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Unit 13: Case Study – ERP SAP Implementation

quicker and reliable trend analysis for efficient decision-making. Besides, the streamlined notes
business process reduces the levels of legacy system and also provides consistent business
practices across locations and excellent audit trail of all transactions.
“Post the introduction of the SAP solution, the results have been terrific. The company has
spent close to ` 40 crores on SAP implementation, and has already saved ` 33 crores,” said
Mr. Ramesh C. Nadrajog, Vice President (Finance). The manpower cost has reduced from
over $ 200 per ton two years ago, to about $140 per ton in 2000. The overdue outstanding
has been brought down from ` 5170 millions in 1999 to ` 4033 millions by June 2000. The
inventory carrying cost has drastically deflated from ` 190 per ton to ` 155 per ton. To add
to this, there have been significant costs savings through management of resources with
the implementation of SAP.

With SAP’s solution Tata Steel can now update their customers on a daily basis and provide
seamless services across the country improving customer management. The availability of
online information has facilitated quicker and reliable trend analysis for efficient decision-
making. Besides the streamlined business process reduces the levels of legacy system and
also provides consistent business practices across locations and excellent audit trail of all
transactions. “Now I shudder to think how we were functioning so many years without
a world-renowned ERP system. Along with the hard times we had, came the rewards of
the success of implementation,” remarked Mr. K. V. Srinivasan, Member, Team ASSET at
TISCO.

achieving Business agility through sap
Marching ahead, Web enabling of SAP R/3 is on the cards. On the surface, it means it would
allow anyone to access our SAP R/3 over the Internet. But beneath it, the implications
are tremendous, as it would result in sharing of information with enterprise accounts and
key customers. The success in Marketing and Sales has prompted a re-visit of the existing
system in the works and a detailed rollout is expected as below.
1. Phase I: To Extend SAP in Works with FI, CO, MM, PP & QM
2. Phase II: To implement SAP modules such as Asset Management & Budget
management sub-modules of FICO, Plant maintenance, Human Resources,
Production Optimizer (such as SAP APO)
3. Phase III: SEM (Strategic Enterprise Management)
The company also plans to adopt the mySAP Customer Relationship Management solution
to enhance its customer relationships in the near term and eventually realize its dream of a
becoming the most efficient and competitive company in the world in its vertical.

Questions
1. The cost-cutting measures seemed to have helped TISCO to a large extent. Apart
from TOP, what are the other steps taken by TISCO for reducing costs?

2. The lowered production costs enabled TISCO to record a profit during 1999-2000,
despite a depressed market and low margins. Do you think the low costs would help
the company in the long run?

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