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EXECUTIVE SUMMARY
JSW Steel Coated Products Ltd. is a Public company. The project has been undertaken on the
topic “HOW ACCOUNTING AND ERP BENEFICIAL TO THE COPANY.” The
principal aim of this study is to investigate the accounting benefits that the adoption of an
!P system by companies in "ndia may entail in relation to !P user satisfaction. This study
e#plored the impact that the !P system has had on accounting information and practice.
This study also e#amined $hether differences e#ist bet$een accountants and "T professionalsconcerning ho$ each group assesses !P accounting benefits and !P user satisfaction.%urthermore& this research identifies factors related to accounting $hich affect the level of !P user satisfaction. "mplications of these results for practice and research are provided.
The findings of this study $ill be of value to any companies that are considering the inclusionof their accounting techni'ues and operations in an !P system.
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COMPANY’S PROFILE
JSW Steel is "ndia(s leading private sector steel producer and among the $orld(s most
illustrious steel companies.
JSW Steel is around )* billion global conglomerate spread over si# locations in "ndia and afootprint that e#tends to the +S& South ,merica and ,frica.
The flagship company of around )-- billion JSW roup& JSW Steel is testament to decadesof e#perience and a dynamic culture that have culminated in the company becoming theleading provider of speciali/ed steels in "ndia.
JSW Steel(s business vision is centered on sustainability. We reali/e that only by creating asustainable future can $e pave the $ay for our goal of a self0reliant "ndia. This belief hasal$ays stood us in good stead. With a conviction in our values& $e have gro$n from a singlesteel mill in -*12 to the large operations that define us today.
JSW Steel is a pioneer in the use of innovative technology that keeps us ahead of the curve.
3ot only do $e offer the $idest product portfolio in "ndia& $e also further leverage our capability to customi/e offerings to match customer e#pectations.
4ur strategy of al$ays staying on the leading edge of technical advancement has led to partnerships $ith global sector leaders such as J% Steel& 5arubeni "tochu Steel& Pra#air andSever field !o$an Plc. This technological edge has helped our plants rank among the lo$est0cost steel producers in the $orld.
The strong focus on innovation and !67 has led to JSW Steel being recogni/ed $orld$ideas a purveyor of high0end& value0added steel. 3early 89 percent of our products today arehigh value steels: $e intend to take this figure up to ;9 percent. 3early one fifth of our
products are e#ported and $e are "ndia(s largest e#porter of coated products $ith a presencein over -99 countries.
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4ur strategic approach to gro$th has driven the Company(s for$ard and back$ardintegration initiatives. 4ur steel plants in engal and Jharkhand.
,t JSW& sustainability is the touchstone on $hich $e have evolved our operational processes.4ur systems for governance& manufacturing& supply chain management& human resourcemanagement& community engagement& mitigation of our carbon footprint and customer engagement& among others& are benchmarked against global best0in0class standards.
4ur deeply held beliefs on doing business the sustainable $ay have led to strong partnershipsamong the communities $here $e operate. The success of our models for land ac'uisitionand community engagement make them torchbearers for "ndian industry. The canopy of our CS! ?corporate social responsibility@ initiative covers micro0level engagements as $ell as
macro development programs that leave a measurable positive impact in every location $here$e have a presence.
Histo!
The JSW roup(s foray into steel manufacturing began in -*12& $hen it set up the Jindal "ronand Steel Company $ith its first steel plant at Aasind near 5umbai. The ne#t t$o decadessa$ significant e#pansion and several ac'uisitions& follo$ing the merger of Jindal "ron andSteel Co ?J"SC4@ and Jindal Aijayanagar Steel Ltd ?JASL@ in 299;. Today JSW Steel has
plants in si# locations in "ndia B Aijayanagar in
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"SW #t T##$%
T!$&' Steel 5ill
A 5aharashtra
Po(%)ts' Cold rolled& color coated and galvani/ed steel.
O*+&s' JSW Steel Limited
S,#&,o-(&s' JSW roup
The Tarapur plant marks one of the first milestones for the JSW Steel. This plant $as
originally inaugurated on --th 5ay -*D8 by Eon. Aasant !ao 3aik. The than Chief 5inister
of 5aharastra state& and the same $as ac'uired by Late Shri 4. P. Jindal on *th 3ovember
-*12& from Piramal Steel Limited and $as renamed as Jindal "ron and Steel Company. The
Company $as later merged $ith Jindal Aijayanagar Steel to form JSW Steel.
The plant offers coated products catering to several sectors. Tarapur plant specialised in
galvani/ing& alvalume and colour coated steels. "t is "ndia(s largest producer and e#porter of Coated Products.
