AWC Existing Computer Systems
In general, a critical assessment of current Information System (IS) to support the operations of the various entities within AWC Group of companies reveals that it is obsolete. The implication of this observation is that AWC is not in a position to compete favorably with some of its competitors. Moreover, this also implies that the existing IS has a high operational cost, insecure, inefficient, and that the integrity of the data it disseminates to the organization to facilitate the various decision-making processes is questionable. In a nutshell, AWC is in a stage that is traditionally identified to as technological obsolescence. According to Feldman and Sandborn (2007), technological obsolesce refers to the condition in which a service or product is no longer needed despite the same being a working condition. Therefore, in the context of AWC, this implies that although the organization’s IS continues to work or function properly, the company no longer needs it. Ideally, the general rationale behind the occurrence technological obsolesce is as a result of new technological products and innovations entering the market with the primary goal of replacing the older versions of the same technological products and innovations (Sandborn 2007).
Subsequently, it is important for the Board of Directors to note that the “DataAction” system used in the Adelaide headquarters for purposes of integrating the organization’s financial accounting system does not support sales and marketing. Moreover, the company’s raw materials inventory for the glass bottling plant is being tracked using a Peartree Module, which parenthetically was never converted over to the DataAction, despite the fact that the organization continues to make vendor payments through the existing accounting system. Accordingly, the status of the DataAction and the use of the Peartree Module to monitor the raw materials inventory for the glass bottling plant restrict the company’s operational efficiency, and more importantly, raise fundamental questions on the accuracy of the payments the company is making towards the vendors. The fact that the Peartree Module is not integrated or converted over to the DataAction means that AWC is not in a position to verify the quantity and quality of the raw materials that are used in the glass bottling plant. Hence, there is a significant possibility that the organization could be making losses without sufficient knowledge of the same.
Nevertheless, the company’s procurement division has an IS that runs a proprietary Supply Chain Management (SCM) system that has not been integrated into any other system. Interestingly, this lack of SCM system integration is evident despite the company’s Sale and Marketing office in Sydney using a separate computer system that runs a proprietary logistics program, which parenthetically helps the office with wine shipment to the overseas distribution centres. In addition, the Sydney-based system also has another application that is used to provide the basic Information Technology (IT) support for its sales and marketing operations. The implication of this failure to integrate the SCM system with the Sydney-based Sales and Marketing system is that the company cannot effectively monitor its supply chain management and that the decisions that the organization’s makes in so far as its production operations are concerned are not properly tied to an accurate database. Furthermore, this also means that both the past and current production decisions may have not been premised on unreliable data and hence, could have contributed to AWC not performing at an optimal level.
In addition, the failure to integrate the procurement’s proprietary SCM system to any other system within the organization does raise critical questions on the integrity of the data as well as its security should the system fail at any given time. The possibility of the SCM system failure also poses a considerable risk on data recovery and normalization of operations in the organization in case of a serious failure. On the other hand, the company’s failure to integrate the procurement division’s proprietary SCM system to any other system within the company has resulted in the company losing several benefits that ordinarily accrue from such a system, for example increased flexibility, improved inventory management, and increased profit margins due to a reduced cost structure (Cousins & Menguc 2006; Ballou 2007).
Interestingly, each of the organization’s winery operates a separate network of Personal Computer (PC) that is connected to the Internet through a server. The production data for each of the wineries is stored on separate databases and routinely disseminated to the organization’s headquarters at Adelaide where it is consolidated into AWC’s database. Additionally, the production and bottling operations for each of the wineries lacks automation. Moreover, the company’s DataAction system is also for billing and invoicing the customers, as well as for internal accounting. Furthermore, the finance department uses the DataAction system to prepare the payrolls and other employee compensation packages. Nonetheless, the system’s capability to handle international sales is not reliable. In summary, the general conclusion on the status of AWC’s current computer system is that its operation cost is relatively high, inefficient, insecure, and has a considerably low data integrity level. Consequently, there is an urgent need by the Board of Directors to consider a complete of overhaul of the company’s present computer system and simultaneously, replacing the same with a more robust and significantly updated Enterprise Resource Planning (ERP) system. The importance of a new ERP system to AWC would contribute to the improvement of the organization’s ERP system modules, including: sales order processing, product life cycle, customer relation management, decision support system, warehouse management, human resources management, and customer relationship management (Lall & Teyarachakul, 2006; Ngai, Law & Wat 2008). In this report to the firm’s Board of Directors, the Chief Information Officer (CIO) proposes the adoption of SAP ECC as the company’s new ERP system.
