A

PROJECT REPORT

ON

SUMMER TRAINING

UNDERTAKING AT

PANASONIC BATTERY INDIA CO. LTD.

VADODARA

SUBMITTED TO

SEMCOM

IN PARTIAL FULFILMENT

OF

BBA (ITM)

BY
BHAVIKA A. SHETH
ROLL NO:-09

PREFACE

BBA-ITM (Bachelor of Business

Administration with Information
Technology and Management) is an exposure to the practical side of the

1
business world. It involves both theoretical and practical training of
management and administration to the student.

The main motto of summer training is to create a bird’s view for

business administration. We get to know the exact functioning of the various
departments i.e. PRODUCTION, FINANCE, MARKETING, HRM, R&D,
etc. During my training, I observed that the practical training has a great
importance along with a theoretical Knowledge provided in four walls of
classroom.

I as a student have tried my level best to understand the working.

BHAVIKA SHETH

2
 ACKNOWLEDGEMENT

I would like to express my sincere thanks to all those who have guided me
throughout the training.

I am also grateful to all the staff members of the company for helping me
and guiding me throughout the training. I also thank to PANASONIC
BATTERY INDIA CO. LTD. For giving me all the co-operation that I
needed by providing me all the information.

I would like to thank my principal Dr. NIKHIL ZAVERI. I also extend my

deep regards to my various teachers for providing me guidelines about how
to undergo on summer training and for guiding and help me throughout in
preparation of this report.

I also express my sincere thanks to Mr. A.C.SHAH head of Finance

Department, Mr. MAYANK VAISHNAV head of IT Department Mr.
S.P.PAREKH manager- Personnel and Mr. R.N.Bhatt for helping me.

BHAVIKA SHETH

3
 HISTIRY & GROWTH OF THE COMPANY

Lt. Mr. K. Matsushita

India's former Prime Minister Late Mrs. Indira Gandhi when visited Japan, she was
highly impressed by the business policy of Late Mr. Konu Suke Matsushita. It was
then decided to set up a dry cell battery unit in technical & financial collaboration
with Matsushita Electric Industrial Company Limited, Japan, who were world leaders
in this field.

The incorporation of the company took place on 24th May 1972.

Late Mr. D. D. Lakhanpal, the founder of the Panasonic Battery India Co. Limited
formerly Matsushita Lakhanpal Battery India Limited & Mr. Konu Suke Matsushita
laid the foundation stone of the Matsushita Battery India Limited, on 15th August
1972 at G. I. D. C. Makarpura Industrial Estate, Vadodara.

The building work & installation of the machinery from Japan was undertaken rapidly
& the production commenced from 2nd July 1973 with metal jacketed cell in Hyper
Grade in UM-1 & UM-2 segments. On 1st October 1973 PBICL formerly MLBI,
Vadodara introduced Hi-Top grade performance cell for the first time in India & on 1st
January 1976 it introduced paper jacketed "SPECIAL" cells. Since then the company
has progressed between ups & downs by sincere efforts of management & employees
and the future has been paved for higher achievements.

4
 BACKGROUND OF THE COMPANY

Our Profile
Name: Panasonic Battery India Co. Limited
Registered Office: G.I.D.C., Makarpura,
P.B. No.719,
Vadodara - 390 010.
Gujarat, India.
Phone: +91 265 642661-62, 643137, 643643
Fax: +91 265 644525, 647026
Email: [email protected]
Cable: NOVINO Vadodara
Incorporation: May 24th 1972
Capital: 7.5 Crores
Chairman: Mr. Ajai K. Lakhanpal
Managing
Mr. Y. Sato
Director:
No. of
973
Employees:
Vadodara (Gujarat)
G.I.D.C., Makarpura,
Works: P.B. No.719,
Vadodara - 390 010.
Gujarat, India.
Pithampur (Madhya Pradesh)
Plot No. 112, Sector III,
Pithampur Industrial Area,
Dist.: Dhar (M.P.)

5
 Panasonic Battery India Co. Limited formerly Matsushita Lakhanpal Battery India
Ltd., has a very simple and systematic philosophy. It has been clearly defined to all
employees of the organization. The main vital philosophy of the organization is “To
Make People before Product". This philosophy has been supported and
implemented by all the employees from top level to lower management in the
organization. The logic behind this philosophy is to achieve organizational goals and
objectives.

The main basic management objective of the company is “To Contribute to the Society ".
Therefore, in order to achieve above said objective, the company has its own creed and
principles.

The major business of Panasonic Battery India Co. Ltd. is:-

 Manufacturer and sales of batteries and batteries appliance.

 Manufacturer and sales of battery component parts and machinery spare parts.
 Manufacturer and sales of separator for dry batteries.

Achievements & Awards:

• ISO – 9001 Certification

o Quality Policy
• ISO – 14001 Certification (EMS)
o Environment Policy
• Export Awards
• Gold Medal in International Technical Skill Competition

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OUR AIM:

“Our aim is to supply portable source of energy and its

related products, thus contributing to the betterment of society,
not only in India but throughout the world.”

 NOVINO was the first to introduce Top seal in India for batteries to
ensure Tamper-free cells.

 NOVINO was first to mention Manufacturing Date in India to indicate

the freshness of the cells.

 NOVINO was the first to use Zinc Chloride technology in India, that set
the industry standard for others to follow.

 NOVINO was the first to make environment friendly batteries in India-

thus contributing to the conservation of the environment.

 NOVINO was the first to mention ‘Best use before’ Date in India, on
Batteries for the benefit of the consumers.

 NOVINO was the first Asian Dry Manufacturing Company to get

ISO 9001 certification.

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 PRODUCT PROFILE

NOVINO is a major manufacturer of Batteries and Torches.

The major appliances are:
 Novino Goldlite
 Novino Flash
 Novino Ujala
 Novino Roshni

NOVINO GOLDLITE & GOLDLITE JR.

Specifications:

Bulb: FF-134:3.6 volts; 0.5 Amps.

Battery: FF-134: 3 x R-20 batteries.
Bulb: FF-124:2.4 volts; 0.5 Amps.
Battery: FF-124: 2 x R-20 batteries.
FF-124
Highlights:

The body is made from engineering plastics to lend it sturdiness and durability. The
barrel surface is specially designed to ensure firm grip. The Unique rotary switch can be
operated simply by holding the barrel of the torch.

Applications:

NOVINO GOLDLITE torches provide long and short range illumination through its
specially designed reflectors and lens. They can serve as ideal accessory for the traveling
executive, doctors, officer on duty, business man and to everyone at home. Both the
Novino Goldlite models can also serve as an ideal gift items.

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 NOVINO FLASH

Specifications:

Bulb: 4.8 volts; 0.5 Amps.

Battery: 4 x R-20 batteries.

BF-104
Highlights:

It has a strong polypropylene body with a wide diameter vacuum metallised reflector,
Silver and Nickel coated special contact points. A heavy duty switch with rubber cap
ensures reliable operation. It is designed for comfortable and excellent grip & gives
more powerful light beam as compared to conventional torches.

Applications:

NOVINO Flashlight is an ideal companion for farmers, industrial security guards and
policemen on night duty. Highly useful for outdoor activities like long distance motoring
trips, outdoor camping, hiking, sailing or fishing.

