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CIS 3009 ERP Assignment Solution
Success Criteria for Success or Failure of an ERP Implementation
The three criteria which will influence the success or failure of an ERP implementation in The Consumer and Products Inc. (CIPI) are:
1. Well planned and phased manner implementation of ERP: In an IT landscape for an organisation where interrelated IT systems are present and the implementation of one system impacts the functioning of other IT systems, it is very important that instead of implementing all the systems on one go; one-by-one approach should be adopted where every system is being implemented one after another based on the priority and complexity of the module. This will not only help in resolving conflicting interests but will increase user adoption rates. Also, internal staff will be available to be employed in every project leading to knowledge retention, cost reduction and dependency on external consultants.
In the development and implementation of Payables and Audit System (PAS), too many interrelated IT system were being implemented at the same time. This made it very difficult to manage all the IT systems together. Already, there was shortage of the corporate IS staffing available for Payable and Audit Systems (PAS) project and with three new systems to be installed simultaneously; it leaves with not enough time for Accounts payable and Disbursement department people to get the testing done before complete deployment Davenport, 1998). If the development and implementation of each and every IT system in the IT landscape of The Consumer and Products Inc. (CIPI) was done in phased manner based on priority and business need of the system, then it would have been very easy to plan the availability of staff on various projects. Again, this would have led to various other benefits to The Consumer and Products Inc. (CIPI) like knowledge retention, cost reduction and dependency on external consultants. This all could have been utilised in support and deployment of other projects reducing the overall cost and deployment time period for the projects.
2. Commitment and Cooperation of members involved: For a successful implementation of ERP systems in any organisation, it is very important that everybody who is involved in the ERP Implementation project should consider the project as important as his personal work and should be committed to the ERP Implementation project. They should be available full time for the ERP Implementation project and provide necessary inputs required for the ERP Implementation project which will help to make the ERP system refined and according to end user needs and integrate with various systems in more effective way.
Anderson, who was the executive sponsor of this project, understood this very well and so as to make others feel the importance of this project, he used to attend the working sessions for Payable Audit Systems (PAS) and spend lot of personal time on this project. However, Arnold Johnson, who was assigned 20% only for this project, was not fully committed. He was assigned to logically document the flow of code since he knew how legacy systems worked. He did not document the requirements and thus Watkins had to involve another consultant who will interview him so as to gain out of Johnson’s experience and knowledge. This again delayed the project work of Payables Audit Systems (PAS) and increased the cost due to employment of external resource for documentation purpose. Every person who was involved in the ERP Implementation Project, whether from corporate IS group of The Consumer and Products Inc. (CIPI) or hired from external consultants, must be fully committed to the ERP Implementation project, so that it is easier to work with them as a team and get the ERP Implementation project implemented in more efficient manner (Francalanci, 2001).
3. Staffing and availability of resources: It is essential to have resources which are full time employed in the project for various activities during the implementation of ERP in any organisation. This will not only help in having focused attention on project activities but proper staffing helps in pooling up the appropriate resource for such activities.
In case of Payables and Audit System (PAS), no qualified person from corporate IS group of The Consumer and Products Inc. (CIPI) was assigned to the project for full time and Linda Watkins had to staff the project with temporary employees from outside contractors. This happened due to shortage of resources with corporate IS Group of The Consumer and Products Inc. (CIPI). There were multiple simultaneous projects running with corporate IS group which had led to this resource shortfall. Linda Watkins was the only full time person from The Consumer and Products Inc. (CIPI) IS department. This would also lead to issues after project delivery. Most of the experience of project implementation will go away with external consultants and will not benefit The Consumer and Products Inc. (CIPI). If internal resources were available to be staffed on Payables Audit System (PAS) Project, the knowledge and learning arising in the development and implementation of Payables Audit System (PAS) will be utilised in the support and upgrade of Payable Audit System (PAS) project. Also, it will be utilised in other similar corporate IS group projects.
Also, she was finding very difficult to schedule activities with disbursement department people as they were busy with year-end closing activities. She had brought this in front of steering group beforehand but they ignored her caution. They asked her to go ahead with it. Then, expectedly she hit a roadblock while connecting with disbursement department people. She needed their user comments and various issues which are surrounding them to refine Payable Audit System (PAS). This led to an overall 1 month of delay and severe increase in cost of resources employed. If this had been beforehand sorted with Disbursement department people in terms of scheduling, their availability would have been found out and arrangements would have been done.
