Impact of GST on ERP systems

Many of the industries in the country had switched to SAP and Oracle based ERP systems beginning in the last decade. For most of them implementing the new ERP system was a struggle as the employees refused to go for the additional work of uploading the data and then punching the daily inputs. Many people were not conversant with computers while others thought that the IT department would do the job. A huge amount of trainings and then lot of involvement by the providers gave some help. However the thrust by the top management and ownership of the process by certain individuals within the company led to the success of the system.

ERP is a part and parcel of the industry today: Today, the industry that utilizes the ERP system for its accounting and various other modules that cover marketing, manufacturing, engineering and human resources will find it difficult to go without it even for a day. They now face a bigger challenge where they have to integrate the new taxation system in the form of GST with the existing ERP system.

Minor changes possible: Changing the percentage of taxes is something they can comply with, but a change in the taxation system that has far reaching implications and links to the input tax credit and destination of sale is a tough call.

Some amount of standardization: The ERP systems supplied by Oracle and SAP have maintained some sanctity by keeping some sort of standardization in the basic software. Over the years they have come out with newer versions which are significantly superior to the old software. But that is not the only catch. Two very significant aspects have to be taken into consideration.

Significant aspects: The first is that the ERP systems offer a lot of customizations during the system design for an organization and are specific to them. The second is that many organizations have not applied the upgrades and continue to use the systems that were supplied to them initially.

Tough call: The exercise does not seem to be simple like a standard software patch to be applied to all the ERP systems available, and from the next day they would be GST compliant. It is a huge amount of work for SAP and Oracle to get the scheme of things going. They have to be very clear on which all modules of their software are going to be affected and how they will correlate the changes with the GST.

Multiple changes: They will have to get many more modules generated to link the far reaching changes like the input credit, destination principle, twin rates, and exclusions etc. Besides this they will have to work on having common GST software modules across their software versions. Problems will also arise between upgraded versions and non-upgraded ones.

Country-wide implementation: How the Oracle and SAP teams will pan out for the simultaneous implementation across the country is something which needs to be worked out? The best team to do it is the industry owners in tandem with the ERP suppliers. The government which is already saddled with the GST passage delays due to the political bickering will not be willing to give much time for ERP integration!

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