The Tarapur plant has %ive ?;@ Cold rolling mills& %ive ?;@ Coated strip 7ivisions& $hichincludes T$o ?2@ 7ual pot alvanising cum alvalume Lines& T$o ?2@ Colour Coated lines 6a =9 5W Captive Po$er Plant.
The plants total capacity is 9.D; million tones per annum ?including ongoing projects@. "tsources coils from the JSW Steel Aijayanagar 6 7olvi plant to manufacture value0added
branded steel products.
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UNIUE FEATURES
• The Tarapur plant is speciali/ed for the +ltra Thin Coated Products.
• The Tarapur plant features t$o dual product lines for galvani/ed cum alvalume $ith
a coating capacity of 9.8; 5TP,.
• "t also has =9 5W Captive Po$er Plant ?CPP@ to meet the po$er re'uirement of both
Tarapur 6 Aasind plant.
• Tarapur has a /ero discharge facility having a multi0effect evaporator system for
effluent treatment.
• "t has a uni'ue service center facility to meet the customi/ed re'uirement of various
segment like #port& 45& !etail for their cut sheetF corrugation and profiling re'uirement• "t has also installed rain$ater harvesting system to meet its $ater re'uirement.
PLANT INFORMATION
The Tarapur palnt features E!SFpickling lines& cold0rolling mills and metal0coating lines. The plant uses regenerative thermal o#idisation for heat recovery for LP saving in colour coating lines.
The unit uses technology from >"C "nternational "nc& +S,& and >lueScope& ,ustralia& besides e'uipment from Eatch& ,ustralia ?for pot e'uipment@& Spooner& +< ?for after0potcooling@ and ,ja# Tocco& +S, ?for ceramic pot and induction heating@.
,s part of its move to conserve electrical energy& the Tarapur unit is installing solar po$er panels& replacing old 7C motors $ith energy efficient induction motors and installing L7lights in upcoming plants.
PRODUCTS PORTFOLIO
The Tarapur $orks produces colour0coated product brands such asG
Jindal Aish$as ?" brand@
JSW Aish$as Plus ?,LA,L+5 brand@
JSW Colouron and
JSW Colouron Plus ?pre0painted galvani/ed brands@ and
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JSW Pragati& a ne$ pre0painted ,LA,L+5 brand.
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VISION AND MISSION OF "SW
Visio+lobal recognition for 'uality and efficiency $hile nurturing nature and society
Missio+
Supporting "ndia(s gro$th in steel domain $ith speed and innovation
Co& /#-%&
• Transparency
• Strive for e#cellence
• 7ynamism
• Passion for learning
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O P "INDAL GROUP
Shri. 4 P Jindal& an industrialist par e#cellence under $hose aegis the 4 P Jindal roup gre$from strength to strength. >ut for the $orld at large Shri 4. P. Jindal $as much more thanthat. Ee $as a leader of the masses& someone $ho $ould often champion the cause of the
poor and do$ntrodden. Ee $as not just a celebrated politician& but also a great humanitarianand an avant0garde visionary. Eis life both as an industrialist and as a social $orker left anindelible mark on this nation. ,nd for us at the 4 P Jindal group& his life gives us inspirationto touch ne$ heights.
The Jindal roup is a +S) -1 billion conglomerate& $hich over the last three decades hasemerged as one of "ndiaHs most dynamic business organisation. The Jindal roup $as
founded in -*;2 by steel visionary Shri 4. P. Jindal& a first0generation entrepreneur $hostarted an indigenous single0unit steel plant in Eisar& Earyana.
4ver the last = decades the roup has gro$n to be a +S) -; billion& multi0national and multi0 product steel conglomerate $ith business interests spanning across mining& po$er& industrialgases& port facilities and of course steel making. %rom mining iron ore and coal& the group
produces sponge iron& ferro alloys and a $ide range of hot0rolled and cold0rolled steel products ranging from E! coilsFsheetsFplates& hot0rolled structural sections and rails to C! coilsFsheets& high0grade pipes and value added items such as stainless steel& galvani/ed steel6 coated pipes. "t has not only diversified into po$er generation but also into petroleum&infrastructure& diamond and high value metals 6 mineral e#ploration. Presently the group has
manufacturing outfits across "ndia& +S& +< and "ndonesia and mining concession in Chile&"ndonesia 6 5o/ambi'ue and marketing representativeHs offices across the globe.
ro$th has been a $ay of life for the Jindal roup and its motto all along has been Hro$th$ith a social conscience.H The group places its commitment to sustainable development& of its
people and the communities in $hich it operates& at the heart of its strategy and aspires to bea benchmark in this direction for players in the industry the $orld over. The groupHs strengthlies in dynamic and aggressive approach of the leaders of the group. These leaders are noneother than the four sons of Shri 4. P. Jindal. Their appetites for gro$th are enormous andhave a clear vision of being recogni/ed as best in the industry by consolidating its corestrengths. +nder their leadership respective companies managed by them as mentioned
hereunder have gro$n by leaps and bounds.
