Critical Success Factors for ERP Implementation

This assignment delves into the critical success factors (CSFs) essential for a successful Enterprise Resource Planning (ERP) system implementation. It examines various perspectives on CSFs, referencing academic literature and real-world case studies. The analysis aims to provide a comprehensive understanding of the key elements that contribute to successful ERP projects.

Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
Integrated Information System Proposal of Auburn Wine
Company
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
Table of Contents
1.1 Background and Introduction about AWC....................................................2
1.2 Need for SAP............................................................................................... 2
1.3 IT Improvements with SAP...........................................................................3
1.4 SAP Implementation Process.......................................................................4
1.5 SAP Business Suite uses & applications......................................................6
1.6 Utilization of Business Process re-engineering concept...............................7
1.7 Training & Change Management Process....................................................7
1.8 Competitive advantage.................................................................................8
2.0 References....................................................................................................10
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
1.1 Background and Introduction about AWC
Auburn Wine Company is a company that is situated in Clare which is operated
by three brothers as partnership established in 1994. The company is a winery shop
that is privately owned and has a Cellar Door. The Cellar Door is used to make most of
all the sales of Auburn Wine Company. In the year 200, the wine selling company
started its selling of wine directly to all the customers and the local outlets. Two new
shops of wineries were built in Barossa Valley and the other in Barmera. The capacity of
the Auburn Wine company was also expanded from 255,000 barrels that was sold in
2002 to an amount of 990,000 barrels in 2004 which was expanded to a great extend.
The company added more additional capacities in next ten years. The current capacity
of barrels that are sold by Auburn Wine Company is near about 2,486,000 barrels. The
shop that was opened in Barossa Valley was established in 2004 was very successful.
A plat of glass bottle in Port Adelaide was built by the company in 2006 and also and
adjoining warehouse was also built. The future plan of AWC (Auburn Wine Company)
for next five to six years is to increase the capacity of the additional purchases of wine
and by adding some additional capacity to all the wineries that already exited in the
company. By 2020, the company plans to double its revenue size if all the plan goes
well.
1.2 Need for SAP
The Auburn Wine Company is working for past twenty years and is the company
is growing significantly. The initial setup for the Auburn Wine Company has already
finished and the company is now focusing to streamline all the processes that are
involved in company. It also enables a high rate growth of the company. As the services
and branches of Auburn Wine Company were increasing tremendously, it was facing
difficulties in managing the Information Technology (Powell 2013). So the company has
identified the need of SAP as an Information Technology Tool that is very effective
which serves the needs that are related to the processes and the systems.
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
1.3 IT Improvements with SAP
The software that is necessary which integrates the system of financial
accounting which manages the internal accounting is the Data Action Software in the
Auburn Wine Company. This software is used to manage the internal accounting,
invoicing and billing to customers who has different outfalls. The software is not
integrated with any other departments in Auburn Wine Company which provides low
integrity of information and also increases the changes of errors (Hsu, Yen and Chung
2015). The settlements and the tracking of all the payments receipts are done manually
for the customers. This decreases the accuracy and also the settlements are delayed of
the accounts against all the payments. There is no integrated tracking of payments and
receipts to vendors and customers were available in the system that existed in the
Auburn Wine Company. By using the SAP, the company will be able to enable all the
payments and receipts that are automatically done by the tool of SAP.
The company does not have any international sales handling software which
provides the company drawback in their expansion plan in future. The company is not
able to keep a look on any of the international sales that were being expanded. But if
the Auburn Wine Company uses the process of SAP, the company can keep an eye
over all the activities that are done in the international sales and live tracking can be
made by the marketing person and the sale force team of the company on their mobile
phones or iPhones. This is done by Mobile SAP which enables to track the situation of
the product and also control the inventory to give a tough competition in the market.
The company also lacks the availability of the dunning procedure which delays
the receipts of all settlement amounts. The company sends manual reminders to all its
customers for the payments that are to be done. This drawback of the company can
also be removed by using SAP. Sap enables automatic reminders for the due payments
which will be sent to all the customers via fax or emails.
The company has a procedure of net 30 terms of payment that are run by
accounts of large customers or the resellers. A charge of about 5.5% interest is
implemented to all the accounts of the customers or the resellers if there is a due
amount which lasts for more than 21 days. The company also pays a discount of 2
percent if the payment is done within the seven days of the delivery. This procedure of
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
the Auburn Wine Company performs all these calculations manually by a finance
person who keeps all the track of the invoices that were created last month. After all the
calculations are made, the discounts or interests that are implied on all the invoices are
done through software of data action which is more time consuming and also requires
more efforts by the finance person (Chang et al. 2015). When the company will
implement SAP, all these works will be automatically done. An automatic report will be
sent by system of SAP and will be delivered as fax or emails to the finance person that
includes all invoices that were created last month. The software tracks automatically all
the interests that are to be implemented if there is a due for more than 21 days and after
calculating all the interest, the amount invoices are sent to the customers or the
resellers. The calculation of all the discount rates that are given by the company also
calculated automatically if the payment is done within seven days. All the manual efforts
and the tracking can be done in a automatized way in implementing Sap which helps
the company to save time and the efforts of its employees.
