May 7, 2018

Industry 4.0: India Approach


Manufacturing Industry in India has a potential to touch $1 Trillion by 2025 accounting for 25 to 30% of India's GDP, and create up to 90 Million jobs. With the Government focusing on 'Make in India', the manufacturing industry must seize the moment by investing in new technology and expanding its competitive advantage and capturing more of the global market.

With government focusing on Digital India initiatives, time is ripe for Indian Manufacturing to transition to Industry 4.0 (I4.0). Also called 'Smart Manufacturing', I4.0 covers the interaction between man and man, man and machine and machine and machine. The technology facilitators are Industrial Internet of Things (IIOT), Cyber-physical systems (3D Printing, Rapid Prototyping etc) and Cloud Computing. This has the potential to bring about significant efficiencies across the entire supply and demand chain of the manufacturing industry.

This article starts of with a quick overview of I4.0. Then we look at potential of I4.0 in India, the challenges that are specific to the country, the ongoing policy initiatives. We wind up the article with a look at a few case studies of the use of I4.0 principles by the manufacturing industry in the country.

Check out this post for a Primar on I4.0

Evolution of Industry 4.0

Manufacturing Industry has gone through four phases. Industry 1.0 was characterised by the use of steam & water power and manual labour. The use of electricity and assembly lines to help mass production in manufacturing plants signalled the arrival of Industry 2.0. Starting from about '70s, the use of computers and CNC machines for precision manufacturing and automation of production heralded the arrival of Industry 3.0

With use of technology expanding rapidly, Big Data supporting sophisticated and complex analytics, IIoT helping interactions between man and machines and also between machines, Cloud Computing supporting huge data storage and fast retrieval of data and finally, new Cyber - physical technologies like 3D Printing and Collaborative Robots (Cobots) that support rapid prototyping and faster roll out of complex designs, time has come to initiate the new phase, what can be called as Industry 4.0 (I4.0).

The following diagram illustrates this evolution.


Opportunities presented by Industry 4.0

These are a few possible areas where I4.0 could deliver customer value:
  1. Flexible production with 'Plug and Produce' capabilities.
  2. Process standardization across various platforms
  3. Energy management by streamlined energy consumption
  4. Accurate logistics planning
  5. Self healing machines
  6. For Indian IT companies, providing 'Smart Factory', or 'Factory in a Box' as a SAAS offering can be a huge opportunity. 
Most of these technologies are already available as islands of expensive technology. I4.0 will use the power of Internet and communication networks to integrate these disparate technologies to help smooth deployment.

Challenges specific to India
  1. Impact on job creation
  2. Increase in social inequality between 'low skill / low pay' and 'high skill / high pay' jobs.
  3. Redistribution of both technology and its benefits to rural India
  4. Re-skilling and up-skilling existing workforce
  5. Ensuring Gender Neutrality in job creation.
  6. SMEs are not tech savvy
India Potential

Rapid developments in global manufacturing suggest that India’s manufacturing companies could easily fall behind their global counterparts. New technologies and patents are enormously beneficial, but patents from the U.S. and the UK outnumber new Indian technologies over ten to one.

The global market for collaborative robots was estimated at $128 million in 2014 and is projected to reach $1 billion by 2019, with a compound annual growth rate of 50.88 percent.  Though India still has one of the lowest levels of robotic penetration in the automation of manufacturing facilities relative to the rest of the world, over the last few years, many newly incorporated manufacturing companies in the country have adopted smart manufacturing practices and there has been a considerable increase in investments made into new robotic applications, especially in the automotive sector.

Manufacturing Industry in India has the potential to touch $1 Trillion by 2025, forming about 25-30% of the country's GDP (from the current 16%) and giving employment to about 90 Million People. This cannot happen without policy initiatives towards technology adoption. Proactive government policies including 'Make In India', 'Digital India' and 'Smart Cities' will add fillip to I4.0 in India. The smart cities could become the forerunners of the Industry 4.0 environment.

Industry 4.0 needs pool of technology professionals including data scientists, cyber systems experts, technology trainers, project managers etc. India has the advantage of a strong technology ecosystem.

Another unrelated potential is the adoption of I4.0 philosophy to agricultural sector in India. The farming sector can benefit from some of the new technologies. For example, government can use analytic tools to identify the best crops to sow at different areas during different seasons. This information can be used to incentivise the farmers to move towards remunerative farming.

What India must do
  1. Skill Building Initiatives, especially in the high technology areas
  2. Create industry awareness about I4.0
  3. Develop cloud enabled IT Platforms that can be accessed by SMEs
  4. Spruce up the patent regime, enabling faster patent and trademark registrations
Conclusion

Industry 4.0 as an idea that started around 2014, has gained momentum over the last 3 years. The advance has been facilitated by growth of new technologies including cyber-physical systems, big data and analytics and cloud computing. While these technologies even prior to 2014, what makes them Industry 4.0 compliant is the networked nature of deployment. Companies that have adopted these technologies have reaped rich rewards in form of cost reduction and improvement in productivity and efficiency.

