Existing IT Systems Analysis
Auburn Wine Company (AWC) is a wine manufacturing company that was established in 1994. It has since has expanded to comprise of a head office in Adelaide and additional offices in Sydney, a bottle plant, a warehouse, three wineries and a restaurant. AWC Board of Directors includes a chief executive officer, chief financial officer, chief information officer and the & sales, marketing & procurement managers and human resource manager. It comprises of 460 permanent employees and takes in about 250-300 casual workers during busy days.
Currently, AWC information systems are out of date. Presently, AWC uses DataAction, an integrated financial accounting system which does not support its sales and marketing functions. Inventory stock control is done through a module that is not integrated with DataAction system even though the payments are handled through DataAction. AWC is also using a standalone Supply Chain Management) system in their procurement department. Sales and Marketing branch located in Sydney is also using a stand-alone system that helps with proprietary logistics as well as another program used for basic IT support. AWC devices are connected together through a Local Area Network (LAN) with access the Internet. In addition, in each winery, company data and information is stored on separate databases. Periodically, database information from the wineries is transmitted to the headquarter office in Adelaide for consolidation. Production planning and inventory control is done on Excel spreadsheets and production and bottling operations is done manually.
The lack of an integrated information system is costly for AWC. Company data and information is dispersed in the different branches meaning there’s no data centralization and employees may fail to get up-to-date information when data is not sent to the main company database. Data retrieval is also time consuming as staff may be forced to wait for data transfer from one branch to another. There are no procedures that lay out policies on who and who shouldn’t access company data. All these challenges affect business efficiency, productivity and competitive advantage.
Therefore, it is important to deploy an Enterprise Resource Planning (ERP) solution to integrate AWC functions and departments for cost savings, improved efficiency and ultimately improved production in order to gain a competitive advantage.
This project will address the outdated information systems that result to business inefficiency and low productivity as a result of data independence and lack of up-to-date information for employees
To deploy a SAP ERP application that will integrate AWC business processes in order to enable business efficiency, effectiveness and productivity.
- To study the existing IT systems
- To generate the requirements of the proposed ERP system
- To implement the ERP implementation
Proposed Implementation Methodology
The proposed information system (ERP) will enable AWS;
- To provide up-to-date information remote access for both employees and company stakeholders
- To reduce on costs associated with data transmission
- To grow and expand through business efficiency and productivity
- To embrace and align with information and communication technology developments for a competitive advantage
Enterprise Resource Planning (ERP) is a business application software that helps to integrate business functions and provides support for information flow both within and outside the business (Elizabeth, et al., 2015). ERP software’s are huge and complex, and combines business modules in order to collect, store, manage, and integrate data from all business processes. It is therefore an enterprise application that incorporates all aspects of business procedures including product planning, manufacturing, development, sales and marketing, finance and accounting in a single database, application with provision for user interfaces (Beal, 2017). The proposed ERP for AWC is a SAP ERP application.
SAP ERP is enterprise resource planning application software developed by SAP Company, and incorporates all the major business functions of an organization (SAP , 2017). SAP ERP consists of various modules, including product planning, financial accounting, planning and controlling, asset accounting, sales & marketing, quality management, project management, human resources and more (SAP , 2017). This means that by implementing SAP ERP, AWC will be able to integrate all its operations in various departments in all the branches including the headquarter office, bottle plant and warehouse in Adelaide, the wineries based in Clare, Barossa Valley and Renmark as well as AWC restaurant based in Barossa valley. The SAP ERP will facilitate in collection and integration of data from the different modules in AWC including production, supply chain management, sales and marketing, financial and accounting, human resource management and more to offer AWC enterprise resource planning. Recommended SAP enterprise applications for AWC are SAP ECC or SAP HANA which are briefly described below.