The inventory of raw materials which includes glass bottling plant is managed by
the Pear tree software. This is separate software and does not integrate with other
systems. To report any data related to bottle manufacturing are to be done manually
which is extremely a difficult job to perform and requires skills to handle the Pear
software. SAP can keep a track of such business processes that are held in the
company related to all the raw materials. Using the SAP software does not need much
skilled employee. Anyone can keep a track on the records using SAP software.
1.4 SAP Implementation Process
The methodology of SAP technology can be implemented through five phases.
The five phases are as follows:
Phase 1: Phase 1 is the Project Preparation phase. The main purpose of this
phase is to do the planning initially and also prepares the implementation of the project
that is being prepared. High level meeting is performed in this phase with all the team
members to decide the scope of project, project phases and procedures of the project,
the team members that are to be selected as core, standards of the projects and finally
sets up the environment that is required to built a project.
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
Phase 2: This involves the blueprint of the business. In this second phase of
implementation, the project team comes to the company premises and understands the
environment and the process of the business. The purpose of this phase is to achieve
an understanding that is common for all the employees which informs the way about
how to run the company business with SAP implementation. Detailed documentation of
the preparation of all the results is gathered in the workshops. All the definition of the
organization structure is also gathered in this phase. Definition of the organization
change and the organization structure is performed in this phase of blueprint.
Phase 3: This is the realization phase. The process of business requirements
that are based on Blueprint of the Business SAP system is the purpose of this phase.
All the testing and configuration of the system is included in this phase. The user
assistance training is provided in this realization phase which implements team to all the
user of the Auburn Wine Company.
Phase 4: This is the final preparation phase. All the final preparation that includes
testing, system management, activities of customer and end user training is done in
final preparation phase (Chou et al. 2014). The open issues that are critical are served
in this phase. A strategy plan is prepared in this phase which gives an idea about when
to cut the legacy of the system and switches to SAP technology. All the details of when
to take the inventory, invoicing and open deliveries are to be done. The shifting of
master information from a legacy system to a SAP system is looked after in this system.
If this phase is completed successfully, the company is ready to run the SAP technology
in its business.
Phase 5: This is the last phase of implementing SAP. All the phases mentioned
above are the offline phase (Ram, Corkindale and Wu 2013). All the works that are
project oriented and environment of pre production is taken to live in this go love and
support phase. When this phase is completed, all the processes are ready to work that
are decided in the scope of the project. Until the system of Sap does not gets stable, the
legacy system must be kept running by the company because if some failure occurs,
then the company will have to face a high risk. After the project is published live, a
support team is provided by the project team to support all the users to be given by the
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
company. The support team helps to resolve the issues that are related to Information
Technology which works on SAP.
1.5 SAP Business Suite uses & applications
The business suite of SAP is imposed of many applications of business software
which allows the companies to execute and plan all the processes when they are saving
the cost of operating on all the processes and also provides opportunities for the
company to move to new businesses (Bernroider, Wong and Lai 2014). The Business
Suite application of SAP is based on the platform of NetWeaver and also gives a
support to the methods that are considered as best methods in all the processes of the
business. The business suite also provides the business application that are integrated
and all the functions from finance, assets management, product development,
purchasing, marketing, production controlling and human resources. The integrated of
applications that are consisted in the SAP Business Suite are as follows:
(1) Resource planning of the Company: It is necessary to get a sound
foundation that is necessary for the company to get a hold in the
marketplace. The ERP application of SAP gives the essential support for
the company’s processes and all the operations that are efficient and are
also tailored to the particular needs of the company.
(2) Management of Customer Relationship: The Customer Relationship
Management of Sap is better than any other CRM software that is
available in the market. The CRM software of SAP that is a part of
business suite helps to address the imperatives of shirt term, reduce the
cost and also increase the ability of decision making. It also helps the
company to achieve the capabilities that are differentiated in completing a
long term project.
(3) Life Cycle Management of SAP Supplier: The management of Supplier
Life Cycle is an approach to manage the relationship of the supplier. The
supply base of the system is determined wholly with the suppliers. The
lifecycle of the individual is covered in the continuous development of life
cycle.
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
(4) Management of Supply Chain: The cost of increasing the customer
service and the innovation and also the responsiveness is reduced by the
supply chain management. The supply chain management of SAP
enhances the collaboration, execution, coordination and planning of the
supply network that empowers the supply chain management process to
shift to competitive environment of ever changing.
(5) Management of Supplier Relationship: With the management of supplier
relationship of SAP, the company can forecast and examine the
purchasing behavior, works with their partners and shorten the
procurement cycle in the real time process (Galy and Sauceda 2014).
These processes allow the company to develop a relationship that last for
long term with all the suppliers who proves them as reliable partners.
