ERP Software Implementation and Accounting: A Case Study Report

This report delves into the adoption and implementation of Enterprise Resource Planning (ERP) software across various organizations, from small to large. It examines the motivations behind ERP implementation, highlighting five key reasons for its adoption. The report uses Nestle, a leading food processing company, as a prominent case study, detailing the benefits of ERP implementation, including significant cost savings and improved supply chain management. It also provides a brief overview of the Sarbanes-Oxley Act (SOX), discussing its purpose, implications, and its role in preventing accounting fraud. The report further explores the advantages of SAP ERP, success stories like Nestle's implementation, and potential challenges. Ultimately, the report emphasizes the importance of proper planning, executive involvement, realistic timelines, and staff training for successful ERP implementation, drawing valuable lessons from the Nestle USA case study. The report concludes with a comprehensive discussion on the impact of ERP systems on business management, technology integration, data analysis, and customer satisfaction.

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COMPUTERIZED ACCOUNTING IN AN ERP
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Abstract
This report is all about the adaptation of ERP software in various organization ranging from
small to large in size. Various reasons behind the implementation of ERP software has been
discussed in brief. Five reasons for the implementation of ERP software in the system has been
discussed in brief. The largest user of ERP software in the industry is ERP which is well known
food processing organization. Sarbanes Oxley Act has been discussed in brief which was passed
by US in the 2002 by congress to prevent investors from any fraud in the accounting department.
Reasons behind the use of this Act has also been discussed.

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Table of Contents
Introduction..........................................................................................................................3
Reason for Adopting ERP software.....................................................................................4
Reasons............................................................................................................................4
Biggest Industry in field Using ERP software.................................................................6
Sarbanes-Oxley Act.............................................................................................................7
Reason of the Act and its implication..............................................................................7
My SAP benefits..............................................................................................................7
Success of SAP ERP implementation..................................................................................8
Failure of SAP ERP implementation...................................................................................9
Conclusion.........................................................................................................................11
References..........................................................................................................................12

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Introduction
The following report is all about implementation of ERP software in large factories or
industries. ERP systems are generally designed in such a way that it can satisfy the need or
demand of different firm all around the world (Ahmad and Cuenca, 2013). The five of ERP
implementation has been discussed in brief. The biggest user of ERP in the industry is Nestle
which is well known food processing firm. The firm claimed that after the implementation of
ERP system in Nestle they have saved more than 325 million dollars and saving mainly raised
from supply chain movement. Sarbanes Oxley Act has been discussed in detail which was passed
by US congress to prevent investors from any fraud in the accounting department. SOX was
mainly implemented in improvisation of financial status of different organization.
In this report a brief reason is given about the fact that why ERP software is adopted
various organization ranging from medium to large. A complete discussion is given on Nestle
which is largest user of ERP software in food processing units. Sarbanes-Oxley Act was
launched for protection of various investor from any fraud in their accounting department. Nestle
is one company which has been benefited by the implementation of ERP system in their
organization. Hershey is an example of organization which has incurred huge loss after the
implementation of ERP software in their system.

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Reason for Adopting ERP software
ERP system was previously used by large factories or industries but now a day’s many
small scale industries are using it. This system may not be practically used by small companies
on the contrary many companies ranging in size from small to medium has adopted it. ERP
systems are mainly designed to satisfy the needs or demand of various organizations round the
globe. Various ERP solutions are available in the market to satisfy the needs of retail stores,
healthcare, oil and gas. Various organizations round the globe can find a possible solution to
satisfy the needs of their business.
Reasons
The following five reasons can be considered to an important reason for adoption of ERP
software in any industry.
 It helps in proper management of business with one system.
 It helps in keeping the various technologies updated.
 It helps in maintaining of streamline with progress of a Business.
 It helps in analysing important data of any industry.
 It helps in satisfying the needs of various customers.
The biggest benefit that can be achieved from the use of ERP solution in any industry can
help in easy management of various important areas of a business with the help of just one
system. A manufacturing ERP system can help in focusing functional areas like financial,
inventory management, quality management and sales management. When a business manages
several other businesses then it can have some problems like errors in data, duplication of stored
records, and improper communication between domains of a business. The ultimate goal of ERP

