ERP Systems and Implementation Challenges

This assignment delves into Enterprise Resource Planning (ERP) systems, examining their advantages and potential pitfalls. It emphasizes the importance of risk management during implementation, highlighting a new risk assessment framework. The discussion also addresses the relationship between business process reengineering and ERP implementation, advocating for a clear order of operations. Furthermore, it explores successful ERP implementation strategies and the role of tools like SAP Solution Manager.

Integrated Information System Proposal Auburn Wine Company
AWC SAP ERP IMPLEMENTATION PROPOSAL
By
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Executive Summary
This proposal report starts by introducing AWC, a wine production based in Australia
and expounds on the problems in the company’s existing information systems which
limit efficiency and productivity. Following is an identified objective to improve
efficiency by deploying either a SAP HANA or SAP ERP ECC solutions. The report
also expounds on SAP Solution Manager, SAP Business Suites and other associated
SAP ERP solutions including CRM that can be integrated together to maximize
efficiency and why they are significant.
ERP Implementation has been described followed by the benefits and risks of
installing the solution. A discussion of business process re-engineering (BPR) has
also been done to emphasize its importance when deploying ERP applications. Since
many software projects are faced by risks and uncertainties, the report also outlines
some possible risks and how they can be controlled and managed through a
discussion of Change Management (CM) and risk management procedures. Finally,
a report conclusion and recommendations for AWC board of directors.
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Table of Contents
1.1 Introduction.........................................................................................................................4
1.1.1 Background.................................................................................................................4
1.1.2 Challenges of Existing Information Systems.........................................................4
1.1.3 Problem Statement....................................................................................................5
1.1.4 Main Objective............................................................................................................5
1.1.4.1 Specific Objectives.............................................................................................5
2.1 Proposed ERP Solution....................................................................................................5
2.1.1 SAP ERP.....................................................................................................................6
2.1.1.1 SAP ECC..............................................................................................................6
2.1.1. 2 SAP HANA..........................................................................................................7
2.1.2 SAP Solution Manager..............................................................................................7
2.1.3 SAP Business Suites.................................................................................................8
2.1.4 SAP Implementation..................................................................................................8
2.1.5 SAP ERP Deployment Benefits...............................................................................8
2.1.6 SAP ERP Associated Risks......................................................................................9
2.1.7 Other SAP Related Solutions...................................................................................9
2.1.7.1 Customer Relationship Management..............................................................9
2.7.1.2 Significance of Associated Software Solutions............................................10
3.1 Time Considerations.......................................................................................................10
4.1 Business Process Re-engineering................................................................................10
4.1.1 Importance of BPR...................................................................................................11
5.1 Change Management.....................................................................................................11
5.1.1. Change Management Issues................................................................................11
6.1 User Training....................................................................................................................11
6.1.1 Training Requirements............................................................................................11
7.1 ERP Implementation Risk Management......................................................................12
8.1 Conclusion........................................................................................................................12
9.1 Recommendations..........................................................................................................12
10.1 References.....................................................................................................................13
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1.1 Introduction
1.1.1 Background
Auburn Wine Company (AWC) is a wine manufacturing company that was
established in 1994. It has since has expanded to comprise of a head office in
Adelaide and additional offices in Sydney, a bottle plant, a warehouse, three wineries
and a restaurant. AWC Board of Directors includes a chief executive officer, chief
financial officer, chief information officer and the & sales, marketing & procurement
managers and human resource manager. It comprises of 460 permanent employees
and takes in about 250-300 casual workers during busy days.
1.1.2 Challenges of Existing Information Systems
Currently, AWC information systems are out of date. Presently, AWC uses
DataAction, an integrated financial accounting system which does not support its
sales and marketing functions. Inventory stock control is done through a module that
is not integrated with DataAction system even though the payments are handled
through DataAction. AWC is also using a standalone Supply Chain Management)
system in their procurement department. Sales and Marketing branch located in
Sydney is also using a stand-alone system that helps with proprietary logistics as
well as another program used for basic IT support. AWC devices are connected
together through a Local Area Network (LAN) with access the Internet. In addition, in
each winery, company data and information is stored on separate databases.