1.6 Utilization of Business Process re-engineering concept
The Business Process Reengineering is a practice that enables to rethink and
redesign the process of work that is to be done to support the mission of the company
and also reduce the cost of the company (Sun, Ni and Lam 2015). The reengineering
begins with high level assessment that deals with the mission of organization, customer
needs and the strategic goals. By implementing the SAP in the company is to follow
concept of all the reengineering process of business in the second phase. This helps
the company to fit the gap of the process analysis and also improves and automates the
processes in different departments to maximize the utilization of processes and
resources. All the areas are covered that are not currently taken care of that includes
the international sales which is ignored because there is a lack of enablement of the
resources that are available in Information Technology area is very important in the
expansion plan of the Auburn Wine Company.
1.7 Training & Change Management Process
The change of the company can be managed by the change management
strategy that ensures a transition that is smooth that runs in the organization. The
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
management of change works on people relationships, processes and also system
relationships (Ravasan and Mansouri 2014). The change management helps to ensure
the change of business processes and also accepts using of new systems. There are
three steps for an effective change management.
1) Communication: It is an important change management because people do not
accept what they do not understand. Progressive, frequent and early
communication in the ERP system is manly implement that explains the change
need.
2) Stakeholder Analysis: The stakeholder analysis defines who will get affected by
the implementation of ERP. The level of the improvement of all the stakeholder
are analyzed and also determines the training amount that is required by the
Stakeholders (Ram, Wu and Tagg 2014). The analysis helps the document
responsibilities and roles of all the stakeholders. The disadvantages and the
advantages of all the stakeholders are analyzed and their related job roles for the
constructing of organization are analyzed. To make involvement is necessary in
the stakeholder assessment so that all the training requirements are identified.
3) End-User Training: To execute the ERP system, training must be provided by the
company to all the employees to develop their knowledge and skills. Each
process must have training so that the employees understand the process of the
company very well. The process of training needs money, time and effort
investment by the company. The training of end user provides the knowledge to
the employees regarding the fundamentals of the software.
1.8 Competitive advantage
The competitive advantages that are provided by the SAP are as follows:
Efficiency: The SAP ERP system discards all the processes that are repetitive
and also reduces the need of entering information manually (Ahmad and Cuenca 2013).
So it makes the company to streamline its process which helps as an advantage in the
Competitive market.
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
Forecasting: The forecasts tools that are needed to create the forecast is given
by the SAP enterprise resource planning. The information that is provided by the SAP
system is very accurate and makes the business to create realistic estimate.
Collaboration: Collaboration in between the all the department of the company is
very important to establish a market competition (Nour and Mouakket 2013). There
should be collaboration in all the departments so that the data that is entered in the ERP
system in a centralized way is consistent.
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
2.0 References
Nour, M.A. and Mouakket, S., 2013. A classification framework of critical success
factors for ERP systems implementation: A multi-stakeholder perspective.
In Competition, Strategy, and Modern Enterprise Information Systems (pp. 98-113). IGI
Global.
Ahmad, M.M. and Cuenca, R.P., 2013. Critical success factors for ERP implementation
in SMEs. Robotics and Computer-Integrated Manufacturing, 29(3), pp.104-111.
Ram, J., Wu, M.L. and Tagg, R., 2014. Competitive advantage from ERP projects:
Examining the role of key implementation drivers. International Journal of Project
Management, 32(4), pp.663-675.
Ravasan, A.Z. and Mansouri, T., 2014. A FCM-based dynamic modeling of ERP
implementation critical failure factors. International Journal of Enterprise Information
Systems (IJEIS), 10(1), pp.32-52.
Sun, H., Ni, W. and Lam, R., 2015. A step-by-step performance assessment and
improvement method for ERP implementation: Action case studies in Chinese
companies. Computers in Industry, 68, pp.40-52.
Galy, E. and Sauceda, M.J., 2014. Post-implementation practices of ERP systems and
their relationship to financial performance. Information & Management, 51(3), pp.310-
319.
Bernroider, E.W., Wong, C.W. and Lai, K.H., 2014. From dynamic capabilities to ERP
enabled business improvements: The mediating effect of the implementation
project. International Journal of Project Management, 32(2), pp.350-362.
Ram, J., Corkindale, D. and Wu, M.L., 2013. Implementation critical success factors
(CSFs) for ERP: Do they contribute to implementation success and post-implementation
performance?. International Journal of Production Economics, 144(1), pp.157-174.
Chou, H.W., Chang, H.H., Lin, Y.H. and Chou, S.B., 2014. Drivers and effects of post-
implementation learning on ERP usage. Computers in Human Behavior, 35, pp.267-
277.
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Integrated Information System Proposal 10/062017 8/19/2024Auburn Wine
Company
Powell, D., Alfnes, E., Strandhagen, J.O. and Dreyer, H., 2013. The concurrent
application of lean production and ERP: Towards an ERP-based lean implementation
process. Computers in Industry, 64(3), pp.324-335.
Hsu, P.F., Yen, H.R. and Chung, J.C., 2015. Assessing ERP post-implementation
success at the individual level: Revisiting the role of service quality. Information &
Management, 52(8), pp.925-942.
Chang, B., Kuo, C., Wu, C.H. and Tzeng, G.H., 2015. Using Fuzzy Analytic Network
Process to assess the risks in enterprise resource planning system
implementation. Applied Soft Computing, 28, pp.196-207.
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