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system is to add all the separate function into a single system which allow in establishing a
proper communication between them (Ahmad and Cuenca, 2013). Now various organization of
an industrial sector has one system which is used for managing various information then all the
important areas can take on decision and action on the same set of data.
Technologies round the globe are changing at a very rapid rate and the up gradation cost
of programming the old system is increasing at a rapid rate. Current technologies like machine
learning, internet of things are submerged with the modern system which helps the various
organization of an industry to take better decision and helps in attaining competitive edge
(Zhang, Zhu and Ding, 2013). For maintaining their position in the market various companies of
the industry need latest systems. They need some system which can help in flexibility and
scalability in their business.
ERP solutions are generally designed in such a way that they offer flexibility and
adaptability for various organization of an industry. The latest ERP system comes up with
different methods which help them in satisfying the requirements of the various businesses.
After the successful implementation of ERP systems various industrial sectors can easily
judging the needs of a business. After the implementation of ERP system various organizations
can easily achieve speed, efficiency (Schniederjans and Yadav, 2013). A latest ERP system can
be beneficial in satisfying the needs of business partners, stakeholders and employees of the
organization. ERP system in general consists of various complex features which can be
considered complex for many users. It the duty of various companies of an industry to teach their
employees about the working principle of an ERP system. If a user shows faster running of a
system, then it is likely that can be adopted easily throughout any organization.

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Analyzing the data of various companies can be considered useful for various companies.
ERP solutions can be considered to effective way of gathering and checking of data from various
areas of business which will ultimately help the various data teams of an organization. Firstly, it
will help the data analysts to look into the core areas of business and gather important data from
it. Secondly ERP system will help various organization of an industry in achieving real time data
on various areas which is inclusive of business processes and work status.
Various customers expect that they can constantly receive their needs regardless of
domain or department they interact and various businesses must ensure that various departments
communicate with each other. Any department of various organization of an industry must have
the details of customer at their fingertip so that they can easily interact with any customer
irrespective of channel.
Biggest Industry in field Using ERP software
Food processing industries are considered as the largest user of ERP software. ERP
software’s are considered to be medicine for every problem of an organization. Application of
ERP system offers various firms to use various business processes, use data and allowing full
access to the data of company in real time (Nour, and Mouakket, 2013). Nestle which is well
known industry in food processing industry has claimed that after the implementation of ERP
software they have saved more that 325 million dollars. The saving mainly arises from various
domains like supply chain movement (Sarfaraz, Jenab and D'Souza, 2012). After the
implementation of ERP system same database and business process have led to more trustworthy
forecast of various demands for various of its products.

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Sarbanes-Oxley Act
In the year of 2002 Sarbanes Oxley Act was passed by U.S congress in order to protect
various investors from fraud in accounting departments of various organization. SOX mainly
emphasizes in improving the financial condition of various corporation and prevent any fraud in
the accounting department (Monk and Wagner, 2012). In reality SOX effects various
organization in many ways. At the time of dealing with international client’s internal controls
and compliance are considered to be biggest problem in the successes of ERP. Process needs to
be designed in such a way that in must satisfy the regulatory compliance and systems need to be
designed in such a way that it can satisfy the compliance and employees need to be trained in
such a way that they can easily execute various complaint.
Reason of the Act and its implication
Sarbanes Oxley Act (SOX) was implemented in the year 2002 to helps in increasing the
confidence of various investors in the market and aims in closing loopholes for various
organization. SOX was implemented due to strengthen various committees of audit and perform
various internal test for controlling of different things. The direct effect of SOX on corporate is
increasing the level of efficiency (Mitra and Neale, 2014). Cost of compliance can be considered
important for various firm which depend on manual control. SOX Act mainly emphasizes
various firms to make financial system more efficient, centralized and automated.
My SAP benefits
SAP is considered to be one of the leading ERP vendors which has been an expected
market of 20% of the global market. My Sap ERP solution generally aims in providing complete
software for enterprise resource planning with a flexible approach. SAP offers integrated