Manufacturing Industry, currently forming 16% of country's GDP. With supportive policy framework, the industry has the potential to scale up to about 25 - 30% (1.00 to 1.25 Trillion USD from the current about 0.4 Trillion) in the coming years. Policy initiatives like 'Make in India', 'Smart Cities', 'Digital India' etc,, by providing the necessary hard and soft infrastructure, will act as a catalyst for the industry to adopt advanced technologies. India also has a strong technology ecosystem that can support new technologies. With all these benefits, I see Indian manufacturing industry moving quickly towards Industry 4.0.

The IT Companies in India are at the forefront of enabling global corporations to adopt advanced technologies and this can become a scalable model generating export revenues. Creating I4.0 as a SAAS based offering is one such opportunity.

However, India will have to develop its own I4.0 philosophy keeping in mind its population and the policy objectives like gender equality, equitable technology benefits to all etc.

Industry 4.0: India Case Studies
  1. The Indian Institute of Science (IISc) is building India’s first smart factory in Bengaluru with a seed funding from the Boeing Company.
  2. Bosch, a German auto component manufacturer will begin implementation of smart manufacturing at its 15 centres in India by 2018.
  3. General Electric has invested USD 200 million in the facility in its only multi-modal factory in India where digitally interlinked supply chains, distribution networks, and servicing units form part of this intelligent ecosystem.
References
  1. India must try to profit from ‘Industry 4.0: Karan Billimoria, The Hindu, Feb 18,2016
  2. The India Potential: Bosch India Blog: Dr.Andreas Wolf - Feb 12,2017
  3. Are Manufacturers in India Ready to Adopt Smart Manufacturing? Apr 25,2017
  4. Industry 4.0 / IOT - Products and Solutions: Festo India: 
  5. Industry 4.0 and the Retrofit Opportunity: Festo Global
  6. Industry 4.0: A world of new business models and markets: Festo Global
  7. India and Germany must collaborate to take Industry 4.0 to the next level
  8. Industry 4.0: The future of Indo German Collaboration
  9. Industry 4.0 as a service for digital manufacturing: Forbes India: Jan 10,2017
  10. What is the prospect and future of Industry 4.0 in India? : Quora
  11. What is Industry 4.0?: Quora
  12. 10 Questions and answers about Industry 4.0: Georgio Stergiou: Nov 28,2017
  13. What the Fourth Industrial Revolution means for India: Prajal Sharma: Oct 03,2017
  14. Do countries benefit from I4.0?: Gary Coleman: Jun 21,2017
  15. Industry 4.0 should be India's battle cry: Akash Gupta: Livemint: Jun 09,2017
  16. Industry 4.0 can transform India's manufacturing: ET GBS: Feb 13,2018
  17. Towards smart manufacturing: Industry 4.0 and India: makeinindia.com
  18. How to respond to Industry 4.0: Klaus Schwab: Jan 14,2016
  19. Manufacturing's next act: McKinsey: June 2015
  20. Is your ERP ready for IIOT Challenge?: Terri Hiskey: Epicor
  21. Recent Advances and Trends of Cyber Physical Systems and Big Data Analytics


Apr 2, 2018

ERP Effectiveness Questionnaire


Mar 25, 2018

What is Industry 4.0? Power Point Slideshow

This is a presentation on Industry 4.0, focusing on the following:
Definition, Design Principles, Challenges, Opportunities, Benefits and India Potential...


Mar 16, 2018

What is Industry 4.0?: A primar

Introduction

The idea of Industry 4.0 (I4.0), that started in Germany in 2013, has quickly caught the imagination of the manufacturing industry across the world. Called a new paradigm shift in manufacturing process, I4.0 envisages the integration of cyber-physical systems, big data, modern technologies and cloud computing, supported by reliable internet access, to transform the manufacturing industry globally.

This article starts of by explaining I4.0, its evolution, principles and major benefits. Then we  look at the integration of three elements, IIoT, Cloud Computing and Cyber-physical systems and discuss some of the challenges related to I4.0.

Since this blog focus on ERP, we also look at the features that an ERP Application should have to ensure a smooth transition to I4.0. We round of this article by looking at the role of Big Data and Analytics (5C Systems) in facilitating and benefiting from I4.0.