Memorandum for: CIPI IS Director
From: T.N. Anderson, Director of Disbursement at CIPI
Subject: Plan of action for PAS project
The Payable Audit Systems (PAS) was undertaken so as to make the payable system more efficient by reducing the irrelevant and redundant tasks and at the same time automatic various processes which as of now is more labour intensive process thus making it easier and faster to pay to vendors. It will reduce 18 step procedures to 2 steps procedure thus saving time and money. At present, I am working as the executive sponsor for the project and Linda Watkins is working as the Project Manager for PAS.
The scope of the project includes also manual purchase orders and other transactions that do not involve purchase order. The new system will not only reduce the voucher processing time but will also reduce the cost of voucher processing over the next 3 years. It will also reduce the staff requirement by 50 percent over next 5 years. It will support integration with transportation, purchasing and accounts payable thus it will provide systematic information for measuring quality of vendors and accounts payable performance.
We have adopted the Stradis methodology which is being used by Corporate IS also. It compromises of 8 stages: initial study, detailed study, draft requirement study, outline physical design, total requirement statement, system design, coding & testing and installation. In order to get inputs from various departments and deal with problems & issues we formed a steering committee which examines development of project every alternate Wednesday. At present we have successfully completed the 4th stage of the project i.e. Outline Physical Design.
It was estimated that the project will make yearly saving of $135,000 and the cost of project will be in the range of $250,000 - $350,000. The project is already having complexities as too many interrelated systems are getting changed at the same time and three new systems are to be installed. Also, the imaging document control is new to the CIPI. Already CIPI-IS is working on many project which makes it difficult to get qualified resource available for PAS. The project does not have any qualified CIPI person to work for full time. Also as we are unable to schedule activities with disbursement department people, as they are busy with year-end closing activities, which make it difficult to get the issues resolved on time.
Linda Watkins is staffing the project with temporary employees from outside contractors. Though we are getting help from IS developmental methodologies group on technical reviews of the project but lack of quality permanent staffing is making the job difficult. This delayed the 3rd stage (draft requirement study) by 4 weeks and increased the budget for this stage by $5000.
The PAS was planned to run on IBM mainframe but technical people used LAN for the movement of PAS which radically increased the estimated budget from $350,000 to $560,000. Also, after completion of 4th stage Linda Watkins had a tragic accident due to which she requires to rest for several months. She was the only full time resource from CIPI and was responsible for staffing the resource, managing the budget and planning the project. Now considering her absence and developments in project resulting in increased costing I propose a new plan of action for the project which will help to bring things on track.
Plan of action:
- I strongly believe that we need few qualified and full time resource from CIPI to work on PAS. These resources should have experience in existing payment process and should be capable of handling such projects. Already without the full time resource we have faced delayed in the project implementation and this has also impacted our budgeting for the project. It will be further difficult to work in the present scenario without a qualified resource from CIPI.
- Also we need to hire a skilled person to work on this project who can replace Watkins position as she specialised in managing project and training someone will cost us both time and money.
- The unavailability of disbursement department people makes it again difficult for us to adhere to the schedule. Few people from that department if assigned for this project will help us to get the issues resolved quickly and comply with the decided timeline.
- The staff should be trained for imaging document control and other required skills. This will help to build up a good knowledge base across the project and thus we will not only gain speed with working on new technologies but will also be able to build resource pool where things will not be depended on a single person.
- Though we are using Stradis methodology but again break down the implementation of various systems on scheduling them on the priority basis will help us to be more focused on one system at a time and implement it better. This will also reduce overall resource consumption however it will increase the time required for implementation of entire PAS. Else we need to hire more skilled person to work on the project otherwise it will be difficult to complete the project on time.
- Consider the present scenario we need to re-schedule the timeline for the project. I will propose the revised time schedule of the project in next meeting as it will depend on the consideration of above plan of action.