AWC can chose to deploy SAP ERP Central Component (ECC). SAP ECC is flagship ERP product by SAP, and is one of the most preferred ERP solutions for many organizations. It is an enterprise resource planning (ERP) software that comprises of several modules that provide AWC with enhanced control and efficient management over their major business procedures (Business Cipher Solutions, 2015). If deployed, SAP ECC will provide AWC with modules including production management, financials management, material management, human resources capital management, sales and distribution (Business Cipher Solutions, 2015). It will also facilitate module collaboration for AWC which will enable fully integrated solutions for enhanced operations and increased business growth through data centralization.
AWC can also opt for SAP HANA ERP. SAP HANA is also an ERP application software developed by SAP company (SAP , 2017). It is a column-oriented relational database management system with in-memory database features that integrates several business modules (Carey, 2017) . As a database server, SAP HANA will provide data storage store and fast data retrieve capabilities for applications. Furthermore, SAP HANA performs advanced data analytics functionalities (O’Donnell, 2015). It will therefore perform text search, spatial data processing, text analytics, predictive analytics, graph data processing and streaming analytics for AWC. SAP HANA can be installed in the cloud by cloud service providers or on-premise (SAP , 2017)
Organizational Structure and Staffing
SAP Solution Manager is an integrated platform product developed by SAP company that supports SAP users to adopt new software deployments (SAP, 2017). It facilitates support for business operations, development and continuity. It therefore helps in implementing, maintaining, running, and adoption of all enterprise applications (SAP, 2017). Not only does SAP solution manage SAP products, it can also be used to manage other software solutions not developed by SAP company (SAP, 2017). For AWC, SAP Solution Manager will enable the installation, running and management of the selected SAP ERP. It will enable end-to-end software lifecycle management to restructure business processes for AWC and facilitate efficiency and effectiveness as well as decreasing risk failure involved in ERP deployment. SAP Solution Manager will facilitate ERP implementation success at AWC by providing the following
- Powerful implementation capabilities that will allow users to efficiently implement SAP ERP and other software applications
- Enhanced user experience by enabling browser-based user interfaces and improved graphic
- Hybrid support through support for all AWC cloud applications
Figure 1: SAP Solutions Manager (SAP, 2017)
SAP Business Suite comprises of several business software applications including SAP ERP as a basic foundation and other solutions including customer relationship management, product lifecycle management, supplier relationship management, and supply chain management units (Rouse, 2014). For AWC, SAP business will enable planning and provide process execution as well as cost saving.
SAP implementation refers to entire set of processes that describe the SAP ERP deployment in an organization (Anderson, 2003) . For AWC, SAP implementation will be based of the best practices and reviews that present a series of processes and products that make up a complete implementation method to allow AWC to successfully design and execute the SAP ERP.
According to (Indusa, 2015), effectively executed SAP ERP systems provide several benefits. By installing a SAP ERP, AWC will obtain the following benefits offer have the following cost benefits:
- Improved planning and control for inventory stock control function
- Enhanced production effectiveness which will diminish scarcities and disruptions.
- Decreased raw materials costs driven value-added procurement and compensation procedures with suppliers
- Decreases labor expenses through better human resource management staff allocation procedures
- Improved sales income through better managed customer relationships.
- Reduced managerial costs.
- Reduced supervisory and monitoring compliance expenses
- Provision for enhanced global integration for currency exchange rates barriers
- Up -to-date real time information access through a common single database and error reduction
- Efficient work environ for company employees (Monk & Wagner, 2009)
- Customizable user interfaces for end users that suits different modules
- ERP Implementation may suffer failure
- It may take long to achieve return on Investment for AWC
- Vendor lock-in where AWC may be tied to a single ERP provider because of service contracts and high switching costs
- ERP Inflexibility challenges where SAP ERP solutions may fail to be compatible to some of AWC business model making customization difficult
CRM is a software solution for managing customer’s current and probable interactions in an organization (Sysco, 2017). Companies majorly install CRM and ERP to ensure business operations effectiveness and efficiency. AWC can therefore install a CRM solution. CRM can manage and improve customer relations for AWC through evaluating customer engagement and experiences for even better and enhanced customer support. CRM can help AWC to understand clients, and enhance their experience through managed relationships. Used together with a SAP ERP, CRM can greatly improve business functionalities for AWC for enhanced efficiency and productivity.
