Enterprise Resource Technology Acceptance: Rolls-Royce Case Study

Problem or Opportunity faced by Rolls Royce

Discuss About The Enterprise Resource Technology Acceptance.

Rolls Royce was established in the year 1987 and acquired Northern Engineering Company in the year 1989. This has empowered Rolls-Royce to demonstrate the competence level in industrial energy. The Allison energy, a US-based company, was acquired by Rolls Royce in the year 1995. This has enabled the company to grow in industrial gas, turbines and aero propulsion. This achievement has assisted Rolls Royce with a major share in US markets (Pavel and Evelyn, 2017). Later, the company launched a unique series of engines which was popularly known as- “Trent Series.”  The engine has enduring flight capabilities, cost-effective operations, and economical maintenance costs. These engines are used for powering A330 and A340-500. The company is world-wide acclaimed and offers paramount products in the marine sector, nuclear and electrical power(Kim, 2011). The Rolls Royce comprises more than three thousand aircraft and jet plane operators, serving more than 1000 marine shippers and forwarders and 150 armed forces. The company has its working operations in more than 110 countries and has reported estimated revenue of 10 billion (in pounds) in the year 2009.

The Rolls Royce case study explores the different aspect of implementing ERP (SAP). The company occupies a strong position in global markets-marine, defense aerospace, and civil aerospace. The company has been successful in maintaining long-term relationships in the service sector. As per the financial statements of 31^ST December 2009, the order book reported 58 billion (in pounds), providing a clear picture of its vision (Babu and Bezawada, 2012). 

The implementation of ERP projects is a major step towards the development of organization’s IT structure. The company has formed an alliance with EDS-electronic data services in the year 1996. The ERP project comprises of IT specialists and engineers, ERP (SAP) consultants and every single unit have its procedures and training modules. The outsourcing company is responsible for the implementation of ERP (SAP) in a Rolls Royce. The company has encountered following problems which can be categorized as follows(McGaughey and Gunasekaran, 2007)-

1. IT/Technical problems
2. The major concern is precision data is not collected.
3. Data duplication
4. Software errors
5. Business Problems
6. The ERP processes cannot be streamlined with the business operations.
7. The ERP (SAP) is complex.
8. The switching costs are very high.
9. Cultural Problems
10. The acceptable levels are lower due to complex training modules.
11. Training cost is high.

The objective of ERP systems is streamlining the business processes with the support of computer systems. The integration of various departments such as Finance, Marketing, operations, manufacturing and procurement in an organization can be achieved through the implementation of ERP. The company can systematize the management information and exchange the present information systems (Orougi, 2015). Various internet technologies are utilized by the ERP for swapping of information within the organizational structure. The main aim is to input the numeric value from different external and internal sources. Once, the data gets stored in the system, all the information gets automatically updated. What is the need for installation of ERP (SAP) systems in an organization? The main objective is to adapt the organization with changing business needs and streamline the external and internal business activities. A database is created within the ERP software that stores the data from the suppliers, distributors and customers. In order to reduce the maintenance costs, the outdated technologies must be removed from the company. This is how the management can take a step forward to replace the old hardware and move to a paradigm shift in IT. The ERP (SAP) systems are mostly preferable in IT based organizations that have the high spending power. The management of the company must be interested in reducing the order and delivery timings. The employees of the organization must be willing to support the management and have IT skills to adapt themselves to changing business needs. This is how the facilitation of data within the single business units of the organization is achieved (James, 2007).

1. The IT and business processes can be integrated.
2. The need for a single platform.
3. Reduced cycle time and lesser working hours.
4. Increased data visibility
5. The increased customer base and responsiveness of the external stakeholders and customers.

Nature of the Enterprise System and the Process of Selection and Implementation

This helps the managers with better decision-making capabilities and data perceptibility. The large data within the organization can be incorporated within the single entity and can be used a ‘single’ expression for external stakeholders of the firm. Customer satisfaction is one of the key components that must be achieved by the adaptation of ERP system.

