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256 Chapter 9 • Organizational Change and Business Process Reengineering

The pilot project was implementation of ERP for order-to-cash process, which included
checking the availability of the goods, querying the status of the order placed, and scheduling.
The different ERP vendors were analyzed, and, finally, Tata Steel decided to go with SAP.
Here are the objectives of the ERP project implementation: Tata Steel aims at lowering
the working capital through reduction in inventory of finished goods and debt overdue. The
inventory of finished goods can be reduced by improving the transparency of the goods in the
supply chain. ERP system should also facilitate the credit status checking functionality, so
that accounts receivables can be effectively managed. Profits can be estimated through ROI
calculations like net present value (NPV) and internal rate of return (IRR). The customer
debts can also be reduced by keeping track of the credit history. The sales process is integrat-
ed with the financial process by information sharing through a centralized database.
Tata Steel decided to use “Accelerated SAP (ASAP) Methodology” (discussed earlier in
Chapter 4 and ERP life cycle) to describe the business processes and did not do any customiza-
tions, thus saving time. The ASAP implementation involved preparation of project, realization
of business prototype, last stage preparations, and, finally, go-live and maintenance. The whole
process took nine months to implement. The outcomes of the implementation were very
impressive, and five-year NPV was INR 139 million and IRR of 23 percent. The centralized
database facilitated the availability of data related to sales in all the global sites. The receivables
were collected faster, almost in less than a day. The orders were placed online more easily and
at a quicker pace. Finished goods inventory was reduced by improving the transparency, there-
by cutting the inventory costs like holding costs and other costs. Thus the pilot project was
successful, and Tata Steel proceeded with the other stages and was successful.

Optimizing Business Processes

BPM software helps to optimize the business processes of an organization and improve the
performance. This section describes how BPM software functions and helps to improve
the business processes. BPM is very important for the process-intensive industries like insur-
ance. Gartner’s research says that BPM helps firms to model, analyze, and test business
processes without the interference of the core systems and then to figure out process problems
more easily. BPM involves proper utilization of people and resources to do the work and also
automate the processes that do not require human expertise and judgment. 27 BPM combines a
range of features—process design and modeling, integration, and postdeployment monitoring
and analytics—but the most important function is to help companies increase process efficiency
and, therefore, reduce costs. 28 The visible process models can be fine-tuned or optimized by
the managers to serve the customers better. Business process management (BPM) and
services-oriented architecture engine markets were at $1.8 billion for licenses, maintenance,
and services in 2008 and are forecasted to increase to $6.2 billion by 2015. 29

27 LexisNexis Academic. (July 5, 2010). What can BPM do? ITWeb Brainstorm.
28 Voelker, Michael. (December 1, 2003). BPM Targets the Bottom Line—Enabling Change, Easing Compliance and
Maximizing Efficiency, Business Process Management Technology Proves its Value in Cutting Costs. Transform
Magazine.
29 http://www.electronics-ca.com/products/Worldwide-Business-Process-Management-(BPM)-Market-Opportunities-
Strategies,-and-Forecasts.html