Periodically, database information from the wineries is transmitted to the headquarter
office in Adelaide for consolidation. Production planning and inventory control is done
on Excel spreadsheets and production and bottling operations is done manually.
The lack of an integrated information system is costly for AWC. Company data and
information is dispersed in the different branches meaning there’s no data
centralization and employees may fail to get up-to-date information when data is not
sent to the main company database. Data retrieval is also time consuming as staff
may be forced to wait for data transfer from one branch to another. There are no
procedures that lay out policies on who and who shouldn’t access company data. All
these challenges affect business efficiency, productivity and competitive advantage.
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Therefore, it is important to deploy an Enterprise Resource Planning (ERP) solution
to integrate AWC functions and departments for cost savings, improved efficiency
and ultimately improved production in order to gain a competitive advantage.
1.1.3 Problem Statement
This project will address the outdated information systems that result to business
inefficiency and low productivity as a result of data independence and lack of up-to-
date information for employees
1.1.4 Main Objective
To deploy a SAP ERP application that will integrate AWC business processes in
order to enable business efficiency, effectiveness and productivity.
1.1.4.1 Specific Objectives
i) To study the existing IT systems
ii) To generate the requirements of the proposed ERP system
iii) To implement the ERP implementation
1.1.5 Significance
The proposed information system (ERP) will enable AWS;
i. To provide up-to-date information remote access for both employees and
company stakeholders
ii. To reduce on costs associated with data transmission
iii. To grow and expand through business efficiency and productivity
iv. To embrace and align with information and communication technology
developments for a competitive advantage
2.1 Proposed ERP Solution
Enterprise Resource Planning (ERP) is a business application software that helps to
integrate business functions and provides support for information flow both within and
outside the business (Elizabeth, et al., 2015). ERP software’s are huge and complex,
and combines business modules in order to collect, store, manage, and integrate
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data from all business processes. It is therefore an enterprise application that
incorporates all aspects of business procedures including product planning,
manufacturing, development, sales and marketing, finance and accounting in a single
database, application with provision for user interfaces (Beal, 2017). The proposed
ERP for AWC is a SAP ERP application.
2.1.1 SAP ERP
SAP ERP is enterprise resource planning application software developed by SAP
Company, and incorporates all the major business functions of an organization
(SAP , 2017). SAP ERP consists of various modules, including product planning,
financial accounting, planning and controlling, asset accounting, sales & marketing,
quality management, project management, human resources and more (SAP ,
2017). This means that by implementing SAP ERP, AWC will be able to integrate all
its operations in various departments in all the branches including the headquarter
office, bottle plant and warehouse in Adelaide, the wineries based in Clare, Barossa
Valley and Renmark as well as AWC restaurant based in Barossa valley. The SAP
ERP will facilitate in collection and integration of data from the different modules in
AWC including production, supply chain management, sales and marketing, financial
and accounting, human resource management and more to offer AWC enterprise
resource planning. Recommended SAP enterprise applications for AWC are SAP
ECC or SAP HANA which are briefly described below.
2.1.1.1 SAP ECC
AWC can chose to deploy SAP ERP Central Component (ECC). SAP ECC is
flagship ERP product by SAP, and is one of the most preferred ERP solutions for
many organizations. It is an enterprise resource planning (ERP) software that
comprises of several modules that provide AWC with enhanced control and
efficient management over their major business procedures (Business Cipher
Solutions, 2015). If deployed, SAP ECC will provide AWC with modules including
production management, financials management, material management, human
resources capital management, sales and distribution (Business Cipher Solutions,
2015). It will also facilitate module collaboration for AWC which will enable fully
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integrated solutions for enhanced operations and increased business growth
through data centralization.
2.1.1. 2 SAP HANA
AWC can also opt for SAP HANA ERP. SAP HANA is also an ERP application
software developed by SAP company (SAP , 2017). It is a column-oriented relational
database management system with in-memory database features that integrates
several business modules (Carey, 2017) . As a database server, SAP HANA will
provide data storage store and fast data retrieve capabilities for applications.
