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COLLEGE OF BUSINESS

BKAL 3063 INTEGRATED CASE STUDY

FIRST SEMESTER 2013/2014 (A131)

LECTURE: Pn. NORAZA BT MAT UDIN

CASE 7: SAP for ATLAM

EXPIRE: 8 December 2013 (Before 10 a.m.)

GROUP A (7)

NAME MARISA BT MUSRIL GOH ING MIN ELIZABETH ESTONIA ANAK JONIC NURLIYANA BT ZAINUL ABIDIN WONG ZI XIN

MATRIC NO 195468 205438 207727 207788 207877
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1...................................................3 Conflict between top management ..........................................6 Political Feasibility .......................2.................. 10 3.................................1...........................................................4 Schedule Feasibility .................................. 12 4.....0 RECOMENDATION ................................................................ 11 3..0 ISSUES AND ANALYSIS .......................1................... 3 2......1 Economic Feasibility .2............. 5 2.........2............................................... 3 2............................................................ 3 2............................................................................................................................................. 9 2...............1 ISSUES .....0 INTRODUCTION ........2 ANALYSIS OF FEASIBILITY STUDY ........................................3 Termination of Mr Lim.................................................. 9 3.........2.............................................................................................. 7 2.........2.....................................................................Contents 1........................................................................... 10 3................................................................................................................................................... 3 2....................................................................................................1 Resistance to Change ................. 8 2.......................................................0 Conclusion ...........................1.......... 13 2 ........ 7 2..................................................1 Implementation of SAP system ..........................................4 Termination of Mr....2 Operational Feasibility .............................2 Conflict Management ..........3 Technical Feasibility ................... 4 2.......3 SAP vs ACCPAC ....................... 4 2.........2.............. 9 2..........................................................................5 Legal and Contractual feasibility ....................................................................................................... 5 2.....................................................................................................2 Resistance to change ...................................................... Lim .......... 5 2..........................................................

Does Zulkifli action reasonable? What should he do regarding this issue/matter? 2. Before privatization on 1 January 1997. they need to allocate one ID per user. the argument is about the cost of implementing the SAP system. However.1. it’s impossible for ATLAM to bear the costs since ATLAM’s cash flow as at December 2001 was at a deficit. was responsible to manage this project. Lim and Gopal. Therefore. Therefore.1 Implementation of SAP system Based on the case study. culture. For the internal control and their audit purposes. ATLAM relied on a customized single-user system where the system cannot produce financial reports.1 ISSUES 2. The third 3 . Second argument is the annual license fee as well as the security for the system. Compared to ACCPAC system. In this situation. and habits. ATLAM had been in a very poor state. The new system should be ready by 1 April 2002. they had been asked to upgrade its accounting system with the PETRA group-wide SAP (Systems. This issues lead Zulkifli took action by terminating Lim from the project team.0 INTRODUCTION Akademi Teknikal Laut Malaysia (ATLAM) was establish on 15 August 1981. change in system/technology will need change in work processes. Their vision was to be a leader in maritime education and training. Some of the project team member’s. and Products) system. ATLAM need to upgrade its accounting system and the Finance Manager. Time also limited to prepare to replace the old system with SAP system. Applications. Lim was having conflict on opinion with Zulkifli when discussing matter of SAP system in ATLAM. there are some issue arises regarding the implementation of new system (SAP system). Zulkifli Osman. user must have ID to access it. where their mission was to facilitate value added learning via a conducive environment and provide excellent services to its clients. This can be related to the security for the system too. not agree with SAP implementation. the Finance Manager. In order to access the system.0 ISSUES AND ANALYSIS 2.1. In addition. But somehow. the cost of implementing SAP is higher and it might affect the company financial and non-financial information and their strategic implications in the long-run. Mr. The management of ATLAM was a wholly owned organization of MICT Berhad. he had to reach an agreement with other top management and this decision had leaded them to some arguments about implementing SAP for the company. Zulkifli Osman decided to implement new accounting system called SAP. it is going to cost them a lot. First of all.