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 NOVINO UJALA

Specifications:

Bulb: FF-308:2.5 volts; 0.5 Amps.

Battery: FF-308: 2 x R-6 batteries.
Bulb: BF-100:2.5 volts; 0.5 Amps.
Battery: BF-100: 2 x R-20 batteries.

Highlights:

• Super tough polypropylene casing.

• Smooth action switch.
• Tarnish-proof, diamond cut reflector.
• Available in Red, yellow & blue in BF-100 and Red & Blue in FF-308 model.

Applications:

NOVINO UJALA provides long and short range illumination through its specially
designed reflectors and lens. They can serve as ideal accessory for the traveling
executive, doctors, officer on duty, business man and to everyone at home. Both the
Novino Ujala models can also serve as an ideal gift items.

10
 NOVINO ROSHNI

Specifications:

Bulb: BF-102: 2.4 volts; 0.5 Amps.

Battery: 2 x R-20 batteries.
Bulb: BF-103: 3.6 volts; 0.5 Amps.
Battery: 3 x R-20 batteries.

Highlights:

• Super tough polypropylene casing

• Tarnish-proof, diamond-cut reflector for the first time in India.
• New Smooth action switch.
• Available in Red & green.

Applications:

NOVINO ROSHNI is an ideal companion for farmers, industrial security guards and
policemen on night duty. Highly useful for outdoor activities like long distance motoring
trips, outdoor camping, hiking, sailing or fishing.

11
 Panasonic Battery India Co. Limited, NOVINO offers a variety of
primary Zn-C as given below:

Battery Nominal
Application Type Product
Designation Voltage
Leclanche
General
(Paste 1.5 V
Purpose
lined)
NOVINO
NOVINO
HYPER
SPECIAL
R20/UM-1/D
Zinc
Heavy Duty Chloride 1.5 V

NOVINO
SUMO

Leclanche
General
(Paste 1.5 V
Purpose
lined)
R14/UM-2/C
NOVINO
HYPER

Zinc
General
Chloride 1.5 V
Purpose

NOVINO
HYPER
Zinc
Chloride 1.5 V

R6/UM-3/AA NOVINO NOVINO

SUMO GOLD

Zinc
Chloride 1.5 V

NOVINO PREMIUM GOLD

(Metal cladd) No mercury and
cadmium added

12
 DRY CELL QUALITY CHARACTERISTICS

Any dry cell should be judged on the basis of following characteristics:

1. SERVICE LIFE:

It is the duration for which a cell lasts in equipment. Novino cells give much
higher service life compared to ISI specifications.

2. STORAGE LIFE:

Also called shelf life, it is the period during which deterioration takes place
in cell's quality characteristics. Novino guarantees maximum storage life, for its
products. Novino Special (1P) has 18 months storage life. Novino Sumo & Novino Hyper
(1S, 3S, 1U, 2U & 3U) have 24 months storage life and Novino Gold & Novino Premium
Gold (3DG & 3NE) have 36 months storage life.

3. LEAK PROOFING:

Oozing out of leakage or chemicals from inside the cell is called leakage.
Novino guarantees leakage upto 0.6 C. V. in case of Hyper (1U, 2U & 3U) and 0.5 C. V.
in case of Gold & Sumo (3DG, 1S, 3S & 3NE).

4. USABILITY IN DIFFERENT CLIMATIC CONDITIONS:

Novino can be used in most of the climatic conditions of the country.

5. CONSISTENT QUALITY:

Fully automatic production machinery and thoroughly tested materials

ensure consistent quality of Novino dry cells.

13
 USEFUL DO’S AND DON’TS FOR DRY CELLS

1) Do not throw a dry cell in fire. It may explode.

2) Do not re-charge dry cell, it may leak or explode.

3) Do not use new and "used" dry cells at the same time, the "used" one may leak.

4) Do not put cells in reverse polarity i.e. always see that -ve (-) of one cell torches
the +ve (+) of the other cell.

5) Do switch off the appliances if not in use. Re-check that the appliance is switched
off.

6) Do use only heavy duty cells like Gold & Sumo (3DG, 1S, 3S & 3NE) in heavy
drain equipment's like two-in-one, tape recorder, walkman, camera etc. and use
multi-purpose cells like Hyper & Special (1P, 1U, 2U & 3U) in equipment's like
transistor, torch, etc.

14
 ORGANIZATION STRUCTURE OF THESE AREAS
The Vadodara site operations are headed by a Managing Director who is overall site in
charge for all operations. Below Managing Director’s position, there are 3 Executive
Directors for 3 major functioning areas. One Executive Director is responsible for
commercial functions like Finance, Personnel & Materials functioning. The other
Executive Director is mainly responsible for the Marketing functions & the third
Executive Director is mainly responsible for Project & Plant activities.

Below all the above Executive Directors, there are various hierarchical positions to take
care of the routinous / operational activities for smooth functioning of their areas of
activities.

For easy understanding, I have attached below an organization structure of the company
for the overall functioning of the organization.

15
 ORGANIZATION CHART

MANAGING
DIRECTOR

EXECUTIVE EXECUTIVE EXECUTIVE

DIRECTOR DIRECTOR DIRECTOR
(FINANCE / PERSONNEL) (MARKETING) (PROJECT / PLANNING)

GENERAL GENERAL GENERAL

MANAGER MANAGER MANAGER

DEPUTY DEPUTY DEPUTY

GENERAL MANAGER GENERAL MANAGER GENERAL MANAGER

MANAGER MANAGER MANAGER

OFFICER OFFICER OFFICER

SUPERVISORS SUPERVISORS SUPERVISORS

ASSISTANTS ASSISTANTS WORKERS

16
 FUNCTION AREAS OF SPECIALIZATION

The overall functioning of the various departmental activities are described as

below:

a) Finance Department:

The finance department is mainly responsible for arranging overall working

capital requirement & its allocation to the respective head of expenditure. The finance
department in consultation with production planning department & projecting, works out
a total funds requirement & allocate the funds as per the requirements. This department
also co-ordinates with marketing department for sales accounting & payment collection
jobs. There are various legal, taxation & octroi matters which are taken care by the
finance department.

b) Marketing Department:

The function of the marketing department is to sell the finished products &
generate revenue for the organization. This department is mainly responsible for the
development of new customers & generates finished product demand through proper
sales planning. This sales planning period are informed to production department to
enable them to plan throughout production accordingly for enhancement of sales & to
achieve sales targets, there are various sales promotion schemes being introduced for
increasing the sales.

17
 c) Materials Department:

The main function of Materials department is proper planning of the incoming

materials based on the production planning figures or raw materials & packing material
planning is prepared & the procurement is accordingly done. Materials department has
to make sure that all the required raw packing, engineering & various other materials
are made available in time & ensure no production stoppages. There are various import
activities taking place for certain raw materials & all the import planning activities are
taken care by the materials department.

d) Technical Department:

The Technical department is mainly responsible for providing support to

production department for improvement in the quality of finished goods. They are also
responsible for the development of new products for cost reduction & also launching of
new technological products in the market.

e) Personnel Department:

Personnel department is mainly responsible for lasing activities with various

government officers & also to ensure compliance of labour loss. There are various
welfare activities being organized by the personnel department for the employees & their
families. All the payroll, time management & release of employees salary on time is also
one of the major responsibilities of personnel department. All the manpower requirement
of various departments is coordinated by personnel department & accordingly the
recruitment of desired manpower is taken care by personnel department.