Furthermore, SAP HANA performs advanced data analytics functionalities
(O'Donnell, 2015). It will therefore perform text search, spatial data processing, text
analytics, predictive analytics, graph data processing and streaming analytics for
AWC. SAP HANA can be installed in the cloud by cloud service providers or on-
premise (SAP , 2017)
2.1.2 SAP Solution Manager
SAP Solution Manager is an integrated platform product developed by SAP company
that supports SAP users to adopt new software deployments (SAP, 2017). It
facilitates support for business operations, development and continuity. It therefore
helps in implementing, maintaining, running, and adoption of all enterprise
applications (SAP, 2017). Not only does SAP solution manage SAP products, it can
also be used to manage other software solutions not developed by SAP company
(SAP, 2017). For AWC, SAP Solution Manager will enable the installation, running
and management of the selected SAP ERP. It will enable end-to-end software
lifecycle management to restructure business processes for AWC and facilitate
efficiency and effectiveness as well as decreasing risk failure involved in ERP
deployment. SAP Solution Manager will facilitate ERP implementation success at
AWC by providing the following
 Powerful implementation capabilities that will allow users to efficiently
implement SAP ERP and other software applications
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 Enhanced user experience by enabling browser-based user interfaces and
improved graphic
 Hybrid support through support for all AWC cloud applications
Figure 1: SAP Solutions Manager (SAP, 2017)
2.1.3 SAP Business Suites
SAP Business Suite comprises of several business software applications including
SAP ERP as a basic foundation and other solutions including customer relationship
management, product lifecycle management, supplier relationship management, and
supply chain management units (Rouse, 2014). For AWC, SAP business will enable
planning and provide process execution as well as cost saving.
2.1.4 SAP Implementation
SAP implementation refers to entire set of processes that describe the SAP ERP
deployment in an organization (Anderson, 2003) . For AWC, SAP implementation will
be based of the best practices and reviews that present a series of processes and
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products that make up a complete implementation method to allow AWC to
successfully design and execute the SAP ERP.
2.1.5 SAP ERP Deployment Benefits
According to (Indusa, 2015), effectively executed SAP ERP systems provide several
benefits. By installing a SAP ERP, AWC will obtain the following benefits offer have
the following cost benefits:
 Improved planning and control for inventory stock control function
 Enhanced production effectiveness which will diminish scarcities and disruptions.
 Decreased raw materials costs driven value-added procurement and
compensation procedures with suppliers
 Decreases labor expenses through better human resource management staff
allocation procedures
 Improved sales income through better managed customer relationships.
 Reduced managerial costs.
 Reduced supervisory and monitoring compliance expenses
 Provision for enhanced global integration for currency exchange rates barriers
 Up -to-date real time information access through a common single database
and error reduction
 Efficient work environ for company employees (Monk & Wagner, 2009)
 Customizable user interfaces for end users that suits different modules
2.1.6 SAP ERP Associated Risks
 ERP Implementation may suffer failure
 It may take long to achieve return on Investment for AWC
 Vendor lock-in where AWC may be tied to a single ERP provider because of
service contracts and high switching costs
 ERP Inflexibility challenges where SAP ERP solutions may fail to be
compatible to some of AWC business model making customization difficult
2.1.7 Other SAP Related Solutions
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2.1.7.1 Customer Relationship Management
CRM is a software solution for managing customer’s current and probable
interactions in an organization (Sysco, 2017). Companies majorly install CRM and
ERP to ensure business operations effectiveness and efficiency. AWC can therefore
install a CRM solution. CRM can manage and improve customer relations for AWC
through evaluating customer engagement and experiences for even better and
enhanced customer support. CRM can help AWC to understand clients, and enhance
their experience through managed relationships. Used together with a SAP ERP,
CRM can greatly improve business functionalities for AWC for enhanced efficiency
and productivity.