1. 4 . All these meetings bring a lot of tense to all the top management. the User Representative. to implement the SAP for the accounting system has brought another argument which is the department will have an issue on the equipment such as lack of PCs and space availability for the staff to practical the new system. They brought many issues on the meetings that include the company capabilities on implementing SAP. Lim also showed aggression and anger towards Mr. ATLAM is a government agency that had been through a privatization on 1 January 1997.3 Conflict between top management We could found out that in the project team. 2. due to that. Thus.argument is about the time constraint issue. In addition. they just want to do their job like they did for the past few years. Lim. 2. Gopal. who highlighted how difficult it was for the staff to adapt and get used to the new system.1. Their minds are conservative enough to resist change in work process. The conflict happens when they are trying to disagree with the other top management decisions for applying SAP into the system by listing out the consequences of SAP to the company. This resistant showed by Mr. Some of the staff had never used computer before. Hence. ATLAM need to implement SAP as soon as possible since the decision to upgrade the accounting system has been made. the User Representative and followed by Mr.2 Resistance to change The next major issue in this case is staff resistant to change from the old system to SAP system. they have to reach an agreement between them and work as a project team to overcome the problems and issues raised. culture and habits that some of the staff might refuse to accept SAP implementation. all these arguments need to be solved in order to implement SAP for the accounting system. the User Project Manager concerning to the implementation of SAP for the accounting system. Zulkifli in meeting such a sign and symptom of an adverse reaction to change. There been a lot of issues rises in the meetings from Mr. Lim. so they are reluctant to learn new things in the work place. Another concern is they afraid they might lose their job based on their ATLAM privatization experience that lead to cut off some of the positions. in order to implement SAP for the accounting system. In addition. there are some issues regarding to the top management behavior among them. Due to the time constraint. the staffs have a very strong character and quite conservative.

Zulkifli. schedules feasibility.2 ANALYSIS OF FEASIBILITY STUDY Feasibility study is an evaluation and analysis of the potential of a proposed project which is based on extensive investigation and research to support the process of decision making. during the meetings were held. Lim was trying to influence other colleagues. Lim was defending his arguments based on cost benefit analysis as via implementing SAP the company will be spending out more money. In contrast. net present value. for instance) by his ideas. Lim or not. his comments were based on the benefits of company and concern on his fellow colleagues. Lim is very experienced and also raise up lots of contrast ideas regarding the implementation of SAP system at ATLAM. He was trying to defend his stands from end. payback period. we came to a conclusion that Mr. For example the cash outflow for start the SAP project. By included the initial outlay of the project will help us to identify whether the project is profitable or not. Mr. Kamal after the second meeting has made a great impact on Mr. Well. i.1 Economic Feasibility Economic feasibility refers to the financial viability for ATLAM to implement the SAP project. 2.4 Termination of Mr. Gopal. Zulkifli saw Mr.2. This is because Mr. Initial Investment Initial investment or initial outlay refers to the cash outflow at the start of a project or investment. Zulkifli also thought that Mr. He started to question himself on his action whether it was right to terminate Mr. Kamal has highlighted that Mr. Lim from the project team by Mr. Lim as a threat as he wasn’t really supporting Mr. technical feasibility. However. legal and contractual feasibility.1. Zulkifli’s idea to implement SAP system in their firm as soon as possible due to the pressure from the higher management. (Mr. 5 . For example. 2. and political feasibility. There are some feasibility to assess and considered in a number of area for the SAP project. after tax cash flow for Years 1 through 6. Lim The climax of all these issues has ended up in the termination of Mr. operational feasibility. ATLAM may use Cost. Mr. Lim’s termination was not the right thing to do. Zulkifli. a small discussion with Mr. Mr.Benefit analysis to access the economic feasibility like initial investment. The initial outlay for the project is as below.2. based on the situation in this case study. like economic feasibility. and internal rate of return.user perspective and was not aiming to underestimate SAP’s benefits. However.