18
 f) Production Department:

In any organization, production department is considered to be the core function

& basically it is a department which is called as the “Heart of the Organization”.
Various functions like finance, materials, technical & personnel are known as the
“Service Departments” to make sure that the production department is fully cooperated
& thereby achieve the highest level of production. The major responsibility of production
department is to make a production plan on the basis of sales plan which they get from
the marketing department. They also coordinate with materials for timely supplies of
incoming materials, personnel department for manpower requirement, technical
department for quality support & sales department for on time supply of finished
products to customers. It is also the prime responsibility of production department to
coordinate with maintenance scheme for proper condition of the equipments &
machinery to get the maximum production outputs.

19
HOW THESE AREAS ARE INTEGRATING WITH
THE OVERALL ORGANIZATION SET UP

The major means through which the communication between the various
departments is carried out are:

 Internet
 Intranet
 Telephones
Etc.

20
SOMETHING MORE ABOUT THE PROFILE AND THE ACTIVITIES
UNDERTAKEN BY
NOVINO

THE SITE INTRODUCTION:

The company was incorporated on 24th May, 1972 with the objective to manufacture and
market dry cell batteries and to carry out allied business. The company manufactures dry
batteries with Novino brand in domestic market. Matsushita Lakhanpal Battery India
Limited, has effectively implemented the Environment Management System at both the
plants since December 1997 and has received ISO 14001 Certificate from TUV India P.
Ltd. MLBI is continuously striving for the improvement in environmental performance
by way of developing ECO friendly product and creating awareness in employees.
Environment Compliance Office is formed in co-ordination with environment
performance committees like Energy Conservation, Wastage Control, and Fire Fighting
& Safety Committee etc. MLBI, Pithampur has received the award in the state level
competetition organized by Confederation of Indian Industry for the excellence in
maintaining good Environment, Safety& Health activities. MLBI also received award
from MEI in 1997 for developing technology in treating effluent for Zinc.
Matsushita Group Site report 2005
FY2005 :April 1, 2004 - March 31, 2005

FY 2005 ENVIRONMENTAL ACTIVITIES:

MLBI has carried out various environmental activities in the year2004-05. Installation of
sewage treatment plant for housing complex at Pithampur plant. CO2 emission has been
reduced by 7.3 % (compared to FY 2000). One of the activities for reducing the
electricity consumption was "Save Air system" at the Vadodara unit. Other activities
were PL lighting and replacement of electric chokes in the tube lights by electronic
ballasts. Water consumption has been reduced by 12.12 % (compared to FY 2000) due to
replacement of bib cock by push cock & control of water at toilet. Rejection has been
reduced by 39 % (compared to FY 2000). Trials were carried out to develope Mercury-
free product in paste type batteries. Extensive Tree plantation was also carried out at both
the plants. Training & awareness programme for Environment up gradation & social
campaigns is conducted for waste consignee, sub-contractors and for employees. "Novino
Premium Gold" launched in year 1999 & same is still maintained as Eco-friendly
product.

21
POLICY:

To manufacture and supply dry batteries and related products to our customers as per
their needs. In order to responsibly discharge our duties towards the environment during
these processes, the following shall be our responsibilities:

 To make a conscious effort for prevention and abatement of pollution by

observing applicable environmental legislation and regulations.

 To make every effort to reduce, reuse and to recycle wastes and to conserve
energy.

 To environmentally educate and create awareness in our employees, suppliers,

waste consignees and other interested parties and to provide a safe working
environment to our employees.

As a responsible enterprise, we shall make every effort for continual improvement in our
Environmental Management System.

22
 Company Performance

First Quarter Second Quarter Third Quarter

AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED ON 31ST MARCH. 2005

(Rs. in Lacs)
Sr.
Particulars QUARTER ENDED YEAR ENDED
No.
31.03.2005 31.03.2004 31.03.2005 31.03.2004

1. Sales 4523 2909 19533 15605

2. Other Income 91 163 217 653
4614 3072 19750 16258
3. Total Expenditure
(A) Increase / Decrease in Stock
112 (311) (6) (343)
in Trade
(B) Consumption of Raw Material 2157 1573 9462 8086
(C) Staff Cost 471 443 1978 1688
(D) Other Expenditure 1722 1454 7275 5955
4462 3159 18709 15386
4. Interest 2 (64) 2 (225)
5. Depreciation 98 145 504 541
6. Profit Before Tax (1+2-3-4-5) 52 (168) 535 556
7. Provision for Taxation (Net) 0 0 275 105
8. Profit After Current Tax 52 (168) 260 451
9. Deffered Tax Assets / (Liabilities) 99 (14) 144 (55)
10. Net Profit After Tax 151 (182) 404 396
11. Paid up Equity Share Capital 750 750 750 750
Reserves Excluding Revaluation
12. 6414 6265
Reserves
13. Basic & Diluted EPS (Rs) 2.01 - 2.43 5.39 5.28
14. Aggregate of Non promoter
share holding
No. of shares 3145856 3145856
Percentage of share holding 41.94 % 41.94 %

23
Note:
1. The above Audited Financial Results have been
recommended by the Audit Committee and thereafter
taken on Record by the Board at its meeting held on 21st
May 2005
2. The operations of the Company are limited to one
segment, namely, Dry Batteries, and so Segment
Reporting as defined in Accounting Standard 17 is not
applicable.
3. The Board of Directors has recommended dividend @ 30%
for the year.
4. Previous period figures have been regrouped wherever
necessary.
5. There was no complaint pending at the beginning of the
quarter.
No complaint has been received during quarter. No
complaint is pending at the end of the quarter.
6. Last year figures are not comparable with Current year
due to change in marketing system.

for MATSUSHITA LAKHANPAL BATTERY INDIA LTD.

Chairman
Date: 21st May, 2005

24
ORGANIZATION OF MARKETING DEPARTMENT

Executive
Director

Dy.General
Manager

Manager Manager Officer

Supervisors(2)
Supervisors(3) Assistants(3)
Supervisors(3)
Assistants(3)
Assistants(3)

25
 THE EXISTING SYSTEM

TALLY SYSTEM

INTRODUCTION:

Tally has been managing the complete accounting and inventory needs of businesses
worldwide for over a decade. Close interaction with their customers made Tally aware
of the unique problem facing business houses having multiple locations/operations:
non-availability of a cost-effective method for instant transmission of accurate
information from branch offices to the head office which led to delayed reporting and
incorrect decision-making.

True to its reputation, Tally is attempting to simplify the lives of harried managers by
launching TallyServer - the server enabled version of Tally ees 6.3 that makes
synchronization/replication of data between the head office and various branches
extremely simple, reliable and instantaneous. In short, Tally will make data
synchronization a "single-click" activity with Tally Server.

