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TABLE OF CONTENT
Abstract .................................................................................................................................................. 2 Company Background.............................................................................................................................. 3 Enterprise Resource Planning System ...................................................................................................... 4 The need for ERP Adaptation in an organization ...................................................................................... 4 SWOT Analysis on the basis of IT and Business ........................................................................................ 6 Drawbacks of the Current Systems Used by Rolls Royce........................................................................... 8 ERP Systems Considered for Rolls-Royce.............................................................................................. 8 SAP vs. Oracles E-Business Suite ......................................................................................................... 9 SAP Technologies Recommended for Rolls Royce .................................................................................. 10 Service Provider recommended for the SAP implementation ................................................................. 11 Business Process.................................................................................................................................... 11 Standard MAPs (Models, Artifacts and Processes) ................................................................................ 12 Implementation (Big Bang vs. Phased Approach) ................................................................................... 13 Organizational Change........................................................................................................................... 14 Issues after Go-Live ............................................................................................................................... 15 Risks Involved .................................................................................................................................... 15 Steps to be taken to overcome the risk .................................................................................................. 16 Summary and Conclusion ...................................................................................................................... 17 References ............................................................................................................................................ 18
By Kunal Chadha
Abstract
Since 1990s organizations around the world have been implementing ERP systems to have a consistent or standardized information system in their organization and re-engineering their business processes (Rajagopal, 2002). ERP system packages have the merit of reduced cost, rapid implementation, and high system quality (Lucas et al., 1988). Even though these applications have its own advantages over custom design software, they may face problems of uncertainty in acquisition and lots of hidden cost during the implementation process. Successful implementation of ERP must be managed as a program of wide-ranging organizational change initiatives and not as a software installation effort. These types of IT initiatives require change of the organizations social and economic systems, which then are got together with technology, people, task culture and structure. So, organizational fight to change is recognized as a significant success factor for ERP Implementation (Hong and Kim, 2002). Organizations have to match and adapt to implement these modern large scale ES Systems which are built with pre-determined business process methods. As a result, customization is important, lengthy, and expensive aspect in the successful implementation of enterprise resource planning system. It is examined how such companies develop and enlarge cliental trust which is a consequence of relevant and trustworthy customization. Considering the significance of ERP, an attempt has been made in this paper to select and implement the right ERP system for a prestigious company in UK.
By Kunal Chadha
Company Background
Rolls-Royce made a comeback in the private sector in the year 1987 and took over Northern Engineering Industries in the year 1989 which enabled Rolls-Royce to show its capabilities in industrial power. It further acquainted Allison Engine Company a US based company in the year 1995, enabling it-self to grow the companys presence in aero propulsion and industrial gas turbines. This acquisition further enabled Rolls-Royce to get a major foothold in the US markets. Rolls-Royce then came up with the most modern family of engines the Trent Series which were used to power Airbus A330, A340-500. This series of engine offered good maintenance costs, long range flight capabilities, economical operating and greater thrust. Rolls-Royce is into Power Generation Market which includes both electrical and nuclear power, which also includes marine applications. Rolls-Royce is truly global business offering a range of first class world leading products.
By Kunal Chadha
By Kunal Chadha
The table below pins out a few more detailed use of ERP systems in small scale and large scale organization with regards to Business and Technical reasons:
By Kunal Chadha
Strength (IT) The company used a system known as CPA for monitoring financial transactions which included pipeline inventory, inter-site transport. Rolls Royce used a CAD system that supported in the process of altering the file formats.
Weakness (Business) Perception of high prices Constant delay in delivery of engines to clients. For example, Boeing blamed engine make Rolls Royce for yet another delay in delivery for its first 787 Dreamliner. (Robertson, 2010)
Weakness (IT) Data redundancy was a major area of concern in Rolls Royce. The company had issues with data accuracy In the current system the data was not normalized, screened and was not stored in a sensible format in the data repository which led to problems in copying data to other systems. The company lacks a legacy system. The company has implemented more than 1500 systems over a period of time. Due to numerous systems used within the company, they had problems establishing direct online communication with customers and partners. Systems were conventional with absolutely no room for growth to sustain changing business environment. The company used a system called MERLIN (Mechanized Evaluation of Resources Logistics and Inventory); which was a scheduling system based on MRPII systems. The software was capable enough to handle the scheduling but involved a lot manual manipulation.