The determination of the best ERP (SAP) system that is appropriate for the company, it largely depends on the organizational functions and requirements of the business units. A Few differences between Oracle and SAP have been summarized below-

1. ERP (SAP) – The E-business suite helps in the better performance of jobs where as Oracle helps the computer system to reduce the procurement order and delivery timings.
2. The implementation of Oracle takes more time when compared with ERP (SAP). The results are more accurate and precise with ERP (SAP) (Parry, 2005).
3. The customer satisfaction levels and middle management tasks cannot be completed on time with the implementation of Oracle, whereas the results are just the opposite with ERP (SAP).
4. The Oracle has lower maintenance rates when compared with ERP (SAP)-the maintenance costs are higher.
5. Oracle software cannot be customized to adapt to the business needs. ERP (SAP) is known as “Vanilla Software” and has a high level of flexibility.
6. Oracle is a relational database structure, whereas SAP is a customer centric database structure. The Oracle facilitates the data management, whereas ERP (SAP) facilitates the real-time management of business processes (Hoch and Dulebohn, 2013).
7. The Oracle software helps in operational planning, financial planning, sales, and marketing planning, whereas data extraction of single business units is possible ERP (SAP).
8. The ERP (SAP) provides structured reports using CRM functionalities whereas this cannot be achieved with Oracle.
9. There are fewer disruptions in ERP (SAP) when undergoing “Go Live” process when compared with Oracle.
10. There is the high business operating risks associated with Oracle, fewer in case of ERP (SAP)(Zeng and Skibniewski, 2013).

A comprehensive view of what ERP (SAP) technologies must be implemented in a Rolls Royce. From the above points, it is clear that an ERP system is focused on human relationship management and this is best recommended that suits the needs of the company. To meet the present requirements at Rolls Royce, the company needs to analyze the budget requirements, time frame, and management guidelines. SAP R/3 can manage complex business processes. It has been designed to coordinate all the information, activities and resources in a firm. The order fulfillment, billing, human resource management and financial control functions can be implemented easily. To fulfill these tasks successfully in a Rolls Royce, following modules needs to be implemented (Koch and Mitlohner, 2010)-

1. SD (Sales Distribution)
2. MM (Materials Management)
3. PP (Production planning)
4. FICO (Financial accounting and controlling)
5. PS (Project system)
6. HRM (Human Resource Management)
7. FSCM (Financial supply chain management)

The communication within the different departments is not a problem anymore. SAP R/3 is the standard business software that is compatible and highly customizable.

SAP (A&D)-Aerospace and defense have been a world-class leader and known in the market for its configuration flexibility. The SAP (A&D) allows rapid responses to serve the changing demands of the industry. The software has been able to output outstanding services and supports program management, proposal management and manufacturing operation, order management and contractual management. The Rolls Royce can cut costs and reduce complexity levels and enhance productivity levels through the successful implementation of SAP (A&D) (Vathanophas and Stuart, 2009).

1. The supply chain management-The overall capacity is compared with extensive number of sales scenarios.
2. The key programs- The sales management board reviews and make the final decision on whether to implement the plan.
3. Suite Plan and programming the factory Requirements-This implies ‘readiness’ to the agreed schedule and moving to production plan.
4. Scheduling shop activity- This implies the conversion of production plan into shop plan.
5. Factory Operations-The workflow processes are controlled by the shop right from the generation of paperwork and finished product delivery.

1. The data are in a stable form for the period of eight to ten weeks. In case, if any changes are made in the master or transaction data, it is logged and then passed on to the new system.
2. The initialization process-The Go live process takes two weeks-time.
3. Risk- There are high risks associated with non-availability of IT infrastructure and hardware during the time of implementation. A possible failure may occur during the ongoing business operations. The data may not be loaded in precise forms(Wickramasinghe and Gunawardena, 2010).