26
GENERAL DETAILS:

Flow of information and data and seamless integration of the same, from remote locations
/ branches / factories, to the Corporate Office.
This essentially involves deploying or enabling of TallyServer at the Corporate Office
and Tally Client at branches / remote locations. The system allows transmission and
updating of data to a branch account maintained for the purpose or integrated into the
main accounts, at the Corporate Office. In effect, data is replicated from the branch /
remote location. The system works through the Internet. The above features are in
addition to the standard features of Tally which allows for multi-company / branch /
currency and multiple year accounting coupled with advanced inventory controls, multi-
level budgeting, reporting and cost controls. On an operational level, with the above
features, Tally will enable companies to monitor sales, stock movements, costs and
profitability at multiple locations.

The simplest use of TallyServer and Tally Client is therefore the transmission and
updating of information and data from branches / remote locations. As is the case with all
Tally products, the installation and set-up is very simple and easy and does not require
complicated procedures or assistance.

TallyServer and Tally Client can also be used to streamline and standardize information
flows across multiple programs running in some functional overlap with Tally (ODBC
compliant databases) and in the creation of complex environments. This will require the
assistance of programmers adept in TDL and scripting languages. TallyServer and Tally
Client is completely modular, which means that existing users of Tally ees 6.3 Gold can
purchase TallyServer and Tally Clients at a reasonable cost.

The Company provides free web-based and telephone support.

27
DATA FLOW DIAGRAM FOR ACCOUNTING PROCESS:

Payment Details
Issue note
VENDOR

Item taken in stock note ACCOU

NTING
PROCE Vendor file
SS

Order details
ORDER FILE
PRODUCTION WORK
ORDER FILE

INVENTORY ACCOUNTING:

28
Multi-Godown Inventory:
Keep track of your stocks at various Godowns. Apart from the regular godowns, you
can have transit godowns, service godowns, godowns as consignment agents, sub-
contractors etc.

Multi-Units Inventory:
Tally handles concepts like Grs of 12 doz pcs, or boxes of 100 pcs and other such
complex units measurements under your direction. An item may be racked in more
than one unit of measure (e.g. in both kgs. and mts.)

Multi-Valuation Inventory:
Simultaneously choose from an array of cost or market valuation methods-including
LIFO(both annual perpetual), FIFO, Weighted Average, Simple Average, Last
Purchase/Sale Price and Standard Cost. Get comparative charts of valuation using
different methods, or even ask Tally to select the methods to maximise or minimize
your Inventory value. Invaluable for insurance determination purposes or estimating
disposable stock value.

Batch-wise Inventory with Expiry Dates:

Tally supports the concept of batches or lots. Use it to track batches in food or
Pharma related business, or simply consignment wise costs and consumption.

Bill of Material (BOM):

Based on the input the standard items required to produce a finished product Tally
automatically calculations the raw material consumed to produce the finished product
whenever a production entry is passed.

 SALES OR PURCHASE ORDER:

29
Tally permits you to produce Purchase and Sales Orders from the system. Purchase
Orders may be produced, printed and sent to suppliers. Goods received are lined with the
PO`s and Invoices. Outstanding purchase orders can be monitored. Likewise, Sales
Orders received are recorded in Sales Order registers. Delivery challans and invoice are
raised against Sales Order. You can view the Sales Order position in stock summary.

MAJOR FEATURES OF TALLY SOFTWARE:

The following are the major features:

SIMPLICITY
Tally is one of the most simple and complete business solutions available in the world.
Anybody who has a basic knowledge of accounts or an average knowledge of English
can use Tally. It is easy to learn, configure and use Tally. Tally is not a computerized
accounting package but is Accounts on computers.

SPEED
A Tally user can get any reports instantaneously for any date / period and can toggle
between reports, either accounting or inventory or even from one company to another
company instantaneously. The user can also shift across dates in any report without any
time loss (i.e.: If one is viewing a daybook for 1st of April he can immediately select 31st
of march of the next year and will be able to see the daybook instantaneously for that
date.).

POWER
Tally has the power to generate management information, which would help the
management in taking correct and quick decisions. This in turn would enable faster
growth of business. The power of on-line information made available by Tally helps one
in keeping his business under complete control.

30
FLEXIBILITY
Tally is very flexible to use. Tally mimics the human thought process, i.e. Tally can adapt
to any business needs rather than the user trying to change the way his business is run to
adapt to the package.

NO CODES
Tally was the first accounting package in the world to introduce the No Codes concepts
for Accounts. Tally accepts alphanumeric characters for accounts and inventory masters
and hence any accounts or stock items can be created and identified by their names. The
codeless concept introduced by Tally is now the widely accepted norm across the world
today. In case the user wants to use codes, Tally supports that too.

REAL TIME
Tally updates all reports (from day book to Balance sheets) as and when the transaction
are entered and hence does not need any back end or day/period end process to be done.

ONLINE HELP
Tally provides user-friendly context sensitive online help for the user. Hence a first time
Tally user can start using Tally without any training. It also helps the user to do his own
configuration as well as use Tally better.

TALLY DATA- TECHNOLOGY ADVANTAGES:

31
DATA RELIABILITY
Tally offers extremely high reliability data. Tally uses a flexi-field, flexi-length, self
indexed weighted file structure for a extremely compact and fast database. Tally is robust
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DATA SECURITY
Tally use of data integrity checks ensures that no external change to the data can pass thru
Tally. It also uses a binary encoding format of storage to prevent devious grouping of
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activated.

TALLY AUDIT
Tally audit feature provides the user with administrator rights, a capability to audit for the
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the altered entries along with the name of the user who has altered the entry and date and
time of alteration.

USER DEFINED SECURITY LEVELS

Tally offers high levels of security. The user can define multiple levels of security as per
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SIMPLE AND RAPID INSTALLATION

Tally has a simple menu driven installation procedure. At the time of installation the user
can opt to install the program files on any drive (i.e. if the hard disk has partitions) as
well as specify the directory names where the program files are to be installed. The user
can also specify the location of the data directory. It does not take more than 60 seconds
to install Tally on the local hard disk and takes only about 8 MB space in the local drive.

How to install Tally?

Insert Tally Installation CD in the CD drive -> select My Computers on the desktop ->
select CD drive -> Run Install.exe -> specify Path (for Program files and data directory)
-> click on Install -> After Installation a message ‘Installation Successful’ is displayed ->
Click on Ok and Tally is installed. The Tally icon is created on desktop.

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UNLIMITED MULTI-USER SUPPORT
A Multi-user Version (Gold) of Tally can be installed on a network having any number of
machines (computers) working with different operating systems like NT, Win 95, 98,
Win 2000. Tally works on any kind of network (i.e. NT, Novell, Peer-Peer N/W etc). The
protocol needed to detect the lock is TCP/IP.

INTERNAL BACKUP / RESTORE

Tally has an in built user friendly Backup and Restore option. The user can take a backup
in the local hard disk or in any external media. Tally provides the user with capability to
take backups of one or more companies or all companies in a single directory.

REMOVAL OF DATA INTO SEPARATE COMPANY

Tally allows users to maintain a company for any number of financial years. Once the
books of accounts are completed for previous financial years and if the user wishes, he
could split the company data into multiple companies as per financial periods required.
Tally offers a feature of splitting company data. The user can specify the date from which
the company has to be split and Tally will split the company to form two companies as
per periods specified. Once the data has been split, the closing balance of the first period
(first company) becomes opening balance for the next period (second company).