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The group has already announced its intention to set up reenfield steel plants and po$er plants in the state of West >engal& Jharkhand& Chhattisgarh& 4dhisa& !ajasthan& 5aharashtraand
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"i+(#- St&&- 0 Po*& Lt(' JSPL is one of the leaders in Steel 5anufacturing and Po$er eneration in "ndia. JSPL is the largest private sector investor in the State of Chhattisgarh
$ith a total investment commitment of more than !s. -9&999 crores. "t is also setting up a I
million tonne steel plant in 4rissa $ith an investment of !s. -=&;99 crores and a I milliontonne steel plant in Jharkhand $ith an investment of !s. -;&999 crores. Jindal Po$er Limited&
$holly o$ned subsidiary of JSPL& is setting up a -999 5W 4 P Jindal Super Thermal Po$er
Plant at !aigarh& $ith an investment of over !s. 8;99 crores. JSPL has also ventured into
e#ploration and mining of high value minerals and metals& like diamond& precious stones&
gold& platinum group of minerals& base metals& tar sands etc.
"SW St&&- Li1it&(' JSW Steel Ltd is a fully integrated steel plant having units across
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2. CHART OF ACCOUNTS 3COA4
, chart of accounts ?C4,@ is a financial organi/ational tool that provides a complete listing
of every account in an accounting system. ,n account is a uni'ue record for each type of
asset& liability& e'uity& revenue and e#pense.
, C4,& $hich lists the names of the accounts that a company has identified and made
available for recording transactions in its general ledger & establishes the level of detail tracked
in a record0keeping system. Typically& a C4, contains the accounts( names& brief descriptions
and identification codes.
"n practice& the C4, serves as the foundation for a company(s financial record keeping
system. "t provides a logical structure that facilitates the addition of ne$ accounts and
deletion of old accounts.
Within the C4,& accounts $ill be typically listed in order of their appearance in the financial
statements. Typically& >alance sheet accounts are listed first follo$ed by the income
statement accounts.
BALANCE SHEET ACCOUNTS Assets Liabilities Owner's (Stockholers'!"#$it%
INCOME STATEMENT
ACCOUNTS4perating !evenues
4perating #penses
3on0operating !evenues andains
3on0operating #penses and
Losses
,n important purpose of a C4, is to segregate e#penditures& revenue& assets and liabilities so
that vie$ers can 'uickly get a sense of a company(s financial health. , $ell0designed C4,
not only meets the information needs of management& it also helps a business to comply $ith
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financial reporting standards. , company has the fle#ibility to tailor its chart of accounts to
best suit its needs. Within the categories of operating revenues and operating e#penses& for
instance& accounts might be further organi/ed by business function andFor by company
divisions.
, chart of accounts $ill likely be as large and as comple# as the company itself. ,n
international corporation $ith several divisions may need thousands of accounts& $hereas a
small local retailer may need as fe$ as one hundred accounts.
DRAWERS5 TITLES5 AND ACTIVE ACCOUNTS
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,ccounts are organi/ed hierarchically according to dra$ers& titles& and active accounts. Theorgani/ation of the chart of accounts follo$s ,,P in $hich there is a separate Kdra$er for accounts representing assets& liabilities& e'uity& revenues& cost of sales& e#penses& financing&and other revenues and e#penses ?see level - in the figure@. Within each dra$er& you organi/eyour accounts by level in a logical fashion appropriate to your financial accounting processes.
7ra$ers are the organi/ational unit on the top level. Mou cannot change the predefineddra$ers provided $ith S,P >usiness 4ne.
very FL account is defined as either a title account or an active account. , title accountgroups together all of the active accounts belo$ it ?see level 2& =& and 8 in the figure@. "nfinancial reports& a title summari/es all of the balances of each active account belo$ it. ,ctiveaccounts contain postings of transactions ?see level 8 and ; in the figure@. Mou candifferentiate titles and active accounts by their te#t color titles appear in blue& active accountsappear in either green or black. reen accounts are control accounts that have been defined asdefault FL accounts for automatic posting of transactions in S,P >usiness 4ne. >lack accounts are those active accounts that have not been selected in FL account determination.
