Enterprise Resource Planning: A Case Study of Rolls Royce.
Kodama (2013) opined that during the recent economic and financial crises, majority of the organization consolidates their ICT services and infrastructure in terms of increasing Return on Investment. Therefore, in order to implement reliable and affective Information System towards business, majority of the organizations are using Enterprise system tools such as SAP- r2/r3, etc. SAP is the most valuable and potential software package of ERP system that allows the organization in identifying the core values as well as issues. Ahmad& Cuenca (2013) cited that, SAP software application allows the firm in focusing the technical and business aspects including cultural issues within the firm.
This particular study firmly focuses on analyzing the implementation of the cloud Enterprise System within the operational process of Rolls Royce. Analyst discusses the several business process modeling tools that get benefitted by the organization. Apart from that, implementation processes and procedures of ES have been also analyzed in this report.
1. Background of the Selected Company (Rolls Royce)
It has been analyzed that Rolls Royce is one of the most famous global company in the industry of car manufacturing. Roll Royce is providing high efficiency based vehicles within the integrated options of power and propulsion solution. According to the management of Rolls Royce, power system of the company is used in Marine, off-highway applications, aerospace, etc.
Therefore, management of the Rolls Royce identified that they have to implement automatic business process and access the information timely. Apart from that, CEO of the Rolls Royce identified that they have to improve their supply chain management process through e-commerce as the company currently leading globally.
Figure: Official Logo of Rolls-Royce
2. Implementation of Cloud based Enterprise System (SAP-r3)
2.1 Requirements of Cloud Based ES at Rolls Royce
In today’s competitive world the companies that try to get the advantage, flexibility, scalability, and independence tends to adopt the cloud enterprise systems. The traditional ES systems were bulky in the size and are expensive and complex in implementation (Al-Johani et al., 2013). To improve this situation most of the business and the Rolls Royce tends and needs, implement the cloud based ES software package especially SAP-r3 is required. The hurdles like increasing competition, expansion of the market, rising consumer expectations (Puklavec et al., 2015). It will helps the Rolls Royce in improving profitability and making more Return on Investment and also minimizing the total cost of supply value chain, the throughput times, inventory costs. To achieve this goal the company or the organization needs to reduce the use of internal as well as external resources.
In order to fulfill these needs of Rolls Royce to survive in the competitive market a new web based infrastructure has been developed known as "Virtual Enterprise resource planning." In extending to this, the cloud enterprise systems were designed. This cloud ES can help the organization to re-engineer the its business practices and consequently helping the team to survive in the global competition. In this report we try to what are the different types of cloud ES service models are available and deployment methods of those service models (Salleh et al., 2012).
To develop the idea about the enterprise cloud system we searched the web for the keywords cloud ES, Software as a Service, and Cloud Computing. Since this are the keywords that are commonly used while describing the cloud ES.
In the present business scenario, the traditional enterprise systems cannot support the challenges of the e-business and is data requirements. Therefore, to accommodate this requirement, there must be a new web based ES that would be modular, separable and pluggable. Because of this requirement the cloud, computing provided a solution. By providing the resources in a standardized and virtualized environment through the cloud services. The traditionally deployed ERP models can be divided into the following principal categories. A solution is termed as ERP II, which makes an inclusion of the planning of the materials, which are traditional. It has the functionality of order entry and distribution, which is strengthened by the management of customer relationship and human resources.
The Enterprise System implementations are the activity where ERP-II can be utilized for more to make the whole system be more effective. The organizations in New Zealand have made an investment of near $800 million for the expenditures in Enterprise implementation. In such cases, failure will lead to loss in short term and business opportunities, which are missed.
Despite the costs, which are big, there is a little research, which makes the examination for the implementation of ES through the help of ERP-II. This research is been reported on the basis of the community staying at New Zealand.
Such practice of usage is implemented in the companies in New Zealand. (Pai & Rane, 2014). The system installed there has the capability for quick, accurate and consistent operation in the entire organization. The integration of ERP-II in ES implementation makes a delivery of the information instantly to the employees, who require it. It makes a management of the access to the information through the establishment of the roles of security and the ratings that define that employee who makes the usage of the particular information. It also makes the addressing of the issue for the locations of multiple offices of the companies in New Zealand through making a web-based solution. Such solution makes the employees for accessing the system no matter where they stay.
In today's era, companies in New Zealand are making more utilization of the internet. The Internet is not just a tool for sending e-mails, single transaction commerce, and research but it's converted to a tool for the globalization of their business. The tools that approve the organization for making tie up with the other employees, customers and the suppliers. It enables the information free flow and the solution of the next generation that will be built upon it. The total set up can take place only after a successful amalgamation of ERP-II in Enterprise System implementation.