MULTI DIRECTORY FOR COMPANY MANAGEMENT

The user can create multiple directories where he can store data. The data stored in these
directories can be accessed directly by Tally after specifying the path.

Import TALLY data / Export TALLY Data

Tally allows users to Import data from other software’s as well as Export data from Tally
to other software’s. Tally allows users to Import and Export in ASCII, SDF and XML
formats. XML is now the most widely used format of exporting data in the world. Any
transactions can be exported from Tally and imported in other software after suitably
altering the current structures to accept Tally data structure. The reverse is also possible
by writing a small TDL program to accept the data from other software’s. The data that is
to be imported into Tally can be in either XML or DBF format. Easy Tally data transfer
or Tally data migration from Tally 4.5 & Tally 5.4 to Tally 6.3, Tally 7.2, etc.

ODBC COMPLIANCE ALLOWS OTHER PROGRAMS TO USE DATA

FROM TALLY DIRECTLY. E.G. : MS-EXCEL :
ODBC - OPEN DATABASE CONNECTIVITY

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Tally is now ODBC compliant. Hence, any program like MS-Excel, Oracle etc that is
ODBC compliant can use data from Tally. Here, data connectivity is dynamic i.e. any
new updation in Tally is reflected in other ODBC Compliant Software immediately.
Now, with ODBC facility the user can extract data out of Tally and design his own report
formats in other ODBC compliant software's.

GRAPHICAL ANALYSIS OF TALLY DATA

Sometimes, pictures can say better than figures. Tally also provides graphical (Bar graph)
analysis of data. The user can do a graphical analysis reports like Sales register, Purchase
register, Ledgers, Funds flow, Cash flow, Item registers etc. This helps the user in deeper
analysis of data. In Tally, a graphical analysis can also show month wise graphs for the
year in comparison with any other period. This will help the management in quickly
locating the highs and lean periods in a financial year and hence be better prepared for
difficult times.

WEB ENABLED
Tally ees 6.3 is now Web enabled. This will help the user in reducing his paper work
further. Now, report in Tally can be e-mailed directly from Tally. It is not just reports, but
even invoices and purchase orders can also be e-mailed directly from Tally. Hence, the
user does not have to send printed invoice or purchase orders from Tally.

ABILITY TO PUBLISH REPORTS AND DOCUMENTS ON THE

INTERNET
Now, Tally allows users to upload reports on the web site directly from Tally. So
companies that would want to publish reports on the web site can do so directly from
Tally. Many companies would also like to publish their price list on their websites along
with the product they deal with.

DIRECT INTERNET ACCESS

Tally now offers direct Internet access. A Tally user while working on Tally can directly
log on to tally website get details of all the facilities offered by Tally. The user can also
download the latest releases of Tally 6.3 as and when available. Tally website also offers
a facility of Tally Chat. Any user can now chat with a Tally representative and get any
information regarding Tally.

PRINT PREVIEW
Any user would ideally like to view format of reports / Invoices / Vouchers before
printing the same. Tally now offers a facility of print preview. Now any report can be

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viewed before printing or before it is mailed. Once Tally shows the preview the user can
either opt to print or mail the same.

PROTOCOL SUPPORT
Protocol Support for HTTP, HTTPS, FTP, SMTP, ODBC, and RAW sockets with data
interchange formats like XML, HTMNL, HTML with XML Islands, SOAP, SDF and
related formats.

Formats:

XML : Extensible Markup Language

HTML : Hyper Text Markup Language
SOAP : Simple Object Access Protocol
SDF : Standard Data Format
Formats, here means the standard for Information to be generated from Tally or from
other applications that can exchange data with Tally.

Protocol (Transport) :

HTTP : Hyper Text Transfer Protocol.

HTTPS : Hyper Text Transfer Protocol (Secure)
FTP : File Transfer Protocol
SMTP : Simple Mail Transfer Protocol
ODBC : Open Data Base Connectivity
Raw Sockets
Transport, here refers to a mechanism by which information (data) can be pushed into
Tally or from Tally.

LIMITATION OF EXISTING SYSTEM

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Tally system is very very useful in many of the functional areas and it has got many
many advantages which we have seen earlier.

But along with having so many advantages it has got some limitations that

 The data entered is always not so accurate and so reliable as the work is done
manually.
 The speed is also not much as the work is done manually.

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 PROPOSED SYSTEM-ERP

What is ERP?

Enterprise resource planning software, or ERP, doesn’t live up to its acronym. Forget
about planning—it doesn’t do much of that—and forget about resource, a throwaway
term. But remember the enterprise part. This is ERP’s true ambition. The software
attempts to integrate all departments and functions across a company onto a single
computer system that can serve all those departments’ particular needs.

Building a single software program that serves the needs of people in finance as well as it
does the people in human resources and in the warehouse is a tall order. Each of those
departments typically has its own computer system optimized for the particular ways that
the department does its work. But ERP combines them all together into a single,
integrated software program that runs off a single database so that the various
departments can more easily share information and communicate with each other.

That integrated approach can have a tremendous payback if companies install the
software correctly.

Take a customer order, for example. Typically, when a customer places an order, that
order begins a mostly paper-based journey from inbox to inbox throughout the company,
often being keyed and rekeyed into different departments’ computer systems along the
way. All that lounging around in inbox causes delays and lost orders, and all the keying
into different computer systems invites errors. Meanwhile, no one in the company truly
knows what the status of the order is at any given point because there is no way for the
finance department, for example, to get into the warehouse’s computer system to see
whether the item has been shipped. "You’ll have to call the warehouse" is the familiar
refrain heard by frustrated customers.

ERP vanquishes the old standalone computer systems in finance, HR, manufacturing and
the warehouse, and replaces them with a single unified software program divided into
software modules that roughly approximate the old standalone systems. Finance,
manufacturing and the warehouse all still get their own software, except now the software
is linked together so that someone in finance can look into the warehouse software to see
if an order has been shipped. Back in the ‘90s ERP was developed as a tightly integrated
monolith, but most vendors’ software has since become flexible enough that you can
install some modules without buying the whole package. Many companies, for example,
will install only an ERP finance or HR module and leave the rest of the functions for
another day.

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How can ERP improve a company's business performance?

ERP’s best hope for demonstrating value is as a sort of battering ram for improving the
way your company takes a customer order and processes that into an invoice and revenue
—otherwise known as the order fulfillment process. That is why ERP is often referred to
as back-office software. It doesn’t handle the up-front selling process (although most
ERP vendors have recently developed CRM software to do this); rather, ERP takes a
customer order and provides a software road map for automating the different steps along
the path to fulfilling the order. When a customer service representative enters a customer
order into an ERP system, he has all the information necessary to complete the order (the
customer’s credit rating and order history from the finance module, the company’s
inventory levels from the warehouse module and the shipping dock’s trucking schedule
from the logistics module, for example).