Definition

Consulting firm McKinsey defines Industry 4.0 as the next phase in the digitization of the manufacturing sector, driven by four disruptions: 

  1. the astonishing rise in data volumes, computational power, and connectivity, especially new low-power wide-area networks; 
  2. the emergence of analytics and business-intelligence capabilities; 
  3. new forms of human-machine interaction such as touch interfaces and augmented-reality systems; 
  4. improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing. 
Evolution of Industry 4.0

Manufacturing Industry has gone through four phases. Industry 1.0 was characterised by the use of steam & water power and manual labour. The use of electricity and assembly lines to help mass production in manufacturing plants signalled the arrival of Industry 2.0. Starting from about '70s, the use of computers and CNC machines for precision manufacturing and automation of production heralded the arrival of Industry 3.0

With use of technology expanding rapidly, Big Data supporting sophisticated and complex analytics, IIoT helping interactions between man and machines and also between machines, Cloud Computing supporting huge data storage and fast retrieval of data and finally, new Cyber - physical technologies like 3D Printing and Collaborative Robots (Cobots) that support rapid prototyping and faster roll out of complex designs, time has come to initiate the new phase, what can be called as Industry 4.0 (I4.0).

At a broad level, I4.0 refers to the change in production and manufacturing techniques that become possible because of the power of modern communication networks.

The following diagram illustrates this evolution.


At its starting point, I4.0 it’s all about networking, between enterprises, factories, machines and individual components so that information can be automatically collected, communicated, analysed, compared and used to improve manufacturing performance and efficiency.

The idea of Industry 4.0 was started in Germany and has quickly caught the fancy of the world. Every country is trying to move quickly to Industry 4.0. With its huge technology talent pool and a facilitating government policies, Indian manufacturing industry has a once in a lifetime opportunity to capitalize on the new trend and establish global competitive advantage.


I4.0 is a strategic initiative of the German Government with the objective of optimizing production across the country. Four companies, Festo, SAP, Siemens and T-Mobile has been included in the steering board. These four companies are responsible for identifying the most effective technologies for the practical aspects of Industry 4.0: enterprise and manufacturing management systems and big data analytics; the electronics, control systems and software; the communication and connectivity; and the physical actuation devices.

Germany has developed a long-term road map for Industry 4.0 covering the next 20 years, covering the short-term priorities and the long term goals. Over the next two or three years, standardisation with respect to communication protocols, CAD, visualisation and simulation platforms have been identified.


There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.

Comparison between factory of today versus factory of I4.0
Principles of Industry 4.0

There are four design principles in Industry 4.0. These principles support companies in identifying and implementing Industry 4.0 scenarios.
  1. Inter-operability: The ability of machines, devices, sensors, and people to connect and communicate with each other via the Internet of Things (IoT) or the Internet of People (IoP)
  2. Information transparency: The ability of information systems to create a virtual copy of the physical world by enriching digital plant models with sensor data. This requires the aggregation of raw sensor data to higher-value context information.
  3. Decentralised decisions: The ability of cyber physical systems to make decisions on their own and to perform their tasks as autonomously as possible. Only in the case of exceptions, interference, or conflicting goals, are tasks delegated to a higher level.
  4. Technical assistance: First, the ability of assistance systems to support humans by aggregating and visualizing information comprehensibly for making informed decisions and solving urgent problems on short notice. Second, the ability of cyber physical systems to physically support humans by conducting a range of tasks that are unpleasant, too exhausting, or unsafe for their human co-workers.

Major Benefits
  1. Optimized factories: Using technology at the design stage to optimize space utilization and smoothen material flow
  2. Improved productivity: Using technology to ensure resource movement within the shop floor to ensure minimal movement. Optimization of material flow leads to cycle time reduction.
  3. Cost savings: Optimum usage of resources ensures reduction in conversion costs.
  4. Analytics based insights lead to better and informed decision making.
  5. Decentralised decision making ensures quick decision making leading to improved turnaround time.
  6. Improvement in employee health and safety by proper design of man machine interaction. In addition, optimum floor design can ensure quick response during emergencies.
  7. Faster response to Job / Configured / Made to Orders, leading to improved customer satisfaction.
  8. Creation of new opportunity sectors, especially in the high technology area.
As per McKinsey, Organizations are already reaping significant benefits through effective use of Big Data, Advanced Analytics, Human Machine Interfaces, Digital to physical transfer etc.

Impact on the business

On the whole, there are four main effects that the Fourth Industrial Revolution has on business—on customer expectations, on product enhancement, on collaborative innovation, and on organizational forms. Whether consumers or businesses, customers are increasingly at the epicentre of the economy, which is all about improving how customers are served. Physical products and services, moreover, can now be enhanced with digital capabilities that increase their value. New technologies make assets more durable and resilient, while data and analytics are transforming how they are maintained. A world of customer experiences, data-based services, and asset performance through analytics, meanwhile, requires new forms of collaboration, particularly given the speed at which innovation and disruption are taking place. And the emergence of global platforms and other new business models, finally, means that talent, culture, and organizational forms will have to be rethought.

With production data available for the asking (through big data), the key tasks for companies will be to structure their data so as to eke out business intelligence out of it. 'Digital Compass', as proposed by McKinsey can help the organizations to do exactly that. The compass consists of 8 value drivers and 26 practical industry levers. Companies can identify the levers that are best suited to solve their specific problems.