%or more information& see FL ,ccount 7etermination. The number of levels in your chart of accounts may depend on your locali/ation and common business practices. Some countrieshave a legally re'uired number of levels. S,P >usiness 4ne provides predefined charts of accounts for individual countries based on local re'uirements. 7iscuss $ith your partner $ho
predefined chart of accounts to use& and $hat additions and adjustments are necessary for your company
6. MEANING OF ENTERPRISE RESOURCE PLANNING
nterprise resource planning ?!P@ is business
management soft$are that allo$s an organi/ation to
use a system of integrated applications to manage the
business. !P soft$are integrates all facets of an
operation& including product planning& development&
manufacturing processes& sales and marketing. "n order
to understand computer net$orks better& it $ould be
helpful to have an overvie$ of the applications
running on the net$ork. !P or nterprise !esource
Planning is an important enterprise application that
integrates all the individual departmentsFfunctions in a
single soft$are application.
Systems make it easier to track the $ork0flo$ !P
across various departments and reduce the operational costs involved in manually tracking&
and perhaps duplicating data using individual 6 disparate systems. "n this article& let us have
a look at the advantages and disadvantages of implementing !P ?nterprise !esource
5anagement@ Systems.
nterprise !esource Planning& for further $ill be abbreviated as !P& has no$ become veryimportant part in the industrial $orld and corporation. ,utomation and integration of all
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functions of involved in the process of forming business !P as an information system
capable of facilitate the flo$ of information bet$een all functions business $ithin the
organi/ation& as $ell as set relationships $ith stakeholders. !P soft$are first appeared on
the market as proprietary and commercial soft$are& because it until no$ vendors such as
S,P& PeopleSoft and oracle still dominates the !P soft$are market. >ut the dominance of commercial soft$are started deterred from open source soft$are movement gaining in
popularity.
!P stands for enterprise resource planning& is a soft$are system that aims to serve as a
backbone for your $hole business. "t integrates key a business and management processes to
provide a sky0level vie$ of much of $hat(s going on in your organi/ation. !P tracks
company financials& human resource data and all the manufacturing information such as
$here you put your inventory and $hen it needs to taken from the parts $arehouse to the
shop floor.
%or Process driven companies it $ould have HrecipeH and HbatchH controls and for project
companies like construction& it $ould be HprojectH control rather than Hshop floorH control. "t
can be monolithic or modular& clientFserver or $eb based.
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ADVANTAGES OF ERP 3ENTERPRISE RESOURCE
PLANNING4 SYSTEM
-. Complete /isi7i-it! into all the important processes across various departments of an
organi/ation ?especially for senior management personnel@.
2. ,utomatic and coherent *o89:-o* from one department F function to another to ensure
smooth transitionF completion of processes.
=. , unified and single &$oti+; system to analy/e the statisticsF numbersF status etc in real0
time& across all the functions F departments.
8. Since s#1& so:t*#& is used across all departments N this can avoid individualdepartments having to buy and maintain their o$n soft$are systems.
;. Certain !P vendors can e#tend their !P systems to provide B%si+&ss I+t&--i;&+)&
functionalities as $ell.
I. ,dvanced &9)o11&)& i+t&;#tio+ is possible $ith !P systems that can handle $eb0
based order trackingF processing.
D. Single 7atabase is implemented on the back0end to store all the information re'uired by
the !P system and that enables )&+t#-i
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DISADVANTAGES OF ERP 3ENTERPRISE RESOURCE
PLANNING4 SYSTEMS
-. The )ost of !P Soft$are& planning& customi/ation& configuration& testing&
implementation& etc is too high.
2. !P deployments take =96 !s to get completed and fully functional.
=. Too little )%sto1i $#!7#)8 may not be reali/ed immediately after the !P implementation
6 it is 'uite difficult to measure the same.
;. The $#ti)i$#tio+ of users is very important for successful implementation of !P
projects N So& e#haustive user training and simple user interface might be critical. >ut !P
systems are generally difficult to use ?and learn@.
I. There may be additional i+(i&)t )osts like ne$ "T infrastructure& upgrading the W,3
links& etc.
D. Mi;#tio+ of e#isting data to the ne$ !P systems is al$ays difficult to achieve as $ithintegrating !P systems $ith other stand alone soft$are systems.
1. !P implementations are difficult to achieve in (&)&+t#-i
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WHY ERP IS SO IMPORTANT
"nter&rise eso$rce lannin) &ro*ies +an% bene,ts to b$siness s$ch as
=. E+,#+)& $o(%)ti/it!5 :-&?i7i-it! #+( )%sto1& &s$o+si/&+&ss @
-% inte)rate core b$siness &rocesses to)ether in one sin)le a&&lication. it hel&s
co+&an% +a/i+ie the ecienc% o b$siness &rocess across the entire
or)aniation lant +an$act$rin) can &ro$ces &ro$ct aster ncrease on ti+e
eli*er%. ncrease &ro$cti*it%. ncrease abilit% to orecast e+an to s$&&lies.
ncrease orer ca&acit%. an i+&ro*e c$sto+er ser*ice ($sto+er elationshi&
ana)e+ent (!!