People in these different departments all see the same information and can update it.
When one department finishes with the order it is automatically routed via the ERP
system to the next department. To find out where the order is at any point, you need only
log in to the ERP system to track it down. With luck, the order process moves like a bolt
of lightning through the organization, and customers get their orders faster and with
fewer errors than before. ERP can apply that same magic to the other major business
processes, such as employee benefits or financial reporting.

That, at least, is the dream of ERP. The reality is not so rosy.

Let’s go back to those inboxes for a minute. That process may not have been efficient,
but it was simple. Finance did its job, the warehouse did its job, and if anything went
wrong outside of the department’s walls, it was somebody else’s problem. Not anymore.
With ERP, the customer service representatives are no longer just typists entering
someone’s name into a computer and hitting the return key. The ERP screen makes them
businesspeople. It flickers with the customer’s credit rating from the finance department
and the product inventory levels from the warehouse. Did the customer pay for the last
order yet? Will we be able to ship the new order on time? These are decisions that
customer service representatives have never had to make before, and the answers affect
the customer and every other department in the company. But it’s not just the customer
service representatives who have to wake up. People in the warehouse who used to keep
inventory in their heads or on scraps of paper now need to put that information online. If
they don’t, customer service reps’ screens will show low inventory levels and reps will
tell customers that the requested item is not in stock. Accountability, responsibility and
communication have never been tested like this before.

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People don’t like to change, and ERP asks them to change how they do their jobs. That is
why the value of ERP is so hard to pin down. The software is less important than the
changes companies make in the ways they do business. If you use ERP to improve the
ways your people take orders and manufacture, ship and bill for goods, you will see value
from the software. If you simply install the software without trying to improve the ways
people do their jobs, you may not see any value at all—indeed, the new software could
slow you down by simply replacing the old software that everyone knew with new
software that no one does.

How long will an ERP project take?

Companies that install ERP do not have an easy time of it. Don’t be fooled when ERP
vendors tell you about a three- or six-month average implementation time. Those short
(that’s right, six months is short) implementations all have a catch of one kind or another:
The company was small, or the implementation was limited to a small area of the
company, or the company used only the financial pieces of the ERP system (in which
case the ERP system is nothing more than a very expensive accounting system). To do
ERP right, the ways you do business will need to change and the ways people do their
jobs will need to change too. And that kind of change doesn’t come without pain. Unless,
of course, your ways of doing business are working extremely well (orders all shipped on
time, productivity higher than all your competitors, customers completely satisfied), in
which case there is no reason to even consider ERP.

The important thing is not to focus on how long it will take—real transformational ERP
efforts usually run between one and three years, on average—but rather to understand
why you need it and how you will use it to improve your business.

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What will ERP fix in my business?

There are five major reasons why companies undertake ERP.

1. Integrate financial information—;As the CEO tries to understand the

company’s overall performance, he may find many different versions of the truth.
Finance has its own set of revenue numbers, sales has another version, and the
different business units may each have their own version of how much they
contributed to revenue. ERP creates a single version of the truth that cannot be
questioned because everyone is using the same system.
2. Integrate customer order information—;ERP systems can become the place
where the customer order lives from the time a customer service representative
receives it until the loading dock ships the merchandise and finance sends an
invoice. By having this information in one software system, rather than scattered
among many different systems that can’t communicate with one another,
companies can keep track of orders more easily, and coordinate manufacturing,
inventory and shipping among many different locations simultaneously.
3. Standardize and speed up manufacturing processes—;Manufacturing
companies—especially those with an appetite for mergers and acquisitions—often
find that multiple business units across the company make the same widget using
different methods and computer systems. ERP systems come with standard
methods for automating some of the steps of a manufacturing process.
Standardizing those processes and using a single, integrated computer system can
save time, increase productivity and reduce headcount.
4. Reduce inventory—;ERP helps the manufacturing process flow more smoothly,
and it improves visibility of the order fulfillment process inside the company.
That can lead to reduced inventories of the materials used to make products
(work-in-progress inventory), and it can help users better plan deliveries to
customers, reducing the finished good inventory at the warehouses and shipping
docks. To really improve the flow of your supply chain, you need supply chain
software, but ERP helps too.
5. Standardize HR information—;Especially in companies with multiple business
units, HR may not have a unified, simple method for tracking employees’ time
and communicating with them about benefits and services. ERP can fix that.

In the race to fix these problems, companies often lose sight of the fact that ERP
packages are nothing more than generic representations of the ways a typical company
does business. While most packages are exhaustively comprehensive, each industry has
quirks that make it unique. Most ERP systems were designed to be used by discrete
manufacturing companies (that make physical things that can be counted), which
immediately left all the process manufacturers (oil, chemical and utility companies that
measure their products by flow rather than individual units) out in the cold. Each of these
industries has struggled with the different ERP vendors to modify core ERP programs to
their needs.

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Will ERP fit the ways I do business?

Before the checks are signed and the implementation begins, it’s critical for companies to
figure out if their ways of doing business will fit within a standard ERP package. The
most common reason that companies walk away from multimillion-dollar ERP projects is
that they discover the software does not support one of their important business
processes. At that point there are two things they can do: They can change the business
process to accommodate the software, which will mean deep changes in long-established
ways of doing business (that often provide competitive advantage) and shake up
important people’s roles and responsibilities (something that few companies have the
stomach for). Or they can modify the software to fit the process, which will slow down
the project, introduce dangerous bugs into the system and make upgrading the software to
the ERP vendor’s next release excruciatingly difficult because the customizations will
need to be torn apart and rewritten to fit with the new version.

Needless to say, the move to ERP is a project of breathtaking scope, and the price tags on
the front end are enough to make the most placid CFO a little twitchy. In addition to
budgeting for software costs, financial executives should plan to write checks to cover
consulting, process rework, integration testing and a long laundry list of other expenses
before the benefits of ERP start to manifest themselves. Underestimating the price of
teaching users their new job processes can lead to a rude shock down the line, and so can
failure to consider data warehouse integration requirements and the cost of extra software
to duplicate the old report formats. A few oversights in the budgeting and planning stage
can send ERP costs spiraling out of control faster than oversights in planning almost any
other information system undertaking.

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What does ERP really cost?

There aren’t any good numbers to predict ERP costs because the software installation has
so many variables, such as: the number of divisions it will serve, the number of modules
installed, the amount of integration that will be required with existing systems, the
readiness of the company to change and the ambition of the project—if the project is
truly meant to be a battering ram for reengineering how the company does its most
important work, the project will cost much more and take much longer than one in which
ERP is simply replacing an old transaction system. There is a sketchy rule of thumb that
experts have used for years to predict ERP installation costs, which is that the installation
will cost about six times as much as the software license. But this has become
increasingly less relevant as the market for ERP has slowed over time and vendors have
offered deep discounts on the software up front.

Research companies don’t even bother trying to predict costs anymore. A few years ago,
the dearly departed Meta Group did a study looking at the total cost of ownership (TCO)
of ERP, including hardware, software, professional services and internal staff costs. The
TCO numbers include getting the software installed and the two years afterward, which is
when the real costs of maintaining, upgrading and optimizing the system for your
business are felt. Among the 63 companies surveyed—including small, midsize and large
companies in a range of industries—the average TCO was $15 million (the highest was
$300 million and the lowest was $400,000). While it’s hard to draw a solid number from
that kind of range of companies and ERP efforts, Meta came up with one statistic that
proves that ERP is expensive no matter what kind of company is using it: The TCO for
someone who uses the system a lot over that period was a staggering $53,320.