ERP II is the extended version of the ERP system used in the companies in New Zealand for ES implementation, which includes Product Lifecycle Management (PLM) and Supplier Relationship Management (SRM) (Wu et al.,2014). The Management of Product Lifecycle consists of Product Data Management that enables the enterprises for bringing innovative and the products, which are profitable. It is done for practical marketing especially in the evolution of the environment of e-business. The lifecycle management of the product enables the enterprises for harnessing the process of innovation through the efficient management of life cycle of full product definition in the companies in New Zealand, which can be extended.
The Supplier Relationship Management of ERP II is the analogy of vendor side to the CRM, which is aimed at the supplier management base (Huang & Handfield, 2015). It is also a part to be done for ES implementation. There is a rapid transition of the SRM which has a competitive advantage to a necessity (Wolf & Sacks, 2013).
Such functions are given through combining the processes of best practices of the companies in New Zealand and their technologies. They are like management of product data, visualization, integration of enterprise application, management of components supplier, management of knowledge, etc.
The role of ERP II systems in ES implementation to optimize the supply chain through collaborating with the trade partners of the companies in New Zealand. The domain of ERP II systems will make crossing all the sectors and the segments of the business. They make a focus provide broad functionality for the users. The ERP II system in ES implementation makes the connection with the partners of trading, for taking the processes that are beyond the enterprise's boundaries.
2.1.1 Configuration on a hardware
In this method, the software system is pre-configured and installed. The system consists of the best practices in the industries, or can be specific to the workflow of an industry.
2.1.2 Managed services
In this method, a third party hosts a licensed processor application acquired by the organization. This hosting can be implemented on the separate hardware. In this way when third party hosts the service, this third party delivers the utilities of the service on the user organization on a subscription basis.
2.1.3 On-demand deployment
In this deployment method, the software system is not licensed or acquired by the end user. Instead of that, the organization uses it as a service. For this service, the organization pays for subscription fees.
2.1.4 On-premise services
In this method, the licensed software is installed on a particular system that resides in the organization premise.
The selection between the above methods depends on a combination of functionality, cost, and ease of access and speed of implementation.
Figure 1: Cloud Management System
The differences between the actual ES and the cloud ES are, i) In the case of cloud ES system the users in the organization access the services through the cloud that is only relevant to their business. ii) Instead of buying the whole ES in the case of cloud ES the organization has the independence to buy the system on pay as you go basis. Also, the cloud ES is the option in which multiple users can reach out the same resources at the same time without upgrading the software and spending a lot of money on buying new equipment. In this way, the cloud ES provides much more flexibility and agility to the organization's performance (Al-Ghofaili et al., 2014).
3. ES implementation through business process modeling tools
The tools for business process modeling provide the users of the business with the ability for modeling their business processes in implementing ES. The tools also make the implementation and execution of the models and refinement of the models that are based on the data, which is executed. In result, the tools for business process modeling can provide the transparency into the processes of business, as well as make the centralization of the models of the corporate business process and the metrics of execution (Marrella et al., 2015).
Figure 2: Business Process Management Life Cycle
The management of the business process is the field of management that is focused on the alignment of the organizations with the needs and wants of the clients. It is the approach of holistic management, which makes a promotion of the effectiveness of the business and efficiency for striving the flexibility, innovation, and integration with the technology. As the organization makes a strive attain their objectives, the management of business process attempts for continuous improvement of the processes. The methods of making the definition, measurement and improvement are all over defined as the process of optimization to implement Enterprise Systems.
The business process modeling is an important chapter for the understanding and restructuring of the activities and information that the companies in New Zealand use for achieving its goals for the business. Through the modeling tool such as the Enterprise Architect, you can make the modeling, documents and restructuring of those processes and the flows of information using the industry standard UML and the notation of Business Process Modeling. Best of all, the designs of the processes and the models can be used for driving the process restructuring.
The ERP allows the corporate management of the companies in New Zealand and makes an aiming for the integration of the functional systems such as the finance, manufacturing, distribution and procurement. The business process modeling tools allow those companies for replacing their existing information system and also helping for standardizing the management information flow. It is regarded as the next step in the ERP II model's evolution (Ioannou & Dimitriou, 2012). The ERP II model used in the companies, which is termed as MRP II, actually makes a formation of the essential core of ERP. However, the systems of ERP do not contain the modules, which are not employed in MRP II. The MRP II of those companies consist individual modules such as the Tool Management System (TMS), Distribution Resource Planning (DRP), Product Data Management (PDM) (Stark, 2015), Computer Aided Design (CAD) (??u?-Babi?Ќ et al., 2014).
The system makes a usage of the management of a relational database that is under a control of the architecture of client-server for capturing valuable data of the management. The tools can support organizations all the virtual areas throughout all the units of business, departmental functions and plants. The ERP system's development for ES implementation is within the large group of manufacturing that makes the requirement integrate the practices of working.
Through the help the business process managing tools in ES implementation, the companies in New Zealand will have the benefits, which are mentioned below (Osterwalder & Pigneur, 2013).
- The automation of the business process.
- Managing the information for accessing it in time.