2. E-i1i+#t& )osts #+( i+&::i)i&+)i&s @ sin) an " s%ste+ to stanarie b$siness &rocesses can ra+aticall%
i+&ro*e co+&an%s o&eration " enable co+&an% to +ana)e relationshi& with
*enor res$lts in lower cost or &$rchase ite+s -etter reso$rce +ana)e+ent
res$lts in +ore in*entor% t$rns an ecrease the le*el o ineciencies
6. D#t# )o+sist&+)! @
-eca$se an " s%ste+ inte)rates all b$siness +ana)e+ent $nctions. it
ecreases le*el o inconsistenc% inor+ation ro+ ierent s%ste+s :h$s. b%
$sin) " s%ste+. +ana)ers can )ather correct inor+ation an +ake a ri)htecision
. E?t&+( !o% 7%si+&ss %si+; t,& I+t&+&t @
-% inte)ratin) all b$siness $nctions to)ether in one s%ste+. it increases abilit%
o a co+&an% to $se internet as &art o the b$siness strate)% ;eb
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. CONCEPTUAL COMPONENTS OF ERP
>efore $e begin to implement !P system& $e should to understand the high Concept or !P model.
The !P model is consists of four components $hich are implemented through a
methodology. ,ll four components are
=. T,& so:t*#& )o1$o+&+t is the component that is most visible part and seen as the !PProduct $hich is not true. "t consists of several modules such as %inance& Euman resource&Supply chain management& supplier relationship management& customer relationship& and
business intelligent.
2. Po)&ss F-o* is the model that illustrates the $ay ho$ information flo$s among thedifferent modules $ithin an !P system. >y creating this model makes it easier tounderstand ho$ !P $ork.
6. C%sto1& 1i+(s&t >y implementing !P system& the old $ays for $orking $hich user understand and comfortable $ith have to be changed and may lead to users( resistance.mployee0raised facts& beliefs& and values are good indicators of $hat may cause their resistance to change. %or e#ample& some users may say that they have spent many years
doing an e#cellence job $ithout help from !P system. This is the value and belief that usershave to$ard ne$ !P system. "n order to lead !P implementation to succeed& the company
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need to eliminate this kind of negative value or belief that users have to$ard ne$ system. ,tPratt 6 Whitney Canada& top management not only provide the resource& but they alsoformulated a clear vision of goals that they $ished to achieve from the project. >y doing so&it helped to guide employee e#pectations the benefits of ne$ system.
. C,#+;& M#+#;&1&+t "n !P implementation& Change needs to be managed at
several levels.
8.- +ser attitude !esistance to change is a big problem that can lead to project failure. "f thecompany need to success in implementing ne$ system& users need to be understand $hat thene$ system is and give a commitment to ne$ system. >y doing so& a company need to have agood management plan and implementation.
8.2 >usiness process changes $hen ne$ system is implements& the business processes are
also changed ?Legacy systems are removed@. Thus& a company should have a plan for thesechanges.
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. PRO"ECT LIFE CYCLE IN ERP IMPLEMENTATION
"n project life cycle& there are four stages that a company should to follo$.
=. Po&)t Co+)&$t>I+iti#tio+ This stage determines the scope of development. "f this
stage is not performed $ell: it is unlikely that the project $ill be successful in meeting the
business(s needs. The key project controls needed here is an understanding of the business
environment and making sure that all necessary controls are incorporated into the project ?>y
using >P! ?>usiness Process !eengineering@ ,ny deficiencies should be reported and a
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recommendation should be made to fi# them. Project 5anager& Project governance& and core
project team also have been assigned in this stage.
2. Po&)t P-#++i+; in this stage of !P implementation& Project management includesfinali/ing the detailed planning process and re'uirements ?Technology& Eard$are& Soft$are&
7ata& and %unctionality $hich involves finali/ing the project scope& schedule& resource
re'uirements& 'uality and risk concerns& plus any organi/ational ?e.g.& centrali/ation versus
decentrali/ation@ issues. This stage should produce a re'uest for proposal ?!%P@ to be sent to
potential vendors. When sending out the !%P& project planners should address an evaluative
scheme for comparing and ranking vendor responses such as a $eighted scoring approach.
"t $ould include factors each vendorHs product are to be evaluated against and their relative
$eights. enerally& scoring is completed after all !%P responses have been received.
6. Po&)t E?&)%tio+ in this stage vendor has been selected and planning proceeds for
s$apping soft$are previously used $ith the ne$ !P package. The most important issue in
this phase is to ensure project activities are properly e#ecuted and controlled. 7uring the
e#ecution phase& the planned solution is implemented to solve the problem specified in the
projectHs re'uirements. The e#ecution stage includes the actual implementation of the designor plan. "n soft$are systems& this includes conversion ?transfer of data from an old system to
a ne$ system@& documentation& and training. Training is also important because it helps users
use the soft$are correctly. The bulk of the projectHs $ork and largest capital e#penditure is
reali/ed in this stage.