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What are the hidden costs of ERP?

Although different companies will find different land mines in the budgeting process,
those who have implemented ERP packages agree that certain costs are more commonly
overlooked or underestimated than others. Armed with insights from across the business,
ERP pros vote the following areas as most likely to result in budget overrun.

1. Training—Training is the near-unanimous choice of experienced ERP

implementers as the most underestimated budget item. Training expenses are high
because workers almost invariably have to learn a new set of processes, not just a
new software interface. Worse, outside training companies may not be able to
help you. They are focused on telling people how to use software, not on
educating people about the particular ways you do business. Prepare to develop a
curriculum yourself that identifies and explains the different business processes
that will be affected by the ERP system. One enterprising CIO hired staff from a
local business school to help him develop and teach the ERP business-training
course to employees. Remember that with ERP, finance people will be using the
same software as warehouse people and they will both be entering information
that affects the other. To do this accurately, they have to have a much broader
understanding of how others in the company do their jobs than they did before
ERP came along. Ultimately, it will be up to your IT and businesspeople to
provide that training. So take whatever you have budgeted for ERP training and
double or triple it up front. It will be the best ERP investment you ever make.
2. Integration and testing—Testing the links between ERP packages and other
corporate software links that have to be built on a case-by-case basis is another
often-underestimated cost. A typical manufacturing company may have add-on
applications from the major—e-commerce and supply chain—to the minor—sales
tax computation and bar coding. All require integration links to ERP. You’re
better off if you can buy add-ons from the ERP vendors that are pre-integrated. If
you need to build the links yourself, expect things to get ugly. As with training,
testing ERP integration has to be done from a process-oriented perspective.
Veterans recommend that instead of plugging in dummy data and moving it from
one application to the next, you should run a real purchase order through the
system, from order entry through shipping and receipt of payment—the whole
order-to-cash banana—preferably with the participation of the employees who
will eventually do those jobs.
3. Customization—Add-ons are only the beginning of the integration costs of ERP.
Much more costly, and something to be avoided if at all possible, is actual
customization of the core ERP software itself. This happens when the ERP
software can’t handle one of your business processes and you decide to mess with
the software to make it do what you want. You’re playing with fire. The
customizations can affect every module of the ERP system because they are all so
tightly linked together. Upgrading the ERP package—no walk in the park under
the best of circumstances—becomes a nightmare because you’ll have to do the
customization all over again in the new version. Maybe it will work, maybe it
won’t. No matter what, the vendor will not be there to support you. You will have

43
 to hire extra staffers to do the customization work, and keep them on for good to
maintain it.
4. Data conversion—It costs money to move corporate information, such as
customer and supplier records, product design data and the like, from old systems
to new ERP homes. Although few CIOs will admit it, most data in most legacy
systems is of little use. Companies often deny their data is dirty until they actually
have to move it to the new client/server setups that popular ERP packages require.
Consequently, those companies are more likely to underestimate the cost of the
move. But even clean data may demand some overhaul to match process
modifications necessitated—or inspired—by the ERP implementation.
5. Data analysis—Often, the data from the ERP system must be combined with data
from external systems for analysis purposes. Users with heavy analysis needs
should include the cost of a data warehouse in the ERP budget—and they should
expect to do quite a bit of work to make it run smoothly. Users are in a pickle
here: Refreshing all the ERP data every day in a big corporate data warehouse is
difficult, and ERP systems do a poor job of indicating which information has
changed from day to day, making selective warehouse updates tough. One
expensive solution is custom programming. The upshot is that the wise will check
all their data analysis needs before signing off on the budget.
6. Consultants ad infinitum—When users fail to plan for disengagement,
consulting fees run wild. To avoid this, companies should identify objectives for
which its consulting partners must aim when training internal staff. Include
metrics in the consultants’ contract; for example, a specific number of the user
company’s staff should be able to pass a project-management leadership test—
similar to what the consultants have to pass to lead an ERP engagement.
7. Replacing your best and brightest—It is accepted wisdom that ERP success
depends on staffing the project with the best and brightest from the business and
IS divisions. The software is too complex and the business changes too dramatic
to trust the project to just anyone. The bad news is a company must be prepared to
replace many of those people when the project is over. Though the ERP market is
not as hot as it once was, consultancies and other companies that have lost their
best people will be hounding yours with higher salaries and bonus offers than you
can afford—or that your HR policies permit. Huddle with HR early on to develop
a retention bonus program and create new salary strata for ERP veterans. If you
let them go, you’ll wind up hiring them—or someone like them—back as
consultants for twice what you paid them in salaries.
8. Implementation teams can never stop—most companies intend to treat their
ERP implementation as they would any other software project. Once the software
is installed, they figure the team will be scuttled, and everyone will go back to his
or her day job. But after ERP, you can’t go home again. The implementers are too
valuable. Because the implementers have worked so closely with ERP, they know
more about the sales process than the salespeople and more about the
manufacturing process than the manufacturing people. Companies can’t afford to
send their project people back into the business because there’s so much to do
after the ERP software is installed. Just writing reports to pull information out of
the new ERP system will keep the project team busy for a year at least. And it is

44
 in analysis—and, one hopes, insight—that companies make their money back on
an ERP implementation. Unfortunately, few IS departments plan for the frenzy of
post-ERP installation activity, and fewer still build it into their budgets when they
start their ERP projects. Many are forced to beg for more money and staff
immediately after the go-live date, long before the ERP project has demonstrated
any benefit.
9. Waiting for ROI—One of the most misleading legacies of traditional software
project management is that the company expects to gain value from the
application as soon as it is installed, while the project team expects a break and
maybe a pat on the back. Neither expectation applies to ERP. Most of the systems
don’t reveal their value until after companies have had them running for some
time and can concentrate on making improvements in the business processes that
are affected by the system. And the project team is not going to be rewarded until
their efforts pay off.
10. Post-ERP depression—ERP systems often wreak cause havoc in the companies
that install them. In a recent Deloitte Consulting survey of 64 Fortune 500
companies, one in four admitted that they suffered a drop in performance when
their ERP system went live. The true percentage is undoubtedly much higher. The
most common reason for the performance problems is that everything looks and
works differently from the way it did before. When people can’t do their jobs in
the familiar way and haven’t yet mastered the new way, they panic, and the
business goes into spasms.

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Why do ERP projects fail so often?

At its simplest level, ERP is a set of best practices for performing the various duties in the
departments of your company, including in finance, manufacturing and the warehouse.
To get the most from the software, you have to get people inside your company to adopt
the work methods outlined in the software. If the people in the different departments that
will use ERP don’t agree that the work methods embedded in the software are better than
the ones they currently use, they will resist using the software or will want IT to change
the software to match the ways they currently do things. This is where ERP projects
break down.

