BUS5EIS - Geneva Steel Case Study: SAP Implementation Analysis

This case study examines Geneva Steel's decision to implement SAP, addressing problems with their legacy systems and the business, technology, and strategic rationale behind the implementation. The analysis covers the company's aim to change its culture through SAP, weighing the advantages and disadvantages of this approach. It further assesses Geneva Steel's current standing, highlighting the impact of SAP on its operations, cost reduction, and customer satisfaction. The study emphasizes the role of SAP in streamlining processes, improving decision-making, and enhancing overall efficiency within the organization. This assignment is a comprehensive exploration of enterprise information systems and their transformative potential.

ENTERPRISE INFORMATION SYSTEMS
BUS5EIS – ENTERPRISE INFORMATION SYSTEMS
Student Name:
Student ID:
University Name:
1

ENTERPRISE INFORMATION SYSTEMS
Contents
Executive summary.........................................................................................................................3
1. What problems does Geneva have with their legacy systems?............................................4
2. What is the business, technology, strategic and business process rationale for Geneva steel
to undertake SAP implementation?..............................................................................................4
3. Geneva plans to use SAP to change culture at Geneva. What are the advantages and
disadvantages of this approach to culture change?......................................................................5
4. Where is Geneva Steel today and why?...................................................................................6
References........................................................................................................................................7
2

ENTERPRISE INFORMATION SYSTEMS
Executive summary
The customer base of Geneva Steel, the only integrated steel mill in the west of Mississippi
River was in the west and central US; selling its products to steel service centres and distributors.
The company had developed the US government’s biggest construction project during World
War II. The plant that was run by U.S. Steel for 40 years, in early 1987 owing to various factors
was shut down. The company was reopened under new ownership of Joseph Cannon, who
owned over half of Geneva Steel till January 1999 together with company president Robert
Grow. The culture at Geneva Steel was like of a conventional steel mill, hierarchical with fears
of failure and challenging for superiors. A recent survey conducted on customer satisfaction
reveals that the company had some problems in this area. For including a number of
heterogeneous systems, the integration and access of information was made difficult in the
information system configuration of Geneva which was further improved over time. Although
huge amount of transaction data is created from its current information system, most of it is not
accessible to users nor are they integrated with each other. This raises difficulties in decision-
makings as limited knowledge about customers and their orders is provided by the IS besides
limiting links with customers. Integrating information is a critical job in management particularly
while designing business plan. For affecting systematic change in its corporate systems,
processes and structures thereby, reducing costs by 20% Geneva started a Delta project in 1997.
It brought organizational change by realigning the management responsibilities amid senior
staffs who were reduced to 219 from 328, operations management reduced to 92 from 155. Many
organizational measures were developed for assessing the impact of the project for providing
adequate data in terms of quality, timeliness and costs. However, Geneva’s existing MIS failed
in capturing enough information and decided to adopt SAP as it would improve reporting
capabilities, availability and use of information through system based integration of data by
linking accounting and IS and improve customer satisfaction. SAP implementation affected
every aspect of its operations. Although the culture change may not be accepted immediately but
people eventually figured out that it would take place.
3

ENTERPRISE INFORMATION SYSTEMS
1. What problems does Geneva have with their legacy systems?
For reducing the administrative and other costs involved by 20%, Geneva with its Delta project
initiated a major reengineering effort in order to bring a systematized and prevalent change
across their corporate systems, process and structures. For remaining competitive in the
prevailing steel markets the team’s focus revolved around bringing improvements in all aspects
of the business that included customer services, employee relations, and operations. With
competition intensifying due to surges in importing steel coupled with growing domestic
capacity, it was important that Geneva responded by making systematic and pervasive changes
for ensuring long lasting competitiveness. The initiation of Delta project brought many
significant changes within the organization. For focusing on the resources on areas having the
potential to yield biggest improvements across the company, changes in the management
structure was implemented. This was done for reflecting its commitment to a flat streamlined
organization focusing on implementing their strategic plan. A number of criteria were developed
for evaluating the impact of changes implemented by acquiring a balanced measurement of
quality, timeliness and cost. The improvement rate in timely deliveries, order fulfilment
accuracy, manufacturing and administrative cost per ton, customer complaints, manufacturing
yields by activity and inventory levels and products were other metrics for assessing the changes.
However, the management information system which the company owned tremendously failed in
capturing the ample information so that précised measurement of all the aforementioned metrics
can be done. Moreover, it was observed that the adoption on newer workflows was restricted by
the company’s legacy systems.
2. What is the business, technology, strategic and business process rationale for
Geneva steel to undertake SAP implementation?
For facilitating the new workflows and laying hold of information for the new balance set of
organizational measures Geneva had opted for implementing SAP at its workplace. Behind
undertaking the decision of SAP implementation the business rationale behind Geneva steel
4