- The budgeting should be re-forecasted according to the present scenario and available resources. We have already faced problem earlier with treasury department with unexpected jump in the project expenditure. The new budgeting will be informed to the treasury department so that they are prepared and planned for expenses that will be required for the project.
Indeed in present scenario with absence of Linda Watkins for few months it will difficult for the project to get completed on time but if provided with good resource, rescheduling of the project time line and budget and implementation of above action points I believe that we will be able to successfully implement the Payable Audit System project. Already, we have completed the 50% of the project and with help from IS there should be no further stopping from completing the entire project.
SAP Evaluation Criteria
- Integration with other Applications
- Adaptability or Customization
- User Friendliness
- Time to Implement
- SAP Brand Name
Journal - SAP tutorial
SAP comprises of many modules. Some of its important modules are:
- SAP Financial Accounting and controlling: Commonly known as ‘SAP FICO’, is union of two modules: i) Financial Accounting ii) Controlling.
- Financial Accounting: It deals with all the transactions in a business which will follow financial accounting reporting principles. In today’s world, organisations are spread across many countries and currency also varies with country. Taken this into consideration, this module provides an ability to manage company’s financial department along with these variances in country and currency.
Financial Accounting includes following sub modules:
- General Ledger (FI-GL)
- Accounts Payable (FI-AP)
- Accounts Receivable (FI-AR)
- Bank Accounting (FI-BL)
- Asset Accounting (FI-AA)
- Funds Management(FI- FM)
- Travel Management (FI- TV)
Any transaction can be categorised as Sales Order, Purchase Order or Materials Management. SAP SD (Sales and Distribution) and SAP MM (Materials Management) integrates together in order to completely define a financial transaction.
- Controlling: It deals with all the necessary information that can be used by company management in order to control and coordinate all the processes within the organisation. It is not bound by any legal system; it is an internal component within an organization.
- SAP MM: The SAP Material Management Module deals with the complete Procure to Pay process. It supports and maintains the purchase cycle of the organization. It handles all the transaction from the start of purchase to the end of its procurement.
It comprises of following sub-components:
- Vendor Master and Material Master Data
- Planning on Consumption
- Inventory Management
- Materials Evaluation
- Invoice Verification
Vendor Master Data holds vendor’s master data and Material Master Data holds materials master data. It also deals with the optimization of data consumption with the help of maintained Vendor and Material data. It provides support during the entire cycle from start of order creation to payment to account payables. In between these processes, various processes like purchasing, inventory management, transmitting order to vendor, invoice receipt creation etc. are taken care of. Along with these, it is quite possible that certain orders are cancelled or returned due to some reasons .These changes can be accommodated in real time.
- SAP SD: SAP Sales and Distribution deals with complete Order to Cash process. It consists of master data, transactions and system configurations which are required in the process. It helps in optimization of order to cash cycle .It comprises of following information and processes:
- Customer Master and Material Master data
- Sales Orders
- Credit Management
Customer Master Data holds all information about the customers and Material Master Data holds all information about the materials. Information regarding CMIR (Customer Master Information Record) hold the information regarding location of sales organization, shipping destinations. Since all these records are maintained and information related to customer and material are managed and linked in a proper way, an optimized solution can be generated with the help of these records .Optimized solution can be related to sales support, shipping and transportation , billing , credit management or foreign trade customs. Billing documentation is done after making all credit checks Since Sales and Distribution is somewhat related to customer, material management and financial accounting, knowledge about the other two modules (SAP FICO and SAP MM ) is also required.
It a quite obvious question that from where the need of ERP comes from? What is reason behind the need for its implementation? An answer to this question can be:
Due to rapid expansion of industries, firms and organization, data related to customers, suppliers, distributors, commodities, products, sales offices, billing information also increased exponentially. It has become a reason of worry to the organizations to hold and maintain such a big amount of data and work efficiently. They thought if this data can be managed or stored in proper way, it would be of great help to them in handling all the operations within the organization. This optimization can proved to be a fruitful step towards organizations’ better future (Pabedinskait?, 2009) .This solution came in the name of Enterprise Resource Planning commonly known as ERP. ERP has given a standardization of all business processes.ERP manages large amount of data in an efficient manner resulting into increase efficiency and productivity of the organization across different countries.
