Control of management costs. We have less control over material costs; however we can certainly control management costs using tools like SAP.
4. Useful while filling tenders for new projects
5. Control over various costs leading to improved profitability.