By Kunal Chadha
The company worked with systems for controlling procurement, finance and commercial functions which had problems in communicating with former systems.
Opportunities (Business) Internationalize there operations as an active player in the modern market Modification of business process to adjust and fit in the new ERP systems available Workshops and training to employees should be provided to work with the current systems and the systems that are to be implemented to make the maximum benefit out of the systems implemented. Demand for comfortable and relatively cheaper cars.
Opportunities (IT) Implementation of an ERP system that would reduce manual manipulation which would reduce time consumption.
Threats (Business) As per Porters Five Forces model of industry competition it has discovered: o Potential entrants and the threat of entrants o Power of buyers o Power of Suppliers and threat of substitute as well as one within the industry Competitive rivalry The rising price of raw materials such as steel threatens to offset the companys earning Threat from rival companies such as Engine Alliance who manufactures and supplies air craft engines.
Threats (IT) Use of SAP by other major manufacturers in the market. Engine Alliance has already implemented SAP A&D (Aerospace & Defense) Transmission of data across communication links due to globalization poses IT Security risk to the data.
By Kunal Chadha
By Kunal Chadha
SAP
SAP is focused on people do their jobs better.
SAP customers are more satisfied with higher level executive satisfaction, employee satisfaction and customer satisfaction.
Oracle did not meet the required satisfactory level of customer requirements.
Maintenance rates for SAP customers are lower. SAP is regarded as Vanilla Software (that is not customized from its delivered form and can be used without any customization applied to it.)
Oracle has higher level of flexibility and can be customized to suit the company needs.
SAP has been created on its own from the base like sales and operation planning, financial reporting, CRM, functionalities into its core ECC and developed all in one ERP solutions
Oracle has been developed mainly from gaining best-of-breed point solution. E.g. Acquisition of Demantra for advance sales and operations planning, Siebel for CRM etc.
SAP has the ability to keep its business risks at its lowest operational disruptions during the go-live process.
Oracle keeps its business at a higher risk during the go-live process.
By Kunal Chadha
As seen in the above table it is apparent that SAP wins the race when in comparison with Oracles E-Business Suite. Below is a detailed view as in how and what types of SAP technologies that should be implemented in Rolls-Royce.
management tasks of an organization. In Rolls Royce, SAP r/3 would be able to handle business process such as invoice payment, production resource management and financial account control. These tasks can be accomplished by employing various modules such as MM (Materials Management) and SD (Sales Distribution). Since, all these modules come under the SAP itself the communication between departments would not be a problem anymore at Rolls Royce. SAP R/3 is one of the worlds most used standard business software for client server computing. SAP R/3 is highly customizable and is compatible with other systems which would avoid the problem of data transferring that has been occurring at Rolls Royce while using the current system. Also, the system handles document updates and master file databases which would avoid data redundancies. The system can support an unlimited number of servers and a variety of hardware configurations An additional advantage of implementing the SAP R/3 would be that it can aggregate itself with the existing computer system which would make sure there will be no data lost after implementing the new system. SAP Aerospace and Defense (A&D) industry solution has been a market leader in the industry. It is known for its configurable flexibility. The system allows intelligent and quick response to demand and supply of dynamics across global supply network to serve the purpose of outstanding performance based services. SAP for A&D supports processes in manufacturing operations, proposal management, and program management, as well as project and contract manufacturing and order management. With the use of SAP for A&D can help Rolls Royce to manage complexity, cut costs and boost productivity. The system responds to the area of MRO (Maintenance, Repair, and Overhaul). SAP A&D will support important business processes in Rolls Royce and provide tools that would help managing these processes with greater efficient and effectiveness.
By Kunal Chadha
Business Process
Implementation of ERP system in Rolls Royce would probably lead to the change of current business process; this can be achieved by internal business process reengineering. This would involve a few steps such as: 1) Drawing and mapping the current processes 2) Identifying problems or issues from the current processes mapped 3) Applying some of these problems to SAP, to compare the problems to the new system that would be implemented. 4) Remapping and modifying the process inline to SAP.