Opportunities presented by Industry 4.0

These are a few possible areas where I4.0 could deliver customer value:
  1. Flexible production with 'Plug and Produce' capabilities that deliver smaller lot sizes at competitive prices and quick turnaround times. This will bring 'Assembly Line' to 'Configure / Make to Order' industry. To achieve this, the production systems must be able to make these individualised products directly from Online Order Instruction, without any human input.
  2. Process standardization across various platforms
  3. Energy management: Effective production planning and scheduling to avoid peak energy consumption, energy efficient production processes, optimal loading of machines based on real time information are some of the ways I4.0 can help to conserve energy.
  4. Logistical process: By effective production planning, production can be matched to demand. This reduces wastage and buffer stock. In addition, integration with GPS tracking devices help organizations plan their logistics operations more accurately and provide accurate delivery information to the customer to plan their operations more effectively.
  5. Predictive Maintenance: Sensors linked to machines can communicate any impending operational issues and machine to machine communication can help down a production line and reroute the production to another available line, thereby reducing the downtime.
  6. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.
  7. For Indian IT companies, providing 'Smart Factory', or 'Factory in a Box' as a SAAS offering can be a huge opportunity. 
Facilitating Technologies

Some of the advanced technologies being used currently in manufacturing include:
  1. Artificial Intelligence: The theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.
  2. Composite Materials: A material made from two or more constituent materials with significantly different physical or chemical properties that, when combined, produce a material with characteristics different from the individual components. The individual components remain separate and distinct within the finished structure.
  3. Quantum Engineering: Uses the field of Quantum Technology for Engineering Applications.
  4. 3D Printing (Additive Manufacturing)
  5. Collaborative Robots (Cobots): These are light weight robots that can do mundane and precision tasks more efficiently than human beings.
  6. Cloud Computing is the delivery of computing services—servers, storage, databases, networking, software, analytics and more—over the Internet (“the cloud”). 
  7. Big Data and Analytics
  8. Industrial Internet of Things (IIOT) is a term for all of the various sets of hardware pieces that work together through internet of things connectivity to help enhance manufacturing and industrial processes. The term includes sensors, devices and machines that contribute to physical business processes in industrial settings.
  9. Digital Twin: A digital replica of every physical machine, that will help the managers to perform Scenario Analysis.
Most of these technologies are already available as islands of expensive technology. I4.0 will use the power of Internet and communication networks to integrate these disparate technologies to help smooth deployment.

Challenges
  1. An over reliance on automation could shrink job creation, a risk especially for a highly populous and young nation like India.
  2. Increase in social inequality between 'low skill / low pay' and 'high skill / high pay' jobs.
  3. Data security on the cloud is a huge challenge. Many companies have patented manufacturing technologies and will be wary of moving the processes to the cloud.
  4. Lack of a clear definition of I4.0. At present, even a simple use of mobile app to perform approvals is being included under the current broad definition.
  5. Availability and access to talent, eg. data scientists
  6. Availability of a strong technology provider ecosystem
  7. Infrastructure to re-skill and up-skill existing workforce
  8. Ability to adapt business processes and systems to embed technology
  9. For SMEs, even getting access to the new technologies and identifying business use cases are a challenge
  10. Different legal requirement in different countries will pose a challenge to global rollout of I4.0 by companies. For example, Indonesia do not allow data to be shared outside the country. 
  11. Disparate system to handle different business challenges (One system to handle predictive maintenance, another to handle production etc) will end up negating the benefits of the technology integration.
How ERP Systems can become ready for Industry 4.0

It is important that the ERP System, being the central information hub, support I4.0 technologies. Globally 7/10 ERP Vendors are developing I4.0 ready solutions. I4.0 demands digitization of products as well as processes. Since transactions generated by IIOT creates a lot of information, it is important that ERP system is capable of quickly processing this information and take correct decisions.

Any ERP System, to be I4.0 compatible, should, in the minimum, have the following features.
  1. Simple and scalable core application architecture: The world of I4.0 is dynamic and new technologies and processes get quickly added. The ERP system architecture should be flexible and should quickly adapt to the new requirements without significant changes to the core architecture. Any new patches should not significantly impact the current processes. Architecture should also allow extensions without impacting the program code. SOA architecture is a good example.
  2. ERP System should make real time data available to all department: ERP System should be the single source of truth. ERP System should be able to easily integrate with other applications like MES for accurate real time information to be available from it. This will enable intelligent decision making based on real time data.
  3. Should provide a 'Networked View' of the business: In addition to Production data, the ERP System should also be able to capture Customer Data, Market Data and should have the analytic capability to make sense of the data. In this way, while your CRM systems can portend a change in customer tastes, the same can be communicated to the ERP system to make the necessary process changes as required. 
  4. Integrated data model for Cloud and On Premise: One of the pillars of I4.0 is cloud computing. This means that your ERP System should be cloud enabled. One of the challenges in Cloud enabling is the 'Either / Or' binary. Since the data models are different between On-premise and Cloud, Organizations are forced to take a binary decision. If your ERP system has the same architecture and data model for both On-premise and cloud, Organizations can seamlessly toggle between On-premise and cloud, HQ being On-premise with subsidiaries being on cloud, for example. Information from Machine Sensors can flow to the cloud servers from where they can be easily updated on your On-premise ERP System / Data Warehouse and the notification can flow to the tablets. 
  5. ERP System should be IIOT Compliant: When a machine needs a maintenance, it can send information to the ERP System, which in turn can raise a maintenance work order, run MRP Planning Engine to check for spare parts availability, raise purchase requisitions and send the same for approval etc. In addition, ERP System should also do real time analysis of the available information from the machine sensors and help in tactical decision making like capacity scheduling, sales planning etc.
ERP System is the backbone of I4.0 architecture. Since manufacturing world is rapidly moving to advanced technology, ensure that the ERP System is in lock step with these changes. 

