Sap for Atlam free essay sample

The conversation between Zulkifli and Sani, the Project Manager; Gopal, the User Project Manager; Lim, User Representative; and Kamal, the Functional Analyst has come to the several issues to be considered. Most of the issues arise are from Lim such as SAP is more suitable for manufacturing industry not education industry. Other issue is ATLAM is lack of equipment and facilities. According to Lim, the department does not have enough personal computers and if they have they do not have enough space available for the personal computer in their department. Time constraint also one of the issue arise in the conversation. The management had decided to schedule the phases of proposed SAP on 1st of April 2002. They are now on third week of January. The time needed for implementing the new system usually takes number of months to be implemented. Lim also raises the issue of the resistance of staff to change to the new system. When people are more comfortable with some technology, they are likely to oppose changes. The reason of the resistance of staff perhaps because of fear the unknown and the uncertainty accompanying change such as losing their job and failure. The other issue is costs of implementing the SAP system that can be consider as higher than the accounting package, ACCPAC. It consists of the annual license fee, training costs, customization work and hardware. The cost-benefit analysis has been done to ensure that the benefits of implementing SAP will be higher than ACCPAC. Analysis of the issues Zulkifli had decided to perform a feasibility study or business case which is prepared during the systems analysis. There are five important aspects to be considered during a feasibility study that consist of economic feasibility, echnical feasibility, legal feasibility, scheduling feasibility and operational feasibility. Economic feasibility is defined as the dimension of feasibility concerned with whether the benefits of a proposed system will exceed the costs. This is proved by calculating the after-tax cash flow from Year 1 to Year 6. From the calculation, the benefits of the SAP system exceed the costs to implement it. The net savings from Year 1 to Year 5 is increasing and start to decline in the Year 6 because of the increasing in the saving and costs. Technical feasibility concerned on the development of the proposed system given the available technology. The SAP systems can possibly be implemented in ATLAM because of it is PETRA’s group-wide system and it had in-house support from SBS team of PETRA group. On the other hand, legal feasibility determines if there will be any conflicts between the system under consideration and the organisation’s ability to discharge its legal obligations. The implementation of SAP system in the management of ATLAM complies with the regulation sets by the management and it also supported with the PETRA group system. Scheduling feasibility only concerned on time taken to develop and the implementation of the proposed system in time allotted. There are two techniques for scheduling and monitoring systems development activities which are PERT (program evaluation and review techniques) and Gantt chart. In this case study, Gantt chart is used to determine the time taken to implement the SAP system. Gantt chart is a bar chart with project activities listed on the left-hand side and units of time which is days or weeks across the top. From the analysis done, SAP system cannot be implement in time allotted which on 1st April 2002. The SAP system needs approximately 8 months to be implemented in the ATLAM’s system. The last feasibility study is the operational feasibility which defined as feasibility that concerned with whether a proposed system will be used by the people in an organization and how useful the system will be within the operating environment of the organization. At the first of the discussion about the implementation of SAP system, the user representative seems to be unhappy with that implementation. He raises the issues and problems if the management wants to implement the system. All the various feasibility measures are used to narrow the list of the alternatives. This techniques used in the capital budgeting model that consists of net present value (NPV), internal rate of return (IRR) and payback period. Net present value (NPV) is the estimation of the future cash flows that are discounted back to the present using a discount rate that reflects the time value of money. The initial outlay costs or capital expenditures are deducted from the discounted cash flows to obtain the NPV. The initial outlay of SAP system consists of cost of training, hardware, initial software license and cost of customization work that approximately to RM5 million and its discount rate is 10%. From the analysis, SAP system has the positive and higher NPV of RM3. 2 million that indicates that the system is economically feasible. Internal rate of return (IRR) is the effective rate that results in an NPV of zero. The calculation of IRR is using trial and error method using two different rates to get the net cash flows. In this case, rate of 24% and 28% is used. The IRR of the SAP system is about 26% and it quite high. The payback period is defined as the number of years required for the net savings to equal the initial cost of the investment. It required approximately 4 years to the initial outlay of the implementation of SAP system to be covered with the net savings. As discussed in the scheduling feasibility, Gantt chart is used to determine timely and successful implementation. There are several tasks involved in the implementation of SAP system such as perform feasibility study, organize implementing team, prepare system support procedures, develop conversion plan and testing plan, prepare program specification, revise system documentation and perform programming tasks. The implementing team can be consists of the several person who has capabilities in the specific department such as finance and account department, IT department and user representative. The team should develop the conversion and testing plan of the SAP system. These tasks take about one month to be completed. After programming task is perform, system are test and system support procedures is install and acceptance test is done. The team should conduct the pilot study of the proposed new system. It is to gather the earlier information about the system so that the weaknesses of the system can be corrected. The user manual can be prepared and training program for the staff can be conducted. The last task of the implementation is the conversion of the system. The conversion includes the data backup. When people are more comfortable with something, they are reluctant to change to the new environment. Individual’s views of change as good or bad will usually depend on how they are personally affected by it. The reason why they resist changing is because of the bad experience with prior changes, a lack of top-management support and communication about the changes. These behavioral problems can be overcome with the several ways. The behavioral problems can be overcome by keep communication lines open. Managers and users should be fully informed of system changes as soon as possible. They should be told what and why changes are being made and they should be shown how the new system will benefit them. This open communication helps prevent damaging and inaccurate rumors and misunderstandings. Other than that, organization also can maintain a safe and open atmosphere to ensure that people who are affected by the system development can have an attitude of trust and cooperation. The organisation also should provide assurances that no major job losses or responsibility shifts will occur. It is lessen the intensity of fear or to calm the employees to not worry about the changes. In addition, the top-management must ensure that users understand the system. If the users are confused or do not understand the system, effective use or support to change the system cannot be obtained. It is also the responsibility of the system developers to describe and emphasize new challenges and opportunities that can be performed with the new system. This may provide job satisfaction among the employees and users. Furthermore, the system should be presented to the users in the proper context to capture the interest of the users. The system also should be properly tested prior to implementation to minimize or avoid the initial bad impressions. Conclusion There is an issue about the finance manager who wants to eliminate or terminate the user representative from the project team. The decision to terminate the user representative, Lim is not the right thing for the finance manager, Zulkifli because from Lim’s arguments, it shows that Lim is an individual who has a lot of experience inside him. All of his arguments are supported with the facts and experiences. Moreover, sometimes people need the criticism to improve oneself. It is because others can see one’s weaknesses than the individual himself. As a user representative, he knows what other users needs and wants. The actions of Lim to make arguments are for the best interest of the company and its employees. Zulkifli should see all the inputs from Lim is beneficial to improve the operation of the company. The analysis done on the implementation of SAP system shows that the main issues can be encounter by performing all the feasibility study and cost-benefits analysis. Most of the main issues are the examples of the staff resistance to change that can be overcome by the several ways discussed before.