It is vital for AWC to deploy other software solutions that can work together with the selected ERP for improved efficiency (Workwise, 2017). Associated SAP ERP applications are vital for AWC because;
- They will facilitate business process streamlining
- They will enhanced real-time data and information
- They will provide an all- rounded view of the company customers
SAP ERP implementation is complex and complicated and therefore requires a lot of planning and considerations (Panaroma Consulting Solutions , 2016). For AWC, time consideration will be very important because the company operates more than one branches. It will be important to ensure that a given ERP implementation phase is successfully installed before moving to another in order to avoid failure. The number of ERP modules, financial capability and vendor support will depend the time duration for the ERP implement in the company.
Business Process Re-engineering
Business process re-engineering (BPR) is a management strategy that aims to study and design business processes organization and workflows in a company. BPR focuses on helping organizations rethink their operations in order to improve customer experience reduce on operational costs, and gain a competitive advantage (Roskill, 2014). As such, BPR and ERP go hand in hand. The best way to ensure ERP implementation success for AWC is to perform BPR first
For AWC, Performing BPR first will ensure that business operations are improved before ERP implementation. BPR will ensure ERP functionality will thoroughly match the actual AWC business processes. It will also reduce implementation complexities as well as reduce implementation time.
Change management (CM) is an approach that directs on hoe to effectively prepare, arm and support people to positively embrace changes in a business for successful outcomes (Prosci, 2017). It is thus important to perform change management at AWC as it will provide a planned methodology to support employees in the organization towards adopting changes associated with ERP deployment.
- Communication issues – ensure that ERP implementation is clearly communicated in the organization for transparency. Let AWC staff know why the change is needed and how it will be done
- Employee resistance – AWC may resist change. Therefore management needs to be involved in the changes by offering user training
User training is a very important factor with ERP software deployment. If end-users do not know how to use the installed ERP, the ERP will not achieve expected outcomes and will be a failure (Darshan, 2016). AWC has over 400 permanent staff members and may regularly employ over 100 casual employees. For ERP success, it will be crucial to train them on AWC understanding the different aspects of the ERP implementation including why, what and how. Training AWC end-users will enable them take full advantage of its benefits
- Training budget
- Align SAP ERP with change management
- Start early and do it more than once
- Select a delivery method such as web-based training, videos, computer based and manuals
ERP deployment comes with associated risks such as failure. It is important to set up risk management procedures in a business in order to manage any up-coming uncertainties (Prasanta, et al., 2016). Since the ERP installation at AWC is a project, the company needs to set up risk management policies to guide risks that may come with the deployment process. Risk management will involve everything stage from the initial phase to the implementation and maintenance phases.
Conclusion
Several emerging technologies are increasingly transforming business processes operations including cloud solutions such as ERP applications. ERP solutions help organizations by integrating functions for increased efficiency, productivity as well as achieving a competitive advantage. Thus business that want to expand their growth and maintain continuity should adopt modern technologies to achieve productivity.
The information officer recommends that AWC should deploy a SAP HANA ERP or SAP ERP ECC software solution in order to be effective, maximize productivity and achieve a competitive advantage. Before ERP deployment, AWC should perform BPR in order to have the ERP aligned with business operations. To ensure ERP deployment success, AWC should train employees on the what, and why the ERP implementation is necessary as well as how to use it for efficiency. In addition, it would also be important to implement CRM solution together with ERP for an all-round business operations streamlining. Lastly, AWC should also ensure the layout of ERP risk management plan in the event that the ERP implementation faces risks and uncertainties.
References
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