Detailed Description of the ERP System Implementation
To begin with, it is crucial for the Board to understand that the replacement of the existing ERP system with the proposed system should not be done hurriedly because such an action may lead to detrimental impacts on the operations of the businesses, including halting completely some of the activities. According to Chou & Chang (2008), the replacement of an ERP system in an organization needs to be implemented in a well-structured framework. The researchers explicate that the framework should comprise of logical phases that take into account a transition phase. However, before exploring the specific or particular phases for implementing the suggested ERP system, that is, the ECC, it important for the Board to observe that there is no single approach for implementing a new ERP system in any organization (Quiescenti et al., 2006). Regardless of the same, Quiescenti et al. (2006) explain that there are at least five themes, if strictly followed, can help to facilitate a successful ERP system transformation process within an organization, namely: (a) effective governance and leadership; (b) sound program management using the appropriate resources; (c) clarity on vendor management; (d) an excellent understanding of the various data legacy system; and (e) addressing the change management problem. Ideally, the mentioned themes form a broad ERP system implementation strategy for any organization in any sector or industry.
In regard to the theme of effective governance and leadership, Quiescenti et al. (2006) as well Monk and Wagner (2012) agree that the establishment of an effective governance and leadership framework for an ERP program from the beginning of the implementation stage is a critical factor that determines the success of the transformation process. According to Monk and Wagner (2012), the senior managers of the organization must at the same time develop the strategic direction for the firm’s strategic program. Monk and Wagner (2012) further point out that as the ERP system implementation process continues to be adopted within the enterprise, there is usually a cost implication attached to the same. Hence, it is important that a coordinated and well-planned governance structure is put in place from the earliest phases, particularly during the organization’s budgetary phase. Accordingly, this ensures that there is sufficient support of the implementation process throughout the entire duration. In a nutshell, tight control and explicit visibility of every aspect of the ERP program is fundamental and must be recognized as a priority for the leaders from the beginning. Therefore, this theme emphasizes the importance of stakeholder management during the ERP system adoption and at the same time, encourages the leaders of the enterprise to ensure that the senior stakeholders of the organization own the business case.
On the other hand, on the aspect of sound program management with the appropriate resources, it is critical that the organization resources the system with the right people (Wang et al. 2007). The researchers explicate that the initial step in any ERP program implementation process for any organization is to identify and select the relevant resources that would deliver it. Therefore, it is important that the system is resourced with adequate number of employees focused on its delivery, which in many cases will entail full time participation. In addition, the competence and skills of the selected individuals should also be the best available to the organization. Subsequently, Monk and Wagner (2012) opine that it is paramount for organizations to put together a team of experts before product selection and definitely prior the ultimate solution is agreed. The authors share the view that it is better to take more time in recruiting the appropriate staff onto the program from the start than rush into making early decisions that may eventually delay the project in case it is revisited.
Ideally, Lall and Teyarachakul (2006) recommend that the ERP system implementation programme should traditionally be staffed with a mixture of experienced, senior individuals, from both technical and functional domains, as well as more junior employees performing the role of staff. In this context, it is important that the staff seconded from the organization do not feel that their career advancement is at risk (Hendricks, Singhal & Stratman 2007; Monk and Wagnerm 2012). Consequently, it is the sole duty of the leaders of the programme to ensure that the staffs on the project are significantly motivated and that they view the program as one of the opportunities in the organization to develop their skills and knowledge, as well as accelerate the growth of the career. Indeed, if the programme is worth implementing, it will be driving critical change within the organization and the entire team involved in the delivery of the project would feel that their contribution is recognized and valued (Bradley 2008). Parenthetically, the leaders of the program develop reasonable plan that they can manage effectively.
Nevertheless, on the theme of clarity involving the management of the vendor, the ERP system implementation leaders should focus on achieving three fundamental objectives (Moon 2007; Monk & Wagner, 2012). First, the leaders must assess the requirements of the business reasonably accurately. In other words, before the program leaders engage the relevant vendors for the program, they should first ensure that the requirements of the business of the ERP system suite are precisely determined (Park, Suh & Yang 2007). A comprehensive and consultative description of the requirements will ensure that there is an optimal fit between the solutions offered by the ERP suite and the required solution. In turn, this will reduce, or ideally exclude, any potential future changes in the scope and possible ERP system modifications which augment capital as well as the continuing cost of the programme. Second, the leaders must actively manage the changes in the ERP scope. Clearly, the changes in the program scope must have a close correlation with the additional benefits and should only be approved when it is established that they can successfully go through the change control process. The significance of this is that limits the possibility of the organization incurring irrelevant costs associated with the firm acquiring a suite that does not accurately match the business requirements. Finally, the program leaders must be explicit about the roles and responsibilities of the vendor. In a pragmatic sense, as the things become increasing complex and the number of vendors increases during the ERP program implementation, it is critical that the leaders of the program come up with a centralised function for managing the various vendors. Accordingly, this would ensure that there is no duplicity of roles and responsibilities and thus, no wastage of the limited resources.