. Po&)t C-os%& The final stage of the !P implementation project00 closeoutFoperation
and maintenance0includes carrying out the usual bug fi#es& responding to enhancements that
$ere not included in the original implementation& and preparing a final report. The report
should include a criti'ue of $hat $ent right and $hat $ent $rong over the life of the project
so that lessons learned may be documented and incorporated into future projects.
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GUIDELINE FOR ERP IMPLEMENTATIONS IN PRO"ECT MANAGEMENT
D&)i(i+; o+ $o&)t s)o$& 9 The scope of an !P project has several components.
The !P project team must decide $hich business processes $ill be included in theimplementation and it should not be changed fre'uently $hich $ill affect other area
and project timeline. The scope should be build to prevent Knever ending project.
T,& Ri;,t St#:: o+& @ It is of the major issues $ith any "T project is the staffing
issue. ood technology staffs& particularly those $ith deep !P e#perience are
e#tremely hard to find. Since itHs difficult to transition !P team members on and off
projects thus by lo$er rate of turnover is importance.
Po&)t s),&(%-i+; @ "t is the project manager should to manage a good time line that
can ma#imi/e efficiency of resource.
Mo+ito Po;&ss 9 The success criteria should be clearly defined in the procedures&
methods& and techni'ues that are part of a high 'uality project control system.
Standards and techni'ues for measuring the 'uality of performance e#pected from the
ne$ system should be defined early& and redefined as needed over the life of the
project.
T,&& 1ost )o11o+ 1ist#8&s o: ERP I1$-&1&+t#tio+
Fo)%si+; o+ T&),+o-o;! There is no evidence any$here in the history of "T
that soft$are alone $ill solve a business problem.
I;+oi+; t,& i1$ot#+)& o: &%i&1&+t (&:i+itio+ many companies try to
adopt !P system $hich doesn(t fit to business re'uirement $hich generally
lead to project failure.
"%1$i+; :o1 t,& R&%i&1&+t (&:i+itio+ to t,& (&/&-o$1&+t $,#s& 5ost
of projects have to deliver the system in the timeline& thus they may skip some
important implementation steps. %or e#ample& Project manager may skip the
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change manage process $hich may create users( resistance to ne$ system and
lead to project failure.
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. MEANING OF ACCOUNTING
,ccounting& as an information system is the process of identifying& measuring andcommunicating the economic information of an
organi/ation to its users $ho need theinformation for decision making. "t identifiestransactions and events of a specific entity. ,transaction is an e#change in $hich each
participant receives or sacrifices value ?e.g. purchase of ra$ material@. ,n event ?$hether internal or e#ternal@ is a happening of conse'uence to an entity ?e.g. use of ra$ materialfor production@. ,n entity means an economic
unit that performs economic activities. The
primary function of accounting relates torecording& classification and summary of financial transactions& journalisation& posting& and preparation of final statements. These facilitate to kno$ operating resultsand financial positions. The purpose of this function is to report regularly to theinterested parties by means of financial statements. Thus accounting performshistorical function i.e.& attention on the past performance of a business: and thisfacilitates decision making programmed for future activities.,ccounting records and financial statements provide financial information $hichhelps the business in making rational decisions about the steps to be taken in respectof various aspects of business. ntities such as companies& societies& public trusts are
compulsorily re'uired to maintain accounts as per the la$ governing their operationssuch as the Companies ,ct& Societies ,ct& and Public Trust ,ct etc. 5aintenance of accounts is also compulsory under the Sales Ta# ,ct and "ncome Ta# ,ct.
DEFINITION OF ACCOUNTING
,merican "nstitute of Certified Public ,ccountants ?,"CP,@ $hich defines accounting as
Kthe art of recording& classifying and summari/ing in a significant manner and in terms of
money& transactions and events& $hich are& in part at least& of a financial character and
interpreting the results thereof.
