Estimating the total cost of ownership in case of enterprise solutions like ERP is very complex. In addition to the cost of the ERP package, there are many additional costs – visible, invisible, one-time and recurring. It can be a substantial drain on resources, if not planned properly. It can also spring some costly surprises during the course of the project.

Several companies are real-izing the importance of enterprise solutions like ERP and the market is growing. However, the awareness levels are still not very high and chances of ERP implementation projects going out of control are plenty. ERP vendors and implementers are generally not very keen on giving a clear picture to the customer right in the be ginning.The sales people are under the pressure of their quarterly targets and focus more on getting the purchase or derthan building up a successful lifelong relationship with the customer.

That is why one quite often hears comments like - "ERP packages are now quite cheap. You can get one for as low as 30to40 lacs!" Add to this the overheads, consultants' fees, training costs and the infrastructure costs and ERP does not look so cheap anymore. If you have branch offices, manufacturing units and stockists / distributors spread all over the country; then the infrastructure costs can be almost comparable to the cost of the ERP solution itself.

I had narrated the story of a failed ERP implementation earlier in these columns, where the customer had lost the benefits of ERP because of lack of proper connectivity at different locations. It is equally important to provide the right connectivity solution across the enterprise, as it is important to choose the right ERP solution. Having an ERP solution with out the necessary connectivity is like buying a cart but not buying a horse because it is too costly and needs to be fed all year round!

Maintaining ERP budgets
Here is a case study of how the cost of ownership for an ERP solution plus a Connectivity solution can be handled in aphased manner. Also, the overall budget can be cut down in the process by making the connectivity solution pay for it selfeven before the ERP solution is rolled out. It is like buying the horse before the cart and making it pay for itself be fore you buy the cart.

Indoco Remedies is a large pharmaceutical company with 6 manufacturing plants and over 30 'C & F' agents/ branch offices spread across the country. Being in business for almost six decades, they already have a legacy system inplace, which works on data coming from locations through e-mails and the cost of communicating with the locations onl ongdistance STD calls runs into lakhs of Rupees. An ERP solution to handle the entire business processes has become a must.

Indoco evaluated many ERP packages for suitability to its business and obtained detailed proposals from the short-listed vendors. When the cost estimation for the entire project including the cost of necessary infrastructure and connectivity was done, they realized that the cost of providing the necessary infrastructure to run the ERP solution smoothly and effectively across the enterprise was quite high.

As the requirements of a pharmaceutical company are very different from other industries for an ERP solution, it was going to be a long process to select the best fitting ERP solution and to go through Business Process Reengineering and Change Management.

During a brain-storming session, Shailesh Modi, Senior Manager-Information Technology, at Indoco, came up with an idea to effectively reduce the burden of the connectivity solution by making it pay for itself even before the ERP solution was rolled out. Impressed by the advantages of MPLS and VoIP technologies and with full support from the Directors of the company, he went ahead with the connectivity solution even before the final choice of the ERP solution was made, as the first step in building the state-of-the-art IT infrastructure at Indoco.

Based on the MPLS and IP-based services provided by the public sector giant BSNL and relying on the high technology experience and all India reach and support network of Allied Digital Services as the systems integrator, Sailesh worked out a connectivity solution that will almost pay for itself by the time the ERP goes live.

BSNL services cost-effective
An advantage of going with BSNL is that the MPLS VPNs are maintained on their own equipment, which has provided significant cost savings and eliminated the need to add more technical manpower at Indoco. The VoIP service is already up and running at all locations and all the 'hot-lines' are ringing without the heavy burden of long distance STD bills. Citrix servers have been deployed to work with the legacy system at the moment. These will also be utilized when the ERP solution is in place.

Citrix servers will play a major role in providing centralized application deployment and optimizing the bandwidth utilization. The solution is aimed at ease of administration and real-time information access across the enterprise and to minimize data transfer cost and maximize data transmission speed. On the data transfer front, pharmaceutical companies generally require more bandwidth during a short period at the end of every month. This is possible through the provision of 'High Bandwidth On Demand' facility.

Just the cost saving and increased efficiency due to VoIP and Citrix deployment is expected to pay for the initial investment in infrastructure by the time Indoco switches over from the legacy system to the ERP solution in the near future. Other services like video conferencing and enterprise wide e-mail messaging are already on the shopping list of Indoco and will be rolled out soon using the available infrastructure.

What this case study brings into focus is the way solution providers and customers can work in tandem to create a solution with a long-term advantage for both.

The author is an independent consultant, and can be reached at: dongre@usa.net

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