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Benefits Of Enterprise Resource Planning In Bharat Electronics Methodology Example

Management is term which has numerous definitions according to the circumstances based on which it is defined. Even though the widely accepted definition is ‘getting things done’; how and when are depended upon the management theory applied in the process of getting things done. The essential of all management theories is the communication. Communication between the employer and the employees, between the employer and the employer, between the employee and the environment and between the employer and the environment are very important for every firm to exist and survive. Many new firms entered into the international market and there began the stringent competition among the multinational giants in the beginning of 20th century. The monopoly of many firms was questioned and the customers began to choose the products which they believed to be best suited for needs and wants which paved the way to a customer driven market. In the fourth quarter of the 20th century many firms have changed their marketing and production strategies so that existing customers can be retained and new customers can be attracted. (Francis. 2005)

In the course of time every firm realised the fact that external environments as well as internal environments have equal importance in the competitive strategy. In order to have an understanding over both environments communication channels have to be established. The marketing department is responsible for the marketing of the product and services for that the department has to analyse the needs and wants, new trends and the potential customer groups in the target market. When this external data is gathered it has to be communicated to the relevant departments of the firm so that the products can be manufactured without any delay. To gather information from the internal sources as well as the external sources different communication channels have to be established; many of these channels were proved to be ineffective in communicating the information on time. (Francis. 2005)

Enterprise Resource Planning (ERP), came in 1960s as panache for the communication problem. ERP is not a management theory or a concept but it is a set of software which improves the communication channel in such a way that all the departments of a firm can be integrated. ERP integrates all the departments to a single communication system so that the information loaded in any one of the data centre can be retrieved from other nodes as well as the communication can be sent directly to the destination directly without any delay. (Mandal & Gunasekaran, 2002)

The concept behind the Enterprise Resource Planning (ERP) is worth appreciating but it has been observed in 2000 that the success rate of ERP is only 10%; this is a disturbing figure and many studies have been revealed the bitter truth that many firms can not adjust with situation created by the ERP implementation. To integrate entire departments of a firm requires a lot of home work known as pre-installation procedure; in this procedure the firm has to make a thorough analysis of the needs of the ERP implementation. The staffs have to be trained to operate the software system and all these processes are continuous in nature, in other words, even after the implementation through analysis is required to find out the effectiveness of the implementation and the staffs should be trained time to time to enhance the efficiency. (Mandal & Gunasekaran, 2002)

The proposed study is to analyse the implementation process of the Enterprise Resource Planning (ERP) in one of the major public sector firm in India, Bharat Electronics Limited. ERP implementation has been taking place in BEL since 2004. It also the purpose of the proposed study is to analyse the problems that the firm had to face and the steps to solve the problems. The study will evaluate the effectiveness of the ERP in BEL and intend to suggest the remedial measures to enhance the effectiveness.

01.02 Background and Justification of the study

01.02 Background of the study

Bharat Electronics Limited (BEL) is a major public sector company in India. The majority of the stocks are with the government of India. This company was established in 1954 with an aim to achieve self sufficiency in the technological development. Major customers of BEL are defence forces of India and other public sector companies. It was the intention of the government of India to form a company which satisfies the technological needs of the various branches of defence forces of India such as Army, Navy, Air-force, State police and other boarder security forces. The customers require high quality products with latest technology at an affordable rate. The delivery time will be short and the production will be huge and it is the speciality of BEL to satisfy its customers with their quality products on time. (Profile of the Company, 2010)

The company is required to maintaining quality standards in its all products, the customers such as the defence forces have very tough quality standards and failing which will result in the rejection of entire consignment. BEL has a wide range of products from simple to complex electronic equipments according to the requirements of the defence forces. The main challenge that BEL faces is the requirement of updated technology and the adaptability of the products in the defence forces. In order to have state of art technologies BEL has an extensive Research and Development facilities in its 08 units situated at various parts of the country. (Stanley, 2009)

R&D of BEL requires billions of Indian rupees and a minor portion of the sum is paid by the government of India and the lion share is from BEL itself, this requires the firm to focus on needs of the customers and provide them the high tech products with value addition. Once an order is placed by the customers BEL analyses it thoroughly and understands the requirements clearly then the product is designed and delivered. Since the major customer is the defence forces, there is no hard core sale function for the company. (Stanley, 2009)

In 1991, the government of India took the historical decision to open its market for foreign direct investment and adopted a liberalisation policy in its economic affairs because of this developments BEL has been facing tough competition from foreign firm who can deliver similar products to their existing customers. The other threat it faces is the integration of the eight units around the country for the R&D. The product design and testing requires the supervision many departments and without coordination the above functions cannot be fulfilled. Keeping this in mind the company decided to implement ERP so that the entire firm can be integrated and various function of the each unit can be collectively or separately controlled. (Profile of the Company, 2010)