2.7.1.2 Significance of Associated Software Solutions
It is vital for AWC to deploy other software solutions that can work together with the
selected ERP for improved efficiency (Workwise, 2017). Associated SAP ERP
applications are vital for AWC because;
i) They will facilitate business process streamlining
ii) They will enhanced real-time data and information
iii) They will provide an all- rounded view of the company customers
3.1 Time Considerations
SAP ERP implementation is complex and complicated and therefore requires a lot of
planning and considerations (Panaroma Consulting Solutions , 2016). For AWC, time
consideration will be very important because the company operates more than one
branches. It will be important to ensure that a given ERP implementation phase is
successfully installed before moving to another in order to avoid failure. The number
of ERP modules, financial capability and vendor support will depend the time
duration for the ERP implement in the company.
4.1 Business Process Re-engineering
Business process re-engineering (BPR) is a management strategy that aims to study
and design business processes organization and workflows in a company. BPR
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focuses on helping organizations rethink their operations in order to
improve customer experience reduce on operational costs, and gain a competitive
advantage (Roskill, 2014). As such, BPR and ERP go hand in hand. The best way to
ensure ERP implementation success for AWC is to perform BPR first
4.1.1 Importance of BPR
For AWC, Performing BPR first will ensure that business operations are improved
before ERP implementation. BPR will ensure ERP functionality will thoroughly match
the actual AWC business processes. It will also reduce implementation complexities
as well as reduce implementation time.
5.1 Change Management
Change management (CM) is an approach that directs on hoe to effectively
prepare, arm and support people to positively embrace changes in a business for
successful outcomes (Prosci, 2017). It is thus important to perform change
management at AWC as it will provide a planned methodology to support employees
in the organization towards adopting changes associated with ERP deployment.
5.1.1. Change Management Issues
 Communication issues – ensure that ERP implementation is clearly
communicated in the organization for transparency. Let AWC staff know why
the change is needed and how it will be done
 Employee resistance – AWC may resist change. Therefore management
needs to be involved in the changes by offering user training
6.1 User Training
User training is a very important factor with ERP software deployment. If end-users
do not know how to use the installed ERP, the ERP will not achieve expected
outcomes and will be a failure (Darshan, 2016). AWC has over 400 permanent staff
members and may regularly employ over 100 casual employees. For ERP success, it
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will be crucial to train them on AWC understanding the different aspects of the ERP
implementation including why, what and how. Training AWC end-users will enable
them take full advantage of its benefits
6.1.1 Training Requirements
 Training budget
 Align SAP ERP with change management
 Start early and do it more than once
 Select a delivery method such as web-based training, videos, computer based
and manuals
7.1 ERP Implementation Risk Management
ERP deployment comes with associated risks such as failure. It is important to set up
risk management procedures in a business in order to manage any up-coming
uncertainties (Prasanta, et al., 2016). Since the ERP installation at AWC is a project,
the company needs to set up risk management policies to guide risks that may come
with the deployment process. Risk management will involve everything stage from
the initial phase to the implementation and maintenance phases.
8.1 Conclusion
Several emerging technologies are increasingly transforming business processes
operations including cloud solutions such as ERP applications. ERP solutions help
organizations by integrating functions for increased efficiency, productivity as well as
achieving a competitive advantage. Thus business that want to expand their growth
and maintain continuity should adopt modern technologies to achieve productivity.
9.1 Recommendations
The information officer recommends that AWC should deploy a SAP HANA ERP or
SAP ERP ECC software solution in order to be effective, maximize productivity and
achieve a competitive advantage. Before ERP deployment, AWC should perform
BPR in order to have the ERP aligned with business operations. To ensure ERP
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deployment success, AWC should train employees on the what, and why the ERP
implementation is necessary as well as how to use it for efficiency. In addition, it
would also be important to implement CRM solution together with ERP for an all-
round business operations streamlining. Lastly, AWC should also ensure the layout
of ERP risk management plan in the event that the ERP implementation faces risks
and uncertainties.
10.1 References
Anderson, G., 2003. SAP Planning: Best Practices in Implementation. s.l.:Sams
Publishing.
Beal, V., 2017. Webopedia: ERP - enterprise resource planning. [Online]
Available at: http://www.webopedia.com/TERM/E/ERP.html
[Accessed 5 October 2017].