ENTERPRISE INFORMATION SYSTEMS
revolves around cost reduction that is involved in the procurement of a vast number of hardware
and software. The SAP implementation will be adopted in client server environment thus,
reducing frequent maintenance costs. The technology rationale for implementing SAP is that the
adoption will contribute in reducing the legacy applications from 50 to 90%. In addition to this,
since being an integrated application SAP system itself will be completely integrated with
minimal hardware and software systems. It further will help in making Geneva’s reporting
capabilities more robust and integrative thus, giving the convenience of placing all reports, be it
of sales, DORs and DROs etc. together; eliminating the need of preparing three different reports.
SAP implementation will improve availability and accessibility of information both internally
and externally (to customers) in a more comprehensible, actionable and usable form. The
strategic rationale of SAP implementation revolves around its ability of generating more planned
utility of information thus, improving the company’s decision-making process by analysing
every aspect of business and past performances. Moreover, the increase in accessibility to data
eventually will enhance the management’s capacity of evaluating the relationships between
different types of data. For example, a particular product’s sale can be related more precisely and
validly with overall cost system. In addition, the implementation of SAP will grow employees’
abilities in terms of querying. Meanwhile, system-based integration of information across all
functions of the business will bring much more transparency in the business process rationale
due to SAP implementation. Moreover, it would drive a steady link amidst the company’s
accounting and information system besides integrating accounting functions with that of the
management thereby, giving structure to decision-making. Other than this, the implementation of
SAP will help Geneva in keeping fewer numbers of accountants and information system staffs
thus, reducing costs. Meanwhile, the impact of SAP implementation can also be seen on the
company’s customer satisfaction and planning ability.
3. Geneva plans to use SAP to change culture at Geneva. What are the
advantages and disadvantages of this approach to culture change?
According to Budoor & Zafar (2016), with rapid adoption of digital lifestyles by the consumers,
all businesses regardless of their size and sector have brought changes within their operations
5

ENTERPRISE INFORMATION SYSTEMS
and the manner they communicate with customers’ every day. Those days have been a thing of
past when companies decided on long-term strategies and executed them over the next five
years. These are no longer seen as compelling or continual since change is constant. For the
successful implementation of SAP, culture, which is the operating system of an organization, is
perceived as the main factor. Geneva can bring a change into its technologies, infrastructure, and
processes, but a change will fail to take place without addressing the human element. Geneva’s
approach of using SAP for changing the culture has many advantages. Since, the company’s
culture is risk-averse; a cultural change through SAP implementation will push it towards the
direct road to innovation. Moreover, since the company’s culture is built around silos, by
bringing a cultural change using SAP will bring together everyone associated with Geneva, right
from the management to the front-line employees to work in a kind of workplace environment
that is open and transparent. Changing the existing culture at Geneva will significantly contribute
in successfully adopting the implementation of SAP. The disadvantage that SAP implementation
will have on culture change is lack of internal readiness or training. Little attention is given to the
“people element” and training aspect of SAP implementation, leading towards increased
expenses in the long run.
4. Where is Geneva Steel today and why?
Manufacturing companies like Geneva Steel are largely involved into turning raw materials into
finished goods and mass productions involving generous amounts of inventory and complicated
processes, which are needed to be effectively managed. According to Ekman (2015), successful
implementation of SAP has helped the company in covering the entire production process, right
from the product development stage to sales. It has incorporated engineering, procurement of
inventory, even actual production further connecting the entire company to increase efficiency
and streamline work. Due to the upsurge in infrastructure projects Geneva has been witnessing a
terrific growth over past years. However, before the company planned of adopting SAP
implementation, because of the surge in the demand for steel, it had to face the brunt of
maintenance and operational costs which increased very steeply. But, turning towards SAP has
helped it in optimizing and streamlining the critical business operations while controlling the
costs. The successful implementation of SAP has further helped Geneva to secure growth in
6

ENTERPRISE INFORMATION SYSTEMS
sales anywhere between 16-28%, increase efficiencies by 10-16%, lessen the costs of
procurements by 7-16%, cutting down stock levels by 7-75%. In addition, SAP implementation
has made significant contributions in enhancing the quality control of production operations. It
has also brought significant reductions in the production time. The position at where Geneva
Steel is currently standing clearly reflects contributions of SAP through improved management
and utilization of resources that are available which has enhanced its customer services.
References
Budoor, S. E., & Zafar, A. (2016). Enterprise architecture: A tool for IS strategy
formulation. International Journal of Education and Management Engineering, 6(2), 14.
Retrieved from: http://dx.doi.org/10.5815/ijeme.2016.02.02
Ekman, P. (2015). The enterprise system revisited: How well does it capture the company's
business network? The Journal of Business & Industrial Marketing, 30(2), 208-217.
Retrieved from https://search.proquest.com/docview/1657271080?accountid=30552
7