Role of Big Data and Analytics (5C Systems)

From the perspective of I4.0, Manufacturing can be considered as a 5M system consisting of Materials (properties and functions), Machines (precision and capabilities), Methods (efficiency and productivity), Measurements (sensing and improvement) and Modelling (prediction, optimization and prevention).  Additive manufacturing integrates the 5M approach to create new products. 
I4.0 envisages the integration of Cyber-Physical systems and Cloud Computing in Big Data environment. While collecting the data is important, it is far more important that these data provide the right information for the right purpose at the right time. Connecting sensors to machines and machines with each other is only a first step. A good MIS should be enhanced with 5C functions. These are:
  1. Connection (sensor and networks)
  2. Cloud (data on demand and any time)
  3. Content (correlation and meaning)
  4. Community (sharing and social)
  5. Customization (personalization and value add)
An NIST (National Institute of Standards and Technology) sponsored workshop has defined cyber-physical systems as consisting of computational and physical components, seamlessly and closely integrated to perceive changes in the real system. For example, (a) future machines will have a twin (an Avatar) integrated in both the physical and cyber spaces; (b) self-aware sensors can perceive changes in machine behavior with precision meaning; and (c) machines can form communities to enable peer-to-peer comparison. This will help create value in the manufacturing of future.

Conclusion

Industry 4.0 as an idea that started around 2014, has gained momentum over the last 3 years. The advance has been facilitated by growth of new technologies including cyber-physical systems, big data and analytics and cloud computing. While these technologies even prior to 2014, what makes them Industry 4.0 compliant is the networked nature of deployment.

As with any paradigm shift, there are bound to be challenges, however, as the various demonstrable examples show, companies that have adopted these technologies have reaped rich rewards in form of cost reduction and improvement in productivity and efficiency.

Any initiative of this nature will not be successful without strong back office support with a strong ERP application. Industry 4.0 places lot of demand on the ERP system to be comply with the standards. Any ERP system that can meet the critical requirements will be the winner in the future. 

References
  1. India must try to profit from ‘Industry 4.0: Karan Billimoria, The Hindu, Feb 18,2016
  2. The India Potential: Bosch India Blog: Dr.Andreas Wolf - Feb 12,2017
  3. Are Manufacturers in India Ready to Adopt Smart Manufacturing? Apr 25,2017
  4. Industry 4.0 / IOT - Products and Solutions: Festo India: 
  5. Industry 4.0 and the Retrofit Opportunity: Festo Global
  6. Industry 4.0: A world of new business models and markets: Festo Global
  7. India and Germany must collaborate to take Industry 4.0 to the next level
  8. Industry 4.0: The future of Indo German Collaboration
  9. Industry 4.0 as a service for digital manufacturing: Forbes India: Jan 10,2017
  10. What is the prospect and future of Industry 4.0 in India? : Quora
  11. What is Industry 4.0?: Quora
  12. 10 Questions and answers about Industry 4.0: Georgio Stergiou: Nov 28,2017
  13. What the Fourth Industrial Revolution means for India: Prajal Sharma: Oct 03,2017
  14. Do countries benefit from I4.0?: Gary Coleman: Jun 21,2017
  15. Industry 4.0 should be India's battle cry: Akash Gupta: Livemint: Jun 09,2017
  16. Industry 4.0 can transform India's manufacturing: ET GBS: Feb 13,2018
  17. Towards smart manufacturing: Industry 4.0 and India: makeinindia.com
  18. How to respond to Industry 4.0: Klaus Schwab: Jan 14,2016
  19. Manufacturing's next act: McKinsey: June 2015
  20. Is your ERP ready for IIOT Challenge?: Terri Hiskey: Epicor
  21. Recent Advances and Trends of Cyber Physical Systems and Big Data Analytics



Mar 6, 2018

ERP Markets in India

Introduction

An enterprise resources planning (ERP) solution allows companies to integrate their business transactions across the organization. ERP software enables both upstream (vendors) and downstream (customers) integration. This helps the organization to manage their inventory, reduce customer and vendor disputes, reduce working capital requirements, and quickly and accurately report on their financial position to the shareholders.
This article starts off with a focus on the ERP market in India covering the local historical growth in ERP investments starting from around 2012. Since GST has become a critical requirement in India, we look at what GST features must be available in an ERP solution. Next we take a quick look at the trends in the ERP market in India for 2018 and beyond.
Finally we have an overview of the Epicor ERP solution and how it can help companies in India become competitive.
Obtaining the latest data relating to the ERP market in India has been a challenge. To overcome it, I have tried to factor in the data covering the last five years starting from 2012.