Business Cipher Solutions, 2015. What is ERP Central Component?. [Online]
Available at: http://www.cipherbsc.com/solutions/sap-erp-central-component-erp-ecc/
[Accessed 4 October 2017].
Carey, s., 2017. What's the difference between SAP HANA, S/4HANA and HANA
Cloud Platform. [Online]
Available at: https://www.computerworlduk.com/it-vendors/there-is-confusion-over-
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hana-we-can-always-be-better-at-explaining-customers-says-sap-3616093/
[Accessed 5 October 2017].
Darshan, D., 2016. 3 Important Aspects of ERP End-User Training. [Online]
Available at: http://blog.commlabindia.com/training-solutions/three-aspects-of-erp-
end-user-training
[Accessed 3 October 2017].
Elizabeth, M., Megha, S., Nayantara, N. V. & VA, S., 2015. A Survey on ERP
Implementation Techniques. International Journal of Emerging Technology and
Advanced Engineering, 5(4), pp. 66-67.
Indusa, 2015. www.indusa.com. [Online]
Available at: http://www.indusa.com/blog/calculating-opportunities-and-benefits-of-
implementing-erp-software/
[Accessed 5 October 2017].
Monk, E. F. & Wagner, B. J., 2009. Concepts in enterprise resource planning. 3rd ed.
Boston : Thomson Course Technology.
O'Donnell, J., 2015. SAP HANA SPS11 tackles analytics, IT and development.
[Online]
Available at: http://searchsap.techtarget.com/news/4500269418/SAP-HANA-SPS11-
tackles-analytics-IT-and-development
[Accessed 3 October 2017].
Panaroma Consulting Solutions , 2016. 2016 REPORT ON ERP SYSTEMS AND,
New York : s.n.
Prasanta, D., Ben, C. & Cheffi, W., 2016. Risk management in enterprise resource
planning implementation: a new risk assessment framework. [Online]
Available at:
https://research.aston.ac.uk/portal/files/10671585/Risk_management_in_enterprise_r
esource_planning_implementation.pdf
[Accessed 4 October 2017].
Prosci, 2017. WHAT IS CHANGE MANAGEMENT?. [Online]
Available at: https://www.prosci.com/change-management/what-is-change-
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management
[Accessed 5 October 2017].
Roskill, J., 2014. What Comes First: Business Process Reengineering or ERP
Implementation?. [Online]
Available at: https://www.acumatica.com/blog/what-comes-first-business-process-
reengineering-or-erp-implementation/
[Accessed 3 October 2017].
Rouse, M., 2014. Tech Target: SAP Business Suite. [Online]
Available at: http://searchsap.techtarget.com/definition/SAP-Business-Suite
[Accessed 3 October 2017].
SAP , 2017. SAP HANA. [Online]
Available at: https://www.sap.com/products/hana/implementation/deployment.html
[Accessed 4 October 2017].
SAP , 2017. SAP Online Tutorials. [Online]
Available at: https://www.saponlinetutorials.com/about-sap-modules-sap-modules-
list-overview/
[Accessed 4 October 2017].
SAP, 2017. SAP Solution Manager. [Online]
Available at: https://support.sap.com/en/solution-manager.html
[Accessed 4 October 2017].
SAP, 2017. The next-generation ERP business suite. [Online]
Available at: https://www.sap.com/products/s4hana-erp.html
[Accessed 3 October 2017].
SAP, 2017. www.sap.com. [Online]
Available at: https://www.sap.com/products/erp/s4hana-erp.html
[Accessed 4 October 2017].
Sysco, 2017. CRM vs ERP: What’s the difference?. [Online]
Available at: https://www.sysco-software.com/crm-vs-erp/
[Accessed 3 October 2017].
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Workwise, 2017. 3 KEY BENEFITS OF CRM AND ERP INTEGRATION. [Online]
Available at: https://www.workwisellc.com/erp-software/3-key-benefits-erp-crm-
integration/
[Accessed 3 October 2017].
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