1. Business problems
2. Transaction problems
3. User authorization problems
4. Complex procedures
5. The unavailability of route cards
6. Higher difficulty levels were experienced in data comparisons when transferring the numeric values from old systems to new systems
7. Role definitions. Required the use of capacity owners and MRP controllers.

The ERP (Enterprise resource planning) systems are accredited with providing a competitive edge to business operations. The implementation of ERP systems adds complexity to the supply chain operations. There are four technical factors that pose difficulties for Rolls Royce. These include-Customization issues, Business process reengineering, outsourcing and supply chain characteristics. Additionally, there are general issues as well-management style, language barriers, labor skills and political factors and others. The implementation of ERP systems has a radical impact on the information systems. A careful planning is required at all the stages for successful implementation of ERP in multinational corporations (Olson and Staley, 2012). The Enterprise resource planning systems are attractive to for any business activity as they have fewer technical risks when compared with the other IT software. The difficulty levels that are faced by the organization can be summarized below-

1. Switching to ERP (Enterprise resource planning) systems is a complex learning procedure. This simply implies that old systems are outdated.
2. The multinational firms undergo regular business changes in a complex environment.
3. The implementation of ERP system requires data integration that impacts the centralized ownership capability.
4. The IT support is centralized; this is done to reduce the IT costs.
5. The implementation of ERP systems has a lot of impact on the balance of power.
6. A recent update suggests that there have been a high percentage of ERP application failures (Sun and Bhattacherjee, 2011).

Few problems experienced with the management are reviewed as follows

The motivation behind the ERP execution is mainly financial and operations based. There is a strong desire in Rolls Royce to swap the complex operations, multiple currency procedures with easy to use ERP systems. Business process reengineering has been successful in eliminating the coinciding activities for major business processes. This has also reduced the amount of work and time spent on paperwork, invoice generation and order processing. BPR has been effective in resolving the linking inquiries, identification of delays in production timings, reducing the delay in shipping, consolidating forecasts and lower levels of finished goods. The Business process re-engineering processes are uniform and homogenous and more standardized procedures are in place. The departmental skills are streamlined with present technology (Rom and Rohde, 2006). This indicates a reduction in IT payrolls and the company reported lower demand for IT programmers. The ERP (SAP) requires higher user involvement. The company needs to work on 2 year business process engineering project and final expenses are approximately 2.5 million (in dollars). This has been unsuccessful due to the budget allocation, delays and fewer benefits.

The Rolls Royce business process engineering required implementation of ERP (SAP) in more than 10 countries. The old system is comprised of more than fifteen hundred software programs. Most of them have reported inaccurate and less precision in the data structure (Beheshti and Beheshti, 2010).

1. Mapping of current procedures
2. Identification of present issues
3. Selection of best SAP practices
4. Remapping the IT and business processes to match with ERP (SAP).

The Rolls Royce management made high efforts to elude ERP (SAP) aerospace customization. The company obtained more than six thousand ERP (SAP) licenses and higher emphasis has been given on training modules. The company efforts were focused towards the presentation of seminars and demonstrating the ERP system values. The employees were given adequate training by SAP specialists and high focus on the technical issues.

The implementation of ERP (SAP) in different countries complicated the business process engineering processes due to the following reason (Kini and Basaviah, 2013) –

1. The implementation costs are higher and bring about changes in the business practices.
2. The different countries have diverse legacy practices
3. The increased constraints faced by the company due to fluctuating regulations.
4. The computer experience varies from user to user.
5. Resistance to change.

The business process re-engineering methods offer a plethora of opportunities in a multinational firm. Every subsidiary undergoes through a unique circumstance, therefore complicating the entire process.

There are high risks associated with customization of software. This is mainly due to enhanced efforts by the vendor to improvise the new versions. The multinational firms have diverse CRM needs. Federalism is an attractive approach to ERP (SAP) implementation and can easily cope up with native needs. The ERP (SAP) systems support the supply chain operations through electronic data exchange and web linkage. The primary goal is to improvise the support to business operations. The technology implemented must be able to cope with security risks. Rolls Royce has technical expertise, but in scenarios where local manpower is not available readily. The outsourcing helps in gaining access enterprise resource planning expertise (Singh and Best, 2015).