The ERP market in India

According to a study by Appsruntheworld.com worldwide the ERP applications market (including cloud based ERP) is projected to reach$84.1 billion by 2021. This will include licenses, subscription, and maintenance revenues. New license revenue will account for about 50% of this. Cloud applications will show a robust growth of about 8% CAGR from 2016 to 2021, from $17.6 billion to $25.9 billion.
As per estimates by Gartner, the enterprise application spending in India (including ERP) will reach$2.39 billion in 2017. According to Infoholic Research, the cloud ERP market in India was valued at $97.8 million in 2015 and is expected to grow at a CAGR of 25.4% between 2015 and 2020. While this is still a small percentage of the overall ERP market in India, it is growing at a terrific pace, mostly driven by Government initiatives and SMEs. 
Among the SME sector, automotive, engineering, manufacturing, steel and consumer durables have shown a very high penetration of ERP solutions. These industries could represent significant potential in the coming years.
SAP, Oracle, and Microsoft continue to be the key players in the ERP market in India. However, the market is very competitive with players including Epicor, Tally, Sage, and Ramco competing for the customer pie. In addition, there is a strong appetite for low cost, open source ERP software, especially in the SME segment. In this segment, cost and customer support continue to be the key factors in the purchasing decision. In addition, availability of cloud offering could become a shortlist criteria.

Critical drivers for the ERP purchase

There are multiple drivers for organizations to turn to ERP solutions. Firstly, companies are turning to ERP solutions to improve their operating efficiency and integrate various application silos. Secondly, to catch up with competition who has achieved a quick ROI on their ERP investments. Thirdly, to increase shareholder value. Markets tend to value companies that use ERP applications higher than those that are not. Fourthly, in recent times, the lower cost of moving to cloud ERP is becoming an attractive option for many companies, especially the SME segment. 

GST support

The immediate challenge in India (and hence the critical purchase criteria for 2018 and beyond) is how an ERP application supports GST requirements. The following are the broad business functionalities relating to GST that any ERP application should handle.
1. Configuration flexibility—the application should handle the critical configurations related to GST including different taxes, rates, HSN (Harmonized System of Nomenclature: An International Product Naming Convention developed by World Customs Organization) codes etc.
2. Seamless transactions—the transactions should easily capture GST related information and calculate the tax impact accurately
3. Versatile reporting—including internal transaction reports, reconciliation reports, external statutory reports, and historical and exception reports
4. Intuitive accounting including GST Receivables/Payable/Paid accounting
5. Integration with the GST portal for GSTR uploads (https://gst.gov.in)
6. Quick and accurate input for credit calculations
7. End to end integration including inventory valuation and financial reporting
Receiving high quality proactive support from the application vendor via patches that are released to handle statutory changes will be a key differentiator.

ERP trends for 2018 and beyond

1. Core ERP solution: India is still an under penetrated market when it comes to ERP. Significant potential exists in the SME segment for core ERP applications to handle inventory management, production scheduling, and order fulfilment. However, in this market, simplicity and ease of use are the top critical success factors. 
2. SaaS: The SaaS (cloud) ERP market in India is still in its infancy. The model is still hybrid, with core applications being on-premise and satellite applications like HCM, CRM, procurement etc. in the cloud. The cloud market in India will be dominated by existing on-premises customers who want to expand to the cloud while new customers could be predominantly SMEs. According to research done by Infoholic Research, the cloud ERP market in India, which stood at $98 Million in 2015 is expected to grow at a CAGR of 25.4% from 2015 to 2020.  A complex taxation system and data security issues remain the major bottlenecks for full fledged cloud adoption in India.
3. Analytics: Getting ERP solutions to support strategic decision making remains a challenge in India. For most customers their ERP system still remains as an excellent OLTP (Online Transaction Processing) system. The focus will shift from descriptive and diagnostic analytics to predictive analytics that can anticipate potential challenges. More companies will use analytics to achieve continuous process improvements.
4. Warehouse and logistics: With the advent of GST, companies will need to look differently at their warehouse and logistics operations. The trend will be to wind down their extensive and complex inter-state operations and move to logistics service providers. This will call for investment in warehouse and transportation management solutions. The companies that can provide simple cloud solutions will have the first mover advantage.
5. Mobility: ERP on the go, mobile first and mobile only will be the mantras going forward. Using ERP systems on mobile phones and tablets will become the de facto features. Mobile will move from being used for notification and approval to end-to-end transactions and reporting.
6. Internet of Things (IoT): Companies will start focusing on integrating their ERP systems with IoT. The manufacturing sector will lead the demand and will use IoT for materials and spares planning as a first step. This opens the market for ERP products with embedded IoT features.