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OB"ECTIVE OF ACCOUNTING
4bjective of accounting may differ from business to business depending upon their specific
re'uirements. Eo$ever& the follo$ing are the general objectives of accounting.
i4 To 8&&$i+; s!st&1#ti) &)o(' "t is very difficult to remember all the business
transactions that take place. ,ccounting serves this purpose of record keeping by promptly
recording all the business transactions in the books of account.
ii4 To #s)&t#i+ t,& &s%-ts o: t,& o$&#tio+' ,ccounting helps in ascertaining result
i.e.& profit earned or loss suffered in business during a particular period. %or this purpose& a
business entity prepares either a Trading and Profit and Loss account or an "ncome and#penditure account $hich sho$s the profit or loss of the business by matching the items of
revenue and e#penditure of the same period.
iii4 To #s)&t#i+ t,& :i+#+)i#- $ositio+ o: t,& 7%si+&ss' "n addition to profit& a
businessman must kno$ his financial position i.e.& availability of cash& position of assets and
liabilities etc. This helps the businessman to kno$ his financial strength. %inancial statements
are barometers of health of a business entity.
i/4 To $ot#! t,& -i%i(it! $ositio+' %inancial reporting should provide information
about ho$ an enterprise obtains and spends cash& about its borro$ing and repayment of
borro$ing& about its capital transactions& cash dividends and other distributions of resources
by the enterprise to o$ners and about other factors that may affect an enterprise(s li'uidity
and solvency.
/4 To $ot&)t 7%si+&ss $o$&ti&s' ,ccounting provides up to date information about
the various assets that the firm possesses and the liabilities the firm o$es& so that nobody can
claim a payment $hich is not due to him.
/i4 To :#)i-it#t& #tio+#- (&)isio+ @ 1#8i+;' ,ccounting records and financial
statements provide financial information $hich help the business in making rational decisions
about the steps to be taken in respect of various aspects of business.
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TYPES OF ACCOUNTS
The business transactions can be grouped under three types of accounts
Personal accounts
!eal accounts
3ominal accounts
PERSONAL ACCOUNTS
Personal accounts are the accounts of persons or firms that the business deals $ith. These are
primarily of three types
N#t%#- $&so+’s #))o%+t' These are accounts of real persons $ho transact $ith the businessin various capacities. The proprietor(s account and the accounts of customers are some
e#amples of natural person(s accounts
Ati:i)i#- $&so+’s #))o%+ts' These are accounts of firms and entities that transact $ith the
business. The accounts of a limited companies or banks that are not real persons are the
e#ample of artificial person(s accounts.
R&$&s&+t#ti/& $&so+#- #))o%+t' These are accounts that represent certain person or
persons. "f a business has not paid the rent of a number of shops for the past t$o months then
all landlords are creditors of the business and the amount due to them is recorded under acommon head called !ent 4utstanding ,ccount. This is a representative personal account.
4ther e#amples of representative personal accounts are "nterest 4utstanding and "nterest Paid
in ,dvance accounts.
REAL ACCOUNTS
!eal accounts are the accounts of the properties& assets and possessions of a business. These
can be of t$o types0
T#+;i7-& R- #))o%+ts These are accounts of things that can be touched& measured& sold or
purchase. #amples of tangible real accounts are land account& furniture account and cash
account.
I+t#+;i7-& R- #))o%+ts These are accounts of things that cannot be touched in the
physical sense but can be measured in terms of money value. Trademark or patent rights are
e#amples of intangible real accounts.
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NOMINAL ACCOUNT
3ominal accounts are the accounts of each head of e#pense or income of a business. They are
used to define the nature of the transactions: hence& they are also called fictitious accounts.
Without nominal accounts& it is very difficult for the management to find out $here the
money $as spent. ,s these accounts are used to define the nature of the transaction they are
nominal accounts.
Certain rules have to be follo$ed for the different accounts to decide $hich account has to be
debited and $hich has to be credited. "t is also important to understand $hether the
transaction has to be posted n the debit side or the credit side of an account.
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. ACCOUNTING SYSTEMS V>S ERP SYSTEMS
ro$ing companies $ho find they are straight0jacketed by their current accounting systems
are typically faced $ith the difficult decision of upgrading as they gro$. They can either
choose to implement an all encompassing system or to Obolt on( smaller applications in order
to add capabilities to $hat they already have.
The first approach& typically an !P ?nterprise !esource Planning@ system& deals $ith every
aspect of business from controlling marketing campaigns and sales reps& order collection&
product $arehousing and distribution& payroll and E!& $orkflo$& reporting& financials and
more. !P systems are e#cellent but be prepared for long and costly implementation projects.
The second method adding functionality to a core accounting system& is usually much less
stressful and costly to implement. The pitfalls may include duplication of data ?such as
customer records@ $hich may be overcome $ith ne$er systems designed $ith seamless links.
This modular approach ends up less painful& as individual modules are purpose built $ith
more capabilities than !P systems.
Which approach is best for you "n order to assess this& you need to list and priorities your
re'uirements and note $hich are not ade'uately achieved by your current solution. The
modular approach is only ever a viable option if you are relatively happy $ith your core
accounting system and there are ranges of available bolt on applications ?to satisfy the
missing needs@ that link seamlessly $ith it.
"n evaluating both options& you must include all costs such as additional hard$are: system
soft$are: costs of data conversion& configuration& testing& training and on0going support: and
maintenance costs.