tax cash flow The following is the cash flow after tax for ATLAM from Year 1 until Year 6. From the calculation. Besides.550 RM72.344. iii.390 ii. The calculation for the net present value for the ATLAM’s SAP project cash flow is as below.Initial Outlay Hardware Software license Training cost Customisation cost Total initial outlay RM2. The calculation below shows that the project was creating more cost saving than the cost expense each year from Year 1 until Year 6.271. Although we can make a summary that invest in SAP create more benefit than cost to ATLAM. 6 . Net Present Value Net present value refers to the total of each year net cash flows discounted to present value for recognize their time value of money.000. but the cash flow calculation did not consider any of the unquantifiable cost and benefit in the analysis. even after consider a 25% tax for each of the years.000. the total cost saving each still enough to cover the total cost incurred in the year.000 RM1.840 RM4. we can also sees that net saving after tax is increasing each year start from Year 1 until Year 6.000 RM1. After.

This was to ensure the quality of the developed SAP system and reduce the risk of system break down or system failure. culture. Payback Period= 2. It could assess whether the new implement SAP system can help ATLAM’s operation more effective and efficient. Far apart from the assessment of availability of the technical staff to develop the new system.2 Operational Feasibility Operational feasibility refers to the assessment of how a proposed system solves business problems or takes advantages of opportunities with the new system. Besides. 7 . that ATLAM also need to ensure the information technology team is well knowledge enough to develop the system. This means ATLAM has capability of technical resources to utilize SAP system. the new SAP system is very likely to affect the staff’s working process. Before ATLAM implement the project.3 Technical Feasibility Technical feasibility refers to the ability of the ATLAM to develop and implement the SAP system.iv.2.2. they need to access the availability of a knowledgeable and experience project manager to lead the SAP project. Besides. staff resistance to change of their working culture and habits will expose the project to the risk of failure. Payback Period Payback period refers to the period of time that ATLAM need to take for the net cash flow from a project to equal its initial investment to the project. the period of time need for ATLAM’s discounted cash flow to cover its initial outlay are as below. and habits. Based from the calculation in the net present value and the initial outlay. ATLAM also need to ensure the availability of knowledgeable and experience IT staff to maintain the SAP system. Based on Lim’s argument. 2. So ATLAM need to think of the ways to handle this issue.

This analysis should include an assessment of the technical risk on SAP System that is depending on four primary factors: project size. the larger the size of the projects. 2. the project team have 8 . For example. Even though there are user representative (Lim) whose refuse to carry on the implementation of SAP system. the SAP system should be ready for use in 1 April 2002. project structure. iii. the result drawn that SAP System project has a medium risk. under the SAP system. Project Size This project is reasonably large project for ATLAM. By using those project risk assessment factors to access the technical risk level of SAP System. ATLAM development group’s experience with similar system. ATLAM is required to assess time frame and project completion dates. Development group and User group The projects have a high risk as the development group and user group has low familiarity with the application area of SAP System. However. conducting some training will reduce the risk. Medium risk of technical assessment of SAP project should be considered as acceptable to ATLAM as refusing to take any risk will cause ATLAM couldn’t make the major breakthroughs in innovative uses of systems. Kamal as Functional Analysts and Zulkifli as Finance Manager) to finish the project in shorter duration time (second weeks of February until fourth weeks of March). Almost 20 departments in ATLAM will involved. it is still under control as the ATLAM management have highly commitment through the system. and user group’s experience with SAP System development projects and the application area. in the conversation in the first meeting on 22 January 2002. to be said. In fact.4 Schedule Feasibility In schedule feasibility study. it will provide an applicable system to ATLAM and to all companies within the PETRA group. This is because the project will impacted on entire ATLAM organizations. the riskier the project is. Lim as User Representative. ii. Project Structure The requirements for SAP System project is highly structured and well define have a lower risk. it will give high stress to project team members which consists of five persons (Sani as Project Manager.2. Gopal as User Project Manager. i. This means.