01.02.02 Justification of the study

The main purpose of every firm is to generate income, in other words, profit and it is also called as shareholders asset so it can be rephrased as ‘To enhance the shareholder’s asset is the sole purpose of every firm’. This aim to increase the profit/ shareholder’s asset is not an easy task particularly in the era of toughest competition in the domestic as well as international market. Those firms who have a strong corporate strategy can survive for a while but have to be vigilant with changes in the market and should be flexible to adapt the new trends in the market so that a dynamic corporate strategy can be maintained. To have an effective and efficient corporative strategy every firm has to analyse the internal as well as the external environment to find out the strength, weakness, opportunity and threat. (Francis. 2005)

The external environment cannot be controlled by the firm but the internal environment can be controlled and it is the usual practise around the world to control the internal environment to cope with the external one. The integration of various functions of a firm is required for an effective and efficient functioning and without having a strong purpose to integrate the functions would be disastrous rather than beneficial. Enterprise Resource Planning (ERP) is a software which helps to integrate the various departments of any institution to have an improved performance but there are both good and bad side to the ERP implementation.

The good and bad side of implementation does not mean the software has some fault but it does mean that fault may be with the approach of the entire firm to the Enterprise Resource Planning (ERP). The ERP installation requires fundamental changes in the functioning of a firm after the installation the entire internal environment will be changed and the firm should be ready to accept this change. Without the clear vision and objectives to transform the firm from a time consuming and static firm to a faster reacting and dynamic one will be a disaster. (Mandal & Gunasekaran, 2002)

It has been observed in various studies in 2000 that the success rate of ERP is only 10%, in other words, in 90% cases the firm could not reap the benefits of this revolutionary software package. Further studies showed that there were many problems within the firm itself which made the entire ERP installation in to a failure such a lack of cooperation from the staff, lack of training in the new software, management philosophies, defective change management, bureaucratic approach in the management process, and lack of up-gradation...etc. (Mandal & Gunasekaran, 2002)

Bharat Electronics Ltd (BEL) is a typical public sector company and the management have a bureaucratic approach in every affairs of the firm. The number of documents to be recorded for any action is sometimes 10 times greater than that of in a private firm. The lack of cooperation from various departments as well as various units posed serious threat in the production of high-tech defence equipments. And in 2002 the government appointed an independent agency to look in to the matter and it was proposed by this firm for the installation of ERP in every unit by 2006. The annual reports from 2005 to 2008 shows the gradual increase in the income level and gradual decrease in the expenditure. But according to the audit report of BEL, by the governmental agency which is submitted in 2009 to the ministry of defence, criticised the entire installation process and pointed out many problems such as the incomplete installation, lack of training, lack of up-gradation, rigid management procedure and it was also pointed out that the firm has failed utterly in using the benefits of ERP installation and the rate of growth achieved was not all at par with the predicted and expected rate of growth. (Comptroller and Auditor General of India, 2009)

In this proposed study, the research will analyse all the aspects of ERP in BEL, the various problem it has faced and facing will be carefully analysed to devise a strategy to solve it. The potential benefits of new system will be analysed on the basis of the market strength and chances for growth. The typical management style of the management in BEL will be studied to understand the shortfalls in the system. The training procedure and the duration will be analysed to understand the up-gradation process of the firm. In nutshell the proposed study intends to analyse the entire aspect of Enterprise Resource Planning (ERP) on the perspective of Bharat Electronics Ltd (BEL)

01.02.03 Aim

The aim of the proposed study is to critically analyse the implementation process of Enterprise Resource Planning (ERP) software and to analyse the various hurdles that has to be overcome before the installation process in Bharat Electronics Ltd (BEL). The proposed study focuses on various aspects of the company such as the management style, IT policy, attitude of the staffs, the change management...etc.

01.02.04 Primary Objectives of the Study

1. To evaluate the Enterprise Resource Planning (ERP) system on general perspective

2. To examine the benefits of ERP

3. To study the different phases involved in Enterprise Resource Planning (ERP) implementation process.

4. To examine the benefits of ERP from the perspective of Bharat Electronics Ltd (BEL)

5. To understand the different phases involved in the ERP implementation in BEL

6. To have a deeper understanding on the various problems that BEL faced during ERP implementation process

7. To examine the impact of ERP system on the e-Business of BEL

01.02.05 Research questions

The following questions are considered for the proposed study.

1. What is Enterprise Resource Planning (ERP) system?

2. What are the benefits of ERP?

3. What are the different phases involved in Enterprise Resource Planning (ERP) implementation process?

4. What led the management to implement the ERP in BEL?

5. What are the benefits of ERP from the perspective of Bharat Electronics Ltd (BEL)?

6. What are the different phases involved in the ERP implementation in BEL?

7. What are the various problems that BEL faced during ERP implementation process?

8 What are impacts of ERP system on the e-Business of BEL?

02. Research method and Approach

02.01 Introduction

The proposed study aims to understand the implementation of Enterprise Resource Planning (ERP) in Bharat Electronics Ltd (BEL). The objectives include the analysis of various phases of installation and the hurdles faced by the firm. The Enterprise Resource Planning (ERP) is package of software, which are customised according to the requirements of the firm in which it is installed. In the case of BEL the ERP software is customised one and the installation phases will change according to the customisation process. The research methodology is adopted to critically understand these customised installation phases and the hurdles in it. The research methods are adopted to have a strong theoretical background as well as to understand the factual details of the BEL.