The selection process is comple# and often risky especially in recessionary times. Mou may
choose to seek the advice of a >usiness Consultant $ith deep kno$ledge of a number of
popular 5odular and !P >usiness ,ccounting Systems.
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. ABOUT SAP
S,P is the $orld(s leading provider of business soft$are. 5ore than 8I&-99 customers in
more than -29 countries run S,P applications from distinct solutions addressing the
needs of small and midsi/e enterprises to suite offerings for global organi/ations. Po$ered by
the S,P 3et Weaver platform to drive innovation and enable business change& S,P soft$are
helps enterprises of all si/es around the $orld improve customer relationships& enhance
partner collaboration and create efficiencies across their supply chains and business
operations. S,P solution portfolios support the uni'ue business processes of more than 2;
industries& including high tech& retail& financial services& healthcare and the public sector.
S,P defines business soft$are as comprising enterprise resource planning and related
applications such as supply chain management& customer relationship management& product
life0cycle management and supplier relationship management.
S,P undertakes no obligation to publicly update or revise any for$ard0looking statements.
,ll for$ard0looking statements are subject to various risks and uncertainties that could cause
actual results to differ materially from e#pectations The factors that could affect S,P(s future
financial results are discussed more fully in S,P(s filings $ith the +.S. Securities and
#change Commission ?KSC@& including S,P(s most recent ,nnual !eport on %orm 290%
filed $ith the SC. !eaders are cautioned not to place undue reliance on these for$ard0
looking statements& $hich speak only as of their dates.
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WHY DO COMPANIES USE SAP 3SYSTEM APPLICATION
AND PRODUCT4
There are many reasons a company selects and implements S,P N some are good and some
are bad. The good ones include replacing an out0dated and inefficient "T ,rchitecture?including the C"4(s nemesis G the burning platform@& enabling business process change&and to gain competitive advantage. The bad ones are too numerous to go into here but $ouldinclude the K$hy are $e the only semiconductor company $ithout S,P 'uestion. 5ore onthe good reasons follo$s
-. !eplacing an out0dated and inefficient "T ,rchitecture "n the beginning& computer
systems $ere developed by individual departments to satisfy the re'uirements of that
particular department. When someone finally reali/ed that benefits could be had by
linking these systems together& interface heaven $as born. There are some companiestoday $ith literally thousands of interfaces& each of $hich needs to be maintained
?assuming of course that there is someone around $ho understands ho$ they $orkQ@.
S$eeping them a$ay and replacing them $ith an integrated system such as S,P can
save much money in support. 4f course& if you have a burning platform as $ell the
'uestion becomes even easier.
2. nabling business process change N %rom the start& S,P $as built on a foundation of
process best practices. ,lthough it sounds absurd& it is probably easier ?and less
e#pensive@ to change your companies processes to adapt to S,P than the other $ay
around. 5any companies have reported good success from combining a S,P
implementation $ith a >P! project.
=. Competitive advantage N The C%4 types around have heard this old saying from the
C"4 types for many years no$. The 'uestion still has to be asked G can you gain
competitive advantage from implementing S,P. The ans$er& of course& depends on the
company. "t seems to us& ho$ever& that
>eing able to accurately provide delivery promise dates for manufactured products
?and meet them@ doesn(t hurt G and
>eing able to consolidate purchase decisions from around the globe and use that
leverage $hen negotiating $ith vendors has got a help G and
>eing able to place kiosks in stores $here individual customers can enter their
product specifications and then feed this data directly into its production planning process is pretty neat. tc
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. CONCLUSION
The aim of the present study $as to investigate the accounting benefits derived from !Papplication in the accounting department and $hether differences bet$een accountants and "T
professionals e#ist concerning the measurement of accounting benefits and !P user satisfaction. 5oreover& this study tried to evaluate the effect of accounting benefits& number of modules implemented and !P cost on !P user satisfaction. Companies that operate inreece and have adopted an !P system provided the data presented here. This studye#plored the impact that the !P system has had on accounting information and practice.
So according to me !P is more beneficial to the company then accounting. nterprise!esource Planning ?!P@ can provide a lot of benefits to organi/ation such as lo$er cost&increase level of data consistency& enable different departments such as 5arketing&7istribution& and 5anufacturing etc. to share information together& increasing ability to do e0
business. ven though& !P can provide many benefits& it also can lead to tragedy inimplementation because of comple#ity to implement& time consuming& re'uiring a lotresource such as money& human resource& hard$are& and soft$are. 3ot only resource that isneeded& but the commitment from top management and users also
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REFERENCE
httpFF$$$.js$.in
htt&=>>www+one%controlco+>
htt&=>>enwiki&eiaor)>wiki>SA?"