Studying After studying SAP, I have realized the need of ERP and how it is structured in an organization. It helps in resource planning of the organization and deals with their coordination. Organizations are greatly benefitted after implementing ERP in their business. A substantial growth has been observed in the industries/organizations which are following ERP practices and solutions (Nah, Lau & Kuang, 2001).
SAP R/3 is based on three tier architecture and deals with the flow of information between data, application and presentation layer in real time scenario.
SAP could be evaluated on following criteria:
Integration with other Applications/Equipment and Functional Specifications
Integration in SAP relates to the connection with other modules and other applications. SAP modules are designed in such a way that they can easily interact with each other. In fact, there are modules in SAP which can connect to other Non-SAP modules or applications also (Nah, Lau & Kuang, 2001).
Functional specification describes the job or functionality provided by the software. It includes purpose, definition, appearances and operations performed by it (Trepper, 1999). An organization structure can be divided into many functions and SAP has designed different modules to serve different functions in the organization. Each module is dedicated to some function and concentrates on that particular domain only. However it can interact with other modules of different function easily.
List of different functional components/modules of SAP includes:
- SAP FICO: Financial Accounting & Controlling
- SAP MM: Material Management
- SAP SD: Sales & Distribution
- SAP PLM: Product Life Cycle Management
- SAP HR: Human Resource
- SAP GRC: Governance, Risk, and Compliance
Adaptability or Customization
Ability of an application to modify or to adapt according to changing and demanding conditions can be termed as flexibility. Ability to provide major functionality on making small changes can be termed as customization.
Change is the most expected thing to occur in today’s world. In order to accommodate these changing demands, ERP packages should be designed in such a way that they have much scope for enhancement. Organizations invest a lot in ERP and their primary demand is the ability of the solution to enhance.
“Customer Exits” concept of SAP deals with the ability of the solution to enhance its functionality according to the customer. Customer can introduce different functions to the application without making changes in the existing system.
User Friendliness/Ease of use
Interface of ERP should be designed in such a way that it is easy to understand and easy to use. Graphical User Interface commonly known as GUI should be designed in such a way that a user can easily navigate, drill down to detail analysis and then again can return back to same location (Davenport, 1998). Also, the information displayed on UI should be precise and accurate. User should be able to figure out the locations from where he/she can perform his/her necessary operations.
Here, SAP is having a complex GUI and hence difficult to use as compare to other ERP products available in the market. However, list of transactions gives the flexibility to drill down easily; complex structure makes it difficult to perform major functions.
Time to Implement
This Time taken to rollout the solution can be termed as Longevity. Everyone wants a quick solution to their problems. Implementation of ERP could prove to be very tedious job for many organizations. More is the time taken for ERP implementation, more is the cost associated with the project. There is an exponential rise in the cost. From here the need for ERP support people arises. Continues support and maintenance is required during its complete cycle. Due to this reason it is very important for any ERP solution to provide proper support and help to its customers and client. SAP provides 24X7 hours service and provide proper help and consultation to its customers r clients
When it comes to quality, brand matters a lot. Organizations invest a large amount of money in implementing ERP and when there is a case of large investment, no one wants to take risks. Customers always choose from well-known and well established players in the market in that particular domain. SAP holds a brand name in ERP market. Quality of its product can be judged from the long list of its customers and growth history of organizations using SAP products. It always follows best practices and processes. From very long time, SAP is serving its customers effectively and efficiently.
- Davenport, T (1998), ‘Putting the enterprise into the enterprise system’, Harvard Business Review, vol. 76, no. 4, pp. 121-131.
- Francalanci, C (2001), ‘Predicting the implementation effort of ERP projects: empirical evidence on SAP R/3’, Journal of Information Technology, vol. 16, pp. 33-48.
- Gulla, J, & Brasethvik, T (2002), ‘A model-driven ERP environment with search facilities’, Data & Knowledge Engineering, vol. 42, pp. 327-341.
- Kumar, K, & Hillegersberg, J (2000), ‘ERP: experiences and evolution, Communications of the ACM, vol. 43, no. 4, pp. 22-26.
- Monk E., Wagner B. (2008), “Concepts in Enterprise Resource Planning”, Third Edition, Organisations and ERP, Oxford Press