About Epicor ERP

Epicor Software Corporation (www.epicor.com) is a leading global ERP vendor that has been providing best of breed, industry-specific ERP solutions for over 45 years. Globally the company operates in over 150 countries and has more than 20,000 customers worldwide. In India, the company has aggressive plans. Epicor recently partnered with Redington India to focus on the manufacturing industry and capitalize on the opportunities created by the ‘Make in India’ and ‘Digital India’ programs.
As per the Top 10 ERP Systems Report 2017 by Panorama Consulting, Epicor is considered a leading ERP solution for the mid-market segment. It is ranked three for ‘ERP System Functional Score (Breadth of functionality)’ and two for the ‘Time to realize business benefits’. At 3.4% market share, it takes the fifth position in terms of market share in the report
The powerful electronic compliance engines embedded in the Epicor applications enable companies in India to quickly and seamlessly deliver the statutory reports related to GST. The application also enables direct interface with the GST portal to upload and download reports. 
Epicor Electronic Compliance Engine

The compliance engine allows content to be delivered dynamically as and when needed. This, in turn, enables the customer to be future ready today.
Epicor solutions are designed around the unique operational needs of each industry and are available in the cloud, hosted, or on premises. They help customers to better manage business complexity and focus on core growth activities. Epicor solutions support the smallest start-up to the largest multinational, as well as the differing complexities in specific industries. With multitude of deployment options, Epicor is well suited to meet the needs of the customer.
Epicor solutions deliver the choice, flexibility, and agility needed to support strategic initiatives and remove redundant processes. The Epicor ERP system offers a modular approach with robust capabilities focused on reducing costs, streamlining processes, and improving customer responsiveness across the enterprise—all top priorities toward achieving continued growth and profitability.
Epicor provides tailor made ERP solutions for manufacturing, distribution, retail, and services industries. The end to end integrated applications cover business functions including procurement, inventory management, manufacturing, order fulfilment, financials, budgeting, costing, accounting, and financial reporting. 
By implementing a global ERP solution such as Epicor ERP customers can take advantage of modern technologies like artificial intelligence (AI), data analytics, predictive analytics, robotics, Internet of Things (IoT), augmented reality (AR) and others. These technologies can help customers improve their business performance as well as support future growth.
The Epicor ERP solution comes with a single line of code which means that the cloud and on-premises versions are same so the customer doesn’t have to go through a cumbersome time consuming migration process if they decide to switch from one option to the other.

Note: This article is sponsored by Epicor. The information in the related section is provided by the company. All the remaining information is culled from publicly available information in the web, the links to which are mentioned in the 'References' section below.  I do not have any special relation with the company and am not endorsing the ERP product in anyway. This blog continues to be application agnostic.

References

Aug 26, 2017

India Goods and Services Tax (GST): Implications for ERP Supply Chain

Taxes Subsumed Under GST


Taxes Outside the Purview of GST

Modules Impacted by GST

1. Inventory: For Item Tax Configuration
2. Purchasing: For capturing Input Tax Payment
3. Sales Order: For capturing Input Tax Collection
4. Accounts Payable: For Capturing Input Tax Payment (In case Purchasing Module is not implemented or in case of Service Purchases)
5. Accounts Receivable: For capturing Input Tax Collection (In case Sales Order module is not implemented or when selling services)
6. India Localization Application: For Tax Settlement and statutory reporting

New Interfaces required
1. An interface with GST Network (GSTN) to upload returns and settlements

Prerequisites before going live in GST
1. Calculate the Opening GST Balances
2. Review all the interfaces with third party applications3. 

Risks
1. Four types of GST (SGST, IGST, UTGST and CGST)
2. Some items out of GST. So there could be a possibility of different taxes running together
3. Some taxes like Customs duty out of GST
4. Continuation of Cess and Surcharges will make tax settlement complex.
5. Complex Reporting

Mar 28, 2017

GST in ERP: Preparation

If your company is running on ERP, a smooth transition to GST will be the most important challenge that you could face in the coming quarter. With GST expected to roll-out as on 1st July 2017, the date act as a rigid constraint that you have to adhere to.

It is important to plan for the transition. The first step is to understand the implication of ERP and enumerate the key aspects that you should consider.

Here are a few of them.

1. Are you on the latest version? Every ERP Vendor has upgraded their applications to become compatible with GST. So the first step is to review with your ERP Vendor and ensure that you are on the correct version that is adaptable to GST. The information below may be dated. Please check up with the Product Vendor for the latest information.