Analysis of difficulties faced by Rolls Royce

The business environment changes rapidly, the firms need to constantly review their working practices through management information system. There are many critical success factors for the successful implementation of an enterprise resource planning system. The integration of business functions and diverse processes has been possible due to ERP (SAP). This is perfectly designed to meet with the needs of varied industries and integrate different modules like sales and marketing, human resource, financial, material planning, customer information and supply chain. This has led to increase the demands of ERP (SAP) among the business units.

This is due to several reasons (Venkatesh, 2013)-

1. High pressures from the competitors
2. To have low costs of production.
3. Increased ability to survive globally
4. Maximization of resources
5. Increased profits/revenue growth

There are numerous challenges faced by the company while implementing the ERP-Enterprise resource planning system. A crucial factor is shortage of financial and human resources to support the initiatives at a global level. Moreover, the commitment made by the government bodies for the development of IT infrastructure that will enhance the overall business functions and promote industrial development (Singla, 2009).

1. Pre-implementation Phase- The firm decides whether they want to implement the Enterprise resource planning system. Identification of critical success factors is necessary at this stage. These can be summarized as below-
2. Project management
3. Top management support
4. User education and training
5. Careful selection of software packages
6. Learning competency
7. Implementation/Execution Phase -The firm needs, to foresee and get prepared for upcoming challenges or difficulties that may occur during the execution phase. Business and technical problems may arise during the implementation stage.
8. Post-implementation phase-The firm needs to be up-to-date about the latest IT software and technologies and must be able to cope up with the any political, legal or IT related issues (Frimpon, 2012).

An ERP (SAP) system consists of a comprehensive database that disseminates information across all the business units. When different business units are integrated, economies of scale can be achieved and the businesses can gain cost reduction. The information is presented in a more transparent way. On a global level, the firm must be able to control the remote business units. An ERP (SAP) system helps in sharing the information across different business units and national borders. The ERP (SAP) system cannot be implemented without a robust information technology structure. Switching from conventional business processes to implementing a modern and unique information system like ERP (SAP). This is a complex task, but there is success stories as well as system failure that lead to insolvency situations (J.Albarakati, 2015). Owing to success factors, the company must be decisive in making huge investments and giving a huge span of time for the implementation of ERP (SAP) system. The enterprise resource planning systems are being adopted by a diverse range of firms. In order to have desirable outcomes, few factors are summarized below-

1. Communication practices between the top level management, middle level and low level management.
2. Different management procedures that can handle the business reengineering processes.
3. The fundamental concern is feasibility, cost, user licenses and training modules.

The critical success factors must be identified for the successful implementation of ERP (SAP). The key issues are teamwork, support from the top management, software development, IT systems, effective communication, appropriate business changes. All the organizational changes must be addressed through technical solutions.

Conclusion

The journey of Rolls Royce begins with the implementation of ERP (SAP) system and continues with pre-implementation processes, execution stage and post-implementation stage. A continued effort by the management is required to reap the benefits of ERP. Critical success factors should be examined at every stage of ERP (SAP) implementation (Obrenovic, 2013). There are a number of factors that affect the ERP (SAP) implementation process (Eito-Brun and Sicilia, 2016). These include-Technological competence, Project planning, Project management and Change management. One of the crucial aspects is to provide ERP (SAP) training as well as interdepartmental cooperation. Most of the developed countries have reported the penetration of enterprise resource planning systems in multinational firms. This is further supported by the ERP project implementation and management. There are unique challenges in change management that are important from the viewpoint of multinational companies. The complexity level has several dimensions. These include software configuration, business strategy, management, execution and technical platform. Management execution plays a greater role towards the ERP (SAP) implementation. The Enterprise resource planning, project implementation becomes challenging when local management is unprepared. These are cultural barriers, language barriers and reporting lines.

References

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