Political fights erupt over how—or even whether—the software will be installed. IT gets
bogged down in long, expensive customization efforts to modify the ERP software to fit
with powerful business barons’ wishes. Customizations make the software more unstable
and harder to maintain when it finally does come to life. The horror stories you hear in
the press about ERP can usually be traced to the changes the company made in the core
ERP software to fit its own work methods. Because ERP covers so much of what a
business does, a failure in the software can bring a company to a halt, literally.

But IT can fix the bugs pretty quickly in most cases, and besides, few big companies can
avoid customizing ERP in some fashion—every business is different and is bound to
have unique work methods that a vendor cannot account for when developing its
software. The mistake companies make is assuming that changing people’s habits will be
easier than customizing the software. It’s not. Getting people inside your company to use
the software to improve the ways they do their jobs is by far the harder challenge. If your
company is resistant to change, then your ERP project is more likely to fail.

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How do I configure ERP software?

Even if a company installs ERP software for the so-called right reasons and everyone can
agree on the optimal definition of a customer, the inherent difficulties of implementing
something as complex as ERP is like, well, teaching an elephant to do the hootchy-
kootchy. The packages are built from database tables, thousands of them, that IS
programmers and end users must set to match their business processes; each table has a
decision "switch" that leads the software down one decision path or another. By
presenting only one way for the company to do each task—say, run the payroll or close
the books—a company’s individual operating units and far-flung divisions are integrated
under one system. But figuring out precisely how to set all the switches in the tables
requires a deep understanding of the existing processes being used to operate the
business. As the table settings are decided, these business processes are reengineered,
ERP’s way. Most ERP systems are preconfigured for most of the major processes,
however, allowing just hundreds—rather than thousands—of procedural settings to be
made by the customer.

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How difficult is it to upgrade ERP software?

It’s extremely difficult, unless you are one of the rare companies that did not tinker with
the system while installing it. In the early days of ERP, vendors pursued a vision that has
since been disproven: Business processes built into the software should be adopted by
every customer. Change your business to fit the system. CEOs like the sound of
reengineering, but take that logic to the departmental head who won’t be able to serve her
customers as well with the process in the software box and suddenly reengineering
sounds less compelling. CIOs were forced (or acquiesced) to tinker with the innards of
these packages to avoid losing valuable chunks of business processes, and it made their
lives hell. Vendors ignored this reality for years. They thought changing the system to fit
your own processes meant you were a weak girly man who couldn’t stand up to your
business people. Those processes couldn’t be any good anyway if they hadn’t made it
into the vendors’ best practice pool when they developed the stuff. Modifying the core
code of ERP was like turning your Pinto into a low rider. You just voided the warranty,
dude. Tough luck. ERP vendors would not support customized versions of their software.

When a new version of the highly integrated suite arrived with cool new features,
customers sometimes could not afford to install them because they had made so many
changes to the previous version. CIOs had built so many different links to the enterprise
systems to get them working with other systems in the company that an upgrade was akin
to starting over. Many of the old links had to be torn apart and rewritten to fit with the
new version. And many of those rewrites were completely pointless. The new suite might
have one new piece and nine others that had changed little since the last version. But it
was all so integrated together that every custom link had to be redone, even to the pieces
that didn’t change.

When vendors began breaking up and componentizing their suites to make them easier to
integrate with each other and with legacy systems inside the company, they also broke up
one of the value propositions that had been so enticing in the first place: “free” upgrades.
Freed of the suite model, enterprise software vendors started charging fresh license fees
for the new components they developed. Many early ERP suites had their development
“frozen.” Customers could continue to get support, but newer features cost extra and
worked much better—or sometimes only—with the newer version of the vendor’s
software. And CIOs stuck with the old suites began wondering where all their
maintenance fees had gone. They couldn’t afford to upgrade to the newer, componentized
version of the vendors’ software models and if they could, they’d pay a new license fee
for their trouble.

In theory, early users of ERP paid for those new versions of the software through yearly
maintenance fees to the vendor that every ERP vendor charges. The largest percentage
of those fees went to R&D rather than to support and maintenance of existing software.
But the economics became untenable for vendors. When the ERP boom crashed after
2000, sales of new software slowed to a crawl and vendors said they were forced to
charge for new components. It may be true, but it ended the short era of “free”
upgrades.

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How does ERP fit with e-commerce?

ERP vendors were not prepared for the onslaught of e-commerce. ERP is complex and
not intended for public consumption. It assumes that the only people handling order
information will be your employees, who are highly trained and comfortable with the
tech jargon embedded in the software. But now customers and suppliers are demanding
access to the same information your employees get through the ERP system—things such
as order status, inventory levels and invoice reconciliation—except they want to get all
this information simply, without all the ERP software jargon, through your website.

E-commerce means IT departments need to build two new channels of access into ERP
systems—one for customers (otherwise known as business-to-consumer) and one for
suppliers and partners (business-to-business). These two audiences want two different
types of information from your ERP system. Consumers want order status and billing
information, and suppliers and partners want just about everything else.

Traditional ERP vendors are having a hard time building the links between the Web and
their software, though they certainly all realize that they must do it and have been
working hard for years to develop it. The bottom line, however, is that companies with e-
commerce ambitions face a lot of hard integration work to make their ERP systems
available over the Web. For those companies that were smart—or lucky—enough to have
bought their ERP systems from a vendor experienced in developing e-commerce wares,
adding easily integrated applications from that same vendor can be a money-saving
option. For those companies whose ERP systems came from vendors that are less
experienced with e-commerce development, the best—and possibly only—option might
be to have a combination of internal staff and consultants hack through a custom
integration.

But no matter what the details are, solving the difficult problem of integrating ERP and e-
commerce requires careful planning, which is key to getting integration off on the right
track.

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Can I use ERP to manage a network of foreign suppliers?

ERP was designed at a time when process management was an internal affair. The
systems have lagged behind the explosive growth of globalization and offshore
outsourcing of manufacturing. When most U.S. manufacturing was still mostly local,
companies could link their ERP systems through expensive electronic data interchange
(EDI) connections. But EDI links (and ERP systems themselves) never penetrated much
beyond a manufacturer’s top tier (read biggest, richest) of suppliers, due to the cost of
installing and managing the links at the supplier. In third-world manufacturing
destinations, even an Internet connection is often a luxury. The market for managing the
core ERP information (orders, inventory, etc.) of the “extended supply chain,” is only
now beginning to emerge.

In today's rapidly changing world, it is imperative that businesses leverage on leading-

edge technology to optimize their usage of resources and knowledge. Increasing the
quality and visibility of business information is the key to boosting bottom lines. To
manage the challenges impacting organizations, Enterprise Resource Planning (ERP) is
no longer an option, but a necessity!

ERP empowers the enterprise to gain a competitive edge in a global business

environment. The NOW Generation ERP demystifies all the preconceived notions of
complexity and high cost of a traditional ERP. It should serve as a company's primary
business management application right from the day you start implementation, assuring
new levels of efficiency and control, while ensuring low cost of ownership and high
return on investment.

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 Board of Directors

Chairman Mr. Ajai K. Lakhanpal

Managing Director Mr. Y. Sato
Director Mr. E. B. Desai
Director Mr. P. P. Shah
Director Mr. D. J. Thakkar
Director Mr. G. N. Punj
Director Mr. T. Konda
Director Mr. Y. Yokoe

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