2. Impact on Registration (Master Update 15 digit GST Registration Number), Returns (Monthly, Quarterly, Annual), Granularity (more details about type of invoices, HSN Codes), Payments, Refunds, Integration with GST Network (GSTN)

3. Impact on Transaction: How to handle Available Stock, Available input credit, Open Transactions like POs, SOs etc, How to handle partial receipts and partial shipments, how to handle Sales Agreements, purchase agreements, long term contracts, Blanket Purchase Orders, Blanket Sales Orders etc

4. Impact on Pricing

5. Impact on Special Transaction Cases: Sales Returns where Shipment made before GST and stocks returned after GST, Goods In Transit etc

6. How to prepare for the transition
  • Impact analysis
  • Version readiness
  • Report readiness
  • Data readiness (ensure correct and complete master data)
  • Transactions assessment and fitment to GST
7. 10 Changes required in ERP
  1. Ensure that the transactions process comply with GST. Some process might need detailed review. These include Interstate Stock Transfer, Outsourcing / Subcontracting etc. In addition, month end process will need to be reviewed to ensure accurate calculation and returns submission
  2. Ensure that Chart of accounts are updated with the required account codes and setups
  3. Ensure that RICE / CEMLI (Reports, Interfaces, Conversions and Extensions / Configuration, Extension, Modification, Localization, and Integration) components are properly updated
  4. Ensure that master data (Organization, Item, Vendor, Customer, Price List) etc are correctly and completely updated
  5. Reduce the number of Open Transactions / Documents (Open PO, Open SO, WIP etc) by closing / Cancelling them
  6. Complete partial transactions like Partial receipt (Receive in full or cancel) and Partial Shipments (Ship fully or cancel), Partial Production Orders (Complete the same, no WIP)
  7. Revalue Stocks if required
  8. Migrate existing tax credit from VAT and CENVAT and transfer them to correct accounts as per GST Law.
  9. Test the standard reports available in your ERP application
  10. Integrate with the GSTN

Feb 26, 2017

ERP For SMEs in India: A Presentation

Here is a presentation that I made to IMCI Bangalore on 'ERP for SMEs in India: Critical Success Factors, Risks, Challenges and Benefits'. This presentation will autorun with Slides Changing every 10 seconds.

Feb 12, 2017

Mr.ERP Consultant, are you Tiger Woods or PV Sindhu?



As all of us know, Tiger Woods plays golf

Some of you may not know Sindhu. She is the Indian badminton player who won the silver medal in the women's singles in the just concluded Rio Olympics.

With regard to the criteria for winning, these two games are philosophically different. In golf, you win by holding the ball in your  possession for as long as possible. In badminton, on the other hand, your success depends on how quickly you can transfer the shuttle to the opponent's court.

In golf, you keep the ball, you win. In badminton, you release the shuttle, you win.

Based on their approach to resolving issues, I categorize ERP consultants into two groups, Golfer and Badminton Player aka Woods and Sindhu

Woods keep the issues with himself. Most of the time, these issues are beyond his control, but he does not do a clean transfer of the issue to the relevant team that can get the issue resolved..

A typical conversation between me and Woods will go as follows.

Me: That issue, which had been open for the last three months, has it been resolved and closed?

Woods: No Ram, it is still pending. 

Me: Why this delay? What is the problem?

Woods: I do not have the required resources. In addition, I need infrastructure to test the solution.

Me: Have you asked the resourcing team for resources?

Woods: There is no use informing the resourcing team. They can't (won't) do anything. They do not help projects. 

Me: How are you planning for resources?

Woods:I am trying to talk to different project managers to get the resources.

Me: Why don't you escalate the issue? 

Woods: Ram, shall I tell you something? This is a bureaucracy, this Organization. Here you do not get any help, only mails get exchanged. You only have to manage to resolve your issues. Same is the problem with Infrastructure. The infra team cannot or do not help.

Me: Have you informed Infra team?

Woods: I sent a couple of mails. No response. Now I am trying to get the infra.

Me: Why have you not informed me yet?

Woods (looking peeved): Ram, this is not fair. I have been marking you in all the mails.

While Woods is the owner of the issue, he is holding on to challenges over which he has no control. 

He neither transfers, informs, escalates nor seek help.

Upshot? The issue (the golf ball) is stuck with him.

Sindhu thrives on transfer. She will only work on the items over which she has control. She will transfer all the obstacles to relevant teams and then follow up. She will use all means of communication, both formal and informal. She will not only transfer obstacles, but will receive formal acknowledgement that the other team has received the issue and are looking into. She will seek clarification from customer, escalate internally,  seek help and do everything till the obstacles are removed and the issue comes back under her control where she can take action. Her communication is action oriented, issue specific, explains the urgency of the information and sets the right context.
 
Sindhu, almost never, has anything pending with her that she is not working on.

Now you tell me....

Who can close issues faster? Woods or Sindhu?
Who gets better customer satisfaction ratings? Woods or Sindhu?
Who keeps complaining? Woods or Sindhu
Who is a problem solver? Woods or Sindhu?

What kind of consultant are you? Woods or Sindhu?
You tell me.....