For example. as they are the user for the system. not on functions Individual solutions Enhance productivity Efficient work environment Real time information Global integration ACCPAC i) ii) iii) Identical user interface Data processing Easy to use and customize Disadvantages: SAP i) ii) iii) iv) High cost Complexity Risk of project failure Inflexibility ACCPAC i) ii) iii) Technical difficulties Integration setbacks Differences in programs 9 . ATLAM need to assess the possibility of legal actions taken towards ATLAM due to copyright offence. 2.6 Political Feasibility Political feasibility refers to the assessment of key stakeholders’ opinion in organization towards the new developed system. when developing the SAP system. For example.2.5 Legal and Contractual feasibility Legal and contractual feasibility refers to the assessment of legal and contractual ramifications of the new system. Besides. the project team needs to find the ways to convicts the staffs to not resistance on the new system. 2.2. ATLAM need to assess the acceptability of the new SAP system in the staff. 2. Perhaps the team may explain how implementation of SAP can helps to ease the system users’ job and increased the effectiveness and efficiency of the organization.less than six month times to develop the project. Besides.3 SAP vs ACCPAC Advantages: SAP i) ii) iii) iv) v) vi) Focus on process. the project team also needs to develop a project task schedule for the project members to identify project tasks sequence and project task that can be run parallel to avoid delay.

For example. iii. According to Kotter and Schlesinger.3. iv.0 RECOMENDATION 3. Power or coercion This approach was aim to solve the resistance to change faster by using the power owned by initiator to force the staff to accept the change. ATLAM may involve its end use for the SAP system by allowing them to design the system’s interface. there are six approaches that ATLAM may choose to overcome the staff’s resistance to change. ATLAM may explain how the implementation of new SAP system can lighten the staffs’ workload and improve their efficiency. But. But this approach comes with a weakness as people might get angry with the initiators.1 Resistance to Change There are some of the approaches that ATLAM may take to deal with the resistance to change. the aim was to involve employee to participate in the project by allowing them to input some ideas in decision making process. But this approach also has the shortcoming of time consuming when the persuasion involved many staffs. the shortcoming of this approach is it might take a longer time for ATLAM to develop the SAP system. For example. employees may need to be counselled to help them overcome their fear and anxieties about the change. Participation In this approach. So ATLAM may counsel their staff why they are resistance to accept the change of SAP system. This approach might be the 10 . ATLAM may compulsory the staff to implement change of SAP system under the CEO’s order. ii. For example. By this ATLAM’s staff will be more committed to implement the change as the interface designed according to their requirements ease them to fit in the change. i. Education and communication This approach was relies upon the hopeful belief that communication about the benefits of change to employee will result in their acceptance of the need to exercise the change. Facilitation and support In this approach.

Negotiation Negotiation refers to the approach to meet the win-win situation between two parties. but it was risky as the staff might still resist to change after the larger amount of time and cost has consume. and in the short term. the project manager takes a direct interest in the conflict between two parties and seeks to find a solution to the conflict. vi. Since there are short of time in for ATLAM to solve the conflict between Mr Lim and Zulkifli. 3.best approach to overcome the resistance to change due to the adjustment issues. Conflict refers to the process that begin when you perceive that someone has frustrated or is about to frustrate a major concern of yours. time intensive. One of the methods to resolving conflict is by mediate the conflict.2 Conflict Management Conflict management is vital to solve the conflict between the project team members. But this approach can be time consuming when they cannot reach an agreement in a meeting. This is because we cannot avoid conflict in the process of forming a team. the project manager is less concern about the source of conflict than the mutually acceptable solution. Manipulation and cooptation This approach should be the last choice of approach to overcome the resistance to change when other approach won’t work and too costly. In defusion tactics. ATLAM may use this approach to ask the staff resist to accept SAP system by bargaining with the company to meet a compromise and agreement between two parties. The project manager may either employ defusion or confrontation tactics in negotiating a solution. But this tactic is more effective in a long run as it seek to determine the causes of conflict so they can be corrected. Whereas confrontation tactics more concern about finding the source of conflict. In this approach. Although this approach can be relatively quick and inexpensive solution to resistance. but can lead to future problems if the staff found out they have been manipulated. v. so the project manager is advice to use the defusion tactic to solve the 11 . This tactic is more emotional. may actually make the conflict worse as both parties stand firm with their opinion.