In contrast, on the theme of excellent understanding of the various data legacy systems, organization should focus on initiating data management at the earliest opportune time and dedicate sufficient resources for its data legacy systems (Nah & Delgado 2006; Sandborn 2007; Monk & Wagner, 2012). The early management of data should entail the routine and continuous maintenance of the data that is entered into the system to reduce ideally eliminate ‘dirty’ data that results from incorrect data entry, past work-arounds, duplication. On the other hand, the dedication of sufficient resources for the management of the data legacy systems is important in that it facilitates the selection of the right individuals who understand well the legacy systems as well as the data from the onset of the program. Hence, the knowledge of these individuals on the use of legacy data and its significance to the implementation of the ERP program is considerably important.
Finally, on the aspect of addressing the change management challenge, the program leaders are advised, among other things, to establish a change network, communicate effectively, set-up the enterprise to work in a different approach, and embed training in order to yield the best out of the new EPR system (Dezdar & Sulaiman 2009; Monk & Wagner, 2012). Accordingly, the impact of the new ERP system on the people that use it, regardless of the real enhancements to the program, defines whether a system is a success or otherwise. Of significance to note is that in situations where an ERP system is implemented effectively, some of the organization’s workforce have to be replaced, thereby making the undertaking of engaging those employees that remain even more challenging.
Overall, based on the explored five themes on ERP system implementation, the specific steps that this report recommends to the Board on AWC’s ERP system implementation will involve ten steps, which are: (i) need assessment; (ii) hire a team of professionals; (iii) the ERP system evaluation and selection; (iv) prepare for change; (v) prepare data; (vi) implement the selected ERP system; (vii) test the implemented ERP system; (viii) provide training and education to the employees; (ix) Activate the ERP system; and (x) perform routine maintenance of the new ERP system. With regard to phase three of the implementation process, the CFO recommends to the Board to consider adopting the The SAP ERP Central Component (ECC) because of its wide scope in terms of modules as well as reported efficiency and effectiveness.
The Facilities in SAP Solution Manager
The SAP ERP Central Component (ECC) is described as an enterprise resource planning software, which incidentally comprises of various modules that offer organizations increased control over their crucial business processes (Solutions, C. (2016). Therefore, as a result of this resource planning enterprise’s wide module composition, it is conclusive to opine that it will be an ideal ERP program for the most the of AWC’s operations. According to Cipher Business Solutions (2016), the modules in ECC possess the capability of communication with each other and consequently, are able to establish a fully integrated solution that is specific to nearly all types of customers within a broad array of industry sectors. Accordingly, the industrial diversity of the ECC means that is going to be an effective ERP system for the organization. Overall, the SAP ERP Central Component (ECC) tools and services include all organizational modules such enterprise services documentation, manufacturing execution, manufacturing integration and intelligence.
Summary of the 4 SAP Business Suites
The 4 SAP Business Suites comprises of a collection of business applications that offer integration of information as well as processes, functionality and scalability that is specific to a particular industry, and collaboration (Stagge 2010). Fundamentally, this Business Suites is mainly based on SAP’s technology platform that is commonly referred to as the NetWeaver. Apart from the ECC, the other SAP applications that will be needed to satisfy the organization’s future IT requirements include: Supplier Relationship Management (SRM), Customer Relationship Management (CRM), Product Lifecycle Management (PLM), and Supply Chain Management (SCM) (Stagge 2010). Accordingly, the mentioned 4 SAP Business Suites will enable AWC to acquire the ability to engage in e-commerce in the future.
Summary of the Functional Areas within AWC
During the adoption of the proposed ERP program in the organization’s IS, this report recommends to the Board to consider a considerable Business Process Reengineering (BPR) to be conducted on three functional areas of the current system, which are: the DataAction syatem, the Peartree Module, and the proprietary SCM system of the Sales and Marketing Department. A BPR on these functional areas will be important in improving the ERP systems reliability, accuracy, data integrity, and data security, among other benefits to the organization.
Summary of Training Needs
On completion of the ERP implementation process, particularly after it has been configured throughout the organization, this report recommends that all the staffs involved in the use and maintenance of the system should be trained on how to use the program. The report further recommends that the Board needs to consider finding a group of experts that specialize in ‘onsite training’ to provide the employees all the training needed for the operation and maintenance of the system. Additionally, the organization’s IT team should be accorded extra training on ways through which it can resolve any technical problems that are likely to arise in the future.
Significance of the Proposed ERP System to AWC
In conclusion, the significance of the proposed ERP system to AWC in the context of acquiring new information, and improving its competitive edge over its main competitors in the market under which it operates cannot be over-emphasized. Accordingly, among other numerous benefits to the company, the proposed ERP system will improve productivity, flexibility, as well as customer responsiveness; eliminate inefficiencies and costs; improve data consistency; and extend the business using the Internet. The report strongly recommends to the Board the adoption of the proposed ERP system, including the recommendation on how the system should be implemented throughout the organization.
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