- Improving the supply chain through the usage of E-commerce and E-communication.
Figure 3: Business Process Model of Rolls Royce
A task, which is required for the implementation of the Enterprise system of ERP is for understanding the difference between the modules and functions (Nettstrater et al., 2015). Such features are stated as the physical tasks, which are performed by the company. The enormous growth of the packages of Microsoft Windows and the Internet are used as the tools, which are collaborative. The business process managing devices actually take them to new heights of efficiency, which enables them for moving the financial data that is from one department to the other.
As the ES implementation is successfully done through the ERP-II and business process management tools in the companies of New Zealand, it makes a linkage of all the areas that includes manufacturing, human resources, order management, financial systems and the distribution of the suppliers of the external environment and its customers who are into a secure integrated system having data of shared visibility. The benefits, which are potential, include the drastic declination in the inventory that is the breakthrough reduction of the working capital (Laguna & Marklund, 2013). The sufficient information about the need of the customer along with the ability for viewing and managing the supplier has extended enterprise and its customers in totality.
The business process managing tools such as Enterprise Architect used in the companies in New Zealand is not enough for planning the resources; that is required for running the enterprise. They are required for running the business and need to be managed as well. The organization should assess itself for seeing if it is ready for the business process managing tools. Therefore, the effective utilization of the tools is needed on the mandatory basis for the prosperity of the organization.
2.2 Process of ES at Rolls Royce
An ERP project tem consist of a management team and specialists from external outsourcing company EDS. The EDS consist of people having talent in the SAP. Also in this team there are internal managers and employees .the employees have vital knowledge about the different business relationships. These teams also have its own ES planning team. This team is responsible for the implementation and the changes to the systems. There are problems that are related to the implementation of the system. These problems can be categorized into cultural, business, and technical problems.
3. Advantages in Cloud Based ES (SAP-r3) for Rolls Royce
The huge advantage that is provided by the cloud ES when compared to traditional ES, on-premise ES is the low initial cost. The cloud ES also provides emphasize on standardization, flexibility for business innovation. The organization can focus on developing their business strategies while the maintenance, development, the cloud vendor can manage deployment. Use of this cloud ES reduces the spending on upgrades, data ownership (Duan et al., 2014).
Business Process Automation: Before the year of 2003 the company the purchasing groups buying goods from the Rolls Royce were using a manual and paper based purchasing process. This things lead to the unauthorized purchases of the products. Therefore, to stop this, and bring automation to the purchase process the organization decided to introduce the E-procurement strategy (Osterwalder et al., 2013). This is a web based ordering system having catalogues. This helped the end users to order the products through online platform and not from the purchase department. In this way the company automated the process of the selling is products.
Proper Access for Management Information: As the Enterprise system has a centralized data storage then also provides authenticated access to the database then it helps in restricting the unauthorized data access and alterations of the data. In this way only the persons with the authority can have the proper access to the organizational database.
Improvement of Supply Chain Management: The implementation of the provides the complete view of the supply chain for a organization. By using, the traditional or the manual process wasn’t possible. Using the ES the organization can monitor its plants, inventories, Suppliers etc. Started from the ordering to the delivery of the finished goods to the customers can be tracked using the system. The ES systems also helps in the bridging the gap between the supplier and the organization using the ES all the partners in the business can share vital data in real time.
4. Challenges in Cloud based Enterprise System for Rolls Royce
Although the cloud ES provides the advantages like security, flexibility, customization, ownership, the integrity of the data (Duan et al., 2013). At the same time, the large business houses find it unnecessary to switch from the on-premise ES to the cloud ES.
Tradeoff: Since the switch between the existing system and the newly installed system may cause tradeoffs. Although there is a reduction in cost for the installation and maintenance, the potential client organizations questions of the possibility of managing all the network traffic and the data from a single point.
Also, other issues act like hinders in the way of adopting the cloud ES. The challenges like interoperability, migration, portability are also acted like the problem for the organizations.
Migration: Like the teams who try to migrate from one provider to another, they lose the control over the infrastructure, platform and data. Integration with the in-house ES is also a customization problem that is faced by the enterprises.
Ownership of data: The ES system fails to give the sense of ownership of the data. The reason behind this issue is neither the infrastructure nor the applications are owned by the organization (Al-Ghofaili & Al-Mashari, 2014). Technical problems as if a start-up could not afford an internet connectivity with higher bandwidth then the organization cannot operate its business using the cloud ES.
It has been discussed throughout the topic that cloud based system is an essential and integral part in today’s management information system architecture. For efficient and effective utilization of data, various companies have adopted the policies to have cloud enterprises. They are about to implement the Enterprise Systems through ERP – II which can address their requirements in a more comprehensive way. For smooth process of the entire organization, an amalgamation of ERP – II and cloud based enterprises should be recommended to be implementing the enterprise system. In such cases, a regular monitoring is required for the successful process implementation. If such integration takes place in an organization then it will see a success in the near future.
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