Peer-to-Peer

Eco-friendly energy company taps ERP

Suzlon Energy went in for an ERP implementation and in the process gained the ability to react proactively to situations and do what-if analysis of the impact of strategic decisions on its operations. By Abhinav Singh

A player in the energy sector, Suzlon Energy deals in alternative energy—wind power to be precise. It operates across multiple locations where wind energy is available to be tapped. Integrating information across these remote energy generating sites is essential for the company. It has deployed SAP ERP to integrate information from different sites and streamline business processes across the company.

The company was using a legacy system developed in Visual Basic, which did not integrate information from remote locations. Sometimes in order to establish its operations and wind turbines Suzlon wanted to put together information pertaining to project planning and procurement of materials while establishing a particular site. For instance a large number of cranes were required to carry material to a proposed site. In case of a failure near a remote site, work at the site used to slow down and affect project completion cycle time if the information of the breakdown was not generated almost immediately.

Moreover information pertaining to the maintenance of existing sites, for instance the amount of electricity being generated by each site, was also not available on a real time basis. In certain places there was no integration as the information had to be sent in the form of manual sheets and it was a cumbersome process to compiling the data. This manual data then had to be integrated with the data collected from other sites. The company has its machines installed at some 228 locations across the country, which includes remote sites like Satara—-where the machines are situated near a plateau.

At the same time the company was growing and expanding the number of sites on a regular basis. It also wanted to go public. Dr VV Rao, group head IT, Suzlon Group explains, “Due to the legacy system with no proper integration of information across departments and remote locations there was a total disconnect between different sites, the corporate headquarters and branches which was becoming a big hassle for the management of the company. This problem manifested across different functions and resulted in delays.” Closing books and generating financial statements was taking an unacceptably long time. Accounts were not being closed as per the scheduled dates due to inaccuracies in the data and also because there was no information integration. The management did not have real-time information on inventory or cash flows.

There was a strong push towards adopting a standardised ERP package to meet these challenges. Suzlon Energy began an evaluation exercise to evaluate different ERP packages. SAP, Oracle and IFS were evaluated during the evaluation exercise. At the end of the evaluation process Suzlon decided to go ahead with SAP. Rao says, “We were looking for better project management capabilities and a long product road map, which SAP was giving us. Additionally SAP Labs keeps on bringing new innovations and most importantly SAP software is inclined towards the Indian Taxation system which no other system offers. Suzlon felt that the SAP package was offering better bandwidth utilisation when compared to other packages.”

A complex implementation

The scope of the implementation can be gauged by the fact that a total of 172 people including the implementation team from IBM Global Services were involved in the process. Suzlon Energy purchased a complete suite of modules of SAP ERP 4.7 with modules such as Finance and Control, Sales and Distribution, Materials Management, Sales and Distribution, Project Management, Plant Maintenance and Quality Management, HRM, Training and Event Management, Customer Service, PLM Management, CRM and Business Intelligence. Rao says, “We chose IBM Global Services as the implementation partner due to its expertise in handling complex implementations spanning multiple locations.”

The company incorporated the best practices of the solution as it is and to ensure manageability of the solution in the long run avoiding extensive customisation for this reason. The implementation exercise, which began in May 2004, was completed in November 2004 with a simultaneous rollout of SAP ERP at 228 sites. Over time the rollout of ERP is extended to new sites. The company is using around 900 user licenses of SAP and the project cost has been estimated to be around Rs 4.5 crores including the cost of the package, hardware, implementation cost and training. Rao says, “There was total support from the management and we had realised that there was no way we could grow without an integrated system that gave sufficient impetus and drive to all concerned.”

Smoother financial operations

Ever since the ERP package went live information integration is complete and it is readily available in real time. The ERP package has also improved financial processes as the official financial balance sheet incorporating data from all the sites is ready by March 31st. Earlier a lot of manual data had to be compiled from different sites and it used to delay the closing of accounts.

After the ERP deployment, financial planning has improved considerably. Rao says, “Projects are planned much better as the errors are detected immediately and can be rectified almost in real time. The package has also led to better project management as any project related information can be passed on to the concerned site office and if any case of delays in procurement of project related equipment or delay in execution of any project related work it can be immediately passed on to the site office through the ERP system.” With all this information proactive action can be taken to tackle situations.

Suzlon Energy has also been able to have a business process simulation analysis through the ERP package and is able to analyse the impact that a strategic decision will have on its business. For instance if a particular project site is changed then it can gauge what impact it will have on the energy generation capabilities of that site and in turn the energy generation capabilities of that particular zone. Suzlon Energy also has a single window interface; the package has helped the company in generating 324 important parameters related to its business and sites on a single screen. The ERP system has also resulted in better inventory management and invoicing is integrated with the rest of the processes and a change is immediately reflected in the system and invoice verification has become streamlined. This has led to faster completion and maintenance of projects and has paved the way for the steady growth of the company.