02.02 Research Methodology of the study

Methodology means a set of methods adopted to reach an objective. Research methodology acts a route map for the researcher to navigate the research in the right path. The set of methods which are designed to understand each aspect of the research will guide the researcher to fulfil objectives of the research. According to the requirements of the research there are various research methods and the researcher can take anyone or a combination of research methods to reach a valid conclusion. (Kothari, 2002)

02.02.01 Explorative Research

It is widely used research method around the world. Both scientific as well as social science researches are using this method extensively. As the name indicates through these methods the research will explore the data about the subject matter of the study. The subject matter may require literature review, field experiments, interview and questionnaire and other methods to gather information and increase the knowledge level on it. (Kumar, 2005)

In this proposed study the theoretical aspects of ERP have great importance and to gather information about these explorative research methods such as literature review and interviews will be done extensively. The nature of the ERP software is that it is being up-graded on daily basis. No two firms use the same ERP packages in the same way, it differs according to the requirements of them and these new experiments will provide new knowledge base to the world. So it is mandatory to have updated information about the ERP. The circumstance of BEL is also changing continuously and the changed circumstance will require new decisions and application of ERP. In order to understand these two aspects of the research the Explorative method is very useful and through this methodology updated data on ERP and BEL can be gathered.

02.02.02 Constructive research

This method is often used in social science research and rarely in scientific researches because; in science such as physics and chemistry the research result should be applicable at any part of the world under the similar circumstances. The similar circumstances can be easily created in a science lab. But in the case of social science subjects the matter under the research will be on a characterises of human interactions and these behavioural pattern is solely depended on various factors such as social, cultural, economic, political and other demographic aspects. So it is obvious there are no similar circumstances in social science but there is only circumstance with certain factors and the result of any two researches will be different according the factors considering. (Malhotra, 2008)

The proposed study will be done on Bharat Electronics Ltd (BEL), which is a public sector undertaking. The management style is entirely different form a privet sector firm. The nature of products of BEL is such that the details of the products cannot always be published or even advertised and this aspect of the firm requires strict supervision from the government of India and the procedure to do anything will require documentation and an extensive file system to store these documentations. The ERP installation is also customised according to the needs of the BEL. The products are sold to defence forces and the quality criteria has to be met as well as the delivery should be made on time. The ERP is designed to meet these challenges as well as to support the innovation of new Technology and equipments for the defence forces.

02.03 Method of the study

The proposed study requires detailed data on the ERP and BE, in order to get these data the research will adopt following method of data collection. The Primary data collection and the secondary data collection methods, in this research both data have equal importance because ERP has to be studies prior to the research and the details of the customised process of installation of ERP in BEL is also necessary to conduct a good research to reach a valid conclusion.

03.03.01 Primary Data

Primary data means the fresh data collected directly from the sample in a survey. Primary data has great importance as it gives fresh and updated information on the subject. But it has to be done carefully and the sample has to be chosen according to the established norms of statistics. Large number of sample may not give accurate data and small number of sample does not always represent the entire population under study. (Kothari, 2002)

In this proposed research the primary data will be collected through interview method. The official of the BEL will be send a set of questionnaire to answer and it will be collected back after a time period of 15 day. If there is any doubt or unclear answers it will be cleared though telephonic interview or though online chatting. The conversation will be recorded so that it can be retrieved at any time.

02.03.02 Secondary data

Secondary data means the second hand information available through various written sources such as books, articles, online journals and websites. These data are called secondary data because it was collected or gathered by a person or persons for any other purpose and researcher can use it as a reference to validate his claims in the research. (Robsons, 2002)

In this proposed study, the secondary data has great significance as the application of ERP software and the user interface are being changed continuously. New plug-in are invented on daily basis to meet the various challenges in the implementation process as well as to customise the software according to the requirements. So it is a mandatory to search the updated information about ERP to do justice with the research. The relevant data regarding the BEL will be required to understand the need for customisation process and the effectiveness of the ERP in BEL. For all these purposes, relevant literature such as the text books, articles, websites, online journals....etc will be used.

02.04 Data analysis

The data analysis will be done to reach a valid conclusion. The authenticity of the conclusion is depended on the use of primary and secondary data together. The primary data will be collected through questionnaire and direct open end interview. Since there is no closed end question with options such as Likert scale, there will not be any analysis of the questionnaire on the basis of statistical methods such as variance analysis or correlation or regression analysis.

02.05 Gnatt Chart

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