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modules for different domains like accounting, production planning, management of different
materials. Sap ERP is considered to be complex process which helps various firms in integrating
financial, human and management of data task in one IT structure. My Sap mainly focuses in
providing functionalities in various domains of accounting which is inclusive of legal financial
reporting and segment reporting.
Success of SAP ERP implementation
One company which is successful in implementation of ERP is Nestle which a well-
known food processing firm. ERP stands for enterprise resource planning which is used to
overcome every problem. SAP ERP implementation was implemented in Nestle SA as the
various executives felt the need of improvisation in the organization (Akeel and Wynn, 2015).
Prior to Nestle SA, ERP was decision was implemented in Nestle UK. SAP ERP was
implemented in Nestle SAP for a period of five years in eighteen sites of manufacturing division.
A third implementation of ERP took place in Nestle USA (Mead and Sack). The project of ERP
implementation began in USA division of Nestle as BEST (Business Excellence through
technology system). Irrespective of case of ERP implementation in Nestle the ultimate goal
behind the ERP implementation were similar in all cases.
After the implementation of SAP ERP Nestle USA claimed that they had made a savings
of more than 325 million dollars and most of the savings came from supply chain improvements.
With the help of SAP ERP similar database and various processes of business led to trusted
forecasts of demand for various products of Nestle (Amid, Moalagh, and Ravasan, 2012). The
problem of various brands of vanilla was solved with the common database. UK based Nestle
experienced the similar success after the implementation of SAP ERP. Nestle USA was an

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excellent case study for the implementation of ERP because it consists of failures and success.
During the planning phase of project there were breakdowns on the contrary the overall project
can be considered to be successful. After analyzing Nestle USA other firms can easily learn a
valuable lesson from it (Banerjee, Humphery-Jenner and Nanda, 2015). The first lesson that can
be learned from the ERP implementation in Nestle USA is that right executives or individual
must be involved from the beginning. The second lesson that can be learned from Nestle that the
implementation of ERP is not a project which the company should force to implement on
specific timeline (Chhaochharia et al., 2016). The future of the organization is on the line and it
must be important for checking the business goals of a given project and after that setting a
particular deadline for the project. Thirdly, the organization looking for the implementation of
ERP must focus on training of different staff members (Li, 2014). Training is considered to be
vital factor for the implementation of ERP in because without proper training various employees
using it cannot process on a day to day.
Failure of SAP ERP implementation
Hershey’s is considered to be largest manufacturer of chocolate in North America. The
headquarter of this organization is located in Hershey, Pennsylvania which is also known as
home to Hershey chocolate world (HassabElnaby, Hwang and Vonderembse, 2012). The
chocolate business was started by Mr. Milton S. Hershey in 1876. The products of Hershey were
sold to around sixty countries around the globe. Hershey’s sales comprise of 80% chocolate and
20% non-chocolate items. The competitors of Hershey comprise of Mars, Nestle, Palmer and
many more.

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For improving the service of different companies and providing better customer services
ERP was implemented in Hershey’s (Chou et al., 2014). In the year of 1996 the management of
this chocolate firm gave an approval to this project named Enterprise 21. Hershey selected SAP
R/3 model of ERP software, manugistic SCM software, Seibel CRM software and IBM for
properly managing of integration among the given three systems. The overall cost of the given
project was expected to be 10 million dollars.
There were several impact on the failure of ERP system on Hershey. Firstly, there were
problems on order fulfilment, processing and shipping started to rise and this firm was unable to
meet the committed date of delivery. Several distributors of who had placed order regarding it
cannot supply the product to retailer on time so there was a loss in credibility in the market
(Deng, Melumad and Shibano, 2012). After the implementation of ERP in Hershey, the stock
price of this firm fall by 8% on a single day which resulted due to malfunctioning of this newly
installed system.
There were certain reasons behind the failure of ERP in Hershey that are over-squeezing
schedule of implementation, Big bang approach instead of phase approach, sacrificing testing of
different system (Erkan, Baç and Rouyendegh, 2012). Various lessons were learned from the
failure of ERP in Hershey that are an implemented project should not be forced into an
unreasonable timeline, testing phase are certain things that should not be compromised. The
organization should provide time to employees to learn about various business process and about
systems.

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