Mr. Zulkifli should not withdraw Mr. Zulkufli to implement the SAP system in ATLAM is to link the system of ATLAM to its parent company’s system. The project manager may use the phrase such as “We are all on the same team here” to demonstrate the desire to defuse the conflict without plumbing its underlying source. From the issues raised.conflict. since another motive of Mr. Lim raises many issues during the meetings about the implementation of SAP. 12 . to reduce the capital fund in investing SAP system in ATLAM. the expenses on hire the experts to implement SAP can be eliminated as the parent company can provide this resource to ATLAM. Besides. Thus. The most strong point to pursue the parent company to subsidise ATLAM in implementing the SAP system is that after the implementation. PETRANET to match the group report structure. Besides. Besides. Besides. 3. This is due to there are possibility that the view of Mr. for some extent. Although Mr. the project team will know better about the problems that may occur while implementing the SAP system in ATLAM. This will also increase the feasibility of the SAP implementation in ATLAM. that Mr Lim is the representative of the user that reflects the systems users’ opinion so the team should not easily terminate him. This will help the project team to have a strategy to avoid the problems to occur or minimize the impact brought by those problems. however. the report of ATLAM will match with the parent company’s report and this will ease the parent company in preparing consolidated reports. as the parent company was successfully implement SAP system. Lim gives influence to the employee and thus the uncooporation of the employee will harden the implementing process of SAP in ATLAM. Zulkifli can discuss with the parent company to subsidise ATLAM in implementing SAP system. This will definitely help in smoothing the implement process of SAP in ATLAM. Lim from the SAP project team. the withdrawal of Mr. if ATLAM get subsidiary from the parent company. the issues been raises by Mr. Lim from the project team will also give constrain to the project team in implementing the SAP system.3 Termination of Mr Lim Mr. Lim are also helping the project team to have a better consideration about the implementation of SAP in ATLAM.

Although Mr Lim raises many issues during the meetings. we suggest that ATLAM continue their plan to implement the system. 13 . ATLAM needs to continue implement SAP system no matter what. Even though there are some issues and constraints to implementing SAP system at the beginning. its was for the good of the organisation. power/coercion. he could help in smoothing the implementation process of SAP system in ATLAM. good teamwork and information system would bring bright future for ATLAM. The payback period need for ATLAM’s discounted cash flow to cover its initial outlay was 3 years and 6 months. It allows the project team to be able to focus on the project status at any date during the project’s development. education and communication. Mr Zulkifli should reconsider his action of terminating Mr Lim. and manipulation and co-optation. His ideas should have been taken into consideration as he’s very experienced and knew what he was doing. ATLAM can use Gantt chart as a tool to monitor the project activities. Based on the Cost-Benefit analysis to access the economic feasibility. There are six approaches that ATLAM may choose to overcome the staff’s resistance to change. Mr Zulkifli should not terminate Mr Lim from the project team just because they having different opinion.0 CONCLUSION After we go through the analysis and evaluation on SAP system. This is because with Mr Lim presence. facilitation and support. we can see that the net saving after tax is increasing each year from Year 1 until Year6. the system would be worthwhile implementing as it would benefit for ATLAM in the future. negotiation. Therefore.4. They are participation. Of course in order to gain something from the system in the future we need to sacrifice or take any risks arises. As conclusion. Regarding time constraint issue. Finally. Therefore.