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Keda’s SAP Implementation

Case
Case Objective
• To examine key drivers for ERP adoption

• To explore complexities associated with ERP


implementation (technological, organizational and
cultural )and associated change management
process.

• To illustrate key success factors for ERP


implementation and how they are manifested in
practice.
Case Questions
1. ERP project are expensive and risky. Why did Keda embark on a
ERP implementation project?

2. What are the major process of implementing an off-the-shelf ERP


system?

3. Leadership plays a pivotal role in the success of ERP project. Which


“leadership best practices” did the Keda managers engage in?

4. What are the main challenges faced by Keda in each stage of its
ERP project? What factors contributed to the project success in the
face of these challenges?

5. Are the particular strategies adopted by Keda project generally


applicable to all ERP implementation?

6. Culture plays an important role in any project implementation. How


were Keda’s cultural characteristics leveraged in bring about a
project success
ERP project are expensive and risky. Why did
Keda embark on a ERP implementation project?

As the potential benefits that outweigh cost


• Competition within the Industry (ERP initiatives are often
undertaken to provide competitive advantage through integration)

• Institutional pressure from China Government agencies.


(Govt. ranks local enterprises in terms of “innovativeness”)
• Material Management (Scattered demand of a large number of
raw materials, made purchasing decision difficult)

• Suboptimal utilization of resources and facilities. (machine


hours are under utilized, 24.6 % efficiency and 90% for competitors)

• Limitation of legacy system.( MRP-II did not support multi-plant


operations and vendor support had been terminated)
What are the major process of implementing an
off-the-shelf ERP system?

• Identify need for system

• Vendor selection

• Process redesign

• System Implementation

• System testing and user training

• System rollout
Which “leadership best practices” did the Keda
managers engage in?

• Identify need for system (Develop a comprehensive, integrated, long


term plan. Elicit deep involvement from top management)

• Vendor selection (Develop an RFP, create a short-list, meet with


vendors and arrange site visit to past and existing clients. Involve
significant top management)

• Process redesign (Delegate business oriented task to key users)


• System Implementation (Create a combination of incentive and
disincentives)

• System testing and user training (Invest significant time and


resources)

• System rollout (Notify senior management promptly, frequently and


honestly to ensure managed expectations)
Leadership plays a pivotal role in the success of
ERP project. Which “leadership best practices” did
the Keda managers engage in?

Stage Identify need for system

Issue Understanding the system requirements

Best Practice Develop a comprehensive, integrated, long


term plan. Elicit deep involvement from top
management
Result The plan provided stakeholders with an
overall blueprint to guide expectations and
activities. Top management involvement
signaled the importance of the initiative.
Which “leadership best practices” did the Keda
managers engage in?

Stage Vendor selection

Issue Choosing the right vendor whose product


and service will closely match business
process and requirement.
Best Practice Develop an RFP, create a short-list, meet
with vendors and arrange site visit to past
and existing clients. Involve significant top
management
Result Site visits provides a through understanding
of the system. Every one was well informed
about the business needs and system fit.
Which “leadership best practices” did the Keda
managers engage in?

Stage Process redesign

Issue Changing business process to match


system functionality
Best Practice Delegate business oriented task to key
users

Result Users became familiar with the system and


figured out how to fit the system to business
practices which reduce the implementation
workload.
Which “leadership best practices” did the Keda
managers engage in?

Stage System implementation

Issue User’s resisting the collocation work


scheme.
Best Practice Create a combination of incentive and
disincentives

Result Users complied. Easier coordination,


increased efficiency resulted
Which “leadership best practices” did the Keda
managers engage in?
Stage System testing and user training

Issue Time and resource needed to devote to


system testing and training.
Best Practice Invest significant time and resources.
Leverage users who can help with testing
while familiarizing themselves with system
operation.
Result The acceptance test was speedy, good user
adoption followed
Which “leadership best practices” did the Keda
managers engage in?

Stage System rollout

Issue Business disruptions, production delays.

Best Practice Notify senior management promptly,


frequently and honestly to ensure managed
expectations.
Result Senior executives remained supportive in
pushing system adoption. Users were
tolerant when business disruption occurred.
What are the main challenges faced by Keda in each
stage of its ERP project? What factors contributed to
the project success in the face of these challenges?
• Time (MRP II ceased maintenance, Big-bang approach)
• Data characteristics (poor quality of data, ensure data accuracy)
• Users’ resistance (opposition negatively affected user adoption)
• Production delay (immediately after rollout, chosen a low season for
rollout)

• Ensure top management support


• ERP as a team effort
• Assign role and responsibility
• Rewards and punishment
Are the particular strategies adopted by Keda project
generally applicable to all ERP implementation?

• No

• Strategies work only in particular cultural settings

• Creating panic and insecurity of staff - this strategy was


successful in Keda’s context

• Might backfired in western setting


Culture plays an important role in any project implementation.
How were Keda’s cultural characteristics leveraged in bring
about a project success

Cultural Characteristic Issue for management


dimension
Subordinates look for management
Power Distance High for leadership and direction. Hence
involvement of management achieve
the psychological “buy-in” and
improve user adoption
Uncertainty Low Long term ERP implementation plan
Avoidance with company goals in sight
Masculinity High The reliance on financial incentives
and strong leadership and forceful
approach was successful in effecting
changes
Individualism Low To ensure diverse individual opinions
Assembled the project team to
involve members from diverse origin
Case Questions
1. ERP project are expensive and risky. Why did Keda embark on a
ERP implementation project?

2. What are the major process of implementing an off-the-shelf ERP


system?

3. Leadership plays a pivotal role in the success of ERP project. Which


“leadership best practices” did the Keda managers engage in?

4. What are the main challenges faced by Keda in each stage of its
ERP project? What factors contributed to the project success in the
face of these challenges?

5. Are the particular strategies adopted by Keda project generally


applicable to all ERP implementation?

6. Culture plays an important role in any project implementation. How


were Keda’s cultural characteristics leveraged in bring about a
project success