By Kunal Chadha
By Kunal Chadha
1 2 3 4
Phase Three 5
The first phase would be to conduct a short study to determine the scope of the project which would provide a base to outline the blue print and costing. A specific body would be formed who will monitor the finance of the project along with controlling the genuine implementation process.
By Kunal Chadha
In the second phase, a detailed plan would be created and a prototype system would be installed. This phase would be very crucial where the model would be developed based on previous implemented models and all existing projects would be drawn together and merged. In this stage a review regarding the whole module would be conducted based on the results derived from the prototype and any suggestions would be considered.
Finally, in the third stage the actual module would be implemented. But, since this phase would be too large, the implementation would be made in two waves. Both the physical and the architecture would be taken into consideration during the execution process. The first wave would deal with replacing the older system with the new ERP system where prototype would act as a foundation for the ultimate implementation process. In the second wave, the necessary infrastructure would be set in place; the employees would be thoroughly trained to use the new desired ERP system. During this wave, the older systems would be set to view only mode as SAP would become the primary system. Once the new system provides some positive responsive, the older system would be completely eradicated.
Organizational Change
There are many factors to be understood by the management before implementing Enterprise system. Such issues are important for the success of the ERP achievement. In order to successfully implement the ERP system, the management of Rolls Royce should plan and manage the execution process with the objective to proficiently fit within the company. There are few ways the management should consider for the success of the project implementation: At an individual level, the reaction of the employees to the new proposed system needs to be identified. There is a need to understand if the employees are exposed to ERP in their past? Whether they are computer literate? If not, the management must provide adequate training and education so that it can encourage the employees to use the new system. Both individual and organizational issues must be considered for the introduction of Enterprise system.
The problem of resistance to change from the employees must be taken into consideration which is very vital for Rolls Royce. At the organizational level, the business objectives of Rolls Royce must be identified. Based on this, several questions need to be answered, such as, how critical it is to integrate the business process? How important is the cost of implementation of Enterprise system and the return on investment (ROI).
By Kunal Chadha
It is very essential for the top management to support and give total obligation to the implementation of Enterprise System. The management responsible for the change must not only involve in planning the change but also for introduction of new system and process. A good communication within the company will guarantee the effectiveness of the implementation.
Change management involves in managing the change in addition to the result of the implementation. The stakeholders have to be informed prior and post the implementation of the system. This makes sure that the shareholders are aware of the present situation and how the change would help the company.
Risks Involved
Risk management is one of the major challenges of the project, and is an important area of concern amongst the stake holders as it requires several precautions and brainstorming amongst themselves. The ERP project that will be implemented would cover various departments. There are certain risks that might take place during the course of the project which need to be handled effectively. In order to avoid such potential failures and errors, the ERP Implementation team shall record and maintain a risk register, which will contain all the details. Some of the major risks involved after the project going Live:
Conflicting directions in the organization can lead to potential failures or inability to align the new IT systems with the business process Lack of reliable IT infrastructures and hardwares due to unavailability or limitation, before and during the implementation of the ERP system Providing insufficient and ongoing support to the company after implementation of the system might not be possible.
By Kunal Chadha
The management and the supervision might resist adapting to the change in the process methods. The project may be treated as a mere IT Implementation by the management and supervisions rather than a complete transformation in the business process. Insufficient training or education provided to the workforce to operate the new system appropriately. Possible failure to give ERP sufficient priority due to the number of existing and ongoing business processes. The implementation of the ERP project may possibly have an effect on the companys interim and end of year accounts. Possible failure to cut over to the new system through the inappropriate systems testing of volume, stress and data conversion Difficulties in maintenance might occur on bridged legacy systems
By Kunal Chadha
By Kunal Chadha
References
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By Kunal Chadha
Yusuf, Y, Gunasekaran, A & Abthorpe,M 2004, Enterprise information systems project implementation: A case study of ERP in Rolls-Royce, International Journal of Production Economics, vol.